We are Hanno Beck, Lindy Davies, Fred Foldvary, Mike O'Mara, Jeff Smith, and assorted volunteers, all dedicated to bringing you the news and views that make a difference in our species struggle to win justice, prosperity, and eco-librium.
In the USA, people of age 16 and above are considered of working age. Of those of that age range, those who are working, seeking work, or hired but not yet working, are designated to be in the labor force. The labor force participation rate is the number of people in the labor force divided by the number of those of working age.
From 1950 to 2000, the labor force participation rate in the USA rose from 59 percent to 67 percent. Much of that increase came from the doubling of the participation rate of women, from 30 percent in 1950 to 60 percent in 2000. But total labor participation has declined since 2000 to 63 percent.
While the portion of women in the US labor force rose, the portion of men has been declining. The prime working years are considered to be from age 25 to 54, and one sixth of the men of that age range are not working. In 1950, only four percent of men of that range were not employed.
Many of those not working are not seeking work, and are therefore not counted in the labor force. They are also not counted as unemployed, because by definition, the unemployed are those actively seeking work plus those who have been hired but not yet started to work for wages. Two thirds of working age men are not seeking work, although some who sought work but stopped because they were discouraged, would take a job if offered.
About 40 percent of the men seeking work have been unemployed for six months or more. The chronically unemployed are less likely to become employed, so the long-term unemployment feeds on itself.
The real wage of lower-skilled workers has been falling since 1970. For workers who did not finish high school, the real wage (adjusted for inflation) has fallen 25 percent. That fall in wages is offset somewhat by the availability of new products such as cell phones and by the fall in the relative prices of electronics and other goods, but the cost of housing, medical care, taxes, and college tuition have risen to offset some of that productivity gain.
There are several reasons why male labor participation has fallen. First, more men are attending college. Second, due to the expansion of the war on drugs, the portion of men in prison has risen. Third, as more women work for wages, some male partners choose home production, doing house work and child care at home, which is real labor but not counted in the output data. Fourth, more people are obtaining government’s disability income. Very few on disability go back to work. Fifth, many in the first of the baby-boom generation, born during 1946-1950, are retiring.
The downward trend of labor participation will continue. The Congressional Budget Office estimates that the participation rate will fall to 61% by 2024. CBO calculates that the Affordable Care Act will reduce the labor force by more than 2 million jobs. Workers will be able to quit their jobs without losing medical coverage, and the expansion of Medicaid will induce many more adults to obtain medical care without having a job.
One of the problems with a lower labor participation rate is that it reduces the ratio of workers to non-workers. Social Security and Medicare are supported by transferring income from workers to non-workers. A smaller labor participation rate will use up the trust funds and create a deficit for these programs sooner. Also, fewer workers results in lower economic growth, which implies that more of those in poverty will stay that way.
Much of the labor participation decline is not voluntary, but caused by tax and subsidy policies. Without taxes on wages and enterprise profits, both wages and employment would be higher. If the funds now going into Social Security instead went into tax-free private retirement accounts, those who retire would rely on their own past savings rather than transfers from those working. Without the income-tax distortion caused by tax-free medical insurance and taxed money wages, workers would be able to choose the insurance plan that fits them best rather than having to accept the limited plans offered by employers and the government.
The alternative to taxing wages is to tax land rent or land value. Without such a fundamental shift in policy, the labor force participation rate can be made more voluntary with employee and self-employment incentives for those long out of work, such as tax offsets and exemptions from restrictions (e.g. licensing, union rules, and city zoning) that prevents working at home, and exemptions from litigation risks. Immigration reform – legalizing those already in the country and allowing more of those with labor skills into the country, would also substantially increase the labor population.
The basic problem with labor world-wide are restrictions on hiring and firing labor, and the heavy costs imposed by taxes, regulations, and mandates on employers. If an employer, including a self-employer, could simply hire a worker without having to deal with forms and regulations, and with no taxes on the employer and the employee, we would have full employment at wages that would provide a decent standard of living. The labor problems we have are iatrogenic, a disease caused by the doctor, in this case, the economic malady caused by government policy. The government that people look to for solving economic problems has caused them in the first place.
This 2014 excerpt of the Boston Globe, Feb 6, is by Edward L. Glaeser, Columnist.
In 1879, during an earlier age of inequality, the reformer Henry George proposed a radical solution — “to abolish all taxes — except on land values.” By following George’s lead and calling for a tax on vacant land, New York Mayor Bill de Blasio has revived interest in the idea among progressives nationwide. Taxing land more and buildings less would encourage the construction that many cities — including Boston — need to become more affordable and more inclusive.
Ed. Notes: What’s good for the city is also good for the country. The city gets more quality development, the country gets less latifundia. Still, all that goodness is made much better by using the recovered natural rents to fund a dividend so residents at the margin can always afford their land dues.
This 2014 excerp of Inter Press Service, Feb 6, is by Carey L. Biron.
The past five years have seen less than 20 percent of global forestland put under community control compared to the previous half-dozen years. Further, far fewer legal safeguards were put in place during this latter period, while those laws that have been passed have been weaker.
The slowdown comes despite a significant uptick in the public discussion over land and indigenous rights, with multinational corporations, national courts, and Western donors increasingly acknowledging the issue’s importance and pledging to strengthen safeguards for forest tenure.
[T]he overriding picture in 2013 remained one of continuing resource grabs by local elites and corporations, aided by governments eager to give away land to investors on almost any terms. Land grabbing has spiked and impoverished countries desperate for an economic boost see forests as a commodity, not as their citizens’ home.
It is no coincidence the global slowdown in reform happened at the exact time that the financial value of land, water, and carbon skyrocketed.
There’s trillions of dollars sloshing around the world looking for a place to go, particularly with global demand for food expected to double by 2050.
Ed. Notes: Presently an owner or investor or lender can profit not so much from their labor and capital applied to land but from the competitive, rental value of the land itself. The latter profit stream — from land — typically is greater than the former stream from one’s work, manual or mental. As long as society allows that flow to be captured by ownership or investment or mortgage, then those forces will enrich themselves and deprive the rest of society.
Yet that value does not belong to any of those three. The worth of Earth, called “rent”, is how much one will pay annually to use some land. This sum is generated not by anyone owning but by society surrounding. Hence ground rent makes the perfect common wealth, morally and practically.
Once reformers win consensus on the right to rent, then land disputes will fade away into our dark past.
These four excerpts of 2014 on the new farm bill are from: (1) Weekly Wastebasket (Volume XIX No. 6), Feb 7, by Taxpayers for Common Sense; (2) WJHG, Feb 6; (3) The Public Opinion, Feb 7, by Paul Johnson; and (4) Southeast Farm Press, Feb 6, by Clint Thompson.
Sacred Cows Come Home to Roost
The trillion dollar Agricultural Act of 2014 (H.R. 2642) is the product of a long, non-transparent journey. The four Agriculture Committee leaders kept the public, and even their own committees, from influencing the backroom-written farm bill.
When you hide the work of Congress you get something like this bill – a Grade-A example of bipartisan binging. Three new programs send checks for dips in income.
Floor amendments that added to the cost of the bill — for example adding crop insurance policies for pennycress (a weed used in biofuels), alfalfa (cheap hay), and losses due to food recalls — made it into the final legislation. Cost-savings amendments that would cap overall spending on new shallow loss entitlements, eliminate the U.S. Department of Agriculture’s duplicative catfish inspection office (we already have one in the FDA), deny farm subsidies to city dwellers, and trim crop insurance subsidies for millionaires (an amendment that passed the Senate twice) were all abandoned. Oh, and a requirement that lawmakers and Cabinet Secretaries publicly disclose their crop insurance subsidies? Yeah they just couldn’t make that fit.
It’s been said that if farming were easy- everyone would do it. Those impacted by the 2014 farm bill say the new legislation certainly isn’t making the job any easier.
Think about the amount of risk a farmer is taking on — cost of seed and chemical and fuel, labor — land rent. Land rent is one that get’s left out of there a lot. Lots and lots of our farm land is rented land and that can be a very,very large cost.
President obama is scheudled to sign the farm bill into law by the end of the week. It’s good for 5-years.
The costS of production have four big areas. Usually the two largest are land and fertilizer. Next is usually seed cost and from there machinery and its operation.
The two big ones with changes since last year are fertilizer prices and land rent. Both have seen changes over the past years. Fertilizer prices are down from 10 to 30 percent depending on when you got yours bought and could be higher by spring.
Land rent has increased but this is different for every farm depending on where they are on land rental agreements. But if you own your own land you need to figure the cost because you could rent the land out and get a return.
Land rent has inflated over the past decade, and likely as a result of the direct payment subsidies. Landowners upped the rent to try to capture some, if not all, of that direct payment. So, it’s questionable if the farmer ever saw the money anyway.
With not as much money coming into farmers’ future incomes, will land rent remain inflated? Farmers will try to farm even more acres now than they did before to make up for the difference. That competition will keep land rent up.
Ed. Notes: Will these experts be proven right? Is there enough farmland now unused so that every farmer could farm more? And is every farmer not already maxed out farming as much as a 40 hour workweek allows? If farmers can’t find more land or more time, then they can’t compete and push up land rents. And if farm owners can’t find new tenants willing to pay more, and have their own costs to meet — perhaps a mortgage or taxes — then those owners will have to lower the rents that they charge prospective tenants. That means rents will fall, and the experts will have been proven wrong (once again).
Besides not helping working farmers, these subsidies actually hurt working farmers, by inflating price or rent of land. Inflated prices favor the deeper-pocket farmers who can gobble up land, leaving none for younger farmers just starting out. The resultant sprawling farms require heavy machinery and pesticides, an operation that lends itself to doing business with one big bank and one big buyer of harvests. Those are the businesses that get the lion’s share of the consumer’s grocery dollar, not an actual farmer or farmworker.
For taxpayers, the subsidies are costly and for consumers, food is not any cheaper. Worse, it is less nutritious. The farmers who get the handouts are factory farmers, not organic gardeners. So government largesse helps unhealthy food capture most of the market, leaving small niches for wholesome growers. Meeting less demand, they do not enjoy any economies of scale and can not cut costs and sell their produce as cheaply as the products of factory farmers.
The best help farmers could get, believe it or not, is a combination of land dues (or land taxes) with a Citizen’s Dividend (a rent share). Land is much, much cheaper in the countryside than in cities, so if land value gets shared thru-out the region, then country people will get a rent dividend fattened by steep urban location values yet live in a part of the region where land dues (or taxes) and the rest of the cost of living are low.
Further, if the government repeals its taxes on wages, then farmworkers — the hardest workers in all of agri-business — would in effect get a raise, and no one tilling the soil is more deserving. Hence the whole geonomic program improves the lot of everyone. In essence what it does is convert those land rents into residential dividends for everyone.
Ed. Notes: It won’t give the right answers if people don’t ask it the right questions. And ironically, the answers have already been found. Every place that has increased owner occupancy has risen up out of poverty. Every place that focused its taxes on land holding, not on producers and merchants, likewise developed. Hopefully, the big, fast, costly computer will discover what’s already known by those concerned with justice. It saddens me that people have so much faith in technology and so little in justice.
The former director of Brazil’s state-owned bank, who was sentenced in Brazil for corruption and money-laundering, has been arrested in Italy.
Henrique Pizzolato, who has dual Brazilian and Italian citizenship, fled to Italy in order to avoid a 12-year prison sentence.
Pizzolato was one of 25 politicians, businessmen and bankers convicted in the big political corruption trial known as Mensalao, or big monthly allowance.
It’s one of the biggest political corruption scandals in the Brazil’s recent history. The Supreme Court found that politicians from the Lula led Workers Party — head of the minority government — were making regular payments to members of the governing coalition in exchange for their support in Congress.
The scheme used funds from government bodies, such as Banco do Brasil, for which Pizzolato worked.
Public funds were also used to pay off debts from election campaigns.
The former chief-of-staff of ex-President Luis Inacio Lula da Silva is serving a long prison sentence.
Ed Notes: In Iceland, bankers went to jail for cheating depositors and citizens. But what must happen behind the scenes for a prominent person to be arrested in a corrupt country? Seduce the wrong guy’s wife? That aside, the “log-rolling” in the US Congress is also corrupt — when politicians of the two big party agree to subsidize each other’s backers — albeit legal.
Such payments are not only morally offensive, not only fatten the few insiders at the expense of everyone else, not only tilt the playing field away from fair and efficient businesses, such unjust spending also pushes the global ecosystem — and hence human civilization — closer to collapse. Who receives those public funds? Military contractors, who are huge polluters. Huge polluters themselves, like the oil companies and agri-business. Not to mention mega-ranchers, loggers, and miners who no longer dig but blow whole mountain tops off coal deposits. There are plenty of pressing reasons to demand an end to political spending.
But both politics and nature abhor a vacuum. Political spending must be replaced by something, and that something is a dividend to the citizenry, funded by society’s immense spending for land, resources, and government-granted privileges it uses. At the same time that government loses its discretionary power over spending it should lose its discretionary power of taxation, which is rife with loopholes as favors to insiders. Limit legislators to recovering the socially-generated value of nature and privilege. That’d topple the elite so they’d have to compete with everyone else who’d be much better off.
This 2014 excerpt of The Economist on inequality, Feb 4, is by R.A.
For a book that hasn’t even been published in English yet, Thomas Piketty’s “Capital in the Twenty-first Century” [in French] has prompted quite a lot of discussion.
The resurgence in capital is driven almost exclusively by a rise in housing values, and those values stem almost entirely from what classical economists would have termed land.
If you wish to be doing business at a certain level in France then you must live in or around Paris. Many wish to experience the legendary culture and beauty of the city and to live in proximity with others who value it. Paris maintains the latter demand in large part by severe restrictions on the height and architecture of buildings within the city.
Those restrictions preserve the history of Paris, but also make it impossible for it to house all of the millions who would come today to live and work in the legislative, financial, and commercial capital of France. The result is that only those willing and able to pay the highest rents or mortgages can live in Paris and the rest are pushed to the suburbs.
This increase in rents and housing prices is properly accounted for as a land value, not a capital value. Soaring housing costs are different from those for soaring returns to financial capital.
In Britain the recent rise in the capital-income ratio is about two-thirds attributable to housing and one-third attributable to other domestic capital. In America growth in other domestic capital is actually more important than growth in housing.
Building restrictions generate soaring asset prices only because there is an extraordinary level of demand for that land. Demand for that land is not really associated with any inherent productivity of the land; the land is only productive because of its proximity to concentrations of economic activity.
Ed. Notes: Funny that even business people need to be reminded that the three most important things in real estate — location, location, location — are also the most important thing in economic growth, in buildings fortunes, and in the business cycle. Efficient land use not only cuts costs but also enables the spontaneous networks that incite new ways of generating wealth. And land speculation is what causes the boom-bust cycle that ultimately topples into recession. Maybe business people should be reading these pages here more often!
Police in Brazil have found three bodies on a Tenharim indigenous reserve in the Amazon region.
Last week police arrested five members of the Tenharim tribe on suspicion of murder, but the tribe has denied any involvement in the contractors’ deaths.
The dead were working for the federal government-owned electricity company, Eletrobras, when they went missing in December.
Their disappearance on 16 December, from a road which crosses through the Tenharim lands, set off riots in the nearby city of Humaita. Non-indigenous residents, who blamed the tribe for the men’s disappearance, set fire to government buildings and to boats used to ferry the Tenharim from their reserve to the town.
Tensions between the two groups had been running high since indigenous leader Ivan Tenharim, 55, was run over by a car in the tribe’s reserve on 3 December.
Ed. Notes: Can you believe that humans — not just Brazilian Indians or newcomer settlers but many others, too — still behave this way, in 2014? When will we ever learn? When enough of us declare that the worth of Earth is a common wealth for all of us to share, while taxes upon our efforts are decidedly not.
This 2014 excerpt of Reason, Feb 3, is by Jesse Walker, Books Editor and author of The United States of Paranoia.
Of the nearly 240 tribes that run gambling operations, the AP reports that “half distribute a regular per-capita payout to their members.” Such payouts have been a real help for low-income Indians.
From that AP story:
The “disenrollment epidemic” is a rising number of dramatic clashes over tribal belonging that are sweeping through more than a dozen states, from California to Michigan….
[I]n Michigan, where Saginaw Chippewa membership grew once the tribe started giving out yearly per-capita casino payments that peaked at $100,000, a recent decline in gambling profits led to disenrollment battles targeting hundreds.
The Grand Ronde, which runs Oregon’s most profitable Indian gambling operation, also saw a membership boost after the casino was built in 1995, from about 3,400 members to more than 5,000 today. The tribe has since tightened membership requirements twice, and annual per-capita payments decreased from about $5,000 to just over $3,000.
Not all of these battles have taken place within tribes that issue payouts to their members. But it’s easy to see that reducing a tribe’s membership rolls means more money for the people left over, and it’s hard not to notice that this wave of battles began just as casino wealth started taking off in the 1990s.
Ed. Notes: Good to see Reason use the term I coined in 1981, “Citizens’ Dividend”, and to use it correctly. It’s meaning and background got mangled at Wikipedia. People consistently confuse this CD, which is a share of a surplus (as are all dividends) with a “basic income”, which is a stipend whose amount is set by political fiat. Sorting that out at Wiki is another thing to do … someday.
Hopefully I’ll get to it while it still matters, before most nations are paying their citizens dividends. And no longer subsidizing special interests. And not taxing our efforts. And only recovering the socially-generated values of land, resources, ecosystem services, and government-granted privileges such as corporate charters … using geonomics in general.
Recovering all those “rents” not only gives the CD heft but also makes it possible to streamline government and the economy. Finally, everyone could get a life, not just a handful of lucky tribal members.
These two 2014 excerpts of IRIN are from Jan 15, on the wrong, modern diet by Elizabeth Blunt, and Jan 23 on the right traditional diet.
Future Diets and the World’s Expanding Waistlines
Food in the United States is cheap, abundant, varied and tasty, but it might not be all that good for you – too much fat and sugar have led to 36 percent of Americans being diabetic and 46 percent obese. Japan’s food, by contrast, is much healthier, but it’s extremely expensive and not as varied.
At the bottom end are countries like Chad and Angola, where food can be unaffordably expensive and not very nutritious. It can also be quite dull. In Madagascar, 79 percent of the food eaten comes from grains and starchy roots, with very little meat, fish, fruit, or vegetables.
Some of the unhealthiest diets of all are in places like Fiji and Mexico, where more than 40 percent of adults are not merely overweight but obese.
Combined with moving to the cities, having less time to cook and leading less active lives, the dietary shift has brought expanding waistlines and an epidemic of ill-health. The number of overweight or obese people in the developing world tripled between 1980 and 2008.
For governments wanting to nudge their country’s transition in a good direction, there are policy levers available. They can ban, ration, or tax unhealthy foods, subsidize more nutritious ones, regulate manufacturers, or try to educate the public.
Information campaigns have not proven very effective. Food subsidies are expensive and rather out of fashion. Banning runs into trade treaties.
A combination of regulation and heavy taxation has been used to reduce smoking, with some success, despite resistance from the tobacco industry. Mexico, which has woken up to the severity of its health problems, introduced a tax on sweetened drinks at the beginning of 2014.
Nutritionists say many traditional and non-processed foods consumed by rural communities, such as millet and caribou, are nutrient-dense and offer healthy fatty acids, micronutrients, and cleansing properties widely lacking in diets popular in high- and middle-income countries.
Indigenous diets worldwide – from forest foods such as roots and tubers in regions of eastern India, to cold-water fish, caribou, and seals in northern Canada – are varied, suited to local environments, and can counter malnutrition and disease.
The disruption of traditional lifestyles due to environmental degradation, and the introduction of processed foods, refined fats and oils, and simple carbohydrates, contributes to worsening health in indigenous populations, and a decline in the production of nutrient-rich foodstuffs that could benefit all communities.
In recent years, grains such as quinoa, fonio, and millet – long harvested by indigenous and rural communities in developing countries but increasingly overlooked by a younger, richer generation that prefers imported foods – have instead grown in popularity in developed countries.
Another so-called superfood now declining in popularity is spirulina, scientifically known as Arthrospira platensis, a type of cyanobacteria that grows in ponds – a staple in many traditional food systems, such as among the Kanembu in northwestern Chad.
Medical studies have found that spirulina has the potential to boost immunity, reduce inflammation, decrease allergic reactions, and provide a healthy source of protein.
Deforestation worldwide, often to make way for large-scale agricultural production, curtails the nutrients that can be gathered from forests.
Ed. Notes: Everything needs a place. If people are to hunt and gather and cultivate using sticks, then they need their own habitat. But now such people don’t have the power to retain their habitat. More societies are accepting absentee ownership (by domestic insiders or foreign corporations). Most governments are subsidizing agri-business. And people everywhere tend to view the new and the First World as superior to the old and the undeveloped.
The key to solving all this is to have government not impose its own policies but do what governments are supposed to do and that is defend rights; i.e., don’t subsidize any growers but recover and disburse the value of land, including urban land. Where owners can’t keep rent but must pay it, there they don’t speculate and don’t amalgamate land holdings into sprawling fiefdoms. Instead, they take no more than they can use and use that wisely.
These Land Dues and rent dividends are the key policy components of geonomics and where applied they bolster owner occupancy and that reinforces diet rationality.
Ed. Notes: Oil companies not only get to waste our natural resources but also get to pollute the air by burning. Meanwhile, government does nothing. Actually, government does do something. It grants oil companies and polluters in general limited liability. That means, the actual individuals in the companies who make the decisions to pollute the public and the environment won’t have to face any legal consequences for their decisions. Without any downside, why not try to maximize profit at the expense of nature, worker, and consumer?
The root of the problem is normalcy bias. We treat pollution as normal. And we treat our rights to both a healthy Earth and to a share of her worth as abnormal.
Fortunately, reversing those biases does not require those who know or care to get the permission of anyone in power in business or government. Progress only requires that those who know or care speak out. So, lend your voice!
This 2014 excerpt of the Los Angeles Times, Feb 2, is by their Editors.
This page has long opposed the death penalty, yet we also found ourselves caught up in the emotions surrounding Timothy McVeigh’s 1995 bombing of the federal building in Oklahoma City, and supported his death sentence — a stance we have since regretted.
That tumbling to the emotion of the moment, though, points up one of the primary roles of the judicial system: to act as a buffer between victims’ justifiable thirst for vengeance and the greater good of society. In our view, it is not the rightful responsibility of the state to act as executioner of its own citizens, no matter how heinous the crime, no matter how infamous the criminal, and no matter how loudly people may call for it.
Cases like this test our strength as a mature democracy, and as a people who believe in justice. Life without parole is the correct response in these extreme cases. It punishes the criminal while protecting society from future acts of violence.
Ed. Notes: While killers do deserve to die according to “an eye for an eye”, should innocents descend to the killer’s level? Do you really want to hire people to kill others? Do you want your hired killers to mix with the rest of society? And if you make a mistake and sentence an innocent to death, then do you hire someone else to kill your original hired killer? Must the judge and jury who erred be killed, too?
Imprisoning a killer for life need not mean that society care for the killer. Killers could be put on an otherwise deserted island where they’d have to fend for themselves. Maybe another killer would kill them. Maybe they’d commit suicide, an act some killers do attempt, an act that society should not deny a killer. Or maybe they’d rehabilitate. But whatever the outcome, it would not affect the rest of society beyond the task of patrolling the island to prevent anyone from escaping.
Bigger picture, still, society should not ignore what its killers often are saying. Usually, people reach the point where they are willing to kill when they’re unbearably frustrated and have absolutely no one listening to them. In this Boston case, if we Americans were to listen to the killer, we’d stop killing innocents in Muslim countries — something we should not have started doing in the first place.
The worst intervention by governments, aside from aggressive war, is excessive litigation. Taxes are burdensome, but they are predictable. The reason that enterprises are not entirely crushed by taxation is that much of the tax burden is at the expense of land rent, so it ends up destroying the economy’s surplus, but not totally wreaking the economy. Regulations act as a tax to impose costs on enterprise, and much of the cost is passed on to workers and the public, so they make us poorer but don’t totally stifle the economy. Subsidies create distortions that generate inequality and the boom-bust cycle, but subsidies is what politics is all about. The worst intervention, that does the most to crush enterprise and employment, is vicious litigation.
A prime example of litigative intervention is the California Environmental Quality Act. CEQA is codified at the Public Resources Code Section 21000 et seq. As California’s web site for CEQA states, “Most proposals for physical development in California are subject to the provisions of CEQA.” The “frequently asked questions” web section explains that “CEQA is a self-executing statute.” That means that “its provisions are enforced, as necessary, by the public through litigation and the threat thereof”. Past court cases can be seen on the web site of the California Natural Resources Agency at <http://ceres.ca.gov/ceqa/cases/>.
As described by a “Schumpeter” blog article in the 25 January 2014 Economist, “The not so Golden State,” this law “has mutated into a monster”. Anybody in California may file a CEQA lawsuit against any project using environmental protection as an excuse. The plaintiffs win half the cases. If someone sues a company and loses, the defendant still has to cover his legal expenses. Many of the lawsuits under CEQA are also against governmental development projects and against permits by local governments to enable private development.
Suppose a developer seeks to build an industrial park. If he hires non-union workers, the union attacks with a CEQA lawsuit. So the builder hires expensive union labor. Suppose someone owns a gasoline station, and a competitor wants to set up a station nearby. The station owner stops the potential competitor by filing a CEQA case. In 2011, there were 254 “California disinvestment events,” in which companies employing more than one hundred workers either left the state or expanded in another state rather than in California. This is estimated to have gotten worse in 2012 and 2013.
The litigations and regulations of California fall hardest on manufacturing. California’s high sales tax and low property tax also induces cities to favor retail stores over manufacturing. Hostile policies in California are largely responsible for the flight of manufacturing to other states and to foreign countries. As noted by the Economist article, electronic devices are designed in “Silicon Valley”, the region from San Francisco to San Jose, but manufactured in Asia. Some environmentalists realize that CEQA does little to protect the environment, but attempts to reform the law have stalled. The frivolous lawsuits reward lawyers, unions, companies seeking to stifle competition, and “not in my backyard” opponents of development.
Litigation is the worst way to handle social problems. Lawsuits impose unpredictable and expensive costs on enterprise. Such laws let opportunists exploit legitimate job-creating industries. Excessive litigation is further rewarded by making the winning defendants of lawsuits have to pay their legal costs. We then get excessive malpractice suits that force doctors to buy expensive insurance. Federal and state laws that enable litigation for job and housing discrimination and environmental protection end up enriching lawyers who get much of the gains.
The best ways to handle environmental destruction is with covenants and easements, along with a liability rule for damages. If some development harms the natural environment, then the government assesses the damage, and the polluter pays for the damage, either as a one-time charge or as periodic payments for on-going pollution. Developers know in advance that they are liable for damage, and so they would have the incentive to prevent the payment by doing their own environmental assessment. The issue would be between the developer and the state, without involving attorneys and court costs.
Economic theory has recognized for the past hundred years that the optimal policy for pollution is a charge paid by the polluters, passed on to the customers, fully compensating society for the damage. That can be done by a pollution tax.
English common law traditionally provided law-suit protection against potential negative effects and damages to one’s property. Litigation can be a useful enforcement and restitution tool, but it has to be within a sensible legal system. In the English tort system, if a plaintiff loses a law suit, the loser has to pay the legal costs of the winner. So if a company sues another firm just to stifle competition, using the environment as an excuse, and that company loses the lawsuit, then that company has to pay the legal costs of the winning competitor. That would stop frivolous or phony law suits. And that is why the lawyer lobby will stop such a legal reform in the USA.
This 2014 excerpt of Dollars & Sense magazine, the January/February issue, is from an article by Polly Cleveland of Columbia University.
Scandinavian nations already come much closer than the United States to providing a healthy, sustainable lifestyle, with far lower per capita natural resource consumption.
We already have — or can easily develop — the necessary technology.
An Iowa State University study compared the Midwestern standard alternation of corn and soy, with a corn-soy-oat cycle and a corn-soy-oat-alfalfa cycle with livestock. Without lowering profits, the longer cycles increased yields while dramatically reducing the need for fertilizer, herbicides, and pesticides. However, the experimental strategies did require more labor.
In Ohio, corn and soy farmer David Brandt, instead of plowing, plants with a seed drill. He keeps down weeds with a diverse mixture of cover crops, which he then mows to mulch the soil for the winter. The approach takes more labor, especially intelligent supervision, as it requires Brandt to carefully monitor conditions on every part of his fields. His fields, however, yield harvests as good as or better than conventional fields, require far less fertilizer and herbicide, absorb rain better, resist droughts, and—best of all—build up carbon-rich humus.
What about farms in impoverished developing countries? Farms in densely-populated Bangladesh produced three times as much per acre as farms in the United States! In general, small farms produce more per acre than large farms, even though they usually occupy inferior land. According to a new UN report, small peasant farmers could easily feed the entire populations of developing countries with existing labor-intensive, environmentally friendly agricultural technologies — were it not for corruption, extreme inequality, and misguided attempts to impose inappropriate “modern” crops and techniques.
From country to city … Some of the richest parts of New York, like my Upper West Side neighborhood, rise to densities of over 200,000 people per square mile, with a mixture of high-rises and five-story, three-to-ten-unit townhouses. (I can zip, through a hole in the ground, the two miles to work, walk four blocks to concerts or shopping, and step into Central Park next door — who needs a car!) Yes, members of the One Percent like high density!
A study in Atlanta found that average households in multifamily units used only 60% as much energy as in single family detached houses. Average residents of New York City produce less than a third as much greenhouse gases as average Americans. And while New York apartments seem cramped by United States standards, a 500 square foot New York one-bedroom would seem palatial to a Japanese family! (How do the Japanese manage? Simple. Every morning they roll up their futons and stuff them in a closet!)
Successful innovators are disappearing, due both to growing patent monopolization and the unavailability of finance. Back in the days of It’s a Wonderful Life (1946), and in fact until Congress repealed restrictions on interstate banking in 1994, small businesses could rely on small banks. Bank officers served the community (at least the white community), making loans based on personal histories and an intimate knowledge of the local economy. No more. Today’s giant banks lend — if they lend at all — according to formulas dictated by headquarters, formulas that do not favor a Turkish immigrant with a new recipe for yogurt, let alone Madge’s storefront bakery. Retail banking jobs have become mindless paper-pushing.
We already have the technology to produce and live and work in ways that vastly reduce stress on natural resources. The obstacles are political.
Ed. Notes: The author extols jobs (not that she or any economist would ever have to do any of them), not leisure. It seems that as long as people have jobs (and the bosses that come with them), then life need not have meaning. Which is such a common point of view that the political obstacles should be overcomeable.
Or, perhaps humanity will wake up to their need for meaning and joy and leisure and replace the demand for jobs with a demand for justice. Since the whole point of economies is to do more with less, it’s true that the technology for this version of a better world is already here, too. Likewise, the obstacle is purely political.
Part of the political solution is for society to recover the socially-generated value of land, resources, and ecosystem services. One way for society to do that is to have its government tax the annual rental value of locations. That can be achieved by shifting the property tax off buildings, onto parcels. In the US, it’s a policy already in place in some Pennsylvania towns, since Pennsylvania’s constitution, unlike those of other states, allows cities great leeway in tax policy. Two political websites in Pennsylvania frequently blog in favor of the Land Value Tax: one is Keystone Politics, the other is Next City, which just had another article in favor. Check it out to understand the policy side of sustainable economics better.
Ed. Notes: Eventho’ reality is offering a plot for a work of mystery fiction, probably one big banker dying after another is just coincidence. Banking is one of the professions with a high rate of depression and shorter lifespans. And stories like this come to everyone’s attention in this modern era of instant and ubiquitous news coverage. One wonders if conscience plays a role.
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.
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.
not a panacea, but like John Muir said, “pull on any one thing, and find it connected to everything else.” Recall last month’s earthquake in El Salvador. We felt it and its formidable after-shocks in Nicaragua. Immediately afterwards, my host nation, one of the poorest in the Western Hemisphere, sent aid to its Central American neighbor. The Nica newspapers carried photos of the devastation. They showed that the cliff sides that crumbled had had homes built on them while the cliffs left pristine withstood the shock. Could monopoly of good, safe, flat land be pushing people to build on risky, unstable cliffs? If so, that’s just one more good reason to break up land monopoly. What works to break up land monopoly, history shows, is for society to collect the annual rental value of the underlying sites and resources. That’d spur owners to use level land efficiently, so no one would be excluded, forced to resort to cliffs. To prevent another man-induced landslide is yet another reason to spread geonomics.
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 POV that Spain’s president might try. A few blocks from my room in Madrid at a book fair to promote literacy, Sr Zapatero, while giving autographs and high fives to kids, said books are very expensive and he’d see about getting the value added tax on them cut down to zero. (El Pais, June 4; see, politicians can grasp geo-logic.) But why do we raise the cost of any useful product? Why not tax useless products? Even more basic: is being better than a costly tax good enough? Our favorite replacement for any tax is no tax: instead, run government like a business and charge full market value for the permits it issues, such as everything from corporate charters to emission allowances to resource leases. These pieces of paper are immensely valuable, yet now our steward, the state, gives them away for nearly free, absolutely free in some cases. Government is sitting on its own assets and needs merely to cash in by doing what any rational entity in the economy does – negotiate the best deal. Then with this profit, rather than fund more waste, pay the stakeholders, we citizenry, a dividend. Thereby geonomics gets rid of two huge problems. It replaces taxes with full-value fees and replaces subsidies for special interests with a Citizens Dividend for people in general. Neither left nor right, this reform is what both nature lovers and liberty lovers need to promote, right now.
an economic policy based on the earth’s natural patterns. Eco-systems self-regulate by using feedback loops to keep balance. Can economies do likewise? Why don’t they now produce efficiently and distribute fairly? The answers lie in the money we spend on the earth we use. To attain people/planet harmony, that financial flow from sites and resources must visit each of us. Our agent, government, must collect this natural rent via fees and disburse the collected revenue via dividends. And, it must forgo taxes on homes and earnings, and quit subsidies of either the needy or the greedy. As our steward, government must also collect Ecology Security Deposits, require Restoration Insurance, and auction off the occasional Emissions Permit. And that’s about it – were nature our model.
an answer for Jonathan of the Green Party (Nov 7): “What does ‘share our surplus’ mean?”
Our surplus is the values that society generates synergistically. It’s the money we spend on the nature we use: on land sites, natural resources, EM spectrum, ecosystem services (assimilating pollutants). It’s also the money we pay to holders of government-granted privileges like corporate charters. We could share it by paying for the nature we use and privileges we hold to the public treasury then getting back a fair share of the recovered revenue. Used to be, owners did owe rent (“own” and “owe” used to be one word). And presently, some lucky residents do get back periodic dividends: Alaska’s oil dividend and Aspen Colorado’s housing assistance. Doing that, instead of subsidizing bads while taxing goods, is the essence of geonomics.
Jonathan: “Is local currency what you mean?”
Editor: It’s not. Community currency is a good reform, but every good reform pushes up site values. That makes land an even more tempting object of speculation. Now, any good will eventually do bad by widening the income gap – until you share land values.
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 neologism for sharing “rent” or “social surplus” – the money we spend on the nature we use. When we buy land, such as the land beneath a home, we typically pay the wrong person – the homeowner. Instead, since land cost us nothing to make and is the common heri-tage of us all, rather than pay the owner, we should pay ourselves, our neighbors, our community. That is, we should all pay land dues to the public treasury, then our government would pay us land dividends from this collected revenue. It’s similar to the Alaska oil dividend, almost $2,000 last year. Indeed, the annual rental value of land, oil, all other natural resources, including the broadcast spectrum and other government-granted permits such as corporate charters, totals several trillion dollars each year. It’s so much that some could be spent on basic social services, the rest parceled out as a divi-dend, as Tom Paine suggested, and taxes (except any on natural rents) could be abolished, as Thomas Jeffer-son suggested. Were we sharing Earth by sharing her worth, territorial disputes would be fewer, less intense, and more resolvable.
what you do when you see economies as part of the ecosystem, following feedback loops and storing up energy. Surplus energy – fat or profit – enables us to produce and reproduce. To recycle society’s surplus, the commonwealth, geonomics would replace taxes with land dues (charged to users of sites and resources, in-cluding the EM spectrum, and extra to polluters), and replace subsidies with rent dividends to citizens (a la Alaska’s oil dividend). Without taxes and subsidies to distort them, prices become precise, reflect accurately our costs and values; then, motivated by no more than the bottom line, both producers and consumers make sustainable choices. While no place uses geonomics in its entirety, some places use parts of it, most notably a shift of the property tax off buildings, onto locations. Shifting the property tax drives efficient use of land, in-fills cities, improves the housing stock, makes homes affordable, engenders jobs and investment opportunities, lowers crime, raises civic participation, etc – overall it makes cities more livable. Geonomics – a way to share the bounty of nature and society – is something we can work for locally, globally, and in between.