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This 2015 excerpt of American Prospect, January issue, is by Sasha Abramsky, reviewing Peter Barnes’s new book, With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don’t Pay Enough.
Peter Barnes, the co-founder of Working Assets, a socially responsible financial services group, took inspiration from Alaska’s Permanent Fund, which pays residents an annual dividend out of the proceeds from taxes on oil companies that operate in the state.
Barnes doesn’t explicitly mention Henry George, but the concept of taxing the unearned increase in the value of land, and then plowing that money back into the common good, is also tacitly present in Barnes’s thinking.
A similar system is being developed in Vermont, via a Common Assets Trust, which would raise money from taxes on pollution and other socially harmful practices and pay dividends to each resident while bulking up social investments such as education and public libraries. Several tribal communities across the country have also embraced a form of collective ownership and wealth-sharing. The principle has been institutionalized in California, via utility bill credits, as a part of the state’s effort to encourage utility companies to reduce greenhouse gas pollution. Barnes reports on local government initiatives, such as in Sherman County, Oregon, where a booming wind energy project has generated large tax windfalls that have allowed the county to pay $590 annually to local households.
Ed. Notes: The spending by all of us for the nature we use — land, resources, spectrum, ecological services, not to mention government-granted privileges — is so great each year that once we recover and share this socially-generated surplus, all of us registered voters could enjoy $1k per month.
These four 2015 excerpts of press support of public recovery of socially-generated land values — two in the US, two in the UK — are from: (1) Forbes, Jan 3, by Tim Worstall; (2) City Metric, Jan 8, by Darren Johnson; (3) the Register, Jan 11, again by Tim Worstall; and (4) MinnPost, Jan 12, by Peter Callaghan.
Why We Want Dynamic Scoring Of Budgets; It Would Bring Us A Land Value Tax
When we levy a tax, some economic activity does not happen. For each $100 we raise in taxation then we lose $30 in economic activity just because we have taxed, regardless of what we spend the money on and whether that is a good idea or not.
Sometimes the deadweight cost is actually the reason to impose the tax, like a carbon tax, the aim and point is to reduce carbon emissions, and others like cigarette taxes.
OTOH, repeated taxes on non-movable property can even have positive deadweights. And that last can also be called a land value tax.
A Land Value Tax should Pay for London’s new Garden Bridge
Presently the biggest winners from public funding are the developers and owners of places near it. They can charge higher rents to tenants, and command a higher price if they choose to sell their office space or flat, all without lifting a finger.
Given concern about high house prices, shouldn’t rising land and property prices be considered a negative?
To offset the public subsidy for bridges and to capture the windfall gain to landowners, tax all landowners based on the rental income from their land, as used to happen.
A land value tax would also act as a disincentive to investors looking to speculate on land and property, and encourage investors hoarding development sites to get on and build something.
This could help stabilise or even reduce house prices in an area of London where they are beyond ridiculous.
Tax Systems: The Good, the Bad and the Completely Toot Toot Ding-Dong Loopy — and how to spot the difference
I would never claim that economics is entirely settled, nor really even mature as a science, with a taxation system we want to look at efficacy (does it collect revenue?), efficiency (how much of everything else does it screw up?) and equity (are we nicking the rich bastards for their share?)
So, the thinking goes, just lightly tax each and every transaction through the banks and we’ll raise all those hundreds of billions easily. Yet if the only taxation in the country is on bank transfers then everyone will stop making bank transfers. Cash becomes king.
Such a tax also fails our efficiency test, making transactions difficult. And finally it fails our equity one. In the words of Sir John Mirrlees, transaction taxes “cascade through the economy” and we’re really not sure where they do end up. A tax on stock purchases ends up with pensioners getting lower pensions and workers getting lower wages.
The lowest deadweight costs of all, and so low that sometimes it’s actually positive, is repeated taxation of real property, or as it can be known, land value taxation.
It’s not that difficult to design a taxation system. Start with land taxation, add on any Pigou Taxes we want (carbon, baccy, booze, pollution etc, we want these precisely because they do destroy certain economic activity), and more if we still need more to feed the ravening maw of government. The most important part of it would be the LVT at the bottom of the system.
Here’s One Way to Reduce the Number of Undeveloped Lots in Minneapolis
Last week, the Intergovernmental Relations Committee discussed land-value taxation. The local chapter of the group known as Common Ground USA has been quietly pushing the idea employed in a handful of cities around the U.S. — though none in Minnesota.
Paying more for fallow land (i.e. surface parking lots) would encourage owners to develop it. Paying less on improvements, developers would not face a disincentive to build or improve buildings.
Any tax shift would produce winners and losers, acknowledged state chapter president Rich Nymoen. Owners of highly developed properties would likely pay less while underdeveloped and fallow land would pay more.
This 2015 excerpt of a Washington Post book review: ‘The Internet Is Not the Answer’ by Andrew Keen :Jan 2, is by Michael Harris.
The history of the Internet began with publicly funded technologists and institutions (people like Tim Berners-Lee, who invented the World Wide Web, and institutions like the Internet’s progenitor, ARPANET). These scientists and agencies cobbled together the various components of the Internet with very public goals in mind — the advancement of science and national security, largely. But that tradition was quickly cut off in the early 1990s, when the U.S. government “handed over the running of the Internet backbone to commercial Internet service providers.” It was, in the words of venture capitalist John Doerr, “the largest legal creation of wealth in the history of the planet.”
Reed Hastings of Netflix and Jeff Bezos of Amazon (who also owns The Washington Post) style themselves as visionaries while the true visionaries — nary a billionaire among them — remain in relative obscurity.
The tigers of yesteryear’s Wall Street were rather upfront about their motivations, while now billionaires say they just want to “make the world a better place.”
Ed. Notes: While government did fund the creation of the Internet in order for the military to communicate better, the people they hired to do the actual original programming were mainly draft dodgers who stretched out their stay in grad school so that they’d not get sent to Vietnam. Irony is heavenly! The real question is whether the Internet could’ve been created without winning wars easier being the motive. Could talented visionaries organize themselves to create something big? It’s hard to know the answer as long as we’re in a society where insecurity is the norm. Yet if we did share the socially-generated values of Earth, I believe good would come from good, and we’d not have to make do without the Internet or anything else desirable envisioned by the mind of Man (humanity).
This 2014 excerpt of ArsTechnica, Dec 26, is by John Timmer.
Deaths due to heart problems drop during major cardiology gatherings.
Patients that were admitted to a hospital with a serious heart condition when specialists were away attending meetings were compared with groups admitted three weeks before and after. The key measure was simply whether the patient was still alive 30 days later.
At teaching hospitals, the rate of death after heart failure was 24.8 percent on non-meeting days. While the cardiologists were out of town, it dropped to 17 percent. A similar trend was apparent with cardiac arrests, where death rates fell from 68.6 percent to 59 percent while cardiology meetings were happening.
That’s a tremendous reduction in mortality, better than most of the medical interventions that exist to treat these conditions.
When specialists are not available, the doctors that remain behind are more cautious about the care they give, avoiding aggressive procedures such as the use of angioplasty or stents to re-open clogged heart vessels. This would be consistent with the lack of effect in acute myocardial infarction patients, where this procedure is used less often.
Ed. Notes: Common sense can be fooled. Some patients have too much faith in the experts. Some experts have too much faith in their tools and toys. That’s why we must be at our best frome of mind in order to think through challenging situations.
What situations like this one call for is a more egalitarian relationship between doctor and patient, and bigger scale, between government and citizen. What delivers that and levels hierarchy is income parity, since we measure our worth by our income (for better or worse). One’s income should be earned by one’s talents in an open exchange with others.
Income should not be increased artificially, as doctors’ income is increased by the state curbing competition among healers via licensing. The amount of money from government — a citizen’s dividend — should go to us all equitably. That’d foster an equal sense of self-worth and confidence in one’s ability to make critical choices.
This 2014 excerpt of TruthDig, Dec 26,is by Ellen Brown. It first appeared at Web of Debt.
Recently the price of oil fell by over $50 a barrel – a drop of nearly 50% since June. The result could be trillions of dollars in oil derivative losses. The hefty bill could be
imposed on taxpayers in a bailout or on depositors in a bail-in. Depositors and taxpayers were not liable until the December 16th deletion of the Lincoln Amendment (to the Dodd-Frank Act), which had required banks to push out a portion of their derivatives business into non-FDIC-insured subsidiaries.
Not only Jamie Dimon, CEO of JPMorgan Chase, but President Obama himself lobbied lawmakers to vote for the bill.
The “too-big-to-fail (TBTF) banks that include JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo hold most of the $280 trillion in derivatives. Leveraging cheap money from the U.S. Federal Reserve into $10 trillion of derivative speculation is one of the TBTF banks’ most profitable business activities.
The deleted rule would have applied to a fraction of the banks’ bets. But five percent of $280 trillion is $14 trillion in derivatives exposure – close to the size of the existing federal debt; $3.9 trillion of this speculation is on the price of commodities, including oil.
The $50 drop in the price of oil was not due merely to the forces of supply and demand, which are predictable and can be hedged against. It also appears to be an act of geopolitical warfare against Iran and Russia by the Saudis. The price has been falling at a time when, given the turmoil in Iraq and Syria caused by Islamic State, it would normally have been rising.
Ed. Notes: Should derivatives even exist? If so, should they be in the trillions? They hardly seem like legitimate market behavior.
What if we had ethical government behavior? If government were our good steward and recovered the “rental” value of oil in the ground and of locations on land, then neither the oil companies nor the banks would have so much money (unearned) that they could boss around politicians. Also, the price of oil and prime locations would drop so low that none of the capitalist gamblers would any longer be interested in them.
If those guys could not get the rents or the free money or borrow cheap money or get bailouts and corporate welfare, it’s unlikely the derivatives would be huge or even exist. But winning that rational result begins with understanding the worth of Earth is a common wealth for humanity to share. Spread the word!
This 2014 excerpt of the New York Times, Dec 13, is by Mark Bittman.
We’re seeing spontaneous protests nationwide, protests that, in their scale, racial diversity, anger and largely nonviolent nature, are unusual if not unique. Meanwhile, workers walked off the job in 190 cities on Dec. 4.
The root of the anger is inequality, about which statistics are mind-boggling: From 2009 to 2012 (that’s the most recent data), some 95 percent of new income has gone to the top 1 percent; the Walton family (owners of Walmart) have as much wealth as the bottom 42 percent of the country’s people combined.
What makes this an exciting time is that we are beginning to see links among issues that we have overlooked for far too long. When underpaid workers begin their strikes by saying “I can’t breathe,” or by holding their hands over their heads and chanting “Hands up, don’t shoot,” they’re recognizing that their struggle is the same as that of African-Americans demanding dignity, respect and indeed safety on their own streets.
And although the amounts were woefully inadequate, four red states voted to approve minimum wage increases last month, showing that the concept resonates across party lines.
As Sanders says, “Even if every cop were a constitutional lawyer and a great person, if you have 30 percent unemployment among African-American young people you still have a huge problem.”
Ed. Notes: If only the protesters could feel worthy of a fair share of society’s abundance and quit demanding dumb jobs and minimum wages. After being dissed for so long, it’s not easy to be as bold as those rich who demand far more than their share of the surplus. But disbursing the common wealth equitably is the ultimate solution. We must not only forget about jobs and wages but also about taxes and welfare and grow up in stature to be able to insist upon divvying up the worth of Earth, the annual (rental) value of land, locations, resources, and government-granted privileges like corporate charters. Once we do that, protests will become a thing of the past.
This 2014 excerpt of SlashDot, Dec 20, is by Paul Fernhout.
An article in the Harvard Business Review by William H. Davidow and Michael S. Malone suggests: “The “Second Economy” (the term used by economist Brian Arthur to describe the portion of the economy where computers transact business only with other computers) is upon us. It is, quite simply, the virtual economy, and one of its main byproducts is the replacement of workers with intelligent machines powered by sophisticated code. … This is why we will soon be looking at hordes of citizens of zero economic value. Ultimately, we need a new, individualized, cultural, approach to the meaning of work and the purpose of life.”
This follows the recent Slashdot discussion of “Economists Say Newest AI Technology Destroys More Jobs Than It Creates” citing a NY Times article and other previous discussions like Humans Need Not Apply. These issues have been discussed by alternative economists for decades, such as in the Triple Revolution Memorandum from 1964.
There is no mention in the article of expanding the “basic income” of Social Security currently only received by older people in the U.S., expanding the gift economy as represented by GNU/Linux, or improving local subsistence production using, say, 3D printing and gardening robots like Dewey of “Silent Running.”
Ed. Notes: What most people don’t realize is that there has always been a lot less necessary work than conformist work. Most people have always had to figure out how to get money by ways other than producing actual useful value (food, clothing, shelter, etc). Hence the plethora of jobs in management, in sales, in clerical, in militaries, in real estate, on and on.
Take a look at the history of the workweek. In the Dark Ages, after a plague gave leverage to labor over landlords, serfs worked 14 hours. In the Stone Age, researcher Sahlin says people worked even less. If people back then could work much less and still receive a fair share of society’s abundance, why can’t we today? It’s our attitudes, but they can change.
Another blind spot (besides the nature of work) is how robots and all techno-progress push up land values (witness Silicon Valley). That rise in land rents is a social phenomenon, not an individual one. Therefore grounds rents make for the perfect common wealth. Once we recover them and share them — sort of like Alaska’s oil dividend — then the further technology goes, the higher rents rise, and the fatter our dividends. Joblessness won’t be anything to worry about; it’ll be an opportunity to live life to the fullest.
This 2014 excerpt of the BBC, Dec 18, is by Jonathan Webb.
Five golden-winged warblers “evacuated” their nesting site one day before the April 2014 tornado outbreak.
The warblers’ evacuation commenced while the closest tornado was still hundreds of miles away. Weather conditions in the nesting area were still nothing out of the ordinary.
Geolocators they wear showed the birds left the Appalachians and flew 700km (400 miles) south to the Gulf of Mexico.
The next day, devastating storms swept across the south and central US. At least 84 tornadoes caused 35 fatalities and more than $1bn (£0.6bn) in property damage.
The warblers — tiny songbirds that weigh about nine grams — had completed their seasonal migration just days earlier, settling down to nest after a 5,000km (3,100 mile) journey from Colombia.
They escaped just south of the tornadoes’ path – and then went straight home again. By 2 May, all five were back in their nesting area.
These birds – and others – may sense such extreme events with their keen low-frequency hearing. The most likely tip-off was the deep rumble that tornadoes produce, well below what humans can hear. Noise in this “infrasound” range travels thousands of kilometres.
Ed. Notes: Life is amazing, isn’t? Birds can hear what we can’t, and most humans can’t see what geonomists can, and that is the role of land in letting people prosper, conserve resources, and live harmoniously with others. If natural evolution can equip birds with this super power, can social evolution equip humanity with a faculty for understanding the role of rents? Sure, and we’re part of that.
Ed. Notes: If government banned the release of toxins that make some people suffer, would we all have to do without convenient transportation? Not likely. There are alternative fuels, engines, and modes of transportation that emit tremendously less amounts of risky byproducts. Why are such alternatives not in use? Probably due to the political influence of the corporations that sell polluting vehicles and fuels.
The latter group — the “oligarchy” — get much of their income from the value of oil in the ground, a value that is separate from the value of oil extracted into tanks above the ground. The rental value of untouched oil now overly-empowers oil companies but it could fill public treasuries instead. Nobody made the oil and everyone’s demand makes it valuable.
That reasoning holds true, too, of not just oil and resources but also of land in general. If society recovered the rental value of locations, then owners would not waste good urban land and would in-fill cities, making them far more compact. Compact cities are easy to get around by foot and bike and so greatly reduce vehicle use, and thus exhaust, and thus autism. Yes, geonomic justice is that powerful.
This 2015 excerpt of Business Insider, Jan 6, is by Tomas Hirst.
Russia’s currency slipped to below 63.5 rubles to the dollar (was 80 last month) as falling oil prices threaten to unwind the government’s efforts to defend the currency.
Russian shopkeepers are telling shoppers to come back later when they’ve put up more-expensive price tags on staple goods.
A variety of goods — from basmati rice and imported hard cheeses to Norwegian salmon, German sausage — have simply vanished, leaving consumers with fewer and less desirable choices.
For Russian companies with large foreign-currency-denominated debts and limited foreign revenue sources — such as a number of Russian banks — a weaker ruble makes it much more expensive to fund repayments.
Gazprombank, the state-run VTB Bank, and National Bank Trust have been beneficiaries of government bailouts over recent weeks, which used money from the National Welfare Fund.
Ed. Notes: Again, politicians bail out bankers at the expense of everyone else.
Left out is why banks should be in debt — usually it’s because they’re gambling with deposits and even borrow to gamble. Why is that legal?
Also left out is why a currency, especially of a big economy, is fragile? Usually it’s because the government issuing the currency is corrupt, wasting public funds on insiders (as Russia did while building its Olympic Village) and taxing things that should be left un-taxed, such as wages, sales, and buildings.
Makes me wonder if currency is something that should be left in the hands of politicians or it it should be in the hands of the people, such as community currencies?
This 2014 excerpt of Publishers Weekly, Nov 12, is by Calvin Reid.
In a private auction, Amazon.com has won the right to operate the .book top-level domain name. Amazon’s winning bid will give it the right to sell Internet domain names that end in the suffix .book. Amazon is reported to have made a winning bid of about $10 million.
The private auctions were organized by ICANN (Internet Corporation for Assigned Names and Numbers), the nonprofit organization that governs the Internet naming system. The new generic TLD strings (including .buy which Amazon also won) were introduced by ICANN in an effort to address a maxed out marketplace for .com names.
Amazon won the auction despite a filing by the Association of American Publishers in 2013 that opposed its bid, and described the possible control of the .book TLD by the retailer, or by any private company, to be counter to the public interest.
Ed. Notes: One must wonder indeed if the public interest is served best by monopolies, especially monopolies that buy limited resources outright rather than pay an ongoing rent to the public. If they did that — rented from society — then they’d be welcome to own all of everything! But then what would be their motive?
This 2014 excerpt of the St Pete Herald, Dec 14, by Dana Melius.
Because the US federal crop insurance program subsidizes up to 70 percent of premium costs and has no limits on how much an individual producer can receive, it provides a public-funded source of cash for bidding up rental and land purchase prices.
It artificially inflates land prices by allowing the largest crop operators to lock in profits and aggressively purchase and rent farmland to expand their operations, driving up land costs beyond the reach of most farmers.
The federal crop insurance makes it difficult for beginning farmers to access sufficient capital since the program limits coverage for producers who have little to no yield history or those who choose to diversify crop production.
Just 2.3 percent of America’s farmers took in half of all premium subsidies paid out totaling over $4 billion. These 50,000 farms each received an average crop insurance subsidy payment of $82,223 while remaining farmers on the program received an average of $7,639.
In Minnesota, two farm operations that same year each received over $1 million in crop insurance premium subsidies, and seven more received more than $500,000.
Ed. Notes: Farmers and the USDA now understand better that subsidies make bads cheap just as taxes make goods spendy. A growing number acknowledge the environmental problems of phosphorus run-off and mono-crops. At this rate, they may soon see how paying rent to their community — not to landlords or lenders — would be the biggest reform to benefit actual farmers.
This 2014 excerpt of Newsweek, Dec 14, is by Betsy Isaacson.
Ending poverty is not a matter of resources.
A simple cash subsidy—$15,000 per year (which is about what the average retiree gets annually from Social Security) for every household, say—would give the poor and middle class a financial floor on which they could live, take care of their loved ones, and think about what they would like to do.
Split $1.88 trillion — what the US federal government and states spend on welfare and Social Security — among all these households and each one gets $16,315.62.
In pilot programs, the reduction in working hours among those given basic income was extremely low. The only participants who stopped working were new mothers, and teenagers who had previously been working while attending high school.
In the age of automation, basic income or something like it could become a necessity.
Ed. Notes: The article offers the Alaskan oil dividend as an example. But what Alaska does is a better example of geonomics. The money for the dividend does not come from taxes on people’s income or purchases or buildings. It comes from the value of nature, oil in this case.
If society shared the values of all nature in use — trillions each year — then registered voters could still get $1k per month.
Yet at the same time government spending and taxing could be drastically curbed, letting the economy become much more productive — another source of prosperity and security for everyone.
Ed. Notes: The bean-counters typically include the estimated price of the land beneath one’s home in the total of one’s “wealth”. However, the only way to capture that wealth for spending it is to sell the land or borrow against it and go into debt. And if everybody sold their home+land at the same time (say, just when the measurement by bean-counters is being taken), the price would drop drastically.
Further, recessions happen because we allow land to be an object of speculation. Buyers bid up the price of land beyond what’s affordable for a critical mass of people and businesses. While pushing up the price of land, they have too little money leftover to spend on goods and services that others produce. So some of those others go bust. Hence, recession.
If you don’t want families to lose so much money every eighteen years, then don’t let land be an object of speculation. Use government to recover the socially-generated value of land then disburse the raised revenue back to the family. It’s called geonomics and it works.
This 2014 excerpt of Business Insider, OCT. 8, is by Mike Bird.
The International Monetary Fund examined the GDPs of China and the US. The IMF measured both GDPs in market-exchange terms and in terms of purchasing power. On the purchasing-power basis, at the end of 2014, China made up 16.48% of the world’s purchasing-power adjusted GDP (or $17.632 trillion), and the US just 16.28% (or $17.416 trillion):
It’ll be some time yet until the lines cross over in raw terms, not adjusted for purchasing power. By that measure, China still sits more than $6.5 trillion lower than the US and isn’t likely to overtake for quite some time.
In terms of the raw market value of China’s currency, it still has a long way to go.
Ed. Notes: China has to pass the US at some point. It has the bigger population — five times bigger. Does it matter? Not at all. A place like Denmark has one of the tiniest economies and one of the most prosperous societies.
an answer to a rarely asked question. If price is a reward for production, why do we pay for land, never produced by any of us? What is land price a reward for? Good behavior? How much money do we spend on the nature we use? Who gets it? What do they do with it? (If you answer all these correctly, you’re not a genius but a geoist.) The worth of Earth is enough that were we to collect and share it, we could abolish taxes on the goods we do produce. For example, San Francisco’s Redefining Progress has calculated that Cali-fornia could abolish all state and local taxes were it to collect the values of resources and of using na-ture as a dump. By exorcising the profit motive from depletion and pollution, rent collection could replace bossy regulation. Economies could self-regulate, as the rest of the eco-system does. See how big problems yield to big answers when we ask the right questions?
a neologism for sharing “rent” or “social surplus” – the money we spend on the nature we use. When we buy land, such as the land beneath a home, we typically pay the wrong person – the homeowner. Instead, since land cost us nothing to make and is the common heritage of us all, rather than pay the owner, we should pay ourselves, our neighbors, our community. That is, we should all pay land dues to the public treasury, then our government would pay us land dividends from this collected revenue. It’s similar to the Alaska oil dividend, almost $2,000 last year. Indeed, the annual rental value of land, oil, all other natural resources, including the broadcast spectrum and other government-granted permits such as corporate charters, totals several trillion dollars each year. It’s so much that some could be spent on basic social services, the rest parceled out as a dividend, as Tom Paine suggested, and taxes (except any on natural rents) could be abolished, as Thomas Jefferson suggested. Were we sharing Earth by sharing her worth, territorial disputes would be fewer, less intense, and more resolvable.
an economic policy based on the earth’s natural patterns. Eco-systems self-regulate by using feedback loops to keep balance. Can economies do likewise? Why don’t they now produce efficiently and distribute fairly? The answers lie in the money we spend on the earth we use. To attain people/planet harmony, that financial flow from sites and resources must visit each of us. Our agent, government, must collect this natural rent via fees and disburse the collected revenue via dividends. And, it must forgo taxes on homes and earnings, and quit subsidies of either the needy or the greedy. As our steward, government must also collect Ecology Security Deposits, require Restoration Insurance, and auction off the occasional Emissions Permit. And that’s about it – were nature our model.
a way to connect the dots. Making the cyber rounds is “The Cavernous Divide” by Scott Klinger, from AlterNet (posted March 21): “As the number of billionaires in the world expands, so does the number of those in poverty.” Duh. The yawning income gap is not news. Nearly every issue of our quarterly digest carries a similar quote. Yet the connection was worked out long ago by one of America’s greatest thinkers, Henry George, who labeled his masterpiece, Progress and Poverty. Techno- and socio-advances always enrich few and impoverish many. Yet progress also pushes up location values – the geonomic insight (is Silicon Valley cheaper now or more expensive?). Instead of taxing income, sales, or buildings, society could collect those values of sites, resources, EM spectrum, and ecosystem services via fees and dues, which would lower the income ceiling, and instead of lavishing corporate welfare, pay out the recovered revenue via dividends, which would jack up the income floor. Dots connected.
of interest to Dave Lakhani, President Bold Approach (Mar 8) and Matt Ozga (Jan 29): “I write for the Washington Square News, the student run newspaper out of New York University. Geonomics seems like it has great significance, especially in this area. When was geonomics developed, and by whom?”
About 1982 I began. Two years later, Chilean Dr Manfred Max-Neef offered the term geonomics for Earth-friendly economics. In the mid-80s, a millionaire founded a Geonomics Institute on Middlebury College campus in Vermont re global trade. In the 1990s, CNBC cablecast a show, Geonomics, on world trade as it benefits world traders. My version of geonomics draws heavily from the American Henry George who wrote Progress & Poverty (1879) and won the mayoralty of New York but was denied his victory by Tammany Hall (1886). He in turn got lots from Brits David Ricardo, Adam Smith, and the French physiocrats of the 1700s. My version differs by focusing not on taxation but on the flow of rents for sites, resources, sinks, and government-granted privileges. Forgoing these trillions, we instead tax and subsidize, making waste cheap and sustainability expensive. To quit distorting price, replace taxes with “land dues” and replace subsidies with a Citizens Dividend.
Matt: “This idea of sharing rents sounds, if not explicitly socialist, at least at odds with some capitalist values (only the strong survive & prosper, etc). Is it fair to say that geonomics has some basis in socialist theory?”
A closer descriptor would be Christian. Beyond ethics into praxis, Alaska shares oil rent with residents, and they’re more libertarian than socialist. While individuals provide labor and capital, no one provides land while society generates its value. Rent is not private property but public property. Sharing Rent is predistribution, sharing it before an elite or state has a chance to get and misspend it, like a public REIT (Real Estate Investment Trust) paying dividends to its stakeholders – a perfectly capitalist model. What we should leave untaxed are our sales, salaries, and structures, things we do produce.
a study of a phenomenon David Ricardo noted going on two centuries ago. When wine grapes rise to $10,000 a ton from the very best land (last year, cabernet sauvignon commanded an average of $4,021 a ton in the Napa Valley), then vineyard prices soar from $18,000 an acre in the 1980′s to $100,000 an acre five years ago and now for a top pedigree up to $300,000 an acre (The New York Times, April 9, via Wyn Achenbaum). Pricey land does not make wine pricey; spendy wine makes land spendy. While vintners make their wine tasty, nature and society in general – not any lone owner – make land desireable. Steve Kerch of CBS’s MarketWatch (April 5) notes that much of what a home sells for on the open market is a reflection of intangible factors such as what school district the house sits in. The price the builder has to pay for the land also tends to be driven by the same intangibles. Because the value of land comes from society, and because one’s use excludes the rest of society, each user owes all others compensation, and is owed compensation by everyone else. Sharing land’s value, instead of taxing one’s efforts, is the policy of geonomics.
a scientific look at how we divvy up the work and the wealth, how some of us end up with too much or too little effort or reward. That’s partly due to Ricardo’s Law of Rent, showing how wasteful use of Earth cuts wages. And it’s partly due to how a society’s elite runs government around like water boys, dishing out subsidies and tax breaks. While geonomists look political reality right in the eye, without blinking, conventional economists flinch. When Paul Volcker, ex-chief of the Federal Reserve, moved on to a cushy professorship at Princeton cum book contract, the crush of deadlines bore down. So Volcker asked a junior associate to help with the book. The guy refused, explaining that giving serious consideration to policy would ruin his academic career. The ex-Fed chief couldn’t believe it and asked the department chair if truly that were the case. That head honcho pondered the question then replied no, not if he only does it once. And economics was AKA political economy!
as unfamiliar as geo-economics. The latter is a course some universities offer that combines geography and economics. A UN newsletter, Go Between (57, Apr/May ’96; thanks, Pat Aller), cited an Asian conference on geopolitics and “geoeconomics”. The abbreviated term ‘geonomics” is the name of an institute on Middlebury College campus and of a show on CNBC. Both entities use the neologism to mean “global economics”, in particular world trade. We use geonomics entirely differently, to refer to the money people spend on the nature they use, how letting this flow collect in a few pockets creates class and poverty and assaults upon the environment, and how, on the other hand, sharing this rental flow creates equality, prosperity, and a people/planet harmony. This flow of natural rent, several trillions dollars in the US each year, shapes society and belongs to society.
the annoying habit of seeing the hand of land in almost all transactions. In geonomics we maintain the distinction between the items bearing exchange value that come into being via human effort — wealth — and those that don’t — land. Keeping this distinction in the forefront makes it obvious that speculating in land drives sprawl, that hoarding land retards Third World development, that borrowing to buy land plus buildings engorges banks, that much so-called “interest” is quasi-rent, that the cost of land inflates faster than the price of produced goods and services, that over half of corporate profit is from real estate (Urban Land Institute, 1999). Summing up these analyses, geonomists offer a Grand Unifying Theory, that the flow of rent pulls all other indicators in its wake. Geonomics differs from economics as chemistry from alchemy, as astronomy from astrology.
an alternative to conventional land trusts. Just as it seems some functions should not be left to the market – private courts and cops invite corruption (while private mediation is fine) – just so some land should not be left in the market. That said, sacred sites do not make much of a model for treating the vast acreage of land that we need to use. So the usual trust model, which is anti-use and counter-market, can not apply where it’s needed most. Trust proponents worry about ownership and control – two very human ambitions – but they’re not central. Supposedly, we the people own millions acres – acres that private corporations treat as private fiefdoms – and conversely, the Nature Conservancy owns wilderness the public can some places use as parks. So, the issue is not who owns but who gets the rent – ideally, all of us.