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Why Is the IRS Fighting Efforts to Unmask Karl Rove and U.S. Chamber Political Money Laundering?
This 2013 excerpt of AlterNet, Dec 31, is by Steven Rosenfeld.
Robert Jacobson, a Tuscon, Arizona physician who brought the lawsuit, believes that a nonprofit created by the State Department in conjunction with the U.S. Chamber to build a much-ridiculed exhibition at the 2010 Shanghai Expo in China had another purpose —- diverting large slices of the $70-plus million in donations to Karl Rove for campaigns to retake the House. The idea was that money from GOP-friendly corporations and even the Chinese government would evade oversight by flowing through barely regulated nonprofits.
Rove’s link to the project was via one of his best friends, former Bush Undersecretary of Commerce, Frank Lavin, Jacobson said. Lavin chaired the Expo’s steering committee, he said, which put him atop the fundraising pyramid. “Frank Lavin was the expert at raising money and Karl Rove was the expert at spending it,” Jacobson said [leaving few funds for the actual expo itself].
Jacobson filed his case against Shanghai Expo three years ago. Between 2008 and 2012, the IRS received 33,064 whistleblower complaints and made 630 awards, recouping $1.46 billion and paying $180.1 million in awards. Last year, the IRS concluded that since the Shanghai Expo nonprofit had disbanded there was no point in pursuing a further investigation.
Jacobson is due back in Tax Court on January 6 to respond to an IRS motion for a summary judgment to dismiss his suit. He is hoping that an administrative law judge -— who is not yet named —- will step outside established precedents and allow discovery to continue, including using federal subpeonas to trace the Expo’s multi-millions in donations.
Ed. Notes: While this particular incident may be illegal, it is not anomalous. What the IRS is doing in particular is what governments have always done everywhere in general: serve the rich. Indeed, for most of history, the rich and the government have been the same entity — the aristocracy. In their deep structure, they still are one — laws come from the lobbyists of the rich. It’s only on the surface that the rich and government seem like different institutions.
This relationship is a normal feature an unequal society. Such favoritism can’t be stopped by bringing the isolated case to trial while leaving steep hierarchy in place. Conversely, if we were to topple hierarchy, then such crimes would only rarely be committed — the advantage of addressing system rather than symptom.
The way to topple hierarchy is to redirect all of society’s surplus that now lifts up the elite, into the pockets of everyone, raising them up into comfort instead. How to redirect such surplus, which is the money we spend for the nature we use? Simple. Geonomize. Replace counterproductive taxes with Land Dues and replace addictive subsidies with a Citizens Dividend. Doing that would put an end to the current concentration of wealth and the shenanigans they commit.
This 2013 excerpt of Pacific Standard, Dec 30, is by Jim Russell.
For Organization for Economic Cooperation and Development countries, cutting the median age by two years (like the difference between the younger U.S. and older U.K.) implies about a 10% increase in new business formation.
If a country gets younger (e.g. via immigration), then entrepreneurial activity will increase, right? Wrong. Age also correlates with geographic mobility. Young adults with college degrees are the most likely to migrate. Immigration also correlates with entrepreneurial activity.
Cities of innovation also correlate with high domestic in-migration and immigration.
The inevitable consequence of high-priced downtown locations is that diversity is being driven from the central city to its remote peripheries – a trend that is reflected in metropolitan areas around the world. The suburbs is where immigrants, along with artists, students, freelance writers, and others are increasingly moving because they can’t afford the alpine rents of downtown.
The affordability, diversity, and the space and time to take risks have migrated from the city center to the suburban periphery or out of the region entirely.
Ed. Notes: It’s actually an old story: High location rents have always driven the creative out of downtowns and the neighborhoods they once made hip and popular, into affordable neighborhoods, such as now days the suburbs. Yet even if some suburbs are becoming hip and popular, that’s still no excuse for sprawl and the waste of land and energy it entails. It is possible to have both efficient land use and affordable locales. All we must do is geonomize.
This 2013 excerpt of Slate, Dec 20, is by Matthew Yglesias, author of The Rent Is Too Damn High.
After yesterday’s post on the aggregate value of all the housing in America, a couple of correspondents noted to me that for recent decades you can actually compute the value of all the land in America from the Federal Reserve’s Flow of Funds report (PDF). The short answer is that all the privately owned land in America is worth about $14.488 trillion—which is a lot.
Now how good is the Fed’s data on this? I don’t know. When David Albouy and Gabriel Ehrlich tried to estimate the total value of residential land through an independent method, they came to the conclusion that “approximately one-third of housing costs are due to land, with an increasing share in higher-value areas, implying an elasticity of substitution between land and other inputs of about one-half.” That’s very similar to the residential piece of the Flow of Funds.
This number is high enough that it tends to confirm that view that taxation of land and other natural resources, supplemented by pollution fees and things like congestion charges, could replace all taxes on labor and investment and still fund an ample welfare state and public sector.
Ed. Notes: The above is based on selling price (“capitalized rent”), not on annual rental value. Rent would be one tenth or less of selling price. However, the total above might not be far off the actual mark.
Once the rental value of land gets recovered (whether by a tax or fee or lease or dues), then its amount will grow. To pay their Land Dues, owners will improve their land, which intensifies the economy and that raises location values. And if the government repeals other taxes, again the rental mount will grow, since de-taxing also stimulates the economy, raising site values.
Plus, the above focuses on the value of land. There’s still natural resources, the EM spectrum, and ecosystem services. Along with nature, there’s also the value of government-granted privileges, such as corporate charters, which are ow handed out for mere filing fees. Instead, government could charge full market value for, say, the privilege to print money, patents and copyrights, and utility franchises. Running government like a business could easily swell the total by at least 50%.
Further, the raised revenue need not fund the things that people don’t want, such as war, corporate welfare, drug war, bridges to nowhere, etc. Minus that waste, not only would the government enjoy a surplus, but also those businesses now not receiving such largesse could compete on a level playing field, profit, make the economy more efficient, and once again swell site values.
Thus, calculating value as rent rather than price, one still finds enough social surplus to fund the public services society may want plus pay citizens a dividend.
This 2014 excerpt of USA Today, Jan 2, is by their Editorial Board.
After 20 years of service, regardless of age, a military retiree can expect a pension equal to 50% of final pay. They can retire in their late 30s or early 40s and collect a pension — intended as old-age protection — in the prime of their working lives, with cost-of-living increases, for the rest of their lives.
This is accompanied by health coverage at $549 per year for a family.
40% of servicemembers have never seen a combat zone.
While the system encourages some people to consider the military who otherwise might not, it also encourages them to leave early, taking their first-rate training to go double-dip by moving into a civilian government job.
Proposed “cuts” come in the form of a reduction in cost-of-living adjustments by 1 percentage point each year until age 62.
The change would also make military pensions less wildly out of line with most Americans’ experience. Private-sector pensions, to the extent that they exist at all, are routinely scaled back or frozen in ways much more dramatic than these changes.
Ed. Notes: Are you obligated to fulfill a deal that you had no part in making? Perhaps you weren’t even born when the deal was negotiated. And one side of the negotiation did not even have their own resources on the table but were offering OPM (Other People’s Money, pronounced like “opium”), and that side — Congresspeople — were often elected by less than a majority, in a gerrymandered district, financed by big outside money. So how legit are these pension agreements? When enlistees accept these deals, they have to go into them with open eyes, just as anyone does when accepting any long-term deal. When circumstances change, deals have to change, too.
While some “retired” military personnel should quit demanding so much for having done so little — as they say in the army: “hurry up and wait” — there are ways to take the sting out of smaller military pensions.
One is to disburse a Citizen’s Dividend to the populace, which of course would include retired military.
Another is to earmark income tax revenue only to the military, meaning pensioned retirees would have to compete with those on active duty and over-stuffed military contractors for tax dollars, while citizens would have to use their dividend for programs like Medicare.
Also, make government quit inflating the money supply, which would halt inflation, and allow techno-progress to constantly lower the cost of living.
Ultimately, have government redirect all of society’s spending for land and resources into the public treasury, which would motivate owners and others to use sites and resources efficiently. In an efficient economy, everyone has the opportunity to prosper.
A rising tide really could lift all boats, ex-personnel included; military pension cuts are long overdue.
Ed. Notes: These bio blurbs, of course, are not thorough. So bear in mind that business success strongly favors a certain personality type, the salesman; not everyone has that competitive edge. And the role of luck is not little but huge, one needing to be in the right place at the right time.
Still, what can gleaned from these Horatio Alger tales? On the surface it seems most of these fortunes are owed not only to the entrepreneur’s determination but also to the size of the US economy, and being able to win a niche in this massive market.
Some examples: Selling your product to big buyers, such as car bumpers to Detroit’s Big Three or computers to the federal government. Another: Starting a fad or getting in on the ground floor, such as a clothing or cafe brand. Others are owed to government granted monopoly, such as a phone company getting a franchise or a software company getting exclusive patents. A few come from capturing the ground rents in big construction projects. And one, Oprah, is almost solely from selling one’s self, but her family were landowners, which is hugely stabilizing. Selling themselves is something they all had to do early on when winning over lenders and investors. So our hats are off to these people.
However, that said, would their fortunes still be as big in a just economy? What if there were no oligopolies as in car manufacturing, or boundless bureaucracy as in the federal government, or fresh, cheap credit for insider banks and big business, or stock-piling of patents for mere filing fees? Or a desperate workforce lacking leverage to negotiate higher wages? And what if people felt so good about themselves as unique individuals that they did not feel the need to belong to an immense faceless mass and preferred creative cafes and non-label clothes? Then you’d still see chains, but they couldn’t be so dominant.
If we did geonomize the economy, we’d create a level playing field, and while fortunes would be smaller, they’d be more numerous, too, so we’d hear many more stories of material success.
Homicides fell sharply in many leading US cities in 2013, plummeting by as much as 20 percent.
America’s biggest metropolises, such as New York, Chicago and Los Angeles, which witnessed sky-high murder rates in the 1990s, saw a continuation of the downward trend of recent years.
Chicago had been struggling to stem an epidemic of homicides, after gang violence pushed the murder toll there to 501 in 2012. Crime reports through December 27, 2013, showed 407 homicides, a nearly 20 percent drop.
Washington was an exception to the national trend, however, with 17 percent more murders committed last year than in 2012. Officials in the US capital explained that the rise was in part a statistical anomaly, since the previous year, 2012, registered an unusually low 88 killings.
Ed. Notes: If people are now behaving more sanely — fewer murders in major US cities — is now a good time to spend less on police and weaponry like drones and helicopters? And let’s make the economy more justice to keep the better times rolling. The way to do that is with geonomics.
This 2013 excerpt of the Washington Post, Dec 31, is by their Wonkblog Team.
Welcome to the third annual Wonky awards, where we recognize outstanding achievements — and spectacular disasters — in policy wonkery. Let’s get to them.
Most worthwhile yet hopeless policy crusade of the year: Land value tax
Most taxes — income taxes, property taxes, sales taxes, payroll taxes, investment taxes, wealth taxes, even consumption taxes — tax things we want to encourage. That’s perverse. So why not change this?
Taxing land would raise enough revenue to replace most all taxes. That’s especially true if you expand the definition of “land” to include other inherently scarce natural resources like oil, coal, natural gas, gems, and water, as UC Riverside’s Mason Gaffney has argued. And the great thing about land, as opposed to income or consumption, is that it doesn’t shrink in response to taxes. We’ve got the land we’ve got. So taxing it doesn’t destroy it. It’s a way to raise a ton of money from rich landowners without any economic distortions.
For more on the case for land taxes, see Jesse Myerson at Salon and Stuart Brittain at the Financial Times. It’s the rare non-trivial policy idea that really does have something in it for both sides, and it deserves more attention.
Ed. Notes: If you’re going to tax people, you really should tax the values that society as a whole generates, such as the value of locations, rather than tax the values that individuals generate, such as the value of their goods and services and efforts and enterprise. The reasons, and there are many, are both ethical and efficient.
But bear in mind you don’t have to tax at all in order to recover the rental value of locations and other components of our common wealth. You could use fees, dues, and leases. And you don’t have to hand over all the “rents” in the world to politicians to spend as they see fit (which is what taxes do) but instead could disburse the raised revenue back to residents as a monthly dividend, their share of the worth of Earth in their region.
And bigger picture still, once you start paying citizens a dividend, then you no longer have any sane reason to subsidize most of the programs that government now make you pay for. You could pare government down to human-scale at the same time you gear up dividends and cultivate the value of land in your region. Indeed, you could eradicate this mad notion of people serving the economy instead of having the economy serve us. Do this geonomic reform of the flow of public revenue and you will have made life on earth as utterly pleasant as possible.
These two 2013 excerpts are of (1) the Curaçao Chronicle, Dec 30, on shifting the property tax by Baker Tilly and (2) Massachusett’s Gloucester Times, Dec 14, on leasing public land by James Niedzinski.
From Property Tax To Land Value Tax Starting In 2014
Willemstad is the capital of Curaçao, an island nation in the Kingdom of the Netherlands (former Netherlands Antilles) in the southern Caribbean Sea.
Its property tax will disappear in 2014. It will be replaced, on January 1, by the Land Value Tax (LVT).
The rate of the LVT is higher and is also a progressive rating system.
‘For Sale’ Signs may Sprout at Long Beach as Residents React to Leases
Long Beach residents say they are experiencing a severe case of sticker shock after receiving new 10-year lease agreements for their summer homes from the town.
New land leases, based on the fiscal 2014 land assessment, may ultimately mean paying an additional $750 per year over each year of the 10-year agreement.
Selectmen have decided to gradually raise the land rent to 3.25 percent of the fiscal 2014 assessed land value over each year of the 10-year leases.
The 10-year leases that expire Dec. 31 charged $2,100 for annual land rent for a beach-front cottage and $1,300 for a back row cottage.
By the end of the new lease, cottage owners will be paying about $9,000 a year in rent for the land under his family’s cottage.
One question raised by officials throughout the process of drawing up the leases was whether tenants who have been renting for generations should receive considerations in the lease agreement.
“I believe that our board worked very hard to strike a balance between our fiduciary responsibility to the taxpayers of Rockport and maintaining the culture of the multi-generational community at Long Beach,” Selectman Eliza Lucas said.
“In my opinion, they have been given a pretty good deal for many years,” Selectman Paul Murphy said. “This is a fair deal.”
Ed. Notes: In some places, the land is public, and elsewhere the tax is on land, not buildings — which is how it should be. Nobody made land, everybody needs land, all of us together give locations their value, and so we owe everyone else for excluding them from our site, just as they owe us. So public recovery of land value rests on solid moral ground.
Nevertheless, people find paying taxes on land offensive. Partly because it means if you don’t pay, government can kick you off, just as banks can evict you if you default on a mortgage. Another reason the payments are disliked is that it’s all one direction; the money to compensate neighbors for excluding them goes in but no money to be compensated oneself ever comes back. That could easily be rectified by paying residents a share of the recovered rents.
A dividend from surplus public revenue would be better than governments bending over backwards for landowners. Politicians in Long Beach charged cottage owners on public land very low ground rents. Leaders in Curaçao charged landowners very low tax rates. Owners had been paying a rate of 0.345%, hardly a thing. The new rate is about 0.5%, still hardly a thing. But paltry charges don’t deter speculators and speculators inflate location values, which hurts buyers, especially young families, and brews up bubbles that always burst, causing a recession, hurting many more people.
While shifting the property tax off human-made structures, onto nature-made land, is a healthy step, at such a low rate it’s hard to imagine that owners will be motivated to put their locations to highest and best use. One immediate benefit for the government is that assessing just the site alone is easier than trying to calculate the value of both the site and the structure together. We’ll have to keep an eye on Curaçao and hope for the best. And eventho’ a baby step toward geonomic justice, it’s still the best news of 2013.
Ed. Notes: Is there a double standard? By the standard used to call those clothes fake, then the so-called “Nobel” prize in economics is fake, too. Alfred never left any money for economics, which has never been very scientific.
Nor did the inventor of dynamite leave any money for mathematics. Legend has it that the woman of his dreams was having an affair with the top mathematician in Sweden at the time, so in a huff Alfred slighted that field. The mathematicians had the good grace to go on and create their own prize, the Field Medal.
But what did global bankers do for economists, a field lacking a code of ethics? With fistfuls of cash, the biggest banks asked the Nobel committee in Stockholm to give the money to economists at the same time they give Nobel’s money to the top scientists in other fields.
Over the objection of Nobel laureates in true sciences, the committee took the bankers’ money and ever since economists have been happy to get it and the prestige that comes with Nobel’s name. The one concession to honesty is that the prize is awarded not in Stockholm with the others but in Oslo Norway.
Is that decent enough? The descendants of Nobel have asked that their ancestor’s name not be used to label the bankers’ prize. People have learned that it’s disrespectful to use another n-word; perhaps they can learn to drop this N-word when referring to the bankers’ favorite economists.
This 2013 excerpt of of the London School of Economics’ blog, EUROPP – European Politics and Policy – Dec 26, is by Alexandre Afonso, Lecturer in Comparative Politics at King’s College London. It also appeared on their sister blog, Impact of Social Sciences, Afonso’s own blog, and was presented on November 19 at the European University Institute’s Academic Careers Observatory Conference.
The academic job market is structured in many respects like a drug gang, with an expanding mass of outsiders and a shrinking core of insiders.
Academic systems rely on the existence of a supply of “outsiders” ready to forgo wages and employment security in exchange for the prospect of uncertain security, prestige, freedom, and reasonably high salaries that tenured positions entail.
“Why drug dealers still live with their moms” was based on the finding that the income distribution within gangs was extremely skewed in favor of those at the top, while the rank-and-file street sellers earned even less than employees in legitimate low-skilled activities, let’s say at McDonald’s, calculated at $3.30 an hour, well below a living wage, so they still live with their moms.
Consider the risk of being shot by rival gangs, ending up in jail, or being beaten up by your own hierarchy. Yet, gangs have no real difficulty in recruiting new members. The prospect of future wealth, rather than current income and working conditions, is the main driver. It is very unlikely that they will make it (their mortality rate is insanely high) but they’re ready to “get rich or die trying”.
Because of the increasing inflow of potential outsiders ready to accept this kind of working conditions in academia and drug gangs, this allows insiders to outsource a number of their tasks onto them. In academia, where there are increasing pressures for research and publishing, it’s teaching. The result is that the core is shrinking, the periphery is expanding, and the core is increasingly dependent on the periphery.
In the United States, more than 40% of teaching staff at universities are now part-time faculty without tenure, or adjunct lecturers paid per course given, with no health insurance or the kind of other things associated with a standard employment relationship. The share of permanent tenured faculty has increased substantially, but it has been massively outpaced by the expansion of teaching staff with precarious jobs and on low incomes’ some adjunct lecturers rely on food stamps, as could the $3 hourly rate of the drug dealer.
The average age of the PhD, between the 1970s and 1990s, hasn’t changed substantially but the age of the first professorship has increased by about 5 years.
Ed. Notes: If academics are to supply the rest of society with useful findings, is this the best way to go about it? What if academia were not subsidized at all and all wannabe academics — the young and the old — had to make it in the real world like everyone else? Then learning would become student-driven — the ideal of George Bernard Shaw and many others. And why not? Isn’t the customer always right?
Ed. Notes: It’s still true that alcohol plays a huge role in setting the course of society, from lobbying functions to grassroots community building. Which does not mean overdo it, sobriety clearly has its role, too. It just means that the individuals who throw one back together take steps forward together.
This 2013 excerpt of the Wall Street Journal, Dec 25, is by Joseph Walker.
A fake surgical procedure is just as good as real surgery at reducing pain and other symptoms in some patients suffering from torn knee cartilage, according to a new study that is likely to fuel debate over one of the most common orthopedic operations.
As many as 700,000 people in the U.S. undergo knee surgery each year to treat tears in a crescent-shaped piece of cartilage known as the meniscus, which acts as a shock absorber between the upper and lower portions of the knee joints. The tears create loose pieces of cartilage that doctors have long thought interfere with motion of the joints, causing pain and stiffness.
The patients agreed to participate in the study prior to the procedure and were informed they would either receive the surgery or not.
The study of placebo surgery is likely to stir controversy over the minimally invasive procedure, known as partial meniscectomy, which can cost between $3,000 and $6,000. The study’s authors estimated that it accounts for $4 billion in annual medical costs in the U.S.
Doctors have a bad tendency to confuse what they believe with what they know,” said Dr. Järvinen, an orthopedic resident and adjunct professor at Helsinki University Central Hospital.
Ed. Notes: Since doctors can cut us and charge whether we need it or not, does their medical license protect us so much or their monopoly profits? Also, how much faster could medical science proceed on a level playing field, one that did not favor entrenched ways or untried ways but merely consensus between informed doctors and patients, and between researcher and willing subject, and between funder and laboratory? Progress is faster in fields without licenses. Maybe society should give it a try.
These two 2013 excerpts of the New York Times series about inequality, the Great Divide, are of (1) Dec 21, on trust by Joseph E. Stiglitz, and (2) Dec 22, on inequality by Bill Keller.
In No One We Trust
Trust is what makes contracts, plans, and everyday transactions possible; it facilitates the democratic process, from voting to law creation, and is necessary for social stability. It is essential for our lives. It is trust, more than money, that makes the world go round.
One of the reasons that the bubble’s bursting in 2007 led to such an enormous crisis was that no bank could trust another. Each bank knew the shenanigans it had been engaged in — the movement of liabilities off its balance sheets, the predatory and reckless lending — and so knew that it could not trust any other bank. Interbank lending froze, and the financial system came to the verge of collapse.
Bank managers and corporate executives still search out creative accounting devices to make their enterprises look good in the short run, even if their long-run prospects are compromised.
Without trust, life would be absurdly expensive; good information would be nearly unobtainable; fraud would be even more rampant than it is; and transaction and litigation costs would soar. Our society would be as frozen as the banks were when their years of dishonesty came to a head and the crisis broke in 2007.
America faces another formidable hurdle if it wants to restore a climate of trust: our out-of-control inequality. When 1 percent of the population takes home more than 22 percent of the country’s income — and 95 percent of the increase in income in the post-crisis recovery — some pretty basic things are at stake. Reasonable people can look at this absurd distribution and be pretty certain that the game is rigged.
When Americans see a tax system that taxes the wealthiest at a fraction of what they pay, they feel that they are fools to play along. All the more so when the wealthiest are able to move profits off shore. The fact that this can be done without breaking the law simply shows Americans that the financial and legal systems are designed by and for the rich.
We need higher norms for what constitutes acceptable behavior, like those embodied in the United Nations’ Guiding Principles on Business and Human Rights.
Some startling numbers: The top 10 percent of Americans used to take in a third of the national income. Now they gobble up half. The typical corporate C.E.O. used to make 30 times as much as the average worker. Now the boss makes 270 times as much as the minion.
The rich (and their children) stay rich, the poor (and their children) stay poor. A stratified society in which the bottom and top are mostly locked in place is not just morally offensive; it is unstable. Recessions are more frequent in such countries. The rich spend heavily on lobbyists and campaign donations to secure tax breaks and tariff advantages and bailouts that perpetuate their status. Not only does a dynamic economy stagnate, but the left-out citizenry becomes disillusioned and cynical.
The economy is not growing the way it did for most of the last century. The sluggish growth means that not only are the poorest stuck at the bottom, but the broad middle is in economic decline. Our economy is already 70 percent dependent on domestic consumers, way more than other developed countries.
Between now and 2030, the working-age population that pays into Social Security grows by 15 percent; the over-65 population that withdraws from Social Security grows by 65 percent.
We are overdue for a raise in the minimum wage. The public overwhelmingly supports it. It won’t help those with no jobs at all, but the best evidence is that it won’t kill jobs either, and it does help inequality by boosting the incomes of the working poor.
Ed. Notes: While the writers may be nice guys, their old ideas that have been used before — regulations and make-work jobs — were not able to prevent the recession and won’t be able to win us prosperity and justice for all. Yet these guys still want their old ways to prevail, rather than think outside the box. Outside the box you’ll find geonomics — share Earth’s worth instead of tax and spend like mad — and these novel Earth-focused reforms have always worked wherever tried, to the degree tried. You’d think the old media would take note, but I guess we’ll have to transform this economy so it serves us instead of we it without the oldsters on board — the way of the world.
These two 2013 excerpts of the Financial Times are from Nov 27 on jobs by Brian Groom and Dec 13 on flat debt by Lucy Warwick-Ching.
North-south Divide On View In Job Vacancy Statistics
The north-south jobs divide has widened sharply as an upturn in construction boosted job vacancies in the south.
Nine of the 10 best cities to find a job last month were in southern England, while nine of the worst 10 were in the north. It was 100 times more difficult to get a job in Salford, where there were 28 jobseekers per vacancy, than in Cambridge, where there were just 0.28 per vacancy.
Job opportunities in construction grew 31 per cent compared with six months ago, boosted by a surge in housebuilding, mostly in the southeast, and infrastructure projects in the capital such as Crossrail and the improvement of London’s Northern line.
Of the 55,663 construction vacancies advertised in October, almost half fell in London – 30 per cent – and the southeast – a further 18 per cent. Only 6 per cent were in the northwest and just 3 per cent in the northeast.
This stark divide is set to widen further when projects such as the Thames Tideway [London supersewer] begin in the south, creating even more jobs near London.
Ed. Notes: While people near London have an easier time finding work, it seems people all over England have a harder time affording housing. It’d be good to know if the people falling behind in paying their landlord are mostly where land is high, despite the jobs, or where jobs are few, despite the affordable housing, or both North and South. Wherever, high land costs could solve the paucity of jobs.
In the south of England, where there are more jobs because there is more construction, that’s because there are more people (think London). That means higher land costs, heavier mortgages, richer banks, and a wider North-South divide in wealth and income, too, not just in jobs. But note, the land values are generated by the presence of the populace. Society generates the value of locations, and nobody, not even owners, created land, so Earth’s worth becomes a perfect common wealth, perfectly fair. All society need do is institute Land Dues (or levy a land tax) and then pay citizens a dividend. People in the south of England would pay more, the people in the North would pay less, but everyone would get an equal share. In the North, where costs are lower, the rent dividend would go much further. In the South, where costs are higher, it would not go so far, but it wouldn’t need to, not with wages being higher.
First, people would have to get over seeing themselves as worthy only of jobs, and see themselves as worthy of a fair share of Earth’s worth, too, just as worthy as those now getting it. The 1% get “rent”, or the money that society spends for the nature it uses, plus they get corporate welfare; they don’t have to worry about getting hired. The rest of society needs to lose its feeling of dependence upon jobs — a real disadvantage — then geonomize, and move from jobs to joy.
This 2013 excerpt of Clawback (of Good Jobs First), Oct 23, is by Phil Mattera.
Three years ago, newly elected governors in several states decided to outsource economic development functions to “public-private partnerships” (PPPs). Things have gotten demonstrably worse since.
“Enterprise Florida is our state’s most glaring example of cronyism and institutional corruption,” said Dan Krassner, executive director of the nonpartisan government watchdog group Integrity Florida. “The organization engages in pay to play: it sells seats on its board to corporations for $50,000 and then gives away taxpayer-funded subsidies and vendor contracts to them in return.”
The Wisconsin Economic Development Corporation (WEDC) was accused of spending millions of dollars in funds from the U.S. Department of Housing and Urban Development without legal authority, failed to track past-due loans, and hired an executive who owed the state a large amount of back taxes.
JobsOhio received a large transfer of state monies about which the legislature was not informed, intermingled public and private monies, refused to name its private donors, and then won legal exemption from review of its finances by the state auditor.
The Rhode Island Economic Development Corporation is still litigating the biggest economic development scandal in Rhode Island history: its $75 million loan to the now-bankrupt 38 Studios.
Ed. Notes: The well-meaning author and his organization want to keep the public funds with a public agency to make jobs. However, if we want jobs (and the bosses that come with them) — here I confess I’d prefer co-ops, self-employment, startups, a shrunken workweek, and lots of leisure — then why do we tax them? And just as dumb, why do we let prime sites in cities where hundreds could be working lie fallow? Some governments have generated jobs in the past, not by creating a bureaucracy to create jobs but by getting out of the way, by getting their taxes out of the way and getting their subsidies to land speculators out of the way. What these jurisdictions did was shift the property tax off buildings, onto land. When owners erected or improved buildings, they didn’t get taxed, but they did hire people. Owners who had been speculating, keeping prime sites from best use, got busy and developed their locations, so they generated jobs, too. That’s how you do it. It worked in Denmark, New Zealand, and could anywhere. Just takes a little understanding a lot of political chutzpah.
in part 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.
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.
a manual. The world did not come without a way for people to prosper, and the planet to heal and stay well; that way is geonomics. Economies are part of the ecosystem. Both generate surpluses and follow self-regulating feedback loops. A cycle like the Law of Supply and Demand is one of the economy’s on/off loops. Our spending for land and resources – things that nobody made and everybody needs – constitutes our society’s surplus. Those profits without production (remember, nobody produced Earth) can become our commonwealth. To share it, we could pay land dues in to the public treasury (wouldn’t oil companies love that?) and get rent dividends back, a la Alaska’s oil dividend. Doing so let’s us axe taxes and jettison subsidies. Taxes and subsidies distort price (the DNA of exchange), violate quid pro quo by benefiting the well-connected more than anyone else, reinforce hierarchy of state over citizen, and are costly to administer (you don’t really need so much bureaucracy, do you?). Conversely, land dues motivate people to not waste sites, resources, and the ecosystem while rent dividends motivate people to not waste themselves. Receiving this income supplement – a Citizens Dividend – people can invest in their favorite technology or outgrow being “economan” and shrink their overbearing workweek in order to enjoy more time with family, friends, community, and nature. Then in all that free time, maybe we could figure out just what we are here for.
more transformation than reform; it’s a step ahead. Harvard economics students this year did petition to change the curriculum, in the wake of the English who caught the dissension from across The Channel. French reformers, who fault conventional economics for conjuring mathematical models of little empirical relevance and being closed to critical and reflective thought, reject this “autism” – or detachment from reality – and dub their offering “post-autistic economics”. Not a bad name, but again, academics define themselves by what they’re not, not by what they are, unlike geonomists. We track rent – the money we spend on the nature we use – and watch it pull all the other economic indicators in its wake. We see economies as part of the ecosystem, similarly following natural patterns and able to self-regulate more so than allowed, once we quit distorting prices. To align people and planet, we’d replace taxes and subsidies with recovering and sharing rents.
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.
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.
a study of Earth’s economic worth, of the money we spend on the nature we use, trillions of dollars each year. We spend most to be with our own kind; land value follows population density. Besides nearness to downtowns, we also pay for proximity to good schools, lovely views, soil fertility, etc. These advantages, sellers did not create. So we pay the wrong people for land. Instead, we should pay our neighbors. They generate land’s value and deserve compensation for keeping off ours, as they’d pay us for keeping off theirs. It’s mutual compensation: we’d replace taxes with land dues – a bit like Hong Kong does – and replace subsidies with “rent” dividends to area residents – a bit like Alaska does with oil revenue. Both taxes and subsidies – however fair or not – are costly and distort the prices of the goods taxed and the services subsidized. By replacing them and letting prices become precise, we reveal the real costs of output, the real values of consumers. Then, just by following the bottom line, people can choose to conserve and prosper automatically. A community could start by shifting its property tax off buildings, onto land – a bit like a score of towns in Pennsylvania do; every place that has done it has benefited.
suitable for framing by Green Parties. When Greens began in Germany two decades ago, they defined themselves as neither left nor right but in front. Geonomics fits that description. The Green Parties have their Four Pillars; geonomists have four ways to apply them:
Ecological Wisdom. Want people to use the eco-system wisely? Charge them Rent and, to end corporate license, add surcharges. To minimize these costs, people will use less Earth.
Nonviolence. Want people to settle disputes nonviolently? Set a good example; don’t levy taxes, which rely on the threat of incarceration, to take people’s money. Try quid pro quo fees and dues.
Social Responsibility. Want people to be responsible for their actions? Don’t make basic choices for them by subsidizing services, addicting them to a caretaker state. Let people spend shares of social surplus.
Grassroots Democracy. Better have grassroots prosperity. Remember, political power follows economic. Pay people a Citizens Dividend; to keep it, they’ll show up at the polls, public hearings, and conventions.
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.
the study of the money we spend on the nature we use. When we pay that money to private owners, we reward both speculation and over-extraction. Robert Kiyosaki’s bestseller, Rich Dad’s Prophecy, says, “One of the reasons McDonald’s is such a rich company is not because it sells a lot of burgers but because it owns the land at some of the best intersections in the world. The main reason Kim and I invest in such properties is to own the land at the corner of the intersection. (p 200) My real estate advisor states that the rich either made their money in real estate or hold their money in real estate.” (p 141, via Greg Young) When government recovers the rents for natural advantages for everyone, it can save citizens millions. Ben Sevack, Montreal steel manufacturer, tells us (August 12) that Alberta, by leasing oil & gas fields, recovers enough revenue to be the only province in Canada to get by without a sales tax and to levy a flat provincial income tax. While running for re-election, provincial Premier Ralph Klein proposes to abolish their income tax and promises to eliminate medical insurance premiums and use resource revenue to pay for all medical expense for seniors. After all this planned tax-cutting and greater expense, they still expect a large budget surplus. Even places without oil and gas have high site values in their downtowns, and high values in their utility franchises. Recover the values of locations and privileges, displace the harmful taxes on sales, salaries, and structures, then use the revenue to fund basic government and pay residents a dividend, and you have geonomics in action.