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Five Economic Reforms Millennials Should Be Fighting For
This 2014 excerpt of Rolling Stone, Jan 3, is by Jesse A. Myerson.
Here are a few things we might want to start fighting for, pronto, if we want to grow old in a just, fair society, rather than the economic hellhole our parents have handed us.
Social Security for All
As much as unemployment blows, so do jobs. What if the government would just add a sum sufficient for subsistence to everyone’s bank account every month. A proposal along these lines has been gaining traction in Switzerland.
We live in the age of 3D printers and self-replicating robots. Actual human workers are increasingly surplus. A universal basic income would provide everyone time to cultivate new pleasures, activities, senses, passions, affects, and socialities that exceed the options of working and saving, producing and accumulating.
Take Back The Land
Ever noticed how much landlords blow? They don’t really do anything to earn their money. They just claim ownership of buildings and charge people who actually work for a living the majority of our incomes for the privilege of staying in boxes that these owners often didn’t build and rarely if ever improve. In a few years, my landlord will probably sell my building to another landlord and make off with the appreciated value of the land s/he also claims to own – which won’t even get taxed, as long as s/he ploughs it right back into more real estate.
Think about how stupid that is. The value of the land has nothing to do with my idle, remote landlord; it reflects the nearby parks and subways and shops, which I have access to thanks to the community and the public. So why don’t the community and the public derive the value and put it toward uses that benefit everyone?
The most mainstream way of flipping the script is a simple land-value tax. We can make disastrous asset price bubbles impossible and curb Wall Street’s hideous bloat. TWe have to stop letting rich people pretend they privately own what nature provided everyone.
A Public Bank in Every State
The whole point of a finance sector is supposed to be collecting the surplus that the whole economy has worked to produce, and channeling that surplus wealth toward its most socially valuable uses. It is difficult to overstate how completely awful our finance sector has been at accomplishing that basic goal. Let’s try to change that by allowing state governments into the banking game.
There is only one state that currently has a public option for banking: North Dakota. When North Dakotans pay state taxes, the money gets deposited in the state’s bank, which in turn offers cheap loans to farmers, students, and businesses.
If any of these ideas sound good to you, there’s a bitter political struggle to be waged. Let’s get to work.
Ed. Notes: The author listed two other ideas but these three selected are more crucial and actually related. How do you fund an extra income for everyone? You use taxes, fees, dues, or leases to redirect all of society’s spending for land and resources and government-granted privileges like corporate charters (her LVT above) into the public treasury. Then you’d have a surplus for paying citizens a dividend.
How do you make banking unattractive to business so it’d evolve into a public utility organically? Again, you use taxes, dues, etc, to recover the annual rental value of sites, resources, and of little pieces of paper like patents and copyrights. Then, as the dues for land rises, the price for land falls, shrinking mortgages, spoiling their role as the gravy train for bankers. Also, with so much income from these charges, government no longer would need to borrow so much, again deflating the lust of lenders. Doing so would also deflate the cost of living, so people would have much less need for loans and credit cards. Bankers will become very unhappy so government may want to step up to the plate and provide whatever few financial services people may still want.
The economy would no longer be a major threat in anyone’s life.
This 2014 excerpt of Newsle, Jan 2, is by Sheldon Richman. The column originally appeared in the Future of Freedom Foundation.
Licensing is one way that freedom is limited on behalf of special interests. The licensing regime is overseen by the current practitioners, giving them the power to limit the number of their competitors. This is a double whammy: it locks people out of occupations, and it raises prices to consumers.
We’re told that licensing exists to protect consumers from shoddy work, but licensing does not protect consumers. Ask yourself: When you move to a new area and are looking for a physician, dentist, lawyer, hairdresser, plumber, mechanic, or electrician, do you randomly choose one from a list of licensed practitioners, or do you ask a neighbor or check a web-based rating service?
Licensing does not really filter out the cons and incompetents? If it did, who’d need Angie’s List? Thus, we can’t even claim that the loss of freedom from occupational licensing is compensated for by the elimination of poor products and services. Without licensing, independent rating and certification services would flourish.
By raising barriers to self-employment, occupational licensing reduces low-wage workers’ bargaining power and helps lock them into jobs they would rather escape. We see a good deal of lobbying on behalf of raising the minimum wage and facilitating union organizing, but what people need are real alternatives to working for someone else. A worker can cut a better deal with an employer if he or she can say, “Take this job and shove it,” and pursue self-employment instead.
But even the kind of independent work that would be accessible to most anyone — driving a taxi, say, or being a street vendor — is mired in special-interest government decrees if not outright prohibitions. Zoning and other kinds of land-use restrictions often rule out home-based income-producing activities. The dramatically falling cost of computers and software — and new technologies such as 3D printing — are opening up the prospect of highly decentralized small-scale manufacturing that could be done from a home or garage.
Taxes and regulations may formally apply across the board, but they take a greater toll on microbusinesses than on big businesses, which have accounting and legal departments expert at dealing with government-imposed burdens. As a result, small businesses remain small. Government ends up protecting the market share of established firms.
The working poor don’t need favors but freedom from confining rules.
Ed. Notes: We could not only help poor entrepreneurs get started, we could also trim the regulating bureaucracies, saving some tax dollars. We could help all businesses even more by shifting the property tax off buildings, onto locations, spurring current speculators to put their prime vacant lots to good use. Constructing new buildings attracts investment and generates jobs. And finally, we could pay people a share of the recovered land rents; getting a share of land rent is similar to getting a share of land in that people can use it to develop themselves, their ideas, as they would develop the land.
This 2014 excerpt of Natural News, Jan 2, is by Ethan A. Huff.
A new study published in the journal, Proceedings of the National Academy of Sciences, by scientists from the Monterey Bay Aquarium Research Institute (MBARI) in California recently discovered that the number of dead sea creatures blanketing part of the floor of the Pacific is higher than it has ever been in the 24 years that monitoring has taken place.
This sudden explosion in so-called “sea snot,” which is the name given to the masses of dead sea creatures that sink to the ocean floor as food, has skyrocketed since the Fukushima incident occurred.
At an ocean research station known as Station M, located 145 miles out to sea between the Californian cities of Santa Barbara and Monterey, masses of dead sea plankton, jellyfish, feces, and other oceanic matter drift to the ocean floor. “In March 2012, less than one percent of the seafloor beneath Station M was covered in dead sea salps,” writes Carrie Arnold for National Geographic. “By July 1, more than 98 percent of it was covered in the decomposing organisms. … The major increase in activity of deep-sea life in 2011 and 2012 weren’t limited to Station M, though: Other ocean-research stations reported similar data.”
Though the most significant increases were observed roughly a year after the Fukushima incident, the study makes mention of the fact that the problems first began in 2011.
Life depends upon healthy oceans, the life of which provides some of the oxygen that we all breathe.
This 2014 excerpt of Grist, Jan 3, is by John Upton.
Highlights in 2013 carbon-trading news included the launch of trading programs in China and Mexico. As for existing programs …
In a bleak year for carbon markets, North America was a rising star. Despite ongoing failure by the U.S. and Canadian governments to impose limits or taxes on greenhouse gas pollution, state and regional initiatives on the east and west coasts of North America moved forward. California and Quebec are now the most expensive places in the world in which to pump carbon dioxide into the air.
Still, the healthy growth in the North American markets was not enough to compensate for a stagnating European market and the collapse of UN-issued credits. For the first time since 2010, the global carbon markets receded year-on-year. The total value of the transactions was 38.5 billion euros [$52.3 billion], a 38 percent decrease from the 2012.
But in California and in the north-eastern states’ Regional Greenhouse Gas Initiative (RGGI) market, overall transactions rose to 390 million metric tonnes with a value of $2.8 billion (€2 billion) — a volume growth of 200 percent and a value growth of 262 percent.
North America still has a long way to go before it could rival the sheer size of the E.U. Emission Trading Scheme (which trades EUAs) or, to a lesser extent, the U.N.-run international market for certified emission reductions (CERs) and emission reduction units (ERUs).
Ed. Notes: Good to see humanity move forward, however slowly, along the lines of “polluter pays”. That principle fits into a bigger one: “Pay for what you take, not what you make.” Meaning, pay your community for the land and resources and ecosystem that you take or use, but don’t get forced to pay taxes on the goods you make and services you perform. That principle, in turn, fits into a bigger one still: “Share the worth of Earth, not the take of states.” That means, rather than get taxed and get subsidized programs you may not want or need, instead pay Land Dues into the public treasury and get rent shares back. Such a Citizen’s Dividend is the key component of geonomics.
This 2014 excerpt of USA Today, Jan 1, is by Nina Rees, president and CEO of the National Alliance for Public Charter Schools.
In just one school year, the typical New York City charter school student gained about five additional months of learning in math and one additional month of learning in reading compared with students in traditional public schools.
These gains, repeated year after year, are helping to erase achievement gaps between urban and suburban students. Students who attend New York City¹s charter schools from Kindergarten through 8th grade will make up 86% of the suburban-urban achievement gap in math and 66% of the gap in English.
What makes these results so impressive is that charter schools are not elite private schools. They are tuition-free public schools, funded by taxpayers and open to any student.
New York has roughly 70,000 students enrolled in public charter schools, and the numbers are on the rise. This school year alone, 14,000 new students in the city enrolled in charter schools with the vast majority in low-income neighborhoods.
While just 30% of students citywide passed New York¹s new Common Core math exam, 97% of students passed the exam at Bronx Success Academy 2. The passage rate was 80% at Leadership Prep Ocean Hill in Brownsville, a community that has suffered academic failure for generations.
Like traditional public schools, some charters do under-perform, and the charter school movement is working hard to improve quality at every school. But study after study shows that high-quality charter schools are putting high school graduation and college within reach for many New York City students who once had bleak educational prospects.
Former New York Mayor Bloomberg introduced “co-location” as a way to turn unused classrooms into productive learning environments. Sharing space also tests the hypothesis that environmental factors make it difficult for children in certain neighborhoods to succeed in school. Charters quickly proved that theory wrong. For example, 88% of third and fourth graders at Success Academy Harlem 5 passed the state math exam. The traditional public school located in the same building only managed to attain a pass rate of 6%.
Charter schools are public schools. Traditional public schools in New York City don¹t pay rent for their classrooms, and they already receive more funding per student than charter schools do. New Mayor de Blasio wants them to pay rent in the city with the highest real-estate costs in the nation.
In his election night victory remarks, de Blasio called inequality “the defining challenge of our time,” and said, “we are all at our best when every child, every parent, every New Yorker has a shot.” There are 50,000 families who are on charter school wait lists in New York City. What better way to give every child a shot at success than to let schools that are doing a great job educating kids serve even more?
Ed. Notes: City charter schools give parents greater input, and parents are ultimately responsible for their kids. If choice is a principle that is good (as in the abortion debate), it seems worth adhering to in the schooling debate. The greater the participation, the healthier the society, no? Interestingly, many of our greatest thinkers who also saw the wisdom of making land value into common wealth — such as Einstein, Mark Twain, and George Bernard Shaw — also favored non-rigid, student-driven education. Maybe de Blasio will add his name to the list!
This 2013 excerpt of Ecowatch, Dec 31, is by Brandon Baker.
Some of China’s farmland is far too polluted with heavy metals and chemicals that it can’t be used to grow food, Wang Shiyuan, deputy minister of China’s Ministry of Environmental Protection said.
The country needs at least 120 million hectares of arable land to meet the large population’s needs. The nation began the year with 135 million hectares of arable land, but contamination and efforts to convert farmland to forests, grasslands, and wetlands dropped that amount to 120 million hectares.
Farmers are already prohibited from raising crops for humans in areas deemed too badly polluted, though tainted rice and other crops still wound up in the food supply.
Ed. Notes: When we must wait a long time for the negative consequences of our actions, it seems many of us go and commit the acts that will bring short-term gain and long-term loss. What might stop people from abusing their very own land? Perhaps if people did not feel so desperate for an income but felt materially secure, then they might be able to afford to look over the horizon. Such security could come in the form of an extra income apart from one’s labor. And if the source of that extra income were the value of land, then people would care about the health of land — the healthier the land, the heftier their share of the rental value of the land. While geonomics is not a panacea, it would solve the problems that the absence of sharing Earth’s worth — in lieu of ordinary taxes and subsidies — causes. Perhaps geonomics needs to be translated into Mandarin.
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.
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 new field of study offered in place of economics, as astronomy replaced astrology and chemistry replaced alchemy. Conventional economics, in which GNP can do well while people suffer, is a bit too superstitious for my renaissance upbringing. If I’m to propitiate unseen forces, it won’t be inflation or “the market”; let it be theEgyptian cat goddess. At least then we’d have fewer rats. Meanwhile, believing in reason leads to a new policy, also christened geonomics. That’s the proposal to share (a kind of management, the “nomics” part) the worth of Mother Earth (the “geo” part). If our economies are to work right, people need to see prices that tell the truth. Now taxes and subsidies distort prices, tricking people into squandering the planet. Using land dues and rent dividends instead lets prices be precise, guiding people to get more from less and thereby shrink their workweek. More free time ought to make us happy enough to evolve beyond economics, except when nostalgic for superstition.
the policy that the earth’s natural patterns suggests. Use the eco-system’s self-regulating feedback loops as a model. What then needs changing? Basically, the flow of money spent to own or use Earth (both sites and resources) must visit each of us. Our agent, government, exists to collect this natural rent via fees and to disburse the collected revenue via dividends. Doing this, we could forgo taxes on homes and earnings and subsidies of either the needy or the greedy. For more, see our web site, our pamphlet of the title above, or any of our other lit pieces; ask for our literature list.
one of many words I coined over 20 years ago: geoism, geonomics, geonomy, geocracy, etc – neologisms that later others came up with, too. CNBC once had a Geonomics Show, and Middlebury College has a Geonomics Institute. If “economy” is literally “management of the household”, then geonomy is “management of the planet”. The kind of management I had in mind is not what CNBC was thinking – top-down. My geonomics is not hands-on, interfering, but hands-off, organic. It’d strive to align policy with natural processes, similar to what holistic healing does in medicine, what organic farming does in agriculture. Geonomics attends to two key components: One, the crucial stuff to track is fat — or profit, especially profits without production, such as rent, or all the money we spend on the nature we use. Society’s surplus is the sine qua non for growth, needed to counter death – not merely more, but sustainable development, more from less. Two, the basic process to respect is the feedback loop. These let nature maintain balance automatically and could do the same for markets, if we let them. Letting them would turn our economies, now our masters, into a geonomy, our servant, providing us with prosperity, eco-librium (to coin a term) and leisure, time off — a hostile environment for economan but a cradle for a loving and creative humanity.
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 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 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.
an answer to a rarely asked question. If price is a reward for production, why do we pay for land, never produced by any of us? What is land price a reward for? Good behavior? How much money do we spend on the nature we use? Who gets it? What do they do with it? (If you answer all these correctly, you’re not a genius but a geoist.) The worth of Earth is enough that were we to collect and share it, we could abolish taxes on the goods we do produce. For example, San Francisco’s Redefining Progress has calculated that Cali-fornia could abolish all state and local taxes were it to collect the values of resources and of using na-ture as a dump. By exorcising the profit motive from depletion and pollution, rent collection could replace bossy regulation. Economies could self-regulate, as the rest of the eco-system does. See how big problems yield to big answers when we ask the right questions?
a study of a phenomenon David Ricardo noted going on two centuries ago. When wine grapes rise to $10,000 a ton from the very best land (last year, cabernet sauvignon commanded an average of $4,021 a ton in the Napa Valley), then vineyard prices soar from $18,000 an acre in the 1980′s to $100,000 an acre five years ago and now for a top pedigree up to $300,000 an acre (The New York Times, April 9, via Wyn Achenbaum). Pricey land does not make wine pricey; spendy wine makes land spendy. While vintners make their wine tasty, nature and society in general – not any lone owner – make land desireable. Steve Kerch of CBS’s MarketWatch (April 5) notes that much of what a home sells for on the open market is a reflection of intangible factors such as what school district the house sits in. The price the builder has to pay for the land also tends to be driven by the same intangibles. Because the value of land comes from society, and because one’s use excludes the rest of society, each user owes all others compensation, and is owed compensation by everyone else. Sharing land’s value, instead of taxing one’s efforts, is the policy of geonomics.
a 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.