We are Hanno Beck, Lindy Davies, Fred Foldvary, Mike O'Mara, Jeff Smith, and assorted volunteers, all dedicated to bringing you the news and views that make a difference in our species struggle to win justice, prosperity, and eco-librium.
This 2015 excerpt of Newsweek, Apr 14, is by David Cay Johnston.
Take an evening stroll on either side of New York’s Central Park and you will notice how few lights are on in the newer apartment buildings. That’s because no one lives there.
Across the globe, empty luxury apartments darken many of the most desirable cities—Miami; San Francisco; Vancouver, British Columbia; Honolulu; Hong Kong; Shanghai; Singapore; Dubai; Paris; Melbourne, Australia; and London. The reason: The world’s richest people are buying these grand residences not to live in but to store their wealth. In Paris, for instance, one apartment in four sits empty most of the time.
Some of these wealthy owners are looking for status, others a good investment. And for rich people in unstable countries, or those whose incomes depend on dubious businesses, holding real estate in foreign countries functions as private insurance.
Holding money in banks is unattractive because the planet is awash in so much cash, interest rates are at historic lows. Instead of paying interest, some large cash deposits now incur bank charges.
Many of these absentee owners buy their units through companies they control, transforming what would be personal after-tax operating costs into tax-deductible expenses.
There are far more billionaires than the 1,826 on the latest Forbes global list. Forbes primarily counts liquid wealth, mostly concentrated ownership of publicly traded companies that must be disclosed. Thus Forbes misses many more private and diversified fortunes.
Mason Gaffney, newly retired University of California, specialized in real estate taxation. He says tax only land values, not buildings, to encourage the highest and best development of land.
This 2015 excerpt of EUROPP – European Politics and Policy by the London School of Economics — undated but probably near the ides of April is by Andrea Lorenzo Capussela, PhD.
Corruption — the use of public office for private gain – has been a persistent problem in Italy, with the country receiving one of the lowest scores of EU member states in Transparency International’s latest ‘Corruption Perceptions Index’. On several measures, corruption has even increased since the late 1990s. Almost every contract made by the public agency in charge of roads [magnets and multipliers of land rent] during the previous two decades was tainted by corruption, through a well-organised cartel among infrastructure companies that had entirely superseded the official public procurement system.
Corruption eats into public finances, SMEs, the quality of public investments, productivity, and trust in the country’s institutions.
Corruption depends on: first, a large public administration with relatively low-paid civil servants; second, a highly regulated public sector; third, fast-changing legislation; fourth, a lack of firewalls between politics and businesses; fifth, low social cohesion or social and political fragmentation, and economic inequality; sixth, oligopolistic markets; and finally amoral familism.
The cost of being caught and punished depends on the effectiveness of the judicial system and the treatment provided to those who report such cases.
At the regional level corruption cases are consistently more numerous in Lazio – Rome’s region – where all national ministries and agencies are located, and lowest in Emilia Romagna, the region with a high level of social capital.
Where corruption is systemic, rarely punished, and supported by tolerant social norms, corrupt companies, civil servants, and politicians prosper, whereas ‘clean’ ones are at a disadvantage and are gradually marginalised. Even the ordinary citizens resorts to petty corruption to solve the everyday problems that an inefficient public administration creates.
Fighting corruption is difficult given that the time horizon exceeds the political cycle, and because of the strength of the vested interest opposing such policies. However, Italy’s high debt-to-GDP ratio threatens the survival of the euro (and, therefore, also of the European Union). Hence, Europeans might assist Italy reduce corruption.
Ed. Notes: Ironically, little has changed from the days of the Roman Empire. Who else might help bring about reform are Italy’s anarchists and syndicalists. Both movements want to reduce the size and power of the state and to replace hierarchy with cooperation.
Fitting in nicely with their philosophy is geonomics (which probably would have appealed to the ancient Gracchi brothers). Using geonomic public revenue reform, any nation can cut out most government programs by replacing them with a Citizen’s Dividend. They can cut out taxes by replacing them with user fees and land dues.
It’s the dues for owning land that would recover the socially-generated site-values which would fund the “rent” dividend to citizens. Cutting out taxes and subsidies should appeal to anarchists everywhere while instituting land dues and rent dividends should appeal to syndicalists everywhere. And Italy would be corrupt no more.
This 2015 excerpt of the New York Times, Apr 12, is by Landon Thomas.
The private equity firm Blackstone, while better known for its huge buyouts in the deal boom before the financial crisis, is the largest private sector landlord in the United States: skyscrapers in New York and Chicago, sprawling malls and luxury hotels in Europe, Asia and the Middle East and, recently, close to 50,000 rental homes across the United States. Now Blackstone will buy a $14 billion chunk of real estate from General Electric.
Of the $272 billion that Blackstone now oversees, $81 billion is related to real estate, followed by private equity, high-yielding debt, and hedge funds. Over the last two years, 50 percent of the firm’s $7.8 billion in core profits have come from what it has made from buying properties, sprucing them up, and reselling them.
About 200 real estate professionals at Blackstone (out of a companywide 2,300 people) have delivered $4 billion in cash to the firm in just two years.
Last year, real estate chief Jonathan D. Gray took home about $126 million in cash, compared with $690 million for the Blackstone chairman, co-founder Stephen A. Schwarzman. At the firm, he is now the second-largest shareholder with a 4 percent stake. (Mr. Schwarzman owns 22 percent of the $46 billion company.)
Gray pointed out that he has seen no evidence of too much capital and too many cranes — the sign for him that markets are overheating.
Ed. Notes: It’s no surprise that a real estate company would buy more of the stuff. But why did the other corporate giant sell? Do the two have contrary views of what the business cycle (land price cycle) will soon be doing?
And what was an electric motor and appliance company doing with so much real estate in the first place? And so many mortgages? It’s like General Motors, a car company, getting into the lending business. There was a time when GM made more money of its borrowers than it did off its cars.
It’s so funny to hear people say that land does not matter anymore while the enormously rich know so much better.
This 2015 excerpt of Vox, Mar 20, is by Dylan Matthews.
The press — and humans in general — have a strong negativity bias. Bad news gets more coverage than good news. Negative experiences affect people more, and for longer, than positive ones. Yet the world is getting much, much better on a whole variety of dimensions. Here are 10 ways — out of 26 charts and maps — that show the world is getting much, much better:
Extreme poverty has fallen
The share of the world population living on less than $1.25 a day fell from 53 percent in 1981 to 17 percent in 2011.
Child labor is on the decline
The rate of decline — one third reduction from 2000 to 2012 — is nontrivial and worth celebrating.
People in developed countries have more leisure time
Compared to the late 19th century, developed countries have much more reasonable work schedules today.
Child mortality is down
In east Asia, Latin America, and north Africa, the under-five mortality rate fell by over two thirds between 1990 and 2013, and in sub-Saharan Africa it fell by 48 percent.
Death in childbirth is rarer
Maternal mortality declined by 45 percent between 1990 and 2013.
Teen births in the US are down
The teen birth rate has fallen fast — 38.4 percent annually between 2007 and 2013.
As is smoking
Americans have come a long way from 1955, when 45 percent of Americans reported smoking in a given week, to 2014, when a mere 21 percent do.
War is on the decline
The rate of documented direct deaths from political violence (war, terrorism, genocide and warlord militias) in the past decade is an unprecedented few hundredths of a percentage point.
Homicide rates are falling
In the 1200s and 1300s, Europe had an average homicide rate of about 32 per 100,000. By the 1900s, that rate had fallen to about 1.4 per 100,000.
The US has historically been an outlier among rich countries, but its murder rate has been declining sharply in recent decades. And non-murder violent crime has been falling steadily in the US since the early 1990s, as part of the overall dramatic decline in crime rates.
Moore’s law is still going
Moore’s law — the empirical observation, first made by Intel’s Gordon Moore, that the number of transistors on a chip will double roughly every two years. Decades of exponential progress are extraordinary. Optimists in the industry argue that it can continue.
Ed. Notes: So much for things having to get way worse before they can get way better. Now I wonder, as life keeps getting better, will people demand that economic justice get tossed into the mix, too? Geonomics is a policy shift, not a technological break-thru, and it rests on a subtle argument, not on an obvious wrong or flaw in the world. Sharing the worth of Earth (geonomics) might require a rise in consciousness, too. Are you ready for that?
This 2015 excerpt of BIS, Apr 11, is by Claudio Borio, Magdalena Erdem, Andrew Filardo, and Boris Hofmann.
Concerns about deflation – falling prices of goods and services – derives largely from the Great Depression. Yet researching 38 economies over the last century and half suggests that any link between output deflation and growth is weak. A link between asset price deflations, particularly during postwar property [land] price deflations, and output growth is stronger.
As is well known, deflations were very common before World War II. Only four have occurred postwar: in Japan (twice), China, and Hong Kong SAR. That said, transitory deflations have not been that rare even in the postwar era; there have been well over 100 deflation years.
On balance, inflation years have seen only somewhat higher growth. Yet in the postwar era the growth rate has actually been higher during deflation years, at 3.2% versus 2.7%.
By contrast, output growth always weakens following equity and property [land] price peaks [busts]. It’s not deflation of goods and services prices but of property [land] that has played a significant role in episodes of economic weakness. Cumulative growth is about 10 percentage points lower by the end of the five years.
The growth slowdown appears to be considerably larger when ‘excess’ private sector debt is interacted with property [land] price declines.
It is misleading to draw inferences about the costs of deflation from the Great Depression, as if it was the archetypal example. The episode was an outlier in terms of output losses. Further, the scale of those losses may have had less to do with the fall in the price level per se than with other factors, including the sharp fall in asset prices and associated banking distress.
There is a case for policymakers to pay closer attention than hitherto to the financial cycle – that is, to booms and busts in asset prices, especially property [land] prices.
Ed. Notes: The conventional wisdom is to fear deflation. But if a falling cost of living does no harm — indeed, does your pocketbook some good — then why must we hear that constant beating of the deflation drum? My guess is that if deflation = bad then inflation must = good. They want you comfortable with inflation, since rising prices makes the few richer and the many poorer. Also (since owners use debt to swell their investments), because inflation masks how massive debt becomes.
While the authors still say the fudgey “property” instead of the precise “land” (manmade buildings mostly depreciate, nature-made locations mostly appreciate), at least they do see the crucial role that immovable, non-exandable land plays.
Anyone who pays closer attention to land — and tracks the 18-yr land-price cycle — can do quite well investing, whether the economy is booming or busting. Any society that shares the value of land can feast, too; it can quit taxing and subsidizing and thoroughly enjoy widespread and enduring prosperity.
If society were to recover the value of locations (something the presence of society generates), then speculators would quit buying and driving up the prices of land and resources. Prices would fall. People would not have to borrow to own land. Debt would shrivel. Deflation would become the full-time norm.
And shrinkage of the workweek would follow. Economies would serve us instead of us them. So don’t let the inflationists strike fear in you!
These four 2015 excerpts are from: (1) Weekly Wastebasket, Apr 10, on corporate subsidies by Taxpayers for Common Sense; (2) Common Dreams, Apr 10, on corporate loopholes by Deirdre Fulton; and on individual loopholes (3) Washington Post, Apr 9, by Emily Badger & Christopher Ingraham ; and (4) OtherWords, Apr 8, by Chuck Collins.
End the Ex-Im
The Export-Import Bank is a government-backed entity that provides loan guarantees and insurance-like products to US exporters. Nearly two-thirds of total assistance that the Ex-Im Bank provided in 2013 went to just 10 international conglomerates – including General Electric, Caterpillar, and Boeing (which reaped more than 30 percent of the benefits on its own). Highly capitalized and highly profitable foreign companies don’t need U.S. taxpayer subsidies.
Private capital follows government subsidies to less efficient companies. Unsubsidized competitors lose sales and must pay more to get loans. These downstream losses cost nearly $3 billion a year.
Both the Government Accountability Office and the Inspector General have repeatedly criticized the “Bank of Boeing” for shoddy management, bad accounting, and faulty risk analysis. The bank’s authorization is set to expire on June 30th. Congress should let the Export-Import Bank expire.
Ed. Notes: Rich corporations get both huge subsidies then get to guide that augmented income thru huge tax loopholes.
Corporate Tax Dodgers Avoid Paying Their Fair Share—or Any Share At All
Not only did media giant Time Warner pay nothing in federal income taxes last year, it received a rebate of $26 million from the IRS even though it made $4.3 billion in U.S. profits.
15 companies paid no federal income tax on $23 billion in profits in 2014, and they paid almost no federal income tax on $107 billion in profits over the past five years. All but two received federal tax rebates in 2014, and almost all paid “exceedingly low” rates over five years.
Jetblue, PG&E, PEPCO Holdings, and Ryder used accelerated depreciation, a tax break that allows companies to write off the cost of their capital investments much faster than these investments wear out, to dramatically reduce their tax rates.
Ed. Notes: Both rich corporations and rich individuals get treated gently by the taxman.
The Rich Get Government Handouts Just Like the Poor<
The rich receive benefits from government (for which we don’t make them pee in a cup or promise not to buy luxuries). Some are direct subsidies. Some are tax breaks.
Here are six deductions from the US federal income tax that benefit hefty incomes much more than frail ones:
1. The mortgage interest matters most to people buying pricier homes.
2. The yacht tax deduction.
3. Landlords deduct many of the expenses you incur renting a home.
4. Fancy business meals. [Republicans are trying to ban food stamp recipients from buying steak and seafood.]
5. Gambling loss deductions.
6. Tax prep accountants are written off, too.
Here are three big exemptions.
7. Retirement money in 401(k) plans or IRAs is not taxed.
8. Social Security taxes exempt income over $118,500.
9. The estate tax exempts estates worth $5.4 million or less.
Here is a lower rate:
10. The capital gains tax rate.
Why America’s Billionaires Owe You a Thank You Note
Here are five tax secrets billionaires deploy:
1. Income from investments (capital gains) is taxed more lightly than wages. E.g., a teacher who earns $40,000 loses 25% to taxes. A hedge fund manager raking in $400 million pays between 15 and 20 percent. [Repeats #10 above]
2. Hide Money Offshore. Global corporations and wealthy individuals are hiding over $21 trillion.
3. Assemble Tax-Proof Trusts to transfer billions to heirs, shielding them from estate and gift taxes.
4. Inheritances are 100-percent exempt from the income tax.
5. Subsidize Charity. When someone who can, donates tons of money to a hospital or university, that reduces taxes on the donor’s income and estate, so the donor gets half the donation back — and gets to set the agenda of the hospital or university.
Ed. Notes: What do we do about revenue policy? The critics want only to tax the rich. They do not mention quit creating the undue rich in the first place.
They are silent about how corporate welfare creates the rich. And appear oblivious to how society’s spending for land and resources is what creates those rich at the most basic level. It’s mortgages and purchases of gasoline, etc, that channels trillions into the coffers of rich owners. Such payments are what originally created the rich millennia ago, and still keep them in their place.
It is only necessary to redirect these payments — land dues in, “rent” dividends back out — to dethrone the undeserved rich and close the yawning gaps in wealth and income. But first, critics might have to get over their money envy.
This 2015 excerpt of CFIF, Apr 9, is by Troy Senik.
At nearly 75,000 pages, the tax code is basically impenetrable. If you’re like me, you’ve spent the past few weeks waist-deep in receipts, desperately trying to figure out what does and doesn’t count as a deduction, and generally spending most of your free time as an unpaid bookkeeper for the federal government.
Let’s do away with withholding altogether. Make Americans write an enormous check to the Treasury Department. The calls for tax reform would be deafening by lunchtime.
Or, make government invoice us for services rendered rather than just collecting the money in a lump sum.
We wouldn’t think twice about paying for police, fire fighters, and a functioning court system. We’d happily foot the bill to maintain our roads and keep our air and water clean. We’d cut a check to take care of the genuinely indigent.
But when we’re asked to pay billions of dollars to farmers for not growing anything? When we’re asked to foot a bill that runs over a million dollars so that international contractors can throw lavish parties? There would be riots in the streets.
Ed. Notes: The writer has some intelligent suggestions. Here’s a more basic one: Evolve beyond taxation altogether. It’s just a hold-over from the days of peasantry and conquest. When the Huns invaded Europe and discovered that even citizens had to pay taxes, too — not just conquered people — they were in hysterics. That’s why you go around conquering people, so you can tax them, not yourselves. What a joke!
What would replace taxes? Things like user fees, land dues, and pollution imposts. What makes these charges different from taxes? Simple. They are quid pro quo. Each charge is linked to an exact behavior, just like doing business in the broader economy. Drivers on public roads can pay via a fee on the price of their fuel. Owners of locations can pay to exclude everyone else via land dues. Polluters can pay when bidding on permits at auctions.
Most of such charges would cover a cost, like, that of a road or of a healthy environment. One of these charges is way different: land dues. Owners do not pay anyone for creating land or cleaning it up after abusing it. Owners owe a compensation for excluding everyone else, just as everyone else owes the owner for keeping off their locations. We’d pay dues in and get dividends back.
This charge — land dues — is linked directly to a Citizen’s Dividend. When getting this extra income, people could afford to hire their preferred teacher and doctor; they won’t need a paternalistic state to act as Big Brother.
The one government expense that the author above left out is the military, most of which, according even to the CIA, goes not to defense but to offense. Don’t let government borrow to pay for war. Make citizens pay all the costs immediately via Citizen Dues (like an income tax). If getting dunned for aggression, Americans will quickly become the most peaceful nation on the planet — and their public budget will be trimmer than anyone’s.
This 2015 excerpt of the New Yorker, Apr 5, is by Andy Borowitz.
A new poll shows that Americans who were unconcerned about climate change as it wreaked havoc around the world are beginning to worry, now that global warming is affecting the appearance of their lawns.
Rising sea levels, the destruction of habitats, and catastrophic weather conditions, such as hurricanes and tsunamis, have not served as the wake-up call to Americans that their lawns’ unsightly barrenness has.
Across the state of California, residents expressed anger and outrage that climate change had been allowed to worsen to the point. Lawns of stones and, yes, cacti — “I’m not sure that this is a world I would want to leave to my children.” Choosing between saving hydrangeas or roses — “We are no longer living like humans.”
Californians blamed scientists “for failing to warn us of the true cost of climate change. They always said that polar bears would starve to death, but they never told us our lawns would look like crap.”
Reoccurring radio bursts from space have revealed a strange mathematical pattern and the thought of these signals coming from an intelligent life form is one of the theories attached to this phenomenon today. Scientist have calculated that these patterns have only a 5 in 10,000 chance of being a coincidence. These radio bursts are coming from a source that is fairly close to earth, but most likely not inside the galaxy. The theories surrounding these radio bursts today include messages coming from extraterrestrial intelligence. The radio bursts have scientists baffled because they are too far away statistically from being coincidental. This leaves some scientist to considering the theory that something intelligent may be trying to communicate. Still many scientists are a long way from giving any consideration to this theory.
Ed. Notes: Can you imagine being alive when Earthlings and aliens actually make contact? How will that change your own life? Knowing that the universe is more amazing than previously proven, would it inspire you to make Earth the fairest in all the universe? Like cleaning house before company comes? Let’s get started and make justice rule! Let’s geonomize the planet now!
These three 2015 excerpts of supportive articles are from: (1) Sydney Morning Herald, Apr 7, by Jessica Irvine; (2) Australian Financial Review, Apr 7, by Fleur Anderson; and (3) Medium, undated, by Root Bug, author of Fixing the Root Bug.
Land Tax Often Overlooked in the Tax Debate
Land tax is one of the most efficient taxes for precisely the reason it is unpopular: it is hard to dodge.
Of the roughly four things governments can tax – companies, individuals, consumption and land – economists agree that land is by far the most efficient source for taxation.
Economists hate stamp duties because, as a tax on transactions, they prevent transactions from taking place that would otherwise have been mutually beneficial. First-home buyers must save for longer before they can buy a home. Ageing property owners are discouraged from moving to smaller properties.
Treasury says Australian households would benefit from a land tax because of of the extent of foreign landowners who would be forced to pay the tax. Treasury estimated 10 per cent of income from land currently goes to foreign owners.
Australia’s most efficient tax is not the GST but a broad-based tax on landowners regardless of whether it a suburban block or a sprawling pastoral estate, according to Treasury economists.
Their working paper found the burden of company income tax mainly fell on workers through lower productivity and wages, and stamp duty on conveyancing was also passed on to workers.
A lower interest rate would devalue an area’s currency lowering labor costs, and both LVT and negative interest rates on government debt would allow reducing harmful taxes on trade (income tax, VAT, corporate taxes), vastly increasing any area’s competitiveness over productive, risk-bearing real investments.
Ed. Notes: With more talk about taking rents in the media, perhaps somewhere will do it soon. Hopefully, once won, it will last longer than almost all previous real world implementations. All lacked the dividend component and all were repealed.
Ed. Notes: We not only have a right to some Earth, we also have a right to all Earth in healthy shape. Most people feel so inferior to big technology, big business, big government, that they accept such violations of their rights. Yet if life is precious and is to be lived in good health, we should raise the bar. The kind of people who expect better treatment are people who feel good about themselves. And people who enjoy self-esteem are materially comfortable. Thus receiving a share of Earth’s worth — a Citizen’s Dividend — makes us more likely to insist that our rights be respected, and people who insist that society’s surplus be shared are more likely to dissuade anyone from polluting them. Wouldn’t you say?
These two 2015 excerpts on Apr 6 are from PlanPhilly on public recovery of rent by Jon Geeting, and Transformation on residents sharing the rent by Rajesh Makwana.
Land taxes: We’re Hearing More About Them.
The idea is that the higher correct land assessments would raise the cost to landowners of not improving land, nudging them to either build on their lot, sell it to someone who wants to build sooner, or simply pay a higher tax bill.
Land taxes have been experiencing something of a comeback lately. It’s been catching on with some segments of the technocratic center-left as well. And the economics blogosphere has also been debating the more academic point of whether a 100% land value tax would be economically distortionary.
Land taxes appeal to activists affiliated with a variety of political causes, but inequality has really been driving the recent interest. They also appeal to economists and people concerned with pro-growth tax reform.
I’ve been puzzling over this for years: the simple elegance of the policy combined with a clear-seeming moral and political story makes it political catnip for a certain type of ideologue. Google “land value tax” and you’ll see that people write about this idea with a quasi-religious fervor that can be off-putting to those not yet converted.
Which is too bad, because the basic case for land taxes seems fairly sensible.
In 1930, John Maynard Keynes famously posited that standards of living would be between four and eight times higher in a hundred years’ time, and that people would need to work a mere 15 hours a weeks.
For the past three decades the demand for labor, and wages as a share of GDP, have both been declining. Meanwhile, people are living longer and retiring later, and part-time work, insecure casual contracts, and self-employment are increasingly the norm for the precariously underemployed.
All citizens have a right to income from the commons —- such as land and other resources that are either inherited or co-created by society. Charge user fees on shared resources, which can then be distributed to all citizens as a basic right.
Ed. Notes: The first writer above cites only the “inhaling” but the second extols the total “breathing”, both the land dues in and the rent dividends back out (carbon taxists include dividends). Two wings make it easier to fly, two wheels make it easier to pedal. Hence holistic geonomics should eventually win.
This 2015 excerpt of Common Dreams, Apr 2, is by Jon Queally.
“Large-scale system change is needed” to address humanity’s deepest crises, but cautious optimism is warranted because social, economic, and political alternatives do exist in some communities around the world.
Gar Alperovitz, founder of the Democracy Collaborative, who—alongside veteran environmentalist Gus Speth, launched the “Next Systems Project” to formulate, refine, and publicize comprehensive models that would prove that achieving “superior social, economic, and ecological outcomes” is possible.
The mission statement has been endorsed by more than 350 contemporary journalists, activists, academics, and thought leaders.
Ed. Notes: These are good guys yet good people are biased toward yacking. Still, as long as they’re going to yack, the greatest service these good guys could perform would be to raise awareness of geonomics. The systemic flaw is we don’t know what’s yours, mine, and ours. Geonomics corrects that. Once we get to keep our individual earnings, untaxed, and get to share our common wealth, via dues and dividends, then that lets us prosper, naturally, in ways that conserve resources automatically. It has been proven in practice and definitely merits a widespread conversation.
This 2015 excerpt is of Slashdot, Mar 28, by Bruce66423.
A fraudster used a mobile phone while inside a UK prison to email the prison a notice for him to be released. The prison staff then released him. The domain was registered in the name of the police officer investigating him, and its address was the court building. The inmate was in prison for fraud — he was originally convicted after calling several banks and getting them to send him upwards of £1.8 million.
Ed. Notes: Not that we’re for anyone evading any deserved punishment, but it is interesting to see how an inventive mind can solve pressing problems. It’s an attitude that people not convicted crime could utilize to their favor. Perhaps wannabe reformers could get today’s respected authorities — celebrities — to “email” the government to release all the pent up common wealth — which is the worth of Earth — as dividends to everyone. Wouldn’t that grant us all a good laugh!
These 2015 excerpts are from: (1) Forbes, Mar 28, by Adam Ozimek; (2) Peristaltor, Mar 29; (3) Pieria, Mar 30, by John Aziz; (4) The Economist, Apr 1; (5) NextBigFuture, Apr 1; (6) BBC, Apr 2; (7) Confessions of a Supply-Side Liberal, Apr 2, by Miles Kimball (U Michigan); (8) Mitrailleuse, Apr 2; (9) Straits Times, Apr 3, by Phang Sock Yong; and (10) and (11) The Economist, Apr 4.
The Problem With 100% Land Value Taxes
The fundamental case for some land value taxation remains intact.
I very recently finished a pretty darned good book, Henry George’s Progress and Poverty from 1879. In it, he asks some serious questions of the class of scholars then known as “political economists,” specifically why more people starve where civilization is most developed, and not less.
In the longer run, I’d probably phase out income taxes altogether and switch to a two-pronged model of land value tax and carbon emissions tax. But in the short-term, a mansion tax may be the best way to get there.
Lifting Barriers to Urban Growth in America could Add the equivalent of Canada’s GDP to US GDP
In the past ten years real prices in Hong Kong have risen by 150%. Residential property in Mayfair, in central London, can go for as much as £55,000 ($82,000) per square metre. A square mile of Manhattan residential property costs $16.5 billion.
The home-ownership rate in the metropolitan area of downtrodden Detroit, at 71%, is well above the 55% in booming San Francisco.
Governments should impose higher taxes on the value of land. Whereas a high tax on property can discourage investment, a high tax on land creates an incentive to develop unused sites.
Dartford Election Candidates Clash Over Tesco ‘Bombsite’
The Green Party’s Andy Blatchford said Tesco Ltd had bought and “banked” land across over the country. “There needs to be something like a land value tax which will stop this.” Lib Dem candidate Simon Beard agreed there should be a land value tax.
The Wrong Side of Cobb-Douglas: Matt Rognlie’s Smackdown of Thomas Piketty Gains Traction
It is good news if a lot of wealth and inequality is about housing, because we have known for a long time how to deal with wealth inequality from at least the land component of the value of housing: Henry George’s idea of a tax on land values that Noah Smith talks about, for example, in his Quartz column “This 100-year-old idea could end San Francisco’s class war.” Land taxes are typically much less distortionary than taxes on any other form of capital. So to the extent that inequality is about high land values, it doesn’t run into the issues I talked about in my post “Is Taxing Capital OK?”
The Economist’s newest issue is dedicated to urban land and space. The most widely accepted critique of Piketty is based on the importance of land in inequality. Henry George is proposed as a solution to Silicon Valley’s housing woes.
The common thread to these ideas is, well, Henry George. He was a combination of JK Rowling, Milton Friedman, and Ralph Nader; JK Rowling because his book, Progress and Poverty, was the most read book second only to the bible, Milton Friedman, because he founded an intellectual movement, Ralph Nader because he entered politics as an outsider, coming in second running for governor of New York City.
Even this combination fails to do justice to George. His book was a dense treatise on political economy, hardly a bestseller today. And while Friedman was the public face of libertarianism, the movement came with a rich history and many other scholars. Further, George’s influence was so high that several communities were founded on his principles.
Singapore, a global superstar city as well as a nation state, is ranked third in global competitiveness after New York and London, and the most globally competitive in Asia. The fourth position is shared by Paris and Hong Kong, and Tokyo is ranked sixth.
Among the global superstar cities, Singapore’s income distribution is less equal than Paris’, but more equal than those of London, Hong Kong and New York City. Singapore’s house price to income ratio of five is the lowest.
Singapore contains elements of George’s land value capture tax. Henry George held nothing against capitalists. Instead, his remedy was that any increase in land rents should be shared by society rather than fall into private hands. To effect this, he advocated a 100 per cent land value tax on the annual value of unimproved land held as private property.
State land as a proportion of total land is currently around 90 per cent. The home ownership rate is 91 per cent, an outlier. The property-owning democracy was not a mere utopian ideal but has, instead, become a reality.
Land, the centre of the pre-industrial economy, has returned as a constraint on growth. Governments could heed the advice of Henry George, an American follower of Ricardo who in the 1880s made the case for a land-value tax. It has many theoretical virtues.
Ed. Notes: There has been spates of such flurries of supportive press in the past but with little to show for it in the way of actual adoption. Will this time be different? Or will advocates need to add the other wing so this bird can fly? That is, marry the dividend to the tax, as advocates of carbon taxes do? Indeed, Singapore above enjoys such a surplus that some years it does pay its citizens a dividend. Any place could.
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 heri-tage 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 divi-dend, as Tom Paine suggested, and taxes (except any on natural rents) could be abolished, as Thomas Jeffer-son suggested. Were we sharing Earth by sharing her worth, territorial disputes would be fewer, less intense, and more resolvable.
the Great Green Tax Shift maxed out”
Economically, taxing pollution and depletion does reduce pollutants and extracts – and thus the tax base; plus such taxes are regressive, requiring a safety net. On the other hand, collecting site rent is progressive and generates a revenue surplus payable as a dividend to residents, which can serve as the safety net.
Environmentally, taxes on waste and extraction do not drive efficient use of land, as does getting site rent. Better settlement patterns do reduce extraction upstream and pollution downstream.
Politically, green fees have less impact if applied locally; local is where grassroots movements have more impact. Yet getting rent usually entails shifting the property tax (or charging user fees), the province of local jurisdictions; both mayors and city voters have been known to adopt a site-value tax.
Ethically, putting into practice “tax bads, not goods” skirts the issue of sharing Mother Earth which collecting rent confronts head on. Since nothing is fixed until it’s fixed right, ultimately, greens must lead humanity into geotopia where we all share the worth of Mother Earth.
about the money we spend on the nature we use. It flows torrentially yet invisibly, often submerged in the price of housing, food, fuel, and everything else. Flowing from the many to the few, natural rent distorts prices and rewards unjust and unsustainable choices. Redirected via dues and dividends to flow from each to all, “rent” payments would level the playing field and empower neighbors to shrink their workweek and expand their horizons. Modeled on nature’s feedback loops, earlier proposals to redirect rent found favor with Paine, Tolstoy, and Einstein. Wherever tried, to the degree tried, redirecting rent worked. One of today’s versions, the green tax shift, spreads out of Europe. Another, the Property Tax Shift, activists can win at the local level, building a world that works right for everyone.
a way to have everybody pulling on the same end of the rope. Last summer’s expansive forest fires shed light on growing class resentment in the West. Old loggers and ranchers rankled at the new urgency to stamp out the blazes that threatened the recent Aspenesque settlers. The newcomers expected working class firemen to make protecting their expensive homes top priority. (Chr Sci Mntr, Spt 7) The tinder for this envy? Rich people moving in bid up the price of land, making it hard to afford by people on the margin. The fault really lies with our system of privatizing land value. If this rising value were collected by land dues and shared by rent dividends – the essence of geonomic policy – who’d complain? The more people move in, the higher the land value, and the fatter the dividend paid to residents. Then people on the margin might go out of their way to invite rich outsiders in.
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.
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 discipline that, compared to economics, is as obscure as Warren Buffett’s investment strategy, compared to conventional investment theory, about which Buffett said, “You couldn’t advance in a finance department in this country unless you taught that the world was flat.” (The New York Times, Oct 29). The writer wondered, “But why? If it works, why don’t more investors use it?”
Good question. Geonomics works, too. Every place that has used it has prospered while conserving resources. Yet it remains off the radar of many wanna-be reformers. Gradually, tho’, that’s changing. More are becoming aware of what geonomics studies – all the money we spend on the nature we use. Geonomics (1) as an alternative worldview to the anthropocentric, sees human economies as part of the embracing ecosystem with natural feedback loops seeking balance in both systems. (2) As an alternative to worker vs. investor, it sees our need for sites and resources making those who own land into landlords. (3)As an alternative to economics, it tracks the trillions of “rent” as it drives the “housing” bubble and all other indicators. And (4) as an alternative to left or right, it suggests we not tax ourselves then subsidize our favorites but recover and share society’s surplus, paying in land dues and getting back “rent” dividends, a la Alaska’s oil dividend. Letting rent go to the wrong pockets wreaks havoc, while redirecting it to everyone would solve our economic ills and the ills downstream from them.
People must learn to stop whining so much and feel enough self-esteem to demand a fair share of rent, society’s surplus, the commonwealth.
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.
one of many words I coined over 20 years ago: geoism, geonomics, geonomy, geocracy, etc – neologisms that later others came up with, too. CNBC once had a Geonomics Show, and Middlebury College has a Geonomics Institute. If “economy” is literally “management of the household”, then geonomy is “management of the planet”. The kind of management I had in mind is not what CNBC was thinking – top-down. My geonomics is not hands-on, interfering, but hands-off, organic. It’d strive to align policy with natural processes, similar to what holistic healing does in medicine, what organic farming does in agriculture. Geonomics attends to two key components: One, the crucial stuff to track is fat – or profit, especially profits without production, such as rent, or all the money we spend on the nature we use. Society’s surplus is the sine qua non for growth, needed to counter death – not merely more, but sustainable development, more from less. Two, the basic process to respect is the feedback loop. These let nature maintain balance automatically and could do the same for markets, if we let them. Letting them would turn our economies, now our masters, into a geonomy, our servant, providing us with prosperity, eco-librium (to coin a term) and leisure, time off – a hostile environment for economan but a cradle for a loving and creative humanity.
what you do when you see economies as part of the ecosystem, following feedback loops and storing up energy. Surplus energy – fat or profit – enables us to produce and reproduce. To recycle society’s surplus, the commonwealth, geonomics would replace taxes with land dues (charged to users of sites and resources, in-cluding the EM spectrum, and extra to polluters), and replace subsidies with rent dividends to citizens (a la Alaska’s oil dividend). Without taxes and subsidies to distort them, prices become precise, reflect accurately our costs and values; then, motivated by no more than the bottom line, both producers and consumers make sustainable choices. While no place uses geonomics in its entirety, some places use parts of it, most notably a shift of the property tax off buildings, onto locations. Shifting the property tax drives efficient use of land, in-fills cities, improves the housing stock, makes homes affordable, engenders jobs and investment opportunities, lowers crime, raises civic participation, etc – overall it makes cities more livable. Geonomics – a way to share the bounty of nature and society – is something we can work for locally, globally, and in between.