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This 2014 excerpt of Thom’s Blog, Mar 28, is by Thom Hartmann.
Regardless of whether you want to fight poverty, stimulate the economy, shrink the size of government, or simply ensure everyone has a sense of human dignity – you should be calling for a no-strings-attached basic income for all.
Rather than administering a huge patchwork of overlapping social programs, our nation could save time and money by simply issuing every citizen a monthly check.
More Americans would have the opportunity to raise families or complete their education when they’re not working three jobs just to get by.
A minimum income would ensure that no one would be denied their basic human dignity by being forced to live in squalor in the richest nation of the face of the Earth.
Since it’s inception, Social Security has been incredibly successful at fighting poverty. So rather than slashing it, or means-testing it, we should expand it to every American.
Ed. Notes: We have a common wealth that if we shared it, each of us getting a share would be equivalent to getting a basic income. What’s our common wealth? The worth of Earth. It’s our spending for land, resources, EM spectrum, and other very valuable aspects of nature. We could use taxes or fees or dues or leases to redirect our spending for things none of us made into our public treasury and use dividends to disburse the revenue to all registered voters. In most economies, the spending for nature and privilege is likely to be half of all spending (roughly the GDP), so there is plenty of money to share, as a Citizen’s Dividen or a Basic Income.
Ed. Notes: While a step in the right direction, a bigger step would to de-fund not just new plants but old ones, too. And the reason would not just be for the environment. An even better reason is that subsidies in general are a bad idea. People relying on governments, and governments claiming to know what’s best, is what got coal and fossil fuels subsidized in the first place. And if any business can afford to succeed without subsidies it’s the filthy (literally) rich coal, oil, and gas industries.
Indeed, rather than get subsidies, the owners of those hunks of nature should pay rent for their claims on our common natural heritage. Government could collect the rents and use the revenue to pay citizens a dividend, a la Alaska’s oil share. Once citizens receive their share, they won’t need as much government, so government can downsize and lower its taxes.
Lower taxes on our efforts, coupled with higher charges for polluting, extracting, and exclusive ownership of locations, would both prod us and reward us for producing efficiently. We could have greater human-made abundance along with a healthier environment. Yes, geonomics is that powerful.
Some economists dislike analogies from physics in economics, because they don’t regard economics as mechanical. But since human action is physical, we can understand economics better if we understand the basics of physics.
We begin with space. For human action, space encompasses distance in three dimensions. For economics, space constitutes the sites in which activity takes place. The economics of space includes three-dimensional volume as well as a location. For human purposes, spacial land is fixed relative to the earth. Space is not altered by use, but it is consumed by using its value, as reflected by its rent, over time. There is also another type of economic space in the electromagnetic spectrum, made up of frequencies that travel through three-dimensional space.
The second rudiment of the universe is time, which has two meanings, a moment and a duration. Time is not an input into production, but a dimension of all activity. An analysis that examines a phenomenon over a duration is called “dynamic,” in contrast to the static analysis of a moment.
The third universal rudiment is mass, or its synonym, matter. Mass is what takes up space and has inertia. Economics categorizes mass as land (natural resources), human beings, capital goods, and trash.
A fundamental law of physics is that of conservation, that matter (and its sibling energy) cannot be created or destroyed, but only changed in form. But there is no conservation of value. In economics, production is the creation of economic value, processing inputs to make them more desirable. Consumption is the using up of economic value. Capital goods are items that have been produced but not yet consumed.
Linear velocity is the rate of the motion of a mass object in some direction. In economics, activity has a velocity as a mass of inputs gets processed into outputs, or objects get transported. There is also angular velocity in the speed of rotation, including the velocity of money as its turnover as measured during a year. Momentum equals mass times velocity, including a velocity of zero. Human action has momentum when activity proceeds at a constant speed and direction.
However, economic dynamics involves changes in speed or direction, which is acceleration (including negative acceleration or deceleration). A fundamental equation in physics is F=MA, force equals mass times its acceleration, Newton’s second law of motion. Newton’s first law of motion is that of inertia, that a body will retain its momentum unless an external force is applied. Force makes mass objects accelerate. On earth, mass has a weight due to the force applied by gravity.
In human action, force can mean either a physical action, as inputs are moved and combined, or else a coercive action by either criminals or governments. The initiation of coercive force alters what people would otherwise voluntarily do. Such forceful intervention imposes a net loss of value on society by accelerating the mass of human action into directions or speeds that reduce its net utility. The economy and society maximize well being with rules that prevent coercive force.
Newton’s third law of motion is that for every action there is an equal and opposite reaction. When one body exerts force on another body, the other body exerts an opposite force on the first body. This law is what propels a rocket, as the force of the ejected fuel makes the rocket go in the opposite direction. Economic action encounters resistance to motion, or friction, which is good if we want to walk (as without friction we would slide around), but is bad if the friction consists of obstacles imposed by coercive force.
In economics, energy is the generation of heat, light, and movement. There are many forms of energy. In physics, potential energy is mass that can be accelerated into motion, such as an object that can fall down, or molecules that can be combined to create heat and light. There is kinetic energy of motion, with the equation: e = ½ mv2. Einstein’s equation reflecting the convertibility of mass and energy is e = mc2, but that has no relevance in the human scale of action.
In physics, work is force times displacement. Applied to human action, work is done when a person applies force (human exertion and tools) to a mass to change its location or composition, even if the change is only of bits in a computer memory. Work can also be a change in the kinetic energy of a system.
Another physics concept that has been applied to economics is equilibrium, a state of constant momentum, including zero velocity, where there is no incentive or force for acceleration. In economics, equilibrium is the exhaustion of gains from trade. At the moment you pay for goods at a store, you are in equilibrium, as you do not wish to trade any more money for goods. But a moment later, you are in disequilibrium, as some goods now have more value than the money you exchange for them. Market prices and quantities move towards equilibrium to remove a shortage or surplus or to gain from extra production, consumption, and trade.
We can see that the application of physics to human action is not mechanistic, as people act on their subjective values and beliefs and psychological inclinations, but their physical action is necessarily subject to the laws and concepts of physics. F=MA applies to human action as it does to physical particles.
This 2014 excerpt of The Age, Mar 25, is by John Kehoe.
Australia’s richest person, mining heiress Gina Rinehart, secured a $US694 million ($764 million) loan from American taxpayers: what some see as crony capitalism.
There are 19 international lenders, including Australia’s big four banks, in the syndicate. Government export credit agencies including the Ex-Im Bank in the US, as well as Japan and Korea, were crucial in helping the massive debt-funding deal over the line.
Commercial banks and bond investors were reluctant to shoulder all the risk.
The US Ex-Im Bank says it “assumes credit and country risks that the private sector is unable or unwilling to accept”.
In return for the US government loan, Hancock Prospecting will purchase American mining and rail equipment from Caterpillar, General Electric, and Atlas Copco.
Caterpillar was being investigated by the US Senate for avoiding US taxes.
In 2008, an upstart senator named Barack Obama labelled the Ex-Im Bank “little more than a fund for corporate welfare”. The Obama administration now regards the agency as important.
Hancock Prospecting is not the only Australian company to benefit from America. QBE Insurance, the second-largest crop insurer in the US, has been a big recipient of federal crop insurance subsidies, which have tripled to about $US9 billion a year for the industry over the past decade. For every $US2 the government spends on crop insurance, $US1 goes to the insurance industry.
At the same time Republicans are voting to cut food stamps for the poor and unemployment insurance: personal welfare bad, corporate welfare good. Rinehart, the largest shareholder in Fairfax Media, which publishes The Australian Financial Review, criticized of personal welfare.
Ed. Notes: Cronies always pretend their fortunes come from succeeding in the market, not from lobbying in legislatures and fancy restaurants. Many people fall for the pretense and bundle capitalism with free markets. In reality, capitalism — that partnership of elite and state — could not survive in a freed market, a market freed from corporate welfare, taxes on wages, and — most importantly — the failure of society to recover the socially-generated values of land and resources. Those values — our spending for locations and minerals and the EM spectrum — those are the foundations of undue fortunes. Until we recover and share those values, we will continue to be plagued and depleted by the cronies called capitalists.
This 2014 excerpt of the Washington Post, Mar 26, is by Kimberly Marten.
The timing of Russian President Vladimir Putin’s decision to grab Crimea suggests that his motives may have had a diversionary twist. Putin may have been searching for something to take Russian minds off his own unfolding scandal when the Ukraine crisis fell into his lap.
Putin’s scandal was the corruption surrounding the Sochi Olympics. The construction costs associated with Sochi facilities and infrastructure exceeded $50 billion. Detailed and documented accusations about massive kickbacks and bribery have been published by Russian opposition figures Boris Nemtsov and Leonid Martynyuk and Alexei Navalny, with damning evidence about a number of Putin’s close associates (like railway baron Vladimir Yakunin and Putin’s childhood judo buddy Arkady Rotenberg and his brother).
Putin made it very clear to everyone that the Sochi games were his highest priority, so no one in a position of authority would have dared to raise the corruption issue before the Olympics were over.
Russia’s economy is stagnating and corruption is to blame.
There are deep nationalist, historical, and triumphalist reasons for Putin’s Crimean adventure. But it is striking how little Putin gained. The region was subsidized by the rest of Ukraine, and he will now have to fund those subsidies out of the Russian budget. Russian generators are now keeping the Crimean capital of Simferopol lit, as Ukraine turns off the electricity flowing in from the mainland. Crimea does have a crucial Russian naval base, but Putin already controlled that base without needing to occupy Crimea, because of a treaty that lasted through 2042.
Putin’s Crimean adventure will further dampen Russian economic growth. NATO will turn its attention back to the European theater.
That Putin’s moves in Crimea do not really further Russia’s long-term interests indicates that something else is in play.
Ed. Notes: The trick that both politicians and magicians play: get people to look anywhere else but where their hands are doing their thing. Since people can be so easily misled from the deeper reality, what is it leading people away from seeing the power in the land? Seeing the difference between spending for things not made by anyone and things that others produce? The existence of society’s surplus which should be our common wealth? Once we know what is diverting people’s attention from how economies actually work, how work and wealth get divided, and how fortunes truly get made, then perhaps we can neuter that trick so it will never work again.
A 2014 excerpt of the Financial Express (of Bangladesh), Mar 23.
1.0pc of people engaged in rent-seeking, control politics, BEA’s public lecture told
President of Bangladesh Economic Association (BEA) Abul Barkat said that Bangladesh is caught in the middle of poverty, inequality, and disparity due to an unholy alliance of one per cent people who are engaged in rent-seeking.
“This one per cent people controls politics, power, and all state machineries and gather wealth by not creating assets but taking away from the existing amount of wealth through embezzlement, misappropriation, lobbying, and many other improper means,” he said while presenting a public lecture at Dhaka University.
The Vice-Chancellor of Dhaka University Prof Dr Arefin Siddique said equal partnership of male and female can help a lot to remove disparities from the society.
Ed. Notes: You could be anywhere in the world and one thing would be the same: the few who are first to amass an extra bit of money use that to influence legislation in their favor. Those state favors make them more wealthy still and with the extra money from the favors they win still more favorable laws and rulings, round and round, until they become a nigh untouchable elite. So what do the rest of us do? We acknowledge the common wealth and demand our fair share. Winning our fair share will kick the underpinnings out from under the, now former, ruling elite.
This 2014 excerpt of Guardian Liberty Voice, Apr 12, is by Michael Cantrell.
As radical as it may sound, taxes are legalized theft that violates the right of property.
After a person trades their most precious commodity, that of time, to an employer in exchange for dollars, the money belongs to that individual and unless the person decides to give or exchange that money for products or services that improve the quality of life, no one has the right to deprive them of it. Yet this is exactly what government does, even deducting taxes before an employee receives their paycheck.
The government exists to serve the people and protect their rights and freedoms. All of the powers the government possesses are supposed to be from the consent of the governed. What if people today have not consented to a particular law or power granted to the government in generations past? Should that activity continue to be legal? More importantly, what gives the state the right to forcibly take someone’s property and give it to someone else? Are regular citizens allowed to participate in such an activity? If someone were to hold a neighbor at gun point, steal their property, and give it away, would that not be frowned upon in modern society?
While many attempt to justify taxation by stating that the money goes to programs to help the poor, forced charity is not charity at all. And while people living in poverty is a horrible reality, high taxes on business owners destroy jobs.
Government uses threats of imprisonment and other harsh consequences to force their hand into the pockets of the people and take their property. Why do people put up with it?
Ed. Notes: “Taxes are the price we pay for civilization,” you hear said by those who get to live off others paying taxes. But what’s so civilized about war and corporate bailouts? Could ending taxes end such bad behavior?
Of course governments do some decent things. But could they fund, say, police protection with membership dues? And fund roads by charging user fees (attached to the price of fuel)? And must government provide parks or could groups like the Nature Conservancy?
Taxes, and their mirror opposite — subsidies — have inherent flaws that come with the territory:
1) they distort price,
2) they require expensive bureaucracy,
3) they overly empower the recipients, and
4) they demean the payor.
Fortunately, however evil they may be, taxes are not necessary. Whenever society as a whole wants to take a collective action that needs funding, it can charge a fee — like a gas “tax” (a fee for polluting the air) — or require dues — like a land “tax” (owed by owners for displacing every other member of society from the site one claims).
So, yes, do feel abused when taxed, but take it one step further and replace them with charges that adhere to the justice of quid pro quo.
This 2014 excerpt of the Financial Times, Mar 23, is a review by Martin Sandbu of Fragile by Design: The Political Origins of Banking Crises and Scarce Credit, by Charles Calomiris and Stephen Haber.
In Fragile by Design, Charles Calomiris and Stephen Haber, say that one reason conventional economists did not see the financial crisis coming is that their models are free of politics.
This sweeping account of how banking and politics have always been intertwined spans three centuries and five countries: the UK, the US, Canada, Mexico, and Brazil.
Governments typically need banks when they are running out of money (historically, usually when they were fighting wars) and are forced to bargain with private financiers. These financiers obtain concessions in return for funding a bank to channel credit to the government: in the last US bubble, they consisted of allowing megabank mergers. Banking develops as a rent-seeking racket where the politically powerful divide with bankers the spoils extracted from those outside of this political “coalition”.
The 1930s reforms in the US — the New Deal’s adoption of deposit insurance, mortgage guarantees, and the Glass-Steagall act that split commercial and investment banking — are usually taken to have transformed banking. Haber and Calomiris instead see continuity.
They argue that the old, inefficient system was stable only while low inflation prevailed. As price rises gathered speed from the late 1960s on, a legal ceiling on deposit rates encouraged savers to opt for money market funds, undermining the funding of depositary unit banks.
Ed. Notes: Economists shy away from politics because the powerful, who get their riches from ownership, can make life difficult for anyone who wants to study who does the work and who gets the rewards in a rigorous, scientific way. The whole raison d’etre of government throughout history has been to funnel wealth from workers to owners. Indeed, up until relatively recently, landowners were the government, and still are indirectly (more direct in England where they still have a House of [Land]Lords). The few researchers who did study ownership and receivership of rents objectively had no trouble at all predicting the last recession. Our own Fred Foldvary gave a reliable forecast in these pages and even before that he did an academic journal. England’s Harrison and Australia’s Anderson also went out on a limb and were far more accurate than ones who get all the press. If only the Financial Times would write about them!
The Supreme Court has overruled 5 to 4 the previous limit on total campaign contributions in the US. In the McCutcheon v. Federal Election Commission case, The Court eliminated the limits on the total campaign contributions an individual could make to candidates and committees per election. Previously, in the Citizens United case, the Court struck down the limits on campaign funding and electioneering by corporations, labor unions, and nonprofit organizations.
Critics of these rulings say that they transform our democracy into a plutocracy, the rule by the rich, but the United States has always been a plutocracy, and the voters have used democracy to keep the system plutocratic. Wealthy donors could already finance Super PACs – political action committees. The amount of money spent in US elections had been escalating each election for decades.
American political culture has had a mixture of two ideals. The first is democracy, the rule by the people as equals rather than by a king or an aristocracy. The second ideal is liberty, especially freedom of speech. When the rich can influence candidates and elections by spending huge amounts of money, the ideal of liberty clashes with the egalitarian ideal of democracy.
Political speech is the most important of all, and the speech that most needs to be free of restrictions. Just as the government should not limit how many times one may give a speech, or how many editorials one may write on a topic, the government should not limit how much one spends to propagate speech.
Proposals to have the government finance campaigns also clash with free speech, if private financing is again limited. Governmental funding entrenches the established parties, and it forces the taxpayers to finance political ads which they may well detest.
Unfortunately, along with democracy and liberty there has been a third political idea in the USA. Economists call it “rent seeking.” In classical political economy, “rent” meant the yield of land. The classical economists knew that landowners receive rent in exchange for nothing, since the title holders did not create the land. They broadened the term to “economic rent,” which means any gains beyond what is needed to put resources to their most productive use.
Then economists in the branch called “public choice,” which applies economics to voting and politics, recognized that the subsidies and privileges that special interests receive from government are economic rent, since it is loot taken from the public in exchange for less than nothing. Hence, when special interests seek favors from government, they are rent seekers.
The modern use of “rent” has become so far removed from its landed origin, and the land factor so much subsumed under capital, that economists no longer appreciate that the biggest rent seekers are the landed interests who obtain the implicit subsidy as the land rent generated by public goods paid for by taxes on labor.
Because superficial appearances trump the understanding of implicit reality, the reflexive reaction to the corruption of rent seeking is to limit campaign money. That then clashes with free speech. But the reason there is a clash between free speech and democracy is that we have inherited an antiquated 19th-century model of voting that is no longer appropriate to the 21st century world of mass democracy combined with great state power.
Public-choice economists such as Mancur Olson have recognized that the way to limit the rent seeking disease of democracy is to vote in small groups rather than in large groups. In a large country, the small groups should federate rather than become a large single group.
The demand for campaign money dissolves when people vote in tiny local districts. The district councils send representatives to a higher-level (or broader-level) council. With such a bottom-up small-group voting system, we would have much fewer political ads in the mass media.
The mass-democracy model has been grafted world-wide, and it has not brought social peace, as we have witnessed in place such as Egypt and Ukraine. But one day, mass democracy will be regarded as a relic like we today regard the former power of monarchs and aristocrats.
Our current targeted welfare system is no way to build a society which claims to value intimacy, honesty. and strong families.
The New Economics Party wanted an unconditional Citizens Dividend for all individuals that was not means tested, asset tested, or work tested. The benefits of the commons — land and the natural resources — should be shared equally.
New Zealand had three precedents for unconditional payouts.
In 1948 every household was given a dividend because we had a particularly good wool cheque that year.
The second was the Universal Family Benefit that existed from 1946 to 1991 when family support became targeted.
The third was in 1977 when the unconditional National superannuation was paid to all over 65 without asset or income testing.
Ed. Notes: Big changes come more easily from small countries. In a small country, it’s easier for the citizens to have a conversation. It’s also easier for a citizen to identify with their territory, the nature, the resources, and the economic value of the land. Perhaps New Zealand could lead the world!
This 2014 excerpt of Share The World’s Resources in London, Mar 21, is by Rajesh Makwana, their director.
There is a growing movement of people calling for a proportion of revenues from the use of land and natural resources to be shared among citizens. And countless campaigns for tax justice, an end to austerity, and the strengthening of social welfare are all predicated on the notion of sharing national resources more equitably.
This does not mean abandoning the goals of existing initiatives, but rather supporting the emergence of a common platform for change that can be explicated in the simplest terms and embraced by the greatest number of people.
With support for the principle of sharing rapidly growing across the globe, a united call for sharing the earth’s resources could ultimately hold the key to safeguarding human progress in the 21st Century.
Ed. Notes: Sharing our surplus is key. The revenue to be made from land and resources is a surplus because our spending for these gifts of nature does not reward anybody’s efforts since none of us made the ground or stuck oil and ores in it. We must pay for the useful parts of nature as a civilized way to allocate them. But pay to whom? While none of us made Earth all of us need her and all of us, via our needs and demands, generate the value of her.
Not only is such sharing needed and fair, it also makes possible a total reform of public revenue. With land dues, we could get rid of noxious taxes on our efforts, on our wages and purchases and buildings. With these “rent” shares, we could get rid of subsidies which mainly benefit insiders (corporate welfare).
Sharing Earth’s worth does not have to be justified by that fact that it’d help the poor, or spare the environment, or make life much more pleasant for all, because it’s already the moral thing to do.
This 2014 excerpt of the New York Times, Mar 20, is by David Gelles.
Robert D. Marcus became chief executive of Time Warner Cable at the start of the year. Less than two months later, he agreed to sell the company to its largest rival, Comcast, for $45 billion.
For that, he will receive nearly $80 million, once the FCC approves. That’s more than $1 million a day for six weeks.
The extraordinarily large exit package is another instance of corporate America rewarding executives with outsize sums for minimal amounts of work — and an example of income inequality in America.
Marcus’ payout will not be close to the largest golden parachutes of all time.
John Welch got from General Electric in 2001 more than $417 million.
Lee R. Raymond got from Exxon Mobil in 2005 $321 million.
William McGuire got from UnitedHealth Group in 2006 $286 million.
Dozens of executives got more than $150 million.
But Welch, Raymond, and McGuire had been at their companies for years. Marcus, 48, for such a short period.
Executives can receive golden parachutes not only when they sell their companies, but also when they retire, and even when they are fired.
Time Warner Cable shareholders can express their displeasure with the package when they vote on the deal. But it will not change a thing. Such votes are nonbinding.
Mr. Marcus will not be the only Time Warner Cable executive in line for a big payday. Arthur T. Minson Jr., the chief financial officer, will receive severance pay of $27 million. Michael L. LaJoie, the chief technology officer, will receive $16.3 million. And Philip G. Meeks, the chief operating officer, will take home $11.7 million.
Ed. Notes: Why is this not theft? Management did not earn those millions that they take from the company. The money belongs to shareholders.
Government needs to break from Big Business and side with the public and write laws that would lead to executives getting arrested and serving time when they steal via paying themselves from their companies.
Also, such fat payouts prove that government, were it truly in the people’s corner, could negotiate far higher “rent” payments for letting tele-comms use the airwaves or enjoy other monopolies in various regions. Government could use the revenue from granting such privileges to pay dividends to citizens, since corporations are not paying fair dividends to shareholders.
This excerpt of The Real News Network, Mar 22, is an interview by Essica Desvarieus of professors Jeffrey Sommers and Michael Hudson.
Essica Desvarieus: The IMF is lending the interim government in Ukraine a $15 billion IMF bailout package. The conditions include cuts to gas subsidies, pensions, public sector employment, as well as privatization of government assets.
Hudson: The UN and the World Bank put Ukraine next to Nigeria for the GINI coefficient of concentrated income. The Europeans have told the kleptocrats that run the country, we will give you a lot of IMF money, you transfer it into your banks and your bank accounts, you send it abroad to your offshore banking centers, and the Ukrainian people will owe it; you tax your people and make them pay.
Russia says that Ukraine owes $20 billion, dating back to the Soviet Union era in exchange for, in addition, to about $5 billion or $6 billion for the oil subsidies that it’s been given. Russia said it is going to charge Ukraine the normal oil price, not the subsidized price. So all the money that the IMF and the U.S. gives Russia says is immediately owed to it itself.
None of the money none of this money’s going to go to the Ukrainian economy any more than the IMF money went to the Irish economy or the Greek economy. It goes to the billionaires who run the countries and immediately send it back to the West so it’s a circular flow. It goes in and out of Ukraine in about 20 minutes.
The government has to pay the IMF loan by privatizing whatever remains in the public domain. The Westerners want to buy Ukrainian farmland. They want to buy the public utilities. They want to buy the roads. They want to buy the ports. And all of this is going to be sold at a very low price to the Westerners. It will pass into foreign ownership, just like it did in Russia and Latvia.
Many Ukrainians say they haven’t been paid for two months. In Russia in 1994, during the Yeltsin selloff, labor went ten or 12 months without being paid. You can’t pay labor and at the same time pay the IMF and pay the kleptocrats.
In Latvia, Greece, and Ireland, 20 percent of the population emigrated. Just like 20 years ago you had an influx of Polish plumbers into London, you’re now going to have millions of Ukrainian plumbers pouring into Western Europe.
Russia moved in to Sevastopol for military reasons. It couldn’t let NATO put hydrogen bombs 20 miles from Russia, because then somebody in the neocons would have said, hey, we’ll never have a better chance to blow up Russia than we have right now; let’s do it. So Russia’s decisions here are cultural and military.
Western Europe is drying up. Russia’s turning towards an economy that’s not destroying itself, towards China and other Asian economies. We’re seeing a vast shift.
Also there’s the Budapest Memorandum of 1994 that bans all foreign countries from interfering in the domestic politics of Ukraine. Russia pointed out that it was the West that had violated the Budapest memorandum; the U.S. and E.U. stated they no longer regard the legally elected head of state as a legitimate partner, unlike the new leaders appointed in the square.
Sommers: The Soviets felt that they were given assurances from the United States that NATO would not encroach upon the former Warsaw Pact nations. What does the United States do over the past two decades? They take in the Warsaw Pact, and then they move even into the former Soviet Republics themselves, the Baltic states, moving towards Georgia, and now tentatively towards Ukraine.
Ed. Notes: You see why you shouldn’t let politicians spend your money? Why you shouldn’t let bankers concentrate your savings and create your currency? Why you shouldn’t let your militaries try to “solve” problems much more complex than meets the eye while merely enriching military contractors? And why, most importantly, you should work for geonomics to create a model of economic justice that would spread worldwide?
This 2014 excerpt of TripleCrisis – global perspectives on finance, development, and environment – Mar 18, is by James K. Boyce.
Rent isn’t just the monthly check that tenants write to landlords. Economists use the term “rent seeking” to mean “using political and economic power to get a larger share of the national pie, rather than to grow the national pie.”
Two other types of rent originate in nature rather than in human investment. Extractive rent comes from nature as a source of raw materials. The difference between the selling price of crude oil and the cost of pumping it from the ground is an example.
Protective rent comes from nature as a sink for our wastes. In the northeastern states of the U.S., for example, the Regional Greenhouse Gas Initiative requires power plants to buy carbon permits at quarterly auctions. In this way, power companies pay rent to park CO2 emissions in the atmosphere. Similarly, green taxes on pollution now account for more than 5% of government revenue in a number of European countries. When polluters pay rent to use nature’s sinks, they use them less than when they’re free.
The current value of the world’s oil, coal, and natural gas reserves is estimated at $27 trillion. Much of this will have to be written off if we phase out fossil fuels. Fossil fuel corporations have shown themselves willing to fight hard to defend extractive rent.
Who should get protective rent? One possibility is to return it to the people via equal per capita dividends. Another option is to let the government keep the money, as in the case of Europe’s green taxes.
Dividends are based on the principle that the gifts of nature belong to everyone equally. Cap-and-giveaway is based on the premise that the same corporations that profit from extracting nature’s wealth ought to be paid to leave it in the ground.
The only way we’ll see a switch from extractive rents for corporations to protective rents for the public will be if ordinary people join together to make this happen. To change the rent we get from nature, we must change who gets it.
Ed. Notes: Of course people should pay for polluting, which would encourage them to find clean alternative fuels. But it’d also be a good idea to quit paying corporate welfare to polluters. And to de-tax wages and investments to facilitate tech-progress to clean fuels and engines.
Another crucial part of the puzzle is to charge people for merely occupying land; doing that would encourage owners to use land efficiently. In cities, they’d develop vacant lots, parking lots, abandoned buildings, and under-sized buildings — they’d infill. Compact metro regions have buildings side by side and shorter trip distances so they both consume fewer resources and emit fewer pollutants.
Cutting demand for fuel weakens the grip of oil companies while charging landowners is something localities can do; without waiting for federal action, cities and counties can shift their property tax off buildings, onto locations, and that would trigger the cascade of benefits for both people and planet. As does Aspen CO and Singapore, they could even generate a surplus and pay residents a dividend — way cool.
A growing number of American children are developing infections caused by antibiotic-resistant bacteria.
While still rare, the bacteria are being found more often in children of all ages, especially those who are 1 to 5 years old.
The prevalence of resistant-enzyme(ESBL)-producing bacteria rose from 0.28 percent in 1999 to 0.92 percent in 2011. Resistance to third-generation cephalosporins climbed from 1.4 percent to 3 percent.
ESBL-producing bacteria were found in children of all ages nationwide, but slightly more than half were found in youngsters 1 to 5 years old. About 74 percent of these bacteria were resistant to many types of antibiotics.
These antibiotic-resistant bacteria have traditionally been found in health care settings but are increasingly being found in the community, in people who have not had a significant history of health care exposure.
Ed. Notes: Is our “arms race” against single-cell life forms a battle humans can win? Or should we try to improve our immune systems in other ways, such as improving our medical system?
People catch most of these bugs in hospitals, which may soon see more patients as government tries to lower the costs that hospitals now charge patients. Perhaps government should instead make hospitals less needed and help people lead healthy lives.
Government could combat pollution and distribute the common wealth — the value of land and resources — two actions that’d take the stress out of our lives so we could feel and live healthier. To lower medical costs, government could permit more qualified competition. And to raise the bar for safety at hospitals, government could hold the doctors there liable.
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 scientific look at how we divvy up the work and the wealth, how some of us end up with too much or too little effort or reward. That’s partly due to Ricardo’s Law of Rent, showing how wasteful use of Earth cuts wages. And it’s partly due to how a society’s elite runs government around like water boys, dishing out subsidies and tax breaks. While geonomists look political reality right in the eye, without blinking, conventional economists flinch. When Paul Volcker, ex-chief of the Federal Reserve, moved on to a cushy professorship at Princeton cum book contract, the crush of deadlines bore down. So Volcker asked a junior associate to help with the book. The guy refused, explaining that giving serious consideration to policy would ruin his academic career. The ex-Fed chief couldn’t believe it and asked the department chair if truly that were the case. That head honcho pondered the question then replied no, not if he only does it once. And economics was AKA political economy!
a way to connect the dots. Making the cyber rounds is “The Cavernous Divide” by Scott Klinger, from AlterNet (posted March 21): “As the number of billionaires in the world expands, so does the number of those in poverty.” Duh. The yawning income gap is not news. Nearly every issue of our quarterly digest carries a similar quote. Yet the connection was worked out long ago by one of America’s greatest thinkers, Henry George, who labeled his masterpiece, Progress and Poverty. Techno- and socio-advances always enrich few and impoverish many. Yet progress also pushes up location values – the geonomic insight (is Silicon Valley cheaper now or more expensive?). Instead of taxing income, sales, or buildings, society could collect those values of sites, resources, EM spectrum, and ecosystem services via fees and dues, which would lower the income ceiling, and instead of lavishing corporate welfare, pay out the recovered revenue via dividends, which would jack up the income floor. Dots connected.
of interest to Dave Lakhani, President Bold Approach (Mar 8) and Matt Ozga (Jan 29): “I write for the Washington Square News, the student run newspaper out of New York University. Geonomics seems like it has great significance, especially in this area. When was geonomics developed, and by whom?”
About 1982 I began. Two years later, Chilean Dr Manfred Max-Neef offered the term geonomics for Earth-friendly economics. In the mid-80s, a millionaire founded a Geonomics Institute on Middlebury College campus in Vermont re global trade. In the 1990s, CNBC cablecast a show, Geonomics, on world trade as it benefits world traders. My version of geonomics draws heavily from the American Henry George who wrote Progress & Poverty (1879) and won the mayoralty of New York but was denied his victory by Tammany Hall (1886). He in turn got lots from Brits David Ricardo, Adam Smith, and the French physiocrats of the 1700s. My version differs by focusing not on taxation but on the flow of rents for sites, resources, sinks, and government-granted privileges. Forgoing these trillions, we instead tax and subsidize, making waste cheap and sustainability expensive. To quit distorting price, replace taxes with “land dues” and replace subsidies with a Citizens Dividend.
Matt: “This idea of sharing rents sounds, if not explicitly socialist, at least at odds with some capitalist values (only the strong survive & prosper, etc). Is it fair to say that geonomics has some basis in socialist theory?”
A closer descriptor would be Christian. Beyond ethics into praxis, Alaska shares oil rent with residents, and they’re more libertarian than socialist. While individuals provide labor and capital, no one provides land while society generates its value. Rent is not private property but public property. Sharing Rent is predistribution, sharing it before an elite or state has a chance to get and misspend it, like a public REIT (Real Estate Investment Trust) paying dividends to its stakeholders – a perfectly capitalist model. What we should leave untaxed are our sales, salaries, and structures, things we do produce.
the annoying habit of seeing the hand of land in almost all transactions. In geonomics we maintain the distinction between the items bearing exchange value that come into being via human effort — wealth — and those that don’t — land. Keeping this distinction in the forefront makes it obvious that speculating in land drives sprawl, that hoarding land retards Third World development, that borrowing to buy land plus buildings engorges banks, that much so-called “interest” is quasi-rent, that the cost of land inflates faster than the price of produced goods and services, that over half of corporate profit is from real estate (Urban Land Institute, 1999). Summing up these analyses, geonomists offer a Grand Unifying Theory, that the flow of rent pulls all other indicators in its wake. Geonomics differs from economics as chemistry from alchemy, as astronomy from astrology.
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 log-gers 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.
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.
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.
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.