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This 2014 excerpt of The Guardian, Aug 18, is by Warwick Smith.
Who benefits from the privatisation of public assets? The buyer. Such assets will only be purchased if they stand to make a return. However, the biggest winners when multiple asset sales are considered are the banks. Privatised assets are almost always bought with borrowed money. So, while individual companies or consortia might benefit from the purchase of a government asset, it’s the banks and other lenders who benefit from a culture of privatisation.
The strategy generally employed by the buyer of public assets is to privatise the profits and shift costs onto the public. It is the public who are ultimately paying the interest; either through a lower sale price of the asset, through the increased cost of the services, or through reduced services.
Understand that these companies’ first interest is not in the efficient and effective supply of service. They just want profit. If they can most easily maximise profits by being good providers of a service that’s what they’ll do but it’s easier to exploit loopholes in regulations. It’s very difficult to write regulations that are watertight when it comes to these sorts of asset sales.
There are plenty of sound ways to fund infrastructure, but land taxes are the best and also the least likely to be used. Taxes that capture uplift in land values (sometimes called betterment taxes) can be effectively used to recoup spending on a lot of public infrastructure. For well prioritised projects, this uplift in land value is well in excess of the cost of the infrastructure.
If we could have fantastic public transport in our major cities that pays for itself, why aren’t we already doing it? There are three major hurdles to implementing greater use of land taxes: the banks, the real estate industry and property investors. The first two are very powerful political lobby groups and very generous political donors, and the last is quite a large voting bloc.
That the banks are the principal beneficiaries of ever-climbing housing prices is yet another largely overlooked fact. The more banks can lend people to buy houses, the more expensive real estate gets, the more money banks get to lend and the more profit they make. It’s a beautiful self-perpetuating gravy train.
Politicians feign concern about housing affordability and how hard it is for first home buyers to get into the market but they don’t enact any of the policy measures that we know would improve affordability for fear of upsetting the financial industry, the real estate industry and all the “mum and dad” property investors who’ve been lured into real estate by distortionary government policies like negative gearing and concessional treatment of capital gains (both of which are effectively corporate welfare for the banks).
Ed. Notes: Joseph Stiglitz, who used to be the chief economist for the World Bank, put his simple fact into a formula (every worthy project can pay for itself with new land values) that he called the Henry George Theorem.
This 2014 excerpt of Guardian Liberty Voice, Aug 26, is by Laura Oneale.
Julius Malema was recently placed under sequestration and the court extended the date of the sequestration hearing to December 2014. In the meantime, Malema must start paying back taxes to the South African Revenue Services (SARS).
Malema said tax laws are not known to black people, including African National Congress (ANC) party members and most ordinary citizens. It was all new and people were still adjusting to comply with the tax laws.
Malema said that the over one million people that voted for the Economic Freedom Fighters (EFF) party were aware of his tax issues.
Malema went on to say that if all the MP’s had to produce a tax clearance certificate from SARS many would fail.
Earlier in the month, Malema said that if a person had land they had everything. While attending a church meeting in Bloemfontein, Malema said the demand for land would start today. Land reform without compensation is a top priority for Malema and throughout the election campaign he told supporters of his intention to implement the return of land to blacks within South Africa.
Not long ago, while addressing a group of Zionist activists, Malema said, “We will take back our land as you did your Israel.” Many Jewish activists including Joe Slovo played a pivotal part during the apartheid struggle to democracy.
Malema remained adamant about the wealth of the country benefiting all the people and reiterated his stance on the nationalization of mines and banks.
Ed. Notes: Because politicians and bureaucrats may be no better than the private owners of banks and mine, consider alternative to nationalization — and to reclaiming land now owned by others.
Government can tax land or charge a user fee or a deed fee or institute land dues, not just for land where people live or work, but also fields and pastures, and mines. Negotiate a lease with the owner that sets terms high enough to recover all the rent, which is the annual value of the location itself, not of any work or building or improvement done to it. Anyone who owns more land than they can use won’t find it any longer worthwhile to hang on to it, just be be a middleman, and will let it go at a low price to previous tenants, as happened in California, Australia, Taiwan, and elsewhere.
As for banking, government can let savers open accounts in the public treasury and use those funds to lend to worthy borrowers. Yet people won’t need to borrow so much if government pays them a dividend from all those recovered rents. This way, money won’t be syphoned off by the privileged few, the economy will grow — as it did in the places noted above — Malema’s party truly will be Economic Freedom Fighters.
This 2014 excerpt of Clawback, Aug 21, by Quinntavious Williams.
The California legislature recently awarded special corporate tax breaks worth more than $420 million each to two of the country’s largest military contractors. The state also boosted the pot of money available for film tax credits from $100 million to $400 million. And it may put up a substantial amount to try to win the contest for the huge battery plant planned by Tesla.
The first of the weapons megadeals went to Lockheed Martin in connection with its role as a major subcontractor for Boeing on a $55 billion contract the Air Force will award for next-generation stealth bombers.
When the legislature approved the subsidy deal in July, Northrop Grumman, the only known competitor for the bomber contract, cried foul play because the tax break gave Lockheed an unfair advantage. To appease the company the legislature passed a similar subsidy bill for Northrop last week that was then signed by Gov. Jerry Brown.
Lockheed has received $134,349,564 in subsidies in 18 states. Northrop Grumman has received $499,567,863 in subsidies in 9 different states. Northrop’s most recent subsidy is a $471 million package from Florida.
With calls for cuts in the military budget coming from both the left and the right, the future of the new stealth bomber program is anything but certain. If the program goes on the chopping block, California will have nothing to show for its new embrace of megadeals.
Ed. Notes: This is how the real world works. People with so much money they don’t need anymore have so much power they can still take what’s not theirs and almost everyone treats it as normal. But the well-connected insiders feeding at the public trough is why either your taxes are too high, or do not return enough service, or both.
It’s also why people invest in weaponeers, since government shields them from market pressures, instead of into useful new ideas like solar power or rapid mass transit.
If you want to put a stop to such wasteful favoritism, you have to put a stop to government subsidies in general. Make government become a good steward and do hardly anything more than recover our common wealth and disburse the funds equitably to us all.
What’s our common wealth, the source of our dividend? It’s the value of land and resources. It’s all our spending for locations and natural goods like oil and timber. Those natural assets have a rental value (apart from their downstream value to consumers).
It’s that rental value we should be sharing — not taxed income or sales or buildings. Weaponeers, too, would get their share, but no more than anyone else.
The economy’s “infrastructure” consists of capital goods which are used for transportation, communications, and utilities. These capital goods are also called “public works,” because they have characteristics of public goods. An non-congested road or bus can accommodate extra users without reducing the services of the current users. The infrastructure of utilities includes the pipes, pumps, and wires that provide water, electricity, and natural gas. Some of the infrastructure is considered a natural monopoly, a product with a high fixed cost and a low marginal cost, the cost of providing more of the product.
Much of the infrastructure of the United States was built decades ago. These capital goods are mostly owned by governments which have failed to provide proper maintenance. The recent assessment of infrastructure by the American Society of Civil Engineers calculated an overall grade of D+.
Capital goods tend to depreciate, and require maintenance. Privately owned capital goods, such as houses and cars, are typically well maintained, since the owner wants to continue using these, and seeks a high resale value. But in the mass democracy we have today, the political incentive to build infrastructure but then to avoid spending to maintain it properly. A politician can take credit for promoting and voting for a project such as mass transit, but he will not boast about providing the on-going maintenance, as this does not provide a news opportunity.
Several major bridges have collapsed in recent years, and some have been shut down after being inspected. Bridges built decades ago now have many times the traffic they were initially built for, and the officials responsible for the bridges have failed to provide proper upgrades. Governments find the funds to repair broken bridges, but can’t provide the political will to maintain and upgrade them so that they don’t break. (A significant exception is the replacement for the San Francisco – Oakland Bay bridge.)
The federal government’s budget for highways comes from the Highway Trust Fund, financed by the federal gasoline tax. This is a unit tax, based on gallons rather than price, and the rate of 18.4 cents per gallon has been unchanged since 1993, while inflation has reduced the real amount. But the problem is not so much the rate, but the tax itself.
A gasoline tax seems like a user fee, since the use of roads is proportional to the use of gasoline. But the tax per gallon of gasoline has little relationship to the costs and benefits of the road. The benefit of a road can be measured by how much extra people are willing to pay to use locations served by the road, i.e. the additional land rent generated by the road. If the road generates less rent than it costs, it should not be built.
The best way to pay for a road and its bridge is from the land rent that gets generated by that infrastructure. There is then no need for a gasoline tax. However, the cost of a road or street is not just the cost of construction and maintenance. There are two other social costs. First is the cost of congestion. Streets and highways world wide are crowded, which wastes time. There should be tolls on all streets, highways, and bridges which vary by time and day, with tolls just high enough to prevent congestion. Another social cost is the pollution from vehicles. The efficient way to reduce pollution to an optimal amount is to measure the emissions with remote sensing, and then send pollution charges to the owners of vehicles which exceed the limits.
Many condominiums and residential associations have a reserve fund for periodic maintenance. The association’s budget includes an annual payment to the reserve fund as an actual expense that offsets depreciation. Government should do likewise. The government responsible for particular infrastructure should included in its budget an operational expense or reserve fund for the upkeep of the capital goods.
The political incentive, however, is the opposite. Politicians will not get publicity for maintenance and reserve funds. Therefore the upkeep funds should be a constitutional requirement. It should be in the constitutions of all governments that whenever public works are built, the budget will include payments for adequate maintenance.
The same economics applies to other infrastructure, such as water provision. The water provision of many American cities is over a hundred years old. Maintenance should be a constitutional requirement. In July 29, 2014, a water pipe burst in Los Angeles by the University of California. Millions of gallons of water were wasted in the midst of an extreme drought. The cost of not doing maintenance is much greater than that of proper periodic upkeep.
An alternative to government-provided infrastructure is provision by the private sector. Private communities such as homeowners’ associations would provide the local streets, and they would federate to provide the larger highways. Assessments, ideally on land value, would pay for the local public goods and also be passed on for the larger infrastructure. Property owners who balk at taxes willingly pay association assessments, so perhaps that is the most feasible path of reform.
This 2014 excerpt of Demos, Aug 20, is by Matt Bruenig.
One of the main reasons rich people buy up apartments in NYC (that they do not then live in) is for speculative investment reasons. They are hoping to increase their wealth by flipping the apartment in the future after the price of it has climbed up and up. If you can attack these speculative returns, you can blow up this entire game.
The easiest and most comprehensive way to attack these speculative returns is not a tax on unoccupied apartments. It is a complete tax on speculative housing returns, which is what taxing land rents would entail.
The price of an apartment roughly consists of two things: the value of the physical structure and the value of the location. Since the value of the physical structure does not generally increase over time (unless it is changed in some way), it is only an increase in the value of the location that causes apartment values in NYC to increase. Speculators are not banking on on the value of the aging physical structure of the apartment going up. They are banking on the value of the location going up.
You can tax the annual rental value of the land at very high rates (ideally 100%). This would operate just like a property tax, except it would be assessed only on the land value.
Under such a land value tax regime, any increase in the rental value of the land is entirely captured by an identical increase in the land tax assessed to the owner. This means that when owners go to sell their apartments to a new buyer, that buyer will not be willing to pay the owner more money for it.
Ed. Notes: The reason locations in NYC cost so much is because so many people live there and want to live there. It is the presence of community that creates the value of location. That is why — along with the fact nobody created land — it is fair for the community to recover this value that it creates.
And conversely, it is unfair to tax buildings, businesses, and earnings, things that individuals do create.
If you got rid of all the unfair and counterproductive taxes and replaced them with land dues and the like, plus if you got rid of spending programs which benefit insiders more than the public and replaced them with a Citizen’s Dividend, you’d have geonomics in practice and all the benefits that go with it.
This 2014 excerpt of Bloomberg Businessweek, Aug 14, is by John Tozzi.
In 2008 there were 1.7 million children born to unmarried women in the U.S. The rate of unwed births, at 52 newborns per 1,000 unmarried women, had been climbing steadily since 2002 and was the highest ever recorded.
After 2008, births to unmarried women declined each year. The steepest declines in childbearing have been recorded among unmarried black and Hispanic women, narrowing the gap with whites.
2009 is when MTV aired its reality show, 16 and Pregnant, followed by a slew of Teen Mom spinoffs. The narratives of hard lives of young mothers prompted Google searches and tweets about birth control or abortion. The show accounted for as much as one-third of the overall drop in teen births in the year and a half after its debut.
A hit TV show dwarfs the influence of pretty much all the public policy that could affect teen birth rates. Changes to welfare, Medicaid coverage for contraception, sex ed or abstinence curriculums, access to abortion -— none of it really moves the needle.
Teens, in particular, are staying childless by using contraception and having less sex, not by an increased reliance on abortion. Since the 1990s, women have been delaying childbirth. The pattern is evident in other developed nations as well.
There’s still plenty of room for unwed birth rates to decline, particularly among populations with the least economic opportunities. The proportion of births to low-educated women that are outside of marriage remains staggeringly high.
Ed. Notes: Our sex drive is pretty strong, as is our territorial imperative. Yet if a TV show can sway people to make rational choices about sex, perhaps another one can help people make rational choices about occupying land. Imagine: tune it, pay land dues, and share land rent!
This 2014 excerpt of the Los Angeles Times, Aug 11, is by Chris Kirkham.
Although the U.S. economy this year recovered all of the jobs lost during the recession, the new jobs are largely in lower-wage industries such as hospitality and healthcare that pay an average of 23% less than the ones lost in the higher-paying manufacturing and construction sectors.
From 2005 to 2012, the bottom 40% of earners saw only 6.6% of all income gains in the country. By contrast, the top 20% were received more than 60% of the increases. More than any other time in the last 60 years, those who receive income through market investments or other assets such as real estate have a much greater income advantage.
Overall, metro areas with the most people earning more than $75,000 were concentrated in coastal California and the Northeast. The largest concentrations of middle-income earners were in the Midwest and the Northwest. And the largest share of households making below $35,000 tended to be located in the South.
Ed. Notes: As jobs wither away and wages fall — thanks to automation and globalization, or progress, which is what we’re supposed to want — people will have to learn to feel the self-esteem that makes them feel entitled to a fair share of society’s surplus. The rich feel no qualms demanding greater than a fair share. Why is it so hard for everyone else to demand only a fair share of the common wealth, of all our spending for land and resources? For assets created by nobody, needed by everybody, and made valuable by the presence of society in general? That’s what’s ours to share — not peoples wages and investments. And once we share it, then the shoe will be on the other foot and workers can negotiate the heck out of wages.
This 2014 excerpt of the Washington Post, Aug 6, is by Robert J. Samuelson.
Like the population, the business sector of the U.S. economy is aging. The trend “has occurred in every state and metropolitan area, every firm size category, and in each broad industrial sector.”
From 1978 to 2011, startups fell from about 15 percent of all firms to 8 percent; the slide was gradual until the 2008-09 financial crisis, when it accelerated.
Since 2000, the decline in startups has spread to high-tech sectors.
Productivity is measured as output per hour worked. Competition among firms raises productivity. 35 percent of productivity gains result from “churning” of firms; the fall in startups dampens these gains.
One theory is that the cumulative effect of regulations discriminates against new businesses and favors established firms that have the experience and resources to deal with it.
Ed. Notes: Regulations deliver an excess burden but so do high costs for locations. Startups need a spot of land to stand on. Yet wherever entrepreneurs congregate, site values rise.
Another big problem is the stockpiling of patents and copyrights by older firms, preventing newbies from exploring those staked out fields of knowledge.
Furthermore, regulations mean jobs for the regulators and for the compliers who fill out the forms. Jobs are about the only way most people can get any income, so meaningless work proliferates. But such jobs are a waste of life.
We could lose regulations and those jobs if we could replace that income from labor (however useless) with an income from land. That is, all of society’s spending for sites (in mortgages and leases) and for natural resources could be redirected in the public treasury via taxes and fees then back out again as dividends, a la Alaska’s oil dividend and Singapore’s land dividend. And as the tax on land goes up, the price for land goes down.
Just as we would charge the full annual rental value for a deed to land, so would we charge the full market value for a patent on an invention or idea. To afford this fee, both inventors and businesses would quit sitting on their assets and rush good new products to market. Firms would relinquish the patents and copyrights that they’re not putting to good use.
Unbarred fields for exploration, coupled with affordable urban parcels, plus an extra income from recovered “rents”, all would liberate the basement inventor and the penny investor; startups would go through the roof!
Of course, to figure all this out, one’s brain could not be senile, either, but as agile as that of entrepreneur launching a startup.
This 2014 excerpt of Inequality, Aug 13, is by Robert Ross.
Each week, millions of dollars are stolen from American families. The perpetrators act with impunity. There are no arrests, few convictions, and largely meaningless fines.
Wage theft. Many working people are paid less than the legal minimum, not paid for overtime, and deprived of legal protections through false classification as independent contractors. If economic losses like these were visited upon big brand retail stores or well-healed neighborhoods, the cry for strict law enforcement would force police chiefs and mayors into rapid response.
In low wage industries – including apparel, restaurants, car washes, and construction – 26 percent of workers were paid less than minimum wage, 75 percent of those who worked overtime did not receive overtime pay, 25 percent were forced to work before or after their shifts had ended, and a vast majority of this work – 70 percent – was completely “off-the books.”
These workers lost an average of $2,634 annually out of total earnings of $17,616. That translates into wage theft of 15 percent of earnings.
Street crimes amounted to $139 million worth of stolen money in 2012. In the same year, the Department of Labor recovered more than twice that amount – $280 million – in stolen wages.
Ed. Notes: The Left hollers when bosses steal pay but one hears not a peep form them when government taxes wages. That’s a double standard and not good for justice. It erodes any moral foundation.
Of course bad bosses should be punished for theft. That goes without saying. But fines and inspectors do not get at the root of the problem.
Note the victimized workers are low-wage. So raise the minimum wage? Not exactly. Remember, that’s what’s getting violated. Instead, pay workers and everyone an extra income apart from our labor (or capital). That is, we would share society’s surplus.
What surplus is our common wealth? It’s the worth of Earth. It’s all our spending for land and resources. And it’s trillions of dollars each year. We could share it a la Alaska’s oil dividend or Singapore’s land dividend.
We could also let “land dues” stand in for most taxes, especially those on wages, and then government would break ranks from business and no longer take what does not belong to them.
This 2014 excerpt of Rebuilding the Fiscal Balance: Creating a greater and better downtown for all citizens, Part II, Aug 15, is by Robert Falcon Ouellette, candidate for Mayor of Winnipeg Canada.
I have a comprehensive financial strategy to ensure that the citizens of the City of Winnipeg are served by an effective and efficient public service [consisting mostly of] …
1. Land Value Tax
Downtown surface parking lots within the city are an eyesore and create a feeling of danger because they are dead-zones. They create a feeling of vulnerability for pedestrians and represent the greatest impediment to the long-term success of Winnipeg.
Owners of older buildings tear them down to reduce their property taxes and avoid the need to repair and replace older buildings.
Land Value Taxation has already been implemented in Denmark, Estonia, Russia, Hong Kong, Singapore, Taiwan, Australia, Mexico, and the United States.
Over time, as surface parking lot owners stopped the long-term speculation, delaying building on their lots, and instead felt an incentive to find development money, we would see a drastic change in the ambience of our city.
Ed. Notes: Some politicians have the courage to say what they know is right. And public recovery of the value of locations is right. Right morally because nobody made the land and the whole community makes its value. And it is right practically because, as noted, it drives efficient use of land. May Robert Falcon Ouellette become a model for others. And may he win!
California exempts solar energy equipment from its property tax. The exemption will last until 2025. The California Wind Energy Association has complained that this exemption puts solar energy at an artificial advantage relative to other renewables such as windmills. Biomass, the use of biological materials such as wood and leftover crops, is also at a relative disadvantage.
Rather than eliminate the solar tax exemption, the other energy industries should seek to eliminate the property tax on all energy capital goods. With this exemption, the government of California is recognizing that property taxes on capital goods – buildings, machines, equipment, inventory – impose costs that reduce production and innovation. Since this tax is toxic, the property tax should be removed from all improvements.
The best revenue neutral tax shift would be to increase the property-tax revenue from land value by the same amount as the reduction in the taxation of capital goods.
The other energy industry chiefs call the solar property-tax exemption a subsidy. We need to distinguish between absolute and relative subsidies. An absolute subsidy occurs when government provides grants to firms, or limits competition. A relative subsidy occurs when one firm or industry receives a greater subsidy than its competitors. All absolute subsidies are also relative subsidies, because they exist relative to the rest of the economy. But if the subsidy is not in funds or protection, but from lower rates on industry-destructive taxes, this is a relative but not an absolute subsidy.
Suppose that there are patients in a hospital suffering from continuous poisoning. The doctor stops poisoning one patient, and he recovers. But the other patients are still being poisoned. The other patients complain that it is not fair for one patient to be singled out for favored treatment. But the just remedy is not to resume poisoning the recovered patient, but to stop poisoning the others. The taxation of capital goods is economic poison, which the state recognizes would poison the solar energy industry they seek to promote. But why poison the other industries? The property tax should exempt all capital goods, all improvements.
A broader issue is the subsidies to energy. All forms of energy, except human muscles, are subsidized by the state and federal governments. Energy from oil and coal are implicitly subsidized by exempting them from the social costs of their environmental destruction. There is no economic need for any subsidies. But to obtain the true costs of energy, governments should also eliminate taxes not only on their capital goods but also on their incomes and sales. We cannot know whether renewable energy can stand on its own until we eliminate all the government interventions, including taxes, subsidies, and excessive regulations.
Since a radical restructuring of public finances is politically impossible today, a politically feasible reform would be to exempt all capital goods investments from the property tax. If this needs to be revenue-neutral, California could replace its cap-and-trade policy with levies on emissions. The relative subsidy to solar power is unfair to the other energy industries, but the real unfairness is the property tax on their investments.
This 2014 excerpt of Business Insider, Aug 12, is by Lucas Kawa.
Mayer Amschel Rothschild, original architect of that Jewish family fortune, was born in 1744. He lived above the family shop with up to 30 relatives in extremely cramped conditions.
Mayer’s father, Amschel Moses, worked as a money changer and silk cloth trader, and had Prince William of Hesse on his client list.
As with his father before him, Mayer was able to ingratiate himself with Prince William and make a decent living by collecting and selling rare coins. These “mail-order antique sales” served as the basis for the Rothschild fortune. In 1769, Mayer was granted the title of court agent, which would prove a boon to his money-making opportunities.
In 1770, Mayer married Gutle Schnapper and received a generous dowry from her father, who also worked as a court agent. The two would have five sons and five daughters.
In his will, Mayer outlined strict, controversial provisions regarding Rothschild marriages. Four of his granddaughters married grandsons (first cousins), while one married her uncle. The practice of inbreeding continued (still practiced by Arabs and others).
During the French Revolution, Mayer profited by providing supplies for the Austrian army with coin from the British.
The Rothschild coat-of-arms includes a fist clutching five arrows, a reference to Mayer’s five sons. At the turn of the 19th century, Mayer sent his sons to establish banks in Frankfurt, Naples, Vienna, France, and London.
Carl established a close (and profitable) relationship with the notorious ruling de’Medici family. His daughter Charlotte ended up marrying his nephew Lionel, the son of Nathan.
Salomon Rothschild founded S M von Rothschild in Vienna. He played a key role in the financing of the Nordbahn rail. His daughter Betty married his brother James, in accordance with family custom.
The Paris branch was among the most successful of the family’s banking branches, due in large part to James’ close relationship with King Louis Philippe. The house where his children grew up is now part of the American Embassy.
The former Prince William of Hesse, who did business with both Amschel Moses and Mayer, assumed his father’s title in 1785. After Napoleon invaded, he fled to Denmark after entrusting Mayer with a substantial portion of his wealth. Rothschild funneled the money to Nathan in England. Nathan’s shrewd investments grew the family fortune using the sovereign’s money. Eventually he returned the principal to William.
Nathan’s wife, Hannah Cohen, was the daughter of a prominent diamond dealer, one of Nathan’s business associates. The marriage increased his business connections and profits, and he opened N M Rothschild & Sons in 1811. He would lend to both sides during wartime and having the winner cover the loser’s debt.
Nathan was the first to hear the news of Wellington’s victory over Napoleon. He sold his stock to trick others into thinking that Britain had lost so they would sell their stock cheap. His agents bought it at discount in a huge profit-making day for the family.
During years of nearly chronic warfare, this strategy was implemented across the family branches. From 500,000 pounds in 1818, the Rothschilds’ wealth rose to 4,330,333 pounds in just a decade.
Ed. Notes: People may think that vast fortunes come from hard work or smart investment but neither is key (since many people do that). What is key is being a smooth talker, getting to be the one who is an insider, a “court agent”, handed lucrative contracts and bonds.
Being an insider also makes it possible to get profitable information before others. Called “insider trading”, it is now illegal but it still goes on.
The inbreeding probably would hinder families that are not minorities.
Another key is monopoly, not just getting to be an agent of the king but also holding a monopoly on a natural resource, like a diamond mine, or on a government-granted right-of-way, like a railroad.
What it all boils down to mainly is government spending, directed a little bit into infrastructure but a tremendous amount into humanity’s’ most vicious and irrational behavior — war. While others would probably have lent to belligerent governments if the Rothschild’s had not, that the money is tainted by blood does rile some people the wrong way. Yet many more wealthy people than the Rothschilds profit from today’s military/industrial complex and wars themselves, while war has not served non-rich Jews well.
Since some people have to die and others have to kill, it seems fair that war should not make anyone else rich. Let government raise taxes on everyone’s income and savings to pay for war in real time. And let the state draft the weaponeers, too, not just the grunts who march in the field.
Wars themselves could likely become a mania of the past if we all were to live in just and prosperous societies. And the way to do that is already known — geonomics. If only knowledge could get our juices flowing as does having enemies. Perhaps it’s a matter of feeling like we deserve justice.
This 2014 excerpt of the Financial Times, Aug 12, is by Matthew C. Klein.
A new working paper from the IMF suggests a “big push“ — government spending a lot of money on new roads, bridges, etc. — does more harm than good. Such major drives have been followed by slumps rather than booms.
Governments borrow money to spend on projects that aren’t worthwhile. At first, this boosts economic activity by putting more money in workers’ pockets — classic Keynesian stimulus. Once the projects are completed however, growth slows so much that the total average growth rate over the period is either the same or worse than it would have been without the bad investments.
Those loans would be easy enough to service if the investments boosted growth and tax revenues, but that usually doesn’t happen. So governments engage in growth-sapping austerity measures. Countries endure capital flights and lost decades.
When money is loose — government flush with fat loans — special interest groups press [for new infrastructure that rewards them]. Yet new roads have less impact than the initial roads that opened up access to major regions of the country.
Fast growth followed some investments — post-war reconstruction in Europe. However, during war, the bridges, roads, ports, and airports that were targeted tend to be those that are strategically and economically important. These structures tend to have high impacts when restored to operation.
Korea and Taiwan are two of the handful of formerly poor countries that managed to become rich in the 20th century. Contrary to popular perception, in Korea, “public investment has never boomed…staying at approximately 5 percent of GDP for several decades.” Taiwan did build out its infrastructure in the late 1960s and the early 1970s, but this was more in response to the needs of exporters facing capacity constraints after years of rapid growth than as an effort to jumpstart a weak economy.
Employing marginal people to build unneeded infrastructure might not be a great use of public funds, compared with giving money to people directly to spend on things they want.
Ed. Notes: All the exceptions, all the successful examples, relied on land reform, including Korea and Taiwan, indeed all the “Asian Tigers”. Taiwan even levied a significant land tax and enjoyed the most spectacular results. In Ethiopia, which in the 1990s performed well, its Regional Government, against the advice of the IMF, adopted a tax on land values and parcel size. The tax on structures inside city limits was drastically reduced.
If a nation were to recover all its rents for land and resources, it would not need to borrow to hand out cash to citizens; it would enjoy a surplus it could share as a dividend, a la oil-taxing Alaska or land-taxing Singapore.
What’s needed is not another study to conclude that waste and redundancy are worthless, but one to show that land justice is critical to success.
This 2014 excerpt of Salon, Aug 10, is by Henry Grabar.
In Miami, only one in 10 new apartments is purchased as a primary residence. Apartments aren’t places to live, even a few months out of the year, or to rent. They are simply unusually shaped deposit boxes where several million dollars (or pesos, or rubles) can be left in security and secrecy.
The “safe haven effect” drives up the cost of housing. And this with an obvious threat in the form of sea-level rise and storm surges looming on the horizon.
Over the past quarter-century, the Miami skyline has grown at a cornfield pace, fueled largely by buyers from South America. Most Miamians speak Spanish at home, and the metro area has the highest share of immigrant business ownership in the country, at 45 percent. This is why the city is sometimes called the “Capital of Latin America.”
Miami’s real estate clientele are looking to move cash reserves from South America’s teetering currencies into American real estate. Only a quarter of Miami condo buyers take out mortgages, versus 70 percent nationwide.
Bank tellers don’t receive a commission on the deposits they accept, so they are more likely to ask questions of a dubious customer than a real estate agent, who stands to make a huge commission on a multimillion-dollar luxury condo deal.
The average price of a unit in a current selling project is $662,439. It’s not pocket change; but it’s also less than half the average condo price in Manhattan. Median sale prices in San Francisco recently topped $1 million.
Is it crazy to add 23,000 units – the crop of the current cycle – to a market with scant local demand, in a metro area with the highest foreclosure rate in the United States? Is downtown Miami a bubble?
Ed. Notes: If only those foreigners would plow their surplus back into their own nations to win economic justice there, so they would not have to flee or to send their money into exile. But the money was probably ill-gotten gains in the first place, so it would not belong to the sort of person interested in either justice or his homeland.
If Miami could control its realtors, it could control its development fate: keep its housing affordable and its neighborhoods intact. How? By taxing land. Then land could not be such a safe haven.
Heck, the city could even get rid of all the other dumb taxes on buildings, sales, and incomes. After that, people would not come for the wrong reasons but to live in justice. And Miami could export a model that benefits everybody — geonomics.
This 2014 excerpt of NBCNews, Aug 12, is by Tony Kokopil.
Robin Williams’ death could push suicide awareness into the mainstream like AIDS after the death of Rock Hudson, or heroin after the overdose of Philip Seymour Hoffman.
Recently, self-harm has been taking more lives annually around the world than war, murder, and natural disasters combined. In more advanced countries, only three causes of death steal more years of life expectancy. In the U.S., suicide deaths now outnumber deaths by automobile accident.
The suicide rate—the number of people per 100,000 who kill themselves each year—dropped in developed countries between 1990 and 2010. In the United States, meanwhile, the rate has jumped almost 20 percent in the last decade. But take a longer view back to World War II and the American suicide rate has not changed much at all.
Heart disease, cancer, HIV, most infectious diseases, almost every kind of accident: they’re all in relatively steep decline, while suicide floats along, or even rises. It’s among the only major threats to get significantly worse in this century than in the last. And the reason is darkly profound: as more people survive into middle and old age, more people are left to die by their own hand.
The suicide rate among Americans 45 to 64 has jumped more than 30 percent in the last decade. Among white, upper-middle-aged men, the rate has jumped by more than 50 percent. Boomers have the highest suicide rate right now, but everyone born after 1945 had a higher suicide rate than expected —- and everyone is on pace for a higher rate than the Boomers.
Williams was depressed, and he has admitted to substance abuse problems, two notorious risk factors for suicide.
Despite his royalties from his hit movies, he also worried about money — after two divorces costing tens of millions of dollars — and so took a role in a TV show. The show got cancelled, and he had to downsize his lifestyle, two blows to his self-esteem. And without his family full-time, he may have lost the daily intimacy many human beings need.
Ed. Notes: Most guys want to have and take care of family. When they can’t, it hurts. When people hurt, some people hurt themselves more.
To correct the situation, there are things that the individual sufferer can do, things the people who care about someone can do, things professionals can do — and things we all can do together. I mean, let’s create an economy that does not foster insecurity and worthlessness any longer. That is, we can recover society’s surplus and share it equitably while leaving our earnings alone, untaxed. More precisely, we’d shift taxes off income, sales, and buildings, and onto pollution, extraction, and locations. We’d shift spending from corporate welfare and other favors for insiders, into a dividend paid to citizens.
Geonomic policy creates security, closes the gap in self-esteem, and lets people heal, families heal, and communities heal, creating a context in which self-harm would no longer be an issue.
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?
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.
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 way to have everybody pulling on the same end of the rope. Last summer’s expansive forest fires shed light on growing class resentment in the West. Old loggers and ranchers rankled at the new urgency to stamp out the blazes that threatened the recent Aspenesque settlers. The newcomers expected working class firemen to make protecting their expensive homes top priority. (Chr Sci Mntr, Spt 7) The tinder for this envy? Rich people moving in bid up the price of land, making it hard to afford by people on the margin. The fault really lies with our system of privatizing land value. If this rising value were collected by land dues and shared by rent dividends – the essence of geonomic policy – who’d complain? The more people move in, the higher the land value, and the fatter the dividend paid to residents. Then people on the margin might go out of their way to invite rich outsiders in.
a 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.
the Great Green Tax Shift maxed out”
Economically, taxing pollution and depletion does reduce pollutants and extracts – and thus the tax base; plus such taxes are regressive, requiring a safety net. On the other hand, collecting site rent is progressive and generates a revenue surplus payable as a dividend to residents, which can serve as the safety net.
Environmentally, taxes on waste and extraction do not drive efficient use of land, as does getting site rent. Better settlement patterns do reduce extraction upstream and pollution downstream.
Politically, green fees have less impact if applied locally; local is where grassroots movements have more impact. Yet getting rent usually entails shifting the property tax (or charging user fees), the province of local jurisdictions; both mayors and city voters have been known to adopt a site-value tax.
Ethically, putting into practice “tax bads, not goods” skirts the issue of sharing Mother Earth which collecting rent confronts head on. Since nothing is fixed until it’s fixed right, ultimately, greens must lead humanity into geotopia where we all share the worth of Mother Earth.
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.
in part the Great Green Tax Shift maxed out. Economically, taxing pollution and depletion does reduce pollutants and extracts – and thus the tax base; plus such taxes are regressive, requiring a safety net. On the other hand, collecting site rent is progressive and generates a revenue surplus payable as a dividend to residents, which can serve as the safety net. Environmentally, taxes on waste and extraction do not drive efficient use of land, as does getting site rent.
a 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.
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.