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.
This 2014 excerpt of Boing Boing, Mar 14, is by Cory Doctorow.
Hampton, Florida is a town so corrupt that it offends the Florida Legislature, a body with a notoriously high tolerance for sleaze. With fewer than 500 inhabitants, Hampton’s major source of revenue is a 0.2 mile stretch of Highway 301 — a stretch where the speed limit dips from 65 to 55. Hampton’s traffic cops write an average of 17 tickets a day against out-of-towners, clearing $419,624 in 2011 and 2012. However, the town also operated at a deficit during this time.
Where’s the town’s money? Ask now incarcerated ex-mayor Barry Moore, his three staffers who resigned in February, the police chief who also resigned, along with 17 “employees”, or the town’s water manager, whose business records were all “lost in a swamp.” According to the sheriff, some residents said they were threatened with having their water turned off if they made trouble.
Then the state legislators heard from the local representative, who was ticketed by a Hampton cop. They’ve given the town 30 days to clean up its sleaze or they’re going to dissolve it, which would make it part of surrounding Bradford County.
Ed. Notes: If somebody robs the entire public, and happens to hold public office, they stand a good chance of getting away with it. So why pay taxes, just to enrich your corrupt rulers? To remove temptation from politicians, remove power from politicians. Don’t let them decide how to raise and spend public money. Put those functions in the constitution, strictly defined.
Government should be limited as to how much it may charge, and for what activity. It should be limited as to how much it may spend, and for what activity. And, most fundamentally, it would act as our steward and institute land dues to recover our common wealth — our spending for sites and resources — and then disperse this socially-generated value of land and nature to citizens as a dividend.
It’s geonomics and it’d make government a lot less tempting to crooks.
This 2014 excerpt of Dollars & Sense, Mar 14, is by Polly Cleveland & Mason Gaffney.
Agriculture consumes some eighty percent of California water. California is basically a dry state, subject to periodic severe droughts. So, how come the largest water user is cow pasture, watered with giant sprinklers sending great sprays into the atmosphere? How come farmers irrigate those long brown furrows by flooding them, losing great quantities of water to evaporation, and bringing harmful salts to the surface? And how come some farmers even grow rice in flooded paddies, seeding them from airplanes?
Why do we see so few elementary efforts to conserve water, such as drip irrigation or mulching fields to protect the soil? Why are irrigation canals not lined and covered to prevent water loss?
Why? Because California farmers get their water free, or close to free.
The California Constitution says that the water belongs to the people. However, farmers may take water provided they put it to “beneficial use,” first come, first served. This is the basis of California “water licenses”. A “senior” water license downstream, used for low-value irrigated pasture, takes precedence over a “junior” water license upstream, used for high-value orange groves.
The California State Water Project (SWP) brings water from the Feather River in the Sacramento Valley south through the Sacramento delta, then pumps it up to a canal running south along the west side of the Central Valley, pumps it up again 2000 feet over the Tehachapi mountains into Los Angeles, and conducts it even further south to San Diego. The SWP was financed by California taxpayers.
Half that water has gone to irrigate the holdings of land barons, including the J. G. Boswell dynasty (200,000 acres) and their in-laws the Chandlers (145,000 acres), at that time owners of the LA Times.
The state could charge for water, thus recognizing that we the people own the water. The state could put a meter on every ground-water pump, and charge accordingly. Overnight, California’s fiscal deficit would become a surplus.
Yes, some water-hogging crops like rice and hay and alfalfa might move away, as they should. That would release water for the more valuable, intensive fruit and vegetable crops for which California is famous.
The farmers might threaten to “pass on” higher water prices to consumers. But that’s an idle threat, because shifting land and water into higher-valued and more intensive crops will raise the total supply of food marketed.
This 2014 excerpt of the Washington Monthly, March/ April/ May, is by Ryan Cooper.
How would you like to get $2,000 in free money, fresh off the government printing presses? And we’d do it for all Americans on an ongoing basis? And that doing so would solve our problem?
As a percentage of total output, wages have fallen from a high of almost 52 percent around 1970 to less than 43 percent today. Meanwhile, inequality within wages also increased. The rich began capturing nearly all the results of economic growth —- the top 1 percent’s share of national income increased from about 8 percent in the mid-’70s to about 23 percent today.
The wealthy disproportionately save their money rather than spend it. They don’t save by piling up huge pyramids of cash like Scrooge McDuck, they “save” by buying financial assets —- which means that most of the fruits of economic growth have been channeled into asset price increases. Since the crisis, while both output and employment growth has been weak, the stock market has regained all the ground lost since 2009 and then some.
Such mass money creation is hardly new: the quantitative easing program has already been carried out in a similar way —- with trillions of dollars in new money.
There is no reason to think that our problem will be cured without some kind of aggressive change. If we change nothing, we could be stuck in our current situation for decades.
Ed. Notes: Some people can justify doing the right thing only if it’s good for “the economy”, not if it’s good for real living human beings. But whatever their reason for getting some of the abundant surplus into the pockets of everyone, every voice added to the call for such an extra income is another step toward eventual victory.
A more accurate analysis — one less distorted by paying obeisance to the ruling class and our coercive customs — would note that our spending for land and other aspects of nature (such as oil) does not reward anybody’s labor or capital (nature was not created by any of us) and that how much we spend for sites and resources is set by our demand for them. Hence, owners of the earth — something all life needs and all humans deserve — owe those whom they displace (just as they are owed by others who displace them). Thus, getting an extra income from our aggregate spending for parts of the planet is not a favor from anyone, not an act of charity or generosity, but our rightful share of the natural bounty, which is an automatic surplus, and should be treated as our common wealth.
It’s a moral position but it leads to the most practical of policies — geonomics.
A mixture of good weather and stubbornly bad public policy leaves French capital in grip of worst atmospheric pollution for seven years – with public transport running for free.
This 2014 excerpt of The Independent, Mar 14, is by John Lichfield.
A run of unseasonably warm, windless days and cold clear nights has clamped a lid of warm air over northern France. Under that lid, minuscule particles of pollution – partly generated by France’s long love-affair with the diesel-powered car – have accumulated to dangerous levels.
The level of official “pollution alert” – 80 microgrammes of tiny particles for every cubic metre of air – has been exceeded each day since Wednesday in 30 départements (counties) across northern France.
In an attempt to keep traffic to a minimum, all public transport has been declared free until Sunday in Paris, Rouen. and Caen. Even the Velib’, the Parisian help-yourself, short-term-hire bikes which fathered the Boris Bikes in London, have been declared free.
Is that sensible? In the midst of one of the most intense and prolonged pollution scares northern France has ever seen, is cycling still good for your health?
France is 60 per cent dependent on diesel cars. Exhaust gases are partly blamed for the fine particle pollution affecting Paris and several French cities. The French car giants, Renault and Peugeot-Citroen, invested heavily in diesel engines. Diesel fuel is taxed less heavily than petrol.
Fumes from diesel cars, as well as industrial emissions and agricultural fertilisers, are blamed for increasing the micro-particles in the French atmosphere to potentially dangerous levels.
According to on study, there are 40,000 premature or unnecessary deaths in France each year because of the high level of atmospheric pollution. The European Commission has brought a legal action against France in the European Court of Justice for its failure to respect EU anti-pollution laws.
Ed. Notes: Should politicians be permitted to impose economic policy? Or should they stick to what government really ought to be doing: defend rights. If the latter, government would not tax whoever it favors less, rather it would charge polluters for polluting at the amount of the damage they cause.
To avoid the charges, both producers and consumers would seek and find clean alternatives. And those alternatives would push the dirty engines out of the marketplace sooner if government quit taxing labor, the biggest cost in manufacturing, freeing that money up for R&D, production, and delivery.
Further, there’d be less need for engines – dirty or clean – if government were to recover the socially-generated value of land. Cars are huge land-users, especially in cities. Imagine if drivers had to pay for all the costs they impose, such as land lost to streets, parking lanes, parking lots, dealer lots, junk yards, gas stations, repair shops, part of the sites for parts stores, insurance offices, and cop shops. If drivers paid directly the costs that are feasible to do so in the price of fuel — where drivers could see them and feel them — then many would forgo driving for walking, pedaling, and riding transit.
Finally, if citizens received a share of the socially-generated value of land and resources, then they’d not be tied down by jobs. They could less, and at various hours, utterly destroying rush hour, which is when transportation spews forth most of its smog.
While France might have a feeble environmental movement, it does have in its intellectual heritage the reform of physiocracy. Those thinkers from the Age of Enlightenment recognized “natural law” (physiocracy) as a guiding principle and called for a single tax on land. If only today’s French thinkers and politicians would resurrect their past!
An article in the 19 March 2014 NewScientist featured Catherine Brahic’s interview of Christiana Figueres, executive secretary of the U.N. Framework Convention on Climate Change. She is leading a project to create a Global Climate Treaty in December 2015. A draft agreement is scheduled to be delivered to all country governments in May 2015.
There was a U.N. climate change conference in Copenhagen in 2009 which failed to achieve an agreement. Christiana Figueres points out that while in 2009 there was doubt that countries would adopt policies to curb emissions, more than 60 countries now have climate legislation that apply to 90 percent of global emissions. There has been more investment in renewable energy. But this progress is much less than what is needed to reduce air pollution to a sustainable optimal level.
A major technological obstacle to the use of renewable energy is the expense of storing electricity in batteries in order to have a steady supply of power on grids. Another technology that is needed for emission reduction is carbon capture and storage.
Unfortunately this interview did not delve into the economics of climate policy. Economists are in wide agreement that the most effective policy to reduce widespread pollution is full-cost pricing, to make the polluters pay the social cost of the damage. The charge is passed on to the buyers of the products, who buy less. The firm either installs methods of reducing the emissions or else pays the fee and reduces pollution by producing less of the product.
A pollution charge or tax is more efficient than command-and-control restrictions, because the tax lets the polluter respond according to its particular costs. In contrast, when government dictates particular methods such as gasoline additives and engine technologies, these may not be the most effective means, and the mandates and restrictions may not encourage innovations.
There is much talk about carbon taxes, but carbon exists in both the inputs and outputs. A tax on the gasoline input does not create an incentive to capture the carbon and other emission outputs, and the tax imposes an excess burden on cars that have already reduced their pollution. A tax on the emission output does induce technology to capture the carbon, and avoids the excess burden.
The executive secretary talked about carbon neutrality, such that each factory, building, city, and vehicle has very low or zero carbon outputs. But the most effective policy is not to regulate and micro-manage, but to set an overall goal and an emission charge per ton of pollutant, and then let each person, enterprise, and facility adjust according to its own costs and benefits. If the cost of carbon neutrality is greater than the social benefit, then such neutrality is bad for the environment, because it wastes resources.
Unfortunately, governments are moving towards regulations rather than pollution taxes. The government of Australia is seeking to replace the carbon tax, enacted by a coalition of the Green and Labor parties in 2012, with a subsidy to industry and an emission permit trading scheme. On 20 March 2014 the Australian Senate voted against repealing the carbon tax, but the prime minister continues to seek repeal.
While emission permit exchanges are more efficient than regulations, the increase in the price of permits is a gain only to the permit holders, and the price of the permits may be different from the social cost of the pollution. A pollution fine, charge, or tax, however it’s called, enables the government to enact a “green tax shift” to replace market-hampering taxes on income, sales, and value added, with payment for emissions that not only reduce pollution but also prevent what would otherwise be a subsidy to polluters by not having them pay the full social costs.
Economists and their journalist followers should be in the forefront of promoting a green tax shift as the best policy both for the environment and the economy. Even the skeptics of global warming should embrace the green tax shift, as pollution is harmful trespass regardless of climate change, and the shift promotes greater economic freedom along with productivity.
If the 2015 Global Climate Treaty is based on pollution levies, it will succeed. If instead the Treaty calls for “command and control,” it will doom the planet to yet another failure of central planning, and the result will be both a worsening global economy and a backlash against the tyranny of regulation strangulation.
Moreover, tax fraud often enhances environmentally harmful activities (e.g. tax evasion and tax avoidance related to company cars). Therefore it is of utmost importance for environment protection to combat tax fraud and the corruption related to it.
In Hungary just the opposite is happening. The sum of the illegally evaded VAT and illegally reimbursed VAT in Hungary is equivalent to between 5% and 6 % of GDP. The main actors are not private persons or small enterprises but highly organized criminal groups with close relations to the state. The main beneficiaries are several retail chains and big exporting companies.
Ed. Notes: Naturally, governments feel they have the right to take what they want from anyone in any way and at any amount, and rationalize their taking by claiming the money will be used to benefit those from whom they take the money. But as we all know, that’s not always true. The EU, for example, pays billions of euros to millionaire farmers to not farm. Why should a middle class person fork over some of their hard earned pay just to have it wasted in an unfair way?
Taxists also overlook another basic truth: they don’t distinguish between individual earnings and social surplus. An individual starts a business or erects a building but it’s the society that creates the value of a location. Our spending for land, resources, EM spectrum, etc, is a surplus because it’s not needed to reward anyone’s effort, since nobody created Earth.
Society’s agent – government – should not tax our wages, sales, and homes but rather recover the annual rental value of locations. Then use the raised revenue to pay citizens a dividend. Government need not use taxes; it could use fees, leases, dues, etc. While corruption would still be possible – a wealthy owner might bribe an assessor to reduce his Land Dues – it’d be more difficult to pull off, as long as the books are kept open and any citizen could check up on the assessments and dues collected. Sunlight is the best disinfectant!
This 2014 excerpt of Corporate Social Responsibility Newswire, Mar 5, is by John Perkins.
Freddy Elhers is Minister of the newly formed cabinet position in Ecuador known as Buen Vivir (literally Good Living).
Freddy’s closing talk on the opening day of the Human Resources Summit in Istanbul for 2,000 corporate executives from all over the world was the “bookend” for my opening keynote in the morning. He talked about how Ecuador is the first country to have a Ministry of Buen Vivir, a ministry that guides all the other branches of government.
The recently revised Ecuadorian Constitution reads:
“We … hereby decide to build a new form of public coexistence, in diversity and in harmony with nature, to achieve the good way of living.”
Freddy Elhers likes to point out that “the pursuit of happiness” is embedded in the most sacred document of the United Sates. We the People can get back to those unalienable rights that our founders fought so hard to insure: “that among these are Life, Liberty and the pursuit of happiness.”
We’re all living on this tiny, fragile space station. It’s time to collectively choose Buen Vivir and to make this the time to get back our freedoms – in fact to attain more freedom than humankind has ever before experienced, the freedom to enjoy true prosperity, good living.
Ed. Notes: Progressive, ethical politics is one thing but it needs progressive, ethical economics to support it. Otherwise, it’s just nice sounding words on paper. OTOH, any place that uses geonomics could probably almost forget about politics altogether.
This 2014 excerpt of Grist, Mar 13, is by Holly Richmond.
Ordos is an epic ghost town. Ghost city, to be precise — the largest in the world. Sitting in the middle of a desert in northern China, Ordos was intended to be the Vegas of Inner Mongolia.
The Kangbashi district, planned to accommodate a population in excess of one million, is home to 20,000 people — leaving 98% of this 355-square kilometre site either under construction or abandoned altogether … a glamorous and nearly empty airport, the rickety corpse of a sports stadium, an unused mosque, and a ghostly downtown. The hotel minibar has peanuts, booze, and gas masks.
Deadlines weren’t met, loans went unpaid, and investors pulled out before projects could be completed — leaving entire streets of unfinished buildings. The ridiculous cost of accommodation put off many would-be inhabitants, so that even fully completed apartments became difficult to sell.
Ed. Notes: Build it and they will come? Well, not exactly. This is a good example of what value is. Things don’t have value, even big things like cities. Rather, people value things. Value is a verb, not a noun, essentially.
Therefore, because value comes from people, and land comes from none of us, then who should get its value? If those who get it are those who create it, and if they get it from those who own the land, then owners would be compensating those whom they exclude from a part of earth, earth being our common birth right. (Of course, each owner as a resident would likewise be compensated by “hers” neighbors.)
How much would owners pay as land dues to their community? Depends on how much demand there is for their site, how much those excluded value the site. In a ghost town, not much if anything at all. Another nice feature of this geonomic arrangement of dues-in-dividends-out is that it could replace taxes and subsidies. Becoming a tax-free jurisdiction might change any place from being a ghost town to a booming city!
This 2014 excerpt of Oxfam, Mar 13, is by Ian Gary.
Rachel Boynton’s documentary “Big Men” goes inside board rooms and presidential living rooms, onto oil rigs and the floor of the New York Stock Exchange, after the discovery of a huge oil find in Ghana in 2007.
Who gets a license to explore oil and how? Who’s behind these companies (the “beneficial owners”) and what are their connections to political elites? Who bears the risk and who gets the rewards?
Jim Musselman is the CEO of Kosmos Energy at the start of the film – an affable (and quotable) Texan who had previous success in the oil-rich dictatorship of Equatorial Guinea.
George Owusu founded an obscure company called the E.O. Group and gained a license to explore in Ghana and who, by his telling, “cold-called” Musselman in the Dallas phone book and lured Kosmos to Ghana.
When Erik Solheim, Norway’s environment minister at the time, tells the audience that Ghana should tax oil companies to the hilt, Musselman is stone faced. When Musselman tells the chairman of the Ghana’s state oil company that he didn’t taxes, the chairman assures him, “Oh, we won’t do it.”
The American Petroleum Institute argued against implementation of a US law requiring oil company transparency.
Will Ghana’s citizens benefit from the more than $20 billion the government is expected to receive from oil in the next decade?
Ed. Notes: Oil should benefit everyone. The value of oil in the ground should be paid into a nearby regional treasury. Companies should profit from extracting, processing, and transporting, but should pay over the value of oil in situ to the surrounding populace.
Government could disburse the “royalties” as dividends to citizens, a la Alaska.
At least, that’s what should happen until the oil runs out or people quit burning it to save their world and to save money by switching to solar energy.
Oil is not so different from other resources or lands or locations in general. The rental value of all nature — the money one is willing to pay to own or use them — is what should be our common wealth to share. Meanwhile, taxes on wages, sales, and buildings should be forgotten.
It’s the geonomic recipe and people who care about Africans would do well to help raise awareness of our right to a fair share of Earth’s worth.
The US Food and Drug Administration (FDA) is now imposing restrictions that will devastate many small farms that provide healthy food. The bad news was published by the Health Impact News Daily issue of 16 March 2014 in an article by the Alliance for Natural Health, “FDA Starts to Take Control of American Organic Farms.”
According to the article, an inspector of the FDA visited the New Morning Farm in Maryland and threatened to impose fines unless the owner switched to government-dictated farming, even though there has been no health problem from food grown on that farm.
Another article, in the 22 February 2014 Los Angeles Times, announced, “Planned food safety rules rile organic farmers.” It stated that the FDA regulations will stop common organic farming techniques such as the use of locally-made fertilizers and irrigation from creeks.” Draft animals used for plowing may become illegal.
The FDA gets its new powers over farms from the Food Safety Modernization Act (FSMA), signed into law in January 2011. You can go to the FDA web site and read the “FSMA Rules & Guidance for Industry.”
If you run a farm, what would you think of having to read through a dozen complicated rules you will have to obey? After a hard day of farming work, the tired farmer has to read publications such as:
“What Information is Required in the Records You Must Establish and Maintain to Identify the Nontransporter and Transporter Immediate Previous Source and Immediate Subsequent Recipients? (Sections 1.337 and 1.345).”
“Who is Required to Establish and Maintain Records for Tracing the Transportation of All Food? (Section 1.351).”
“What Are the Consequences of Failing to Establish and Maintain Required Records or Make Them Available to FDA? (Section 1.363).”
The new FDA farming rules require periodic audits that will cost several thousand dollars for each one. Farms are already closing down their produce production to avoid costs that can be over $100,000 per year.
The FDA is now choking organic farming with huge amounts of such details. As with many other regulatory proceedures, the FDA rules promote the concentration of industries into large companies that can handle the regulation costs, while small companies shut down because of the compliance costs.
The “market failure” doctrine that prevails in economics claims that in a free market, monopolies will arise to dominate industries with higher prices than in competitive industries. But in actuality, it is big government’s regulations that drive out the small producers and promote the concentration of firms in an oligopoly, an industry dominated by a few firms. Despite the presence of large banks, there are still small banks and credit unions that serve local communities. But regulations are too costly, all that will remain are large banks.
Many regulations exempt very small enterprises, but these also stifle business by preventing small firms from getting bigger. The result is less cultivation of fruits and vegetables in the USA and more imported food. Perhaps one good aspect of the FSMA is that in response to safety concerns about imported food, foreign exporters will be subjected to new safety rules. To facilitate foreign compliance, the FDA has translated documents about the FDA Food Safety Modernization Act into 11 languages.
The FDA is implementing a mandate authorized by Congress. The U.S. government claims this authority from the “commerce clause” of the US Constitution (Article I, Section 8, Clause 3), which states that Congress has the power “To regulate Commerce … among the several States.” Many constitutional scholars think that the founders intended this clause to prevent trade barriers among the states, and not to give the US government a blank check to enact any legislation it pleases, which is the current situation, even though this contradicts the original intention of the founders to limit the power of the federal government to strictly listed functions.
There is indeed a global food safety problem, with frightening cases of food contamination and poisoning. But the optimal way to deal with this problem is with a liability rule that enables victims to obtain quick compensation for any damage, and indeed, inspections, ideally by state government agencies rather than the federal government. As a service to the public, the inspections should be paid for from government funds, rather than imposing arbitrary and burdensome costs on farmers. It should be the responsibility of governmental officials to know the rules and apply them, and allow any farm method to be used so long as the inspectors do not judge them to be dangerous.
A demand by the public for food safety, combined with liability for damage, will be met by the market supply of safety measures and assurances. Insurance companies would inspect the farms in order to avoid the adverse selection of bad farms getting the most insurance. There are in fact private food inspectors operating, but since government preempts food safety, the demand and supply for private inspections diminishes.
The US government is responding to a real problem, but as typically happens, the government’s response fails a cost-benefit analysis. Congress ignores the cost of its regulations, and the voters are too busy and too ignorant to insist that Congress adhere to economic logic.
Meanwhile, we can expect a greater concentration of farming into large corporate agriculture, more expensive food, and fewer opportunities for progressive food entrepreneurs.
This 2014 excerpt of In These Times, Feb 20, is by Julia Wong.
More than 400 San Francisco city workers, many dressed as Cupid, marched in protest of Twitter’s ‘sweetheart’ tax break to Twitter headquarters.
The protesters were members of Service Employees International Union Local 1021, which is currently negotiating with the city over contracts covering more than 13,000 workers.
The Twitter tax break — a six-year payroll tax exclusion area around Twitter’s offices in the Central Market/Tenderloin neighborhood — has drawn numerous tech companies to the area.
Add to that the $6 million tax break the nearby Zynga received in 2011 and the $500 million in fines San Francisco chose not to levy against Silicon Valley companies whose private shuttles illegally use public bus stops.
City workers, in recent contracts, accepted furloughs, increased contributions to pensions, wage freezes, and layoffs. Hundreds of workers were also temporarily reassigned to classifications with lower rates of pay.
SEIU 1021 plans to support an anti-speculation tax aimed at those buying real estate for reselling soon thereafter at a higher price.
Another idea local officials are discussing with SEIU International leaders is investing the 1021′s reserves in community land trusts to create affordable housing in San Francisco or Oakland.
Ed. Notes: All the ingredients are there to make San Franciso a geotopia. People are savvy about tax breaks, land speculation, rent inflation, and land trusts. All they need to do is to quit opposing tax breaks for wages, demand a tax hike on locations, and thereby use the sky-high site values of the City on the Bay for resident’s dividends, a la Singapore.
I say, “All they need to do” as if it’s a simple political matter. It’s not. But they do have a movement already started with the unions. They might be able to expand it to include students, homeowners, small businesses, and environmentalists.
Greens tend to like the shift of taxes off buildings and other goods, onto sites, since the higher “land dues” (land tax, land use fee, deed fee, whatever) spurs owners to use their land efficiently. As metro land gets used more intensely, suburban and rural land need not be used at all.
This geonomic policy has worked before, wherever tried, to the degree tried.
What’s needed is something that’d captivate the imagination and inspire a critical mass, and that could be the call to transform high land values into dividends for all San Franciscans. The dividend could actually make a furlough fun!
Ed. Notes: Why should anyone fund Ukraine? Its government is deep in debt because it’s corrupt. Why does the US always choose corrupt rulers to give Americans’ money to? Better than all this macho posturing would be to shut down US bases in Europe and admit Russia into NATO — then shut down NATO, too.
The main reason that power-grabbing individuals want their own country is so that they can rip off their own people. The reason that vast numbers want their own country is so they can be ruled by individuals who belong to the same ethnic group that the people identify with. Both are shallow reasons and make the notion of country appear shallow, too.
If the world went geonomic, these disagreements would become non issue. Who cares who’s in power if they have no power to tax your labor or capital or subsidize their cronies? Who cares where the border is drawn if there’s free trade, free travel, and global Earthling dividends? It’s hard for most people to see beyond the imposed framing on current conflicts but once you do, you see the solutions that work right for everybody.
These two 2014 excerpts are from (1) Future Cities, Mar 3, by Walter Fieuw, and (2) Policy Scotland, Mar 4, by Ken Gibb of University of Glasgow.
How to Fund City Growth? Value Capture
Land value tax dates back to the early roots of modern cities, and it could end up financing our future.
Land value tax is leveraged against unimproved land value. “Land” is the unimproved site, not counting infrastructure or buildings; “Value” refers to the increased market value after public investment; and “Tax” is the payment due for exclusive occupation of the site.
The idea to capture value was first popularized by economist and social reformer Henry George (1839–1897) who was convinced that revenue generated from nature and land belonged to society. In his seminal work, Progress and Poverty, George argued that taxing land value deters speculative land holding.
Paul Romer, director of NYU Stern Urbanization Project, shares the view that strong, principled city charters based on value capture will change power relations in cities:
Building great cities requires brave leadership. Value capture can be a cornerstone of a new system for land taxation and progressive development financing. For, as Henry George taught us, the economic return of land should be shared equally, and not held in the grips of private owners.
Going back to Tom Payne’s use of John Locke’s property rights arguments to justify taxing land, through Ricardo’s attack on unproductive economic rent from monopoly land owners and on to Henry George and the ‘crank’ idea to have a single tax through taxing land. Lloyd George, supported by Churchill, twice proposed an LVT for the UK prior to the First World War. After the Second World War, legislation was supposed to combine the granting of planning permission with some form of land development or betterment tax – four successive attempts subsequently to introduce and make work such taxation abjectly failed.
The core idea is taxing unproductive economic rent derived from land ownership. Taxing the economic rent in land values but leaving the structures untaxed should allow ‘society’ to capture a proportion of the gains landowners receive in uplift in values as a result of planning permission and the benefits of public infrastructure support. Thus, landowners with planning permission have an incentive to build and there is no tax disincentive to make the land productive.
It would be good to get a discussion going about how to make progress on rational tax reform.
Ed. Notes: If you’re going to tax people, it’s makes good sense to put location values into your tax base and boot other values out. Ethically, nobody made land and everybody (the presence of the populace) makes land valuable. Economically, the levy drives efficient land use and raises wages. What’s not to like? Plenty. People just are not interested. How to interest them? Probably downplay the tax. Instead, convert the recovered ground rent revenue into a resident’s dividend and up-play that — money in the pocket!
Ed. Notes: The author calls for the usual higher minimum wage, stronger unions, restricting international exchange, etc. Yet in the past when we had those policies and more, we still had widespread poverty. Shouldn’t we be trying something else?
How about if we try what works? Any place that has used any aspect of geonomimcs has benefitted: de-tax wages, de-fund corporate welfare, enforce environmental standards, recover the socially-generated value of sites and resources, and pay people a dividend from the resultant surplus public revenue, a la the dividend of Alaska or Singapore, for example.
Of those, the most potent and maybe the hardest to implement is the public recovery of publicly-generated land values. It works because it spurs owners to use prime locations most efficiently, which creates jobs and attracts investments. It’s fair because we didn’t create land, we all need land, and paying land dues is a way of compensating our neighbors, those whom we exclude (as long as the government pays a dividend or provides universally desired social services). Land dues run up against land speculation but they are what make geonomics tick.
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.
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?
the study of the money we spend on the nature we use. When we pay that money to private owners, we reward both speculation and over-extraction. Robert Kiyosaki’s bestseller, Rich Dad’s Prophecy, says, “One of the reasons McDonald’s is such a rich company is not because it sells a lot of burgers but because it owns the land at some of the best intersections in the world. The main reason Kim and I invest in such properties is to own the land at the corner of the intersection. (p 200) My real estate advisor states that the rich either made their money in real estate or hold their money in real estate.” (p 141, via Greg Young) When government recovers the rents for natural advantages for everyone, it can save citizens millions. Ben Sevack, Montreal steel manufacturer, tells us (August 12) that Alberta, by leasing oil & gas fields, recovers enough revenue to be the only province in Canada to get by without a sales tax and to levy a flat provincial income tax. While running for re-election, provincial Premier Ralph Klein proposes to abolish their income tax and promises to eliminate medical insurance premiums and use resource revenue to pay for all medical expense for seniors. After all this planned tax-cutting and greater expense, they still expect a large budget surplus. Even places without oil and gas have high site values in their downtowns, and high values in their utility franchises. Recover the values of locations and privileges, displace the harmful taxes on sales, salaries, and structures, then use the revenue to fund basic government and pay residents a dividend, and you have geonomics in action.
a 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.
as unfamiliar as geo-economics. The latter is a course some universities offer that combines geography and economics. A UN newsletter, Go Between (57, Apr/May ’96; thanks, Pat Aller), cited an Asian conference on geopolitics and “geoeconomics”. The abbreviated term ‘geonomics” is the name of an institute on Middlebury College campus and of a show on CNBC. Both entities use the neologism to mean “global economics”, in particular world trade. We use geonomics entirely differently, to refer to the money people spend on the nature they use, how letting this flow collect in a few pockets creates class and poverty and assaults upon the environment, and how, on the other hand, sharing this rental flow creates equality, prosperity, and a people/planet harmony. This flow of natural rent, several trillions dollars in the US each year, shapes society and belongs to society.
more transformation than reform; it’s a step ahead. Harvard economics students this year did petition to change the curriculum, in the wake of the English who caught the dissension from across The Channel. French reformers, who fault conventional economics for conjuring mathematical models of little empirical relevance and being closed to critical and reflective thought, reject this “autism” – or detachment from reality – and dub their offering “post-autistic economics”. Not a bad name, but again, academics define themselves by what they’re not, not by what they are, unlike geonomists. We track rent – the money we spend on the nature we use – and watch it pull all the other economic indicators in its wake. We see economies as part and parcel of the ecosystem, similarly following natural patterns and able to self-regulate more so than allowed, once we quit distorting prices. To align people and planet, we’d replace taxes and subsidies with recovering and sharing rents.
of interest to Dave Lakhani, President Bold Approach (Mar 8) and Matt Ozga (Jan 29): “I write for the Washington Square News, the student run newspaper out of New York University. Geonomics seems like it has great significance, especially in this area. When was geonomics developed, and by whom?”
About 1982 I began. Two years later, Chilean Dr Manfred Max-Neef offered the term geonomics for Earth-friendly economics. In the mid-80s, a millionaire founded a Geonomics Institute on Middlebury College campus in Vermont re global trade. In the 1990s, CNBC cablecast a show, Geonomics, on world trade as it benefits world traders. My version of geonomics draws heavily from the American Henry George who wrote Progress & Poverty (1879) and won the mayoralty of New York but was denied his victory by Tammany Hall (1886). He in turn got lots from Brits David Ricardo, Adam Smith, and the French physiocrats of the 1700s. My version differs by focusing not on taxation but on the flow of rents for sites, resources, sinks, and government-granted privileges. Forgoing these trillions, we instead tax and subsidize, making waste cheap and sustainability expensive. To quit distorting price, replace taxes with “land dues” and replace subsidies with a Citizens Dividend.
Matt: “This idea of sharing rents sounds, if not explicitly socialist, at least at odds with some capitalist values (only the strong survive & prosper, etc). Is it fair to say that geonomics has some basis in socialist theory?”
A closer descriptor would be Christian. Beyond ethics into praxis, Alaska shares oil rent with residents, and they’re more libertarian than socialist. While individuals provide labor and capital, no one provides land while society generates its value. Rent is not private property but public property. Sharing Rent is predistribution, sharing it before an elite or state has a chance to get and misspend it, like a public REIT (Real Estate Investment Trust) paying dividends to its stakeholders – a perfectly capitalist model. What we should leave untaxed are our sales, salaries, and structures, things we do produce.
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.
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 new policy from a new perspective. Once your worldview shifts — so that vacant city lots are no longer invisible — then epiphany. “Of course! Why didn’t I see it before?” Once you do see the emptiness and what damage it does, how can you ever go back to the old paradigm?