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.
A company out sources when it contracts with other firms to provide a product rather than producing it internally. The source of the service is outside the company. Nowadays much of outsourcing by American companies is not only outside the firm but outside the country.
It has become common for a service done over the telephone, such as customer support and inquiries, to be handled in a country such as India, where wages are much lower. Usually the American caller does not realize that the technical support person is an Indian trained to speak like an American.
Outsourcing is a big political issue in this year’s elections. Millions of jobs have been outsourced to foreign countries in recent years. National output is recovering, but jobs are lagging behind. Outsourcing is blamed for the job loss and continuing unemployment. More and more, America’s goods are made in China and its services are done in India.
Will all American jobs vanish other than those that require a personal service? Maybe even haircuts will be done abroad in the future using machines that are controlled by a computer run by a foreign operator!
Maybe when you have a medical checkup, it will be an Indian doctor examining you with a camera and robot!
When an Indian answers a telephone call, this is an imported service just as much as if goods were being imported. The same economic principles that apply to the trade in goods apply to the trade in services such as telephone calling or accounting. The trade does not take place merely because the foreign service is cheaper in dollars. The trade is based on comparative advantage.
Consider a lawyer and her secretary. Suppose the lawyer charges $200 per hour for legal services. She can hire a good secretary for $20 per hour.
The lawyer happens to be a better typist; she can type twice as fast as the secretary. Should she hire the secretary or do the typing herself? She should hire the secretary. If she did her own typing, the lawyer would save $40, the price of two secretaries per hour, but she would lose $200 of legal-service revenue. The lawyer has an absolute advantage in typing, but the secretary has the comparative advantage in having a lower opportunity cost, what would be given up.
Now consider an example in international trade. Suppose the US can make $100 of computer parts with 2 hours of labor, and $100 of television parts with 3 hours of labor. Suppose that Japan can make $100 of computer parts with 1.5 hours of labor, and $100 of television parts with 1 hour of labor.
Japan has lower labor costs for both. Will it profit Japan to trade?
Yes. If Japan does not trade, it requires 2.5 hours of labor for $100 of TV and $100 of computer parts. If Japan only makes televisions and imports computers, it only requires 2 hours of labor. The U.S. requires 5 hours of labor to make both, but if the U.S. only makes computers and imports televisions, it can make $200 of computer parts with 4 hours. Even though the U.S. has a higher cost of labor, trade is mutually beneficial as each country specializes in its most productive industries.
Thus trade by itself does not create unemployment. Trade makes the economy more productive, and that has to be good for employment. In the long run, outsourcing is like any other trade, reducing costs and increasing the standard of living.
Of course, that is a long-run benefit. In the short run, sudden changes in trade will create unemployment in those industries that decline.
Workers need to shift to other industries, and maybe move to more productive locations. But this is no different from changes caused by advancing technology. For many decades, there is been a shift of employment from farming to urban industry because technology has made agriculture more productive.
The employment problem is not caused by trade or outsourcing, but by government intervention. Legal restrictions and taxes on labor and enterprise prevent some workers from becoming employed. Taxes and regulations about double the cost of employing labor. Companies are pushed to replace labor with machines and to out source abroad because government policy forces labor to be too expensive to hire.
A company buys a new machine and gets an investment tax credit. It hires a worker and gets no tax credit, but rather a set of punitive taxes: social security, unemployment, benefits, workers compensation for injury, liability insurance, the threat of lawsuits, and reporting requirements.
Policy punishes firms for hiring labor, so of course business seeks to minimize the punishment.
Many states are now considering legislation to limit outsourcing. There are some silly laws being introduced, such requiring the foreign telephone responder identify which country he is located in. These laws are futile attempts to treat the effects. We will see candidates complain about the lack of job growth and promise to grow jobs, but they won’t tell you how they will do it. Unfortunately, most voters are swayed by empty promises and are easily fooled.
Not one single major political candidate will point to the source of the employment problem, government intervention, and propose the effective remedy, the abolition of restrictions and taxes on labor. Shifting taxes from wages to land rent would create full employment. This would also make it less costly to shift employment as technology restructures industries.
When an Indian accountant gets paid by an American firm, dollars leave the U.S. These dollars eventually return to the U.S. to buy goods or assets.
Imports have to be paid with exports. Nowadays, the U.S. government has a budget deficit of half a trillion dollars per year, and Asians are using the dollars they get selling goods to the U.S. to buy U.S. treasury bonds.
The problem is not the U.S. buying goods from abroad but the U.S. government half-trillion dollar deficit that is largely financed from abroad, mostly Asia. Rather than the futile attempt to limit the importation of goods and services, Americans should demand an end to the horrendous budget deficits and an end to the punitive taxation of American labor.
Copyright 2004 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Fred Foldvary and The Progress Report.What are your views? Share your opinion with The Progress Report!
The Scottish Green Party recently expanded its number of seats in the Scottish Parliament thanks to advocating for serious land reform policies. Now the party is leading the way with specific proposals to make local taxes fairer. Here is a report based on BBC coverage.
The Scottish Green Party has unveiled plans to scrap the council tax and introduce a levy based on land values.
The Greens’ land value tax would be paid locally and would be calculated on the value of land.
Under the system the owners of prime locations would pay more than those owning marginal and run-down land.
The tax could also boost re-generation as owners who develop their land would pay less compared to those speculators who sit on derelict and under-developed land.
Onus on owners
Under the new system, the actual bill would be sent to owners rather than tenants.
Poor pensioners and those on low incomes who own wealthy properties would be able to defer payment and pay the outstanding debt when their property is sold or developed.
The party’s proposals are the latest initiative in a growing campaign to ditch the current council tax system introduced by the Tories to replace the community charge.
Green Finance spokesman Mark Ballard claims the new land tax could boost regeneration
Green finance spokesman Mark Ballard said Labour and Liberal Democrat MSPs might back their idea, which would give it a majority in the Scottish Parliament.
Mr Ballard has lodged the proposal in parliament and now needs 11 signatures of support from MSPs before he can draw up a draft Bill and run a public consultation.
He said: “They know they have a problem defending the current council tax system but I think they want to keep a property tax that brings out social and economic benefits and that’s where the land tax system comes in.”
The party also says the measures would help to cool the overheated housing market and help first-time home buyers.
The proposal has already won the backing of Peter Gibb, the chief executive of social and economic think-tank, the Henry George Foundation.
He said: “We have examined the different options for local government finance in Scotland and believe taxing land values would bring significant economic, social and environmental benefits.”
Similar systems of land taxation already operate in Denmark, South Africa, Jamaica and Australia.
The Greens’ move came the day after the Scottish Parliament refused to back a Scottish Socialist Party call to dump the council tax and replace it with an income-based Scottish service tax.
Senate Fails to Make Polluters Pay for Toxic Waste Site Cleanups
This annoncement comes from the U.S. Public Interest Research Group.
The United States Senate rejected an amendment on March 11, 2004, that would have reinstated Superfund’s “polluter pays” fees. Senator Lautenberg’s amendment to the Budget Resolution would have reestablished a dedicated funding source for cleanups at more than 1200 Superfund sites across the country, protecting the health of millions of people while making polluters foot the bill for toxic waste site cleanups. U.S. PIRG commended those Senators who voted for the amendment, including Senators Snowe (ME), Collins (ME), Nelson (NE), Bingaman (NM), Bayh (IN), and McCain (AZ) who showed new support for making polluters pay.
“By refusing to reinstate Superfund’s polluter pays fees, the Senate voted to extend a 4 million dollar per day tax holiday for polluters and continue charging regular taxpayers for toxic waste site cleanups,” said U.S. PIRG Environmental Health Advocate Julie Wolk.
Funding for the Superfund program decreased by at least 25 percent between 2001-2004 compared with 1992-2000, with site cleanups slowing down nearly 50% in the last three years. Last year, the Bush administration cleaned up only 40 Superfund toxic waste sites compared to an average of 87 sites per year in the middle and late 1990′s. The EPA Inspector General recently reported a $175 million funding shortfall for fiscal year 2003.
Since Congress allowed Superfund’s polluter pays fees to expire in 1995 and the trust fund is now essentially bankrupt, regular taxpayers, who paid 18 percent of program costs in 1996, will pay for virtually all cleanups at abandoned sites this year. Former Presidents Reagan, George H.W. Bush, and Clinton all collected the “polluter pays” fees or supported their reinstatement, but the Bush administration opposes reinstating the fees.
“The Bush Administration continues to let polluting industries off the hook and leave regular taxpayers to pay the cleanup costs, allowing toxic waste sites to languish in communities around the country,” said Wolk. “Congress should reinstate Superfund’s polluter pays fees, re-fund the program, and demand that the Environmental Protection Agency start listing and cleaning up more toxic waste sites,” Wolk concluded.
An international group of religious and scientific leaders has launched an appeal to the United States and all other nuclear states to pledge never to use nuclear weapons and re-affirm their commitments to achieving total nuclear disarmament.
The appeal, signed by the head of the U.S. National Council of Churches (NCC) and the president of the international Catholic peace group, Pax Christi, and 74 others — including four Nobel laureates — declared such weapons to be “inherently immoral” and expressed particular concern over U.S. plans to develop of a new generation of nuclear bombs.
“Even so-called ‘mini-nukes’ and ‘bunker-busters’ would have disastrous effects,” the statement declared. “Threatened use of nuclear weaopns in the name of deterrence is morally wrong because it holds innocent people hostage for political and military purposes.”
“Why do we continue to construct weapons that have the power to destroy us,” asked Rev. Robert Edgar, general secretary of the NCC, which represents some 140,000 Protestant congregations in the U.S., “rather than build systems and structures that will save lives and help all persons reach the potential for which God created them?”
Edgar said the appeal was being made with a “sense of real urgency,” in light of new nuclear planning by the Bush administration and the failure to date of any of the declared nuclear powers to substantially reduce their stockpiles.
More than a decade after the end of the Cold War, the United States and Russia retain a total of about 10,000 tactical and strategic nuclear weapons each. Together, they account for more than 95 percent of the world’s total arsenal.
According to recent estimates by the Washington-based Center for Defense Information, China is next with an estimated 400 warheads, followed by France, with 350; Israel, with perhaps 200; Britain, with 185; India, with 60 or more; and Pakistan, with as many as 48. The Central Intelligence Agency says it believes North Korea has up to two devices for several years.
Under the 1968 Treaty on the Nonproliferation of Nuclear Weapons (NPT), nuclear countries must not only halt the spread of nuclear weapons to non-nuclear countries, but also agree to reduce their own arsenals to zero. In 1996, the International Court of Justice at The Hague ruled that the NPT required eventual disarmament, a position that was formally reaffirmed in 2000 by the five permanent members of the UN Security Council.
Since the Bush administration took power in 2001, however, the U.S. has been ambiguous on the question, while its opposition to the Comprehensive Test Ban Treaty — seen as a key step toward eventual disarmament — has fanned concerns that Washington does not intend to follow through on its earlier commitments.
Adding to these concerns are the administration’s efforts to reverse a unilateral 1993 ban on research and development of low-yield atomic weapons, such as “mini-nukes” and “bunker-busters” which Bush officials insist would be good to use in dealing with small-scale conflicts, such as last year’s war against Iraq, or against suspected criminals.
Some Democrats in Congress tried to prevent the administration from going forward by denying funding for development, but the administration succeeded in prying loose $7.5 million for the project late last year.
Critics have strongly assailed the administration for these efforts, arguing that they undercut the NPT by showing that the world’s strongest nuclear power has no intention of giving them up.
Scientists and weapons specialists who signed the Appeal stressed that the administration’s insistence on retaining a nuclear arsenal and developing new weapons not only risked undermining the NPT and global non-proliferation efforts, but also made little military sense in an era when smaller, more precise conventional weapons using sensors and other systems are available.
“Military leaders don’t see any military utility for making these weapons,” according to Ivan Oerlich, a nuclear physicist at the Federation of American Scientists. “It’s the civilians who want them,” he said. “There is no military mission that cries out for nuclear weapons. These are weapons in search of a mission.”
This new appeal, however, is based more on questions of morality than on utility, according to its signers, who also include Helen Caldicott, founder of Physicians for Social Responsibility and the Nuclear Policy Research Institute who shared the 1985 Nobel Peace Prize with International Physicians for the Prevention of Nuclear War.
“My prognosis is, if nothing changes and Bush is re-elected, within ten or 20 years, there will be no life on the planet, or little,” she said. “It’s good to use the words ‘sin’ and ‘evil’ (in this context),” she added. “It is true that it is evil to have power to destroy life on Earth.”
Marie Dennis, who serves on the executive committee of Pax Christi International, noted that U.S. Catholic Bishops’ Conference recently endorsed a global ban on nuclear weapons as a policy goal and called on the U.S. to issue a no-first-use policy on their use. As recently as one year ago in the run-up to the war against Iraq, the Bush administration refused to do so.
Is building a new set of additional nuclear weapons high on your list of priorities for a nation that already has the most such weapons and is deeply in debt? What do you recommend? Tell your views to The Progress Report!
People will learn lessons from the collapse of the Enron energy company and the value of its stock shares. Some of these will be the wrong lessons.
Critics of markets will exclaim that the Enron debacle shows how “capitalism” is defective. But they won’t tell you what “capitalism” means. If you ask them, they can’t tell you, because they don’t really know. It’s typical of economics screed that the writers don’t define the key terms.
Statists, those advocating government interference with markets, will proclaim that the Enron problem shows that the government should increase the regulation of corporations and financial markets. But “regulation” is also a vague, weaselly word. Regulation can be market-helping, as in prohibiting fraud, or market-hurting, such as controlling prices.
What needs to be done is to strengthen laws, enforcement, and penalties regarding fraud. Fraud is a type of theft, and theft is a violation of market rules.
Let’s start with the accounting firms that are supposed to audit corporations. The purpose of such audits is to ensure that the company has truthfully and fully accounted for its operations. That implies that the auditor should be impartial, and therefore not have any financial interest in the company being audited.
That was not the case with Enron. The auditing firm was also engaged in consulting for Enron. In my judgment, that constituted a conflict of interest. If the auditor reported accounting problems, that might reduce its consulting income. Some might argue that the government should prohibit auditing firms from also doing consulting work for the firm it audits. I argue for a somewhat less interventionist policy.
There should be a general “Law of the Market” that all statements made by firms are truthful unless the charter of the company clearly and explicitly states that it might lie, in which case that policy also needs to be stated on all product labels. The Law of the Market would also require corporations to have impartial audits with firms having no financial interest in the company or any links other than the auditing, unless it is clearly and explicitly stated in the charter that it might have other business with the auditing firm, or that it might not be audited at all.
If the company’s charter states that it may be audited with firms that also have other financial interests in the firm, then all shareholders are warned that the audits might be suspect, and that the accounting reports – the balance sheet and income statements – might be misleading. The value of the shares will then be discounted to reflect this.
The Law of the Market should also specify that the accounting reports of a company fully show all assets and liabilities of the firm at current market prices, unless its charter states otherwise. Enron was able to hide liabilities in partnerships, which were not fully disclosed. A firm’s business includes its membership in partnerships, and if a firm wishes to hide part of its balance sheet in partnerships, this policy should be clearly stated in its charter, for all to see. Then shareholders are warned, and the value of the stock will be lower to reflect this.
Likewise when the executives or board members of a corporation make public statements about the prospects of the company, the Law of the Market should require these to be honest, unless the charter lets the company lie. If the charter does not state that the chiefs may commit deception, they should be legally required to tell the truth, to the best of their knowledge.
It is tragic that many Enron employees put much of their retirement funds in the stock of the company. One of the basic principles of personal finance is that your portfolio, your various financial assets, should be diversified. “Don’t put all your eggs in one basket” is age-old advice we learn from grandma.
This should be a financial lesson for everybody. Companies can fail. We don’t know what is going on inside a company. It can look good on the outside but be crumbling on the inside. A general rule for investing is not to put more than 5% of your assets in the stock of any one company. In my opinion, most folks should have most of their retirement assets in mutual funds and not in individual companies.
The Enron problem was not a fault of the market, but one of violating the rules of the market. There will always be those who try to defraud others. That is why we need laws against theft and fraud. The Enron debacle is the fault of government for not having a clear Law of the Market so that the auditing conflicts would have been illegal unless the company charter had stated that it would engage in such practices, which would have warned everybody.
Copyright 2002 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Fred Foldvary and The Progress Report.What are your views? Share your opinion with your fellow readers at The Progress Report!
U.S. Military Program Full of Corruption, Waste and Fraud
Here is a news update from Taxpayers for Common Sense. TCS is the best organization that monitors excessive government spending, corruption and corporate welfare.
Another Embarrassment for the Pentagon
The Pentagon has cancelled the expensive and increasingly irrelevant Comanche helicopter program. At 15 years overdue and many millions over budget, the only thing the Comanche ever did well was prove that pigs can fly. With any luck, this is just the first domino in a chain of many in the Pentagon budget. The Pentagon insists each of its weapons projects is essential to national security, but the failure of the Comanche has undercut their credibility, and the next domino seems within reach.
The Department of Defense will try to suture its wounds by denying that the Comanche’s problems are systemic. They will claim that it is ‘unusual’ for a weapons program to take far longer than originally planned and be millions over budget. But those criticisms describe pretty nearly every major weapons program that the Pentagon manages. Instead of stemming the hemorrhaging, the Pentagon should be putting itself through an old-fashioned blood letting to exorcise its most bloated and directionless budget items. A major review of some of the military’s biggest programs is long overdue.
Some programs, like the Comanche, are simply floundering after years of poor management. The Land Warrior program, which envisions soldiers with superior body armor, communications, and sensors has fallen so far behind its original schedule that it is now slated to roll out only shortly before the Objective Force Warrior program, which essentially replaces it. The Osprey V-22 program has also become increasingly expensive while failing to perform: two have crashed since testing began, one with fatal results for its 7 occupants. The loss of American service men and women should have been the death knell for this project, but it continues to receive billions in funding.
The Comanche also serves as an example of how some programs suffer from serious conceptual problems. The Cold War served as a template for many of the military’s projects that date back to the 1980′s. In the Comanche’s case, an attempt to give it stealth capabilities is now worthless. Since the beginning of the War Against Iraq, nine American helicopters have crashed or been shot down, killing 32 soldiers. The preponderance of shoulder-launched missiles has made helicopters tempting and all too easy targets. The Comanche was designed to have a low radar profile, making it difficult to track, but this advantage is no help against today’s point and shoot insurgents and terrorists. Beyond the Comanche’s cost and deadline troubles, its more fundamental flaw was that it was a weapon designed for a different war. Like bringing a knife to a gun fight, the Comanche simply didn’t fit in with modern warfare.
The Cold War mentality was also behind development of the Crusader, the massive artillery tank that was cancelled last year, and the F/A-22 Raptor, a fighter plane designed to threaten targets deep within the nonexistent USSR while operating from bases in Western Europe. With the collapse of the Soviet Union, America’s air superiority is under no threat. Updates and further procurement of the cheap and effective workhorses of the Air Force, the F-15 and F-16, could guarantee us control of the skies for some time to come.
Furthermore, the Joint Strike Fighter being developed in conjunction with long-term US allies promises to deliver significant performance improvements at a cost far below that of the F/A-22 Raptor.
Many of these programs are political third rails because of the jobs provided by the multitude of military contractors and subcontractors who are charged with building them. This economic carrot makes it impossible to cut them without enraging the delegations of multiple states. As with any piece of legislation, the Pentagon’s budget should be judged on the merits of the projects it funds. These projects are inefficient, overdue, over cost, and are increasingly unnecessary. Cutting the Comanche is only the first step toward bringing fiscal sanity to our armed forces.
P.S. Congress might restore funding to this overpriced, obsolete and irrelevant program.
For more information, contact Keith Ashdown at (202)-546-8500 ext. 110 or by email at email@example.com TCS is at www.taxpayer.net
What’s your best idea for stopping corruption, waste and fraud in the U.S. military? Share your views with The Progress Report!
Does common sense have anything to do with religion? Does the “common” part of common sense give us any hints about what is transcendentally true and right? Would common sense ever suggest raging and fuming against some people whose religious beliefs don’t match yours?
by Schuyler Lake
Take all the religions of the world, throw them all into a big pot together, mix them up, let them settle. Apply a little heat, not too much. See what rises to the surface, and what remains dissolved in a universal system of belief. Suprisingly, there is very little scum. And what scum there is, has little to do with religion. The core beliefs of almost all religious persons, no matter what their religion, are shockingly uniform.
To an outside observer, the doctrinal differences between a Belfast Catholic and a Belfast Protestant, are so minimal as to seem absurd. To a non-Muslim, the ancient quarrel between the Sunni and the Shia is arcane and non-sensical at best, and completely at odds with the words of the Prophet himself. Yet these doctrinal quarrels, and others like them, result in horrible misery and war and death. These kinds of illogical and useless and petty feuds extend to all religions, including the Hindu and Buddhist religions, and many others. The fault is clearly attribuable to Clericalism, which has been and remains, the bane of every religion ever invented, save perhaps that of the Quakers.
Since the vast majority of mankind relies on religion as the fundamental basis for its ethical and social decisions, is it not high time that we all took a good hard look at the phenomenon, in general? Ayn Rand notwithstanding, it’s fairly obvious that we (humanity as a whole) cannot get along very well without some form of religion. But need it always be so adversarial? I don’t think so.
All religions, and in fact all humanity are faced with a common problem today — namely the survival of the planet, and the survival not only of civilization as we know it, but of life itself. How this problem is addressed in religious terms, by all the various sects and philosophies, will largely determine whether we survive as a species, or not. What is needed is a consensus of religions, starting at the most basic level of agreement, and working down from there. Is it possible for all religions to agree on one single principle of commonality?
I think it is — namely the sacredness of life. From this single principle, a host of corollaries might be deduced, and a host of very useful, international agreements made. Then perhaps a second, and a third universal principle could be proposed. I’ll bet that given time, the world religious community might be able to come up with at least ten such principles, without ever contradicting each their own scriptures.
As it stands we have pirates disguised as Christians, raping criminal Beduins disguised as Muslims, and no good can possibly come of it. The blame rests squarely on the Clergy of all these religions. Show me a Priest who drives an Audi, and I’ll show you a whore who spits on the message of Jesus. Show me a mullah who reclines on seven layers of carpets, and I’ll show you a hypocrite whose heart does not revere the Prophet’s word, but defiles it. World peace cannot issue from sources like this. It must issue independently, from the internet and from local sources, including especially renegade Clergy.
Renegade Clergy of all religions are a hope for the future
Whether “G” “O” “D” exists or not, is completely irrelevant. He can exist in one context, and not exist in another, depending on how He is defined. We must learn to see beyond our own linguistic and cultural boundaries, and to realize that the spiritual heritage of humanity is all of a piece — that its essential nature is not linguistic at all, but spiritual — which is to say, supra-linguistic. We must at least begin to understand that the divine nature of our existence is not sectarian in nature, but is rather a mystery we all share, and one which we have all tried to define, each in his own way. And that it is very, very important to all of us, no matter what guise we have given it.
There are those (a distinct but influential minority) who believe there is no divine authority to the universe — that existence itself, that awareness itself, is a matter of random chance. Should this point of view be denigrated, castigated and condemned, according to some theological theory? Certainly not. It might be right. When it comes right down to it, none of us actually knows for sure what this existence we share is all about. None of us knows for sure what will happen, if anything, at that moment when we pass from the realm of the living to the realm of the dead. The only thing anyone knows for sure, is that we’re all in for it. All the rest of it is more or less speculative, or wishful thinking, or what we call “religion”.
I think it’s time for the theologians of the world to show a little humility. To admit that they don’t exactly have all the answers. That they have some of the answers, but not quite enough of them. To be willing to bend their convictions a bit, for the sake of the things they love.
Schuyler Lake lives in New Mexico, and has spent much time in Europe and Canada. He works as a painter of houses and “very odd and almost completely unsaleable canvases.” Lake observes that patriotism and a sense of global brotherhood are not at all incompatible.
We’ve been hearing in the news lately how giving legal sanction to same-sex marriage would somehow be so damaging to the sacred “institution of marriage” that it simply cannot be allowed. In fact polls show that something like 57% of US voters would support a Constitutional Amendment banning gay marriage. That is in itself the strongest argument I’ve ever heard for representative democracy. Just because people are eager to toss aside their religious freedom doesn’t mean they should be allowed to do it.
What a depressing thought — but, I can shake off the blues by picturing the thousands of couples standing joyously in the rain in San Francisco so they could get married! This is damaging to the institution of marriage? I don’t see it. One couple I heard interviewed on NPR (that insidious purveyor of the “Homosexual Agenda”) stayed on in San Francisco and actually became deputized, spending their honeymoon performing marriage ceremonies for other couples. Frankly, I thought the whole thing was a warm fuzzy, and my wife did too.
The gay marriage thing is one big “religion” story that has been in the news lately. The other, of course, has been the huge flap over Mel Gibson’s movie. I have not seen The Passion of the Christ, and I probably won’t see it. We have two young children and we seldom go to movies these days, and this subtitled bummer isn’t something that is going to draw my eye on the DVD shelf. Be that as it may, I hear that many people think this movie is anti-Semitic. Maybe it is. But, to make a very serious matter as glib as I can: it has always seemed to me that “the Jews killed Jesus” because they were the ones who were given the chance to. If Jesus had been a Puerto Rican from Brooklyn, then theyd’ve been blamed for killing Him. I believe that the “historical Jesus” matters for one reason only: to show that “the Son of Man” (which was always how Jesus referred to himself in the Gospels) really was a living human being. Jesus was neither just a legend nor a super-hero with super powers. Jesus was (is!) a regular flesh-and-blood human being who was (is!) — in the deepest and truest sense — really nobody special.
Well, that’s how it seems to me, anyway — but your mileage may vary, and that’s OK with me. Ann Coulter, the conservative pundit, recently contributed the following exegetical summary (in defense of Gibson’s work against the attacks of whining liberals):
Being nice to people is, in fact, one of the incidental tenets of Christianity (as opposed to other religions whose tenets are more along the lines of “kill everyone who doesn’t smell bad and doesn’t answer to the name Mohammed”)…. In fact, Jesus’ distinctive message was: People are sinful and need to be redeemed, and this is your lucky day because I’m here to redeem you even though you don’t deserve it, and I have to get the crap kicked out of me to do it. That is the reason He is called “Christ the Redeemer” rather than “Christ the Moron Driving Around in a Volvo With a ‘Be Nice to People’ Bumper Sticker on It.”
Coulter’s tone (and what it may reveal about her inner demons) aside, she does the service of distilling a theology that (in my humble opinion) has done profound damage for centuries. It is seldom seen unadorned by the “sacred robes” of learned abstraction. Its message is that we don’t deserve redemption; we never can. Loving one another is “incidental”. Jesus Christ is the super-hero who has come to save the day. All we have to do is believe.
The utter simplicity of that position is comforting, I guess. But I find it hard to swallow. Could that be why heresy has always been punished with such vicious severity? When it comes right down to it, heresy is really nothing more than a theoretical argument. I mean, Ann Coulter may be a smart cookie and all (did you notice how she keeps saying “In fact…”?), but — does anyone have perfect knowledge of God’s will?
People whose position is harder to sustain — because of sheer goofiness, deep-seated hypocrisy, long habit, or any number of reasons — may feel drawn to become violent in their defense of it. I can’t think of any other reason why it should matter so much that other people share one’s religious view.
It might be worth mentioning that the world’s great religious leaders have never been big on preaching. One of Lao Tzu’s favorite sayings was “Knowers don’t speak; speakers don’t know.” Legend has it that the only reason he even wrote his sayings down was that when he was traveling to the mountains to retire, the border guard, having heard he was a famous sage, wouldn’t let him pass until he’d written a book. (What he wrote was quite short.) When it comes to Jesus, he did preach the Sermon on the Mount — but only because something like five thousand people were following him around; he had to tell them something. And what he did tell them was short and simple: Blessed are the meek… blessed are the poor in spirit…” (Jesus was also rather critical of those devout Pharisees who stood loudly, proudly praying on the corner, pointing out that “They already have their reward.”)
My sister-in-law usually hosts the family Thanksgiving dinner. Having learned of my embrace of Quakerism, she graciously suggested, a few years ago, that we add a silent moment before the meal. One family member, though, who is an Atheist, takes it upon himself to regularly disrupt the moment of silence with repeated announcements that he does not believe in anything even remotely resembling the power of prayer.
Each year I get angry, but I walk it off, and say nothing (except to my wife, who has come to expect the rant). I don’t know why his theological position should have to be so rudely proclaimed, but that’s his business. It would be nice if I could say it didn’t bother me at all, but — my faith could be stronger, too.
Human life, and human understanding, is limited. We can have absolute knowledge of nothing whatsoever. If it can’t be stated in the form of a provable hypothesis, science won’t touch it. God, if there is such a thing, is beyond our ken, beyond any way we have of “knowing for sure”. We’re all bozos on this bus.
Now, to me, that fact isn’t threatening or depressing; it’s a warm fuzzy. I wouldn’t go so far as to say we’re all Jesus — sometimes we’re all fearful, impatient, lazy, covetous, all of that — but we all have that of Jesus in us. There is a capacity in each of us to be both the martyred and the martyrer.
It seems that there are two kinds of faith. One gets harder and harder to maintain, even to the point of killing those who disagree. The other gets stronger and stronger, until nothing in the world can threaten it. They asked Lao Tzu how he knew that what he was saying was true, and he said, “Because of this.”
Here are a few excerpts from a recent article in the Philadelphia Inquirer, reporting on people’s opinions about taxes. Unfortunately, the poll did not ask people about more modern, sensible taxes such as levies against pollution, taxes against sprawl, site value tax, etc. Instead, the poll focused only on obsolete, unfair taxes.
by Anthony R. Wood
A new poll documents something that most property owners and politicians have long known: Pennsylvanians hate the property tax.
The oft-maligned federal income tax finished a far-distant second in a survey of least-liked levies in the Keystone State, according to the Quinnipiac University Polling Institute, which released its findings yesterday.
Among the 1,176 potential voters surveyed by the Connecticut institute, 56 percent said that the property tax issue would be “extremely important” in determining whether they voted for Ed Rendell, the Democratic gubernatorial nominee, or Mike Fisher, his Republican opponent. By 40 percent to 30 percent, they said that Rendell was better able to deal with the issue than Fisher.
The respondents expressed little faith in the state legislature to resolve problems with the tax. Surveys have documented that the assessments on which taxes are based are often inaccurate. However, the potential voters, polled July 16 to 22, were deeply divided over what to do about the situation.
Other revenues would have to replace any property tax cuts, but by 62 percent to 32 percent, those surveyed opposed raising the Jim Crow sales tax. By 57 percent to 33 percent, they opposed raising the state income tax.
In the Quinnipiac survey, the real estate tax beat the federal income tax by 53 percent to 16 percent as the least liked. Clay Richards, the Connecticut institute’s assistant director, said that he was taken aback by the level of passion against the property tax. He said that nationwide surveys done in the 1990s showed voters almost evenly split in their loathing of property and federal income taxes. The survey has a sampling error margin of plus or minus 3 percentage points.
Asset taxation is proposed as a unifying position for Georgists, Libertarians, Objectivists, Greens, and Natural Law groups. A proposal that can be supported by all and employed to move the current government towards a more rational and illuminating position.
We all want to change things for the better, and we all have certain beliefs as to how to do so. Georgists/geoists tend to focus on the rights to employ land in the pursuit of one’s fulfillment. Libertarians tend to focus on the rights of the individual, and Greens focus on the environment. In each case we see policies formulated to directly address the issue(s) as perceived by the particular group. There is much to be said for conceiving a proposal in tax reform that can be supported by all of the 3rd parties and which can create a clearer picture of our economy and the issues which surround it. In this way it is possible to bring the power of the current manipulators to heel, and allow logic, reason, and justice to have a chance to persuade the public at large. The current and continuing debate over taxation and economics offers the inroad for public awareness.
The formulation of a cohesive policy in regard to federal taxation reform is probably the best means available for a concerted attack on suppressed individual rights, unearned privilege, and license to destroy the environment. The current proposal at www.geocities.com/CapitolHill/Congress/2578/ is a starting point for a reform that most 3rd parties can support and should support to clarify the economic picture and force the politicians to deal with issues instead of finessing them. It is politically feasible and can be enacted without destroying the economy or bringing undue hardship on any particular group.
Asset taxation is proposed to replace the current federal income tax and federal inheritance taxes with a 2% tax on the market value of all assets, including but not limited to land, improvements, licenses to use natural resources, and any and all properties that can be disposed of or rented to generate income to the owner.
The proceeds of this tax are absolutely limited to supporting federal government efforts in defense, law enforcement, and infrastructure (i.e. those government operations that make ownership possible). Other forms of taxation are relegated to financing social programs and any revenue generated therefrom cannot be used in support of defense, law enforcement, or infrastructure. But whether taxes other than those on land or assets are equitable or whether the federal government should have any social role at all can be debated outside the context of that which is generally agreed to be the primary role of government as supported by asset taxation.
This tax proposal is a beginning, and a means to clarify; it is not an end in itself. Whether the Single tax on land, or the removal of government from social programs, or the focus of government control on protecting the environment is at issue, the clarity imparted to government finances by this proposal is still “a step in the right direction”.
Given the backwards reform proposals being debated by Congress, it is difficult to see why all of the 3rd parties would not support an asset tax proposal along these lines as an alternative. And, if this is true, then together we would have enough foot soldiers to bypass the media and bring some real pressure to bear on our congresscritters.
Michael L. Coburn
What’s your opinion on asset taxation as a unifying issue for third parties? Tell us what you think!
There will be a big celebration of freedom in Las Vegas, May 13-15, 2004. Sponsored by Young America’s Foundation, FreedomFest will gather freedom lovers of many stripes. Some are more interested in financial freedom, others more concerned with civil liberties or issues such as immigration. Some are libertarians, others are small-government conservatists.
The theme is “Great Ideas, Great Books, and Great Thinkers.” It is promoted as an ‘intellectual feast’ where the world’s best and brightest libertarian and conservative authors, students, business people, and think tanks will meet, learn, create, and network.
Why are ‘libertarian’ and ‘conservative’ linked together here? Because American conservatism comes in two brands. There is authoritarian conservatism where big government is advocated to enforce traditional values and power relationships. This big-G conservatism is nationalist. Big-G conservatism values the flag, the military, traditional religious creeds, and strict order.
Then there is small-government conservatism, where the emphasis is on reducing government intervention in economic affairs. Small-G conservatives want lower taxes, less regulation, and less government intrusion. They may value tradition in their personal lives, but if government is involved in upholding tradition, they want it to be decentralized and not imposed at the federal level. The conservative element in FreedomFest is the small-government brand. Small-G conservatives are big on liberty, freedom, and individualism.
Last year’s FreedomFest had nearly 900 attendees and 60 exhibitors, and C-SPAN covered much of the event. This year’s speakers are awesome. John Stossel, of ABC news magazine and ’20/20″ news anchor, will speak to the general session. Ben Stein and Charles Murray will keynote the Liberty Dinner Banquets. Other major speakers include Texas Congressman Ron Paul, economist Art Laffer, technology guru George Gilder, Steve Moore of Cato and the Club for Growth, and FreedomFest organizer Mark Skousen, who teaches at the Columbia Business School and writes a financial newsletter as well as economics books.
Also speaking are David Boaz of Cato, psychologist Nathaniel Branden, economist Gordon Tullock, Reason magazine founder Bob Poole, Jason Sorens (head of the Free State Project to get libertarians to move to New Hampshire), professor and author Ken Schoolland, Libertarian Party past presidential candidate Harry Browne, and myself, Fred Foldvary on ‘Why We Don’t Need Any Stinkin’ Taxes.’
Freedom touches all areas of life and so attracts many people who have particular concerns but also support the liberty issues of others. But one group which is remarkably absent from FreedomFest is the movement founded by Henry George, the Georgists or geoists. Why is there no geoist booth or panel at FreedomFest? Why am I perhaps the only geolibertarian speaker?
The geoist movement has focused on justice rather than liberty. It emphasizes equality more than freedom. Geoists talk more about sharing earth’s bounty than about free trade. Most geoists do not identify with libertarianism and the freedom movements. Some who call themselves ‘Georgist’ are even anti-libertarian, opposed to free trade, and hostile to free markets, contrary to George’s own policy prescriptions.
This separation and even alienation of geoists from libertarians is tragic. Henry George himself praised liberty in Progress and Poverty, and indeed said we need complete liberty, not half liberty. George called for liberty in substance, in contrast to those who sing praises to liberty but do not support full liberty in all its particulars. Using rent for public revenue is inherently decentralist and freedom-promoting.
Most libertarians remain ignorant of rent. A few geolibertarians have promoted geoism within the Libertarian Party, but there is a gaping geoist absence in the freedom movement generally, which is much bigger than the libertarian movement. Geoists have missed the freedom train.
The freedomites will be influential in policy long-term because they have truth on their side. Liberty works, and long-term the logic of liberty has to win, because slavery is a loser. But freedomites need geoism to be complete. Libertarians have to go through contortions to figure out how to finance public goods, because they have no clue about rent. I’ll do my part, but we need more geoist troops in the freedom movement.
But unfortunately many geoist scholars as well as activists don’t fully trust liberty. They know land, but don’t truly know liberty. This goes back to Henry George himself, who misunderstood the new Austrian economic school of thought and did not himself fully believe in freedom for goods such as money. So the Austrian school rather than the Georgist came to dominate the freedom movement, even though, ironically, it was Henry George who sparked the anti-tax and anti-statist viewpoint of modern libertarianism via followers such as Albert Jay Nock and Frank Chodorov.
Today, too many geoists let George do their thinking on issues such as money, instead of following the prime Henry George directive, Think for Yourself!
So there I will be at FreedomFest, telling freedom lovers why they do not need to compromise with liberty when it comes to funding government. Many freedomites dislike taxes, but see a need for some governance, so they say, well, just keep taxes low and flat, and maybe switch from taxing income to taxing goods. I will tell them that we don’t need any stinkin’ taxes at all. We can get all the public revenue we need from land rent, and unlike sales and income taxes, rent does not stink. If you call it a tax, the land-value tax is sweet. LVT is not a stinking tax.
I prefer to call the use of rent a tap, like tapping water. Rent is a surplus flow that we can tap without any economic loss. Freedomites need to learn that tapping rent frees them from taxes that stink up the economy and makes folks slaves of the state. It’s an easy lesson to teach.
But teaching some geoists to value liberty seems to be a difficult sell. It’s curious, because geoism should be inherently liberating. If geoists do not get on board, the freedom train will eventually derail and there will be a tragic wreck. Maybe somebody here can explain to me why geoists have not gotten aboard the freedom train, because, frankly, I’m puzzled.
Copyright 2004 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Fred Foldvary and The Progress Report.
We are pleased to bring you excerpts from an in-depth analysis of the crisis in Nigeria. The full article is made available through the news service of Foreign Policy in Focus. Foreign Policy in Focus has kindly granted us permission to share top articles with the readers of the Progress Report.
by Oronto Douglas, Von Kemedi, Ike Okonta, and Michael Watts July, 2003
Oil Corruption High; Living Standards Low
The mythos of oil wealth has been central to the history of modern industrial capitalism. But in Nigeria, as elsewhere, the discovery of oil, and annual oil revenues of $40 billion currently, has ushered in a miserable, undisciplined, decrepit, and corrupt form of “petro-capitalism.” After a half century of oil production, almost $300 billion in oil revenues has flowed directly into the federal exchequer (and perhaps $50 billion promptly flowed out, only to disappear overseas). Yet Nigerian per capita income stands at $290 per year. For the majority of Nigerians, living standards are no better now than at independence in 1960. A repugnant culture of excessive venality and profiteering among the political class–the Department of State has an entire website devoted to fraud cases–has won for Nigeria the dubious honor of #1 in Transparency International’s ranking of most corrupt states.
Paradoxically, the oil-producing regions within federated Nigeria have benefited the least from oil wealth. Devastated by the ecological costs of oil spillage and the highest gas flaring rates in the world, the Niger Delta is a political tinderbox. A generation of militant restive youth, deep political frustrations among oil-producing communities, and pre-electoral thuggery all prosper in the rich soil of political marginalization. Massive election rigging across the Niger Delta in the April 2003 elections simply confirmed the worst for the millions of Nigerians who have suffered from decades of neglect. It was the great Polish journalist, Kapucinski, who noted in his meditation on oil-rich Iran: “Oil creates the illusion of a completely changed life, life without work, life for free…. The concept of oil expresses perfectly the eternal human dream of wealth achieved through lucky accident…In this sense oil is a fairy tale and, like every fairy tale, a bit of a lie.” It is this lie that currently confronts West African oil producers and the Niger Delta in particular.
Since March 12, 2003, mounting communal violence has resulted in at least 50 deaths and the leveling of eight communities in and around the Warri petroleum complex. Seven oil company employees have also been killed, prompting all the major oil companies to withdraw staff, to close down operations, and to reduce output by over 750,000 barrels per day (almost half of national output). President Obasanjo has dispatched large troop deployments to the oil-producing creeks. Ijaw militants, incensed over illegal oil bunkering (in which the security forces were implicated) and indiscriminate military action, have threatened to detonate 11 captured oil installations. The strikes on the offshore oil platforms — a long-festering sore that is rarely mentioned in the media — were quickly resolved. Nobody seriously expects, however, that the deeper problems within the oil sector will go away. Relatively new to delta politics, however, is a series of assassinations, most notably that of Chief Marshall Harry, a senior member of the main opposition party and a leading campaigner for greater resource allocation to the oil-producing Niger Delta. Fallout from the Harry assassination has already become a source of tension in his native oil-producing state of Rivers. Supporters of the main opposition party, the ANPP, and another opposition grouping of activists and politicians, the Rivers Democratic Movement, have linked the ruling party to the assassination.
The Niger Delta stands at the crossroads of contemporary Nigerian politics. Despite the 13% growth of oil revenues to the delta states, the region remains desperately poor. The resultant deepening material and political grievances place the Niger Delta at the confluence of four pressing national issues in the wake of the April 2003 elections: 1) the efforts led by a number of delta states for resource control, which in effect means expanded local access to oil revenues, 2) the struggle for self-determination of minority people and the clamor for a sovereign national conference to rewrite the federal Constitution, 3) a crisis of rule in the region, as a number of state and local governments are rendered helpless by militant youth movements, growing insecurity, and intracommunity, interethnic, and state violence, and 4) the emergence of what is called a South-South Alliance linking Nigeria’s hitherto-excluded oil-producing states in a bulwark against the ethnic majorities.
Oil Companies Getting a Free Pass
What is most strikingly missing from current discussions of the security problems in the Niger Delta is the role of Shell and other powerful corporate international actors in deepening and sustaining the crisis. Several independent human rights organizations, most notably Human Rights Watch, have linked the oil company to the spate of killings, rapes, and intercommunal feuds that have crippled social and economic life in the Niger Delta since 1993. These human rights groups have also detailed the company’s links to powerful and corrupt Nigerian state officials. Moreover, environmental groups have documented the company’s unrelenting attack on the human ecosystem on which the local communities rely for sustenance. The fact that a case against Chevron was recently heard in San Francisco Federal Court speaks powerfully to these issues of corporate practice. Indeed, detailed local community studies in Nembe, Peremabiri, and Ke/Bille have documented the need for new forms of corporate accountability. Yet, not a single industrialized country consuming Shell’s oil has called for sanctions to be imposed on the oil companies operating in the Niger Delta. Any serious attempt to address the problem of alienation and militancy in Nigeria must focus globally, not just on the Niger Delta.
In a just world, all natural resource revenue belongs to all citizens. To see how this can be achieved for Nigeria, visit the Niger Delta Fund Initiative
In a just world, who would be first in line to benefit from the natural resources of Nigeria? Tell your views to The Progress Report!
The election mess in Florida and elsewhere has brought forth calls to reform the voting process. Some advocate eliminating the Electoral College, the current voting system, and replacing this with a direct election of the president by popular vote. That would be an unwise idea. Here’s why.
The founders of the U.S. Constitution were opposed to mass democracy for the presidency. Much of the public is ignorant, swayed by misleading campaign propaganda, and greedy for special favors. The popular vote also benefits those areas having larger voting populations, which creates an incentive to maximize the voter numbers. A state can get more voters by lowering the standards for voting, including loose standards which allow for voter fraud.
With the electoral college, each State (and the District of Columbia) selects a number of electors equal to the sum of its representation in Congress, the representatives in the House and the Senate. This gives a bit more weight to the small States, each of which have two Senators, just like the big States.
The system has degenerated to a winner-take-all method, where whoever wins in a state gets all its electoral votes. It would better represent the voters if each state split its electoral votes in proportion to the popular vote. That way, Florida today would have split its electors 50/50, and there would not be this mess of court challenges and revotes. Alternatively, each Congressional district could vote for an elector, and the State legislature would elect the two State-wide electors.
Many US voters don’t realize that in many counties, with paper ballots, their votes are not counted precisely. The counting is often statistical, since the machinery does not accurately count each ballot. If the election is not close, it does not matter. But if the election is very close, say within one percent, then the numbers reported are meaningless. It is statistically possible that the winner could have gone the other way.
Voting machines may not be the best solution, since they could be programmed to miscount the votes. That’s also the problem with voting via the internet. It’s difficult to test a computer program for fraud. With paper ballots, fraud is possible if ballots are invalidated or “lost,” but it is easier to witness the process.
The solution with paper ballots in close elections is to run the ballots by machine several times, and then take an average. Hand counting is absurd, being both time consuming and subject to bias.
The election in Florida needs statisticians, not lawyers, to decide the outcome. But in our Brave New America, the lawyers prevail. Judges will determine the outcome rather than statistical analysis.
The ultimate remedy for the problems of mass democracy is nested small- group democracy, as I have written about before. That would be another reason to keep the Electoral College. When democracy gets decentralize to the county level, or better yet, the neighborhood level, then the problems of mass ballot counting will disappear, since each voter will only vote for his neighborhood council. So the best direction of reform is not towards mass popular voting, but towards the other direction, to make the multi-level method even more extensive, all the way down to the neighborhood.
As it stands today, neither candidate has won the presidency, and any outcome will be arbitrary. We will have in effect elected a president by tossing a coin.
What is your opinion? Share it with The Progress Report! Copyright 2000 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Fred Foldvary and The Progress Report.
Special Privileges and Favoritism Undermine Economic Freedom
NAFTA: A Cautionary Tale
We are pleased to bring you this article, made available through the news service of Foreign Policy in Focus. Foreign Policy in Focus has kindly granted us permission to share top articles with the readers of the Progress Report.
by Kevin Gallagher and Timothy Wise
At the end of this month, trade ministers from throughout the Western Hemisphere will gather in Quito, Ecuador for negotiations on the proposed Free Trade Area of the Americas (FTAA). Many FTAA proponents, including the Bush administration, herald the FTAA as a NAFTA for the Americas. Indeed, early drafts suggest that the proposed treaty is modeled closely on NAFTA, which took effect in 1994. Less clear is why the Bush administration believes NAFTA’s spotty track record will help sell the FTAA to wary Latin American governments.
The NAFTA debates of the early 1990s featured many rounds of dueling studies on the agreement’s anticipated impacts. Far less time, energy, or attention has been spent assessing those early promises and warnings, and even less evaluating whether Mexico in particular has benefited from the agreement.
Three years ago, we set out to study the social and environmental impacts of NAFTA and the broader economic integration process of which it is a part. We looked at data not just from the NAFTA period, but from the mid-1980s, when Mexico first began to open its economy. One of our goals was to inform future trade policies and treaties, such as the FTAA, so that developing countries could better assess the promise and the perils of entering into agreements modeled on NAFTA.
Consistent with the public record, our research suggests that Latin American and Caribbean governments should think twice about signing on to the FTAA in its proposed form.
Trade Without Development
It is widely accepted that the goal of economic integration should be to raise living standards. According to our review of the public record, NAFTA has yet to fulfill that promise.
Official figures from both the World Bank and the Mexican government show that trade liberalization has succeeded in stimulating both trade and investment, and it has brought inflation under control. Mexico’s exports have grown at a rapid annual rate of 10.6% in real terms since 1985, and foreign direct investment (FDI) has nearly tripled, posting a real 21% annual growth rate. Inflation has significantly been tamed.
Unfortunately, this growth has not translated into benefits for the Mexican population as a whole. The same official sources show that:
Economic growth has been slow in Mexico–less than one percent per capita per year from 1985-99–compared with 3.4% from 1960-80.
The increase in exports has been far outstripped by rising imports, leaving Mexico with a serious balance of payments deficit.
There has been little job creation, falling far short of the demand in Mexico from new entrants into the labor force.
The manufacturing sector, one of the few sectors to show significant economic growth, has seen a net loss in jobs since NAFTA took effect.
Wages have declined nationally, with real wages down significantly. The real minimum wage is down 60% since 1982, 23% under NAFTA. Contractual wages are down 55% since 1987. Manufacturing wages are down 12% under NAFTA.
Sixty percent of the employed do not receive any of the benefits mandated by Mexican law. One-third of the economically active population is in the informal sector.
The number of households living in poverty has grown 80% since 1984, with some 75% of Mexico’s people now below the poverty line.
Inequality has worsened, with Mexico’s Gini coefficient–the standard international measure of inequality–rising from .43 to .48 since 1984, putting Mexico among the most unequal nations in the hemisphere.
The rural sector is in crisis, beset by grain imports from the U.S., falling commodity prices, and reduced government support. Four-fifths of rural Mexico lives in poverty, and over half are in extreme poverty.
These figures make clear that economic integration in Mexico has come at the expense of development. Our own empirical research on the social and environmental impacts of integration contributes to this gloomy report card.
Environment: Accelerated Degradation
Our research runs contrary to the pre-NAFTA predictions that economic integration with Mexico would eventually lead to an upward harmonization of environmental standards and performance. Between 1985 and 1999, rural soil erosion in Mexico grew by 89%, municipal solid waste by 108%, and air pollution by 97%. The Mexican government estimates that the economic costs of environmental degradation have amounted to 10% of annual GDP, or $36 billion per year. These costs dwarf economic growth, which amounted to only 2.6% on an annual basis.
The surge in foreign direct investment (FDI) has largely failed to bring cleaner technologies to Mexican industry. Although the Mexican cement and steel sectors are now cleaner as a result of overseas investment, they are the exception not the rule. Industrial pollution as a whole has nearly doubled since 1988. Unless economic integration is coupled with strong environmental regulations and enforcement, pollution will only continue to worsen. Since NAFTA took effect, however, real spending on the environment has declined 45%, and plant-level environmental inspections have shown a similar drop.
Corn and NAFTA: The U.S. as “Pollution Haven”
Our research has also demonstrated that some of the most significant trade shifts under NAFTA have net impacts that are very destructive for the environment. In conjunction with Mexican researchers, we have studied the environmental impacts of the growth in U.S. corn exports to Mexico following the rapid elimination of tariffs. The surge in U.S. exports has put added pressure on poor corn farmers in Mexico. This has caused not only increased poverty and out-migration, but also threatens the rich stock of plant biodiversity cultivated by Mexico’s traditional farmers and relied on as a public good by the world’s crop breeders.
In environmental terms, Mexico’s loss is not the United States’ gain. The rise in U.S. corn production has provided a stimulus to some of the most environmentally destructive agricultural practices in the United States. Corn is very chemical-intensive, both in terms of fertilizers and pesticides. Recent expansions of corn production have taken place in some of the drier states, necessitating irrigation at unsustainable levels. It has also encouraged the recent rise in the cultivation of genetically modified corn, as the product is particularly designed to resist pests that are more prevalent in dry conditions. In effect, the U.S. is serving as a “pollution haven” for corn, with more environmentally destructive U.S. practices supplanting more sustainable practices in Mexico.
NAFTA: No Blueprint for the Americas
We have also carried out case study research regarding the manner in which Mexican civil society organizations in Mexico’s most vulnerable communities are responding to the challenges of economic integration. This research highlights how many Mexicans are being left behind by the economic integration process–maquiladora workers seeking health and safety protection, coffee farmers fighting falling international prices, basic grains farmers struggling against the flood of imports, community-based forestry cooperatives facing both economic and human rights issues, and poor communities trying to protect health and environmental standards challenged under NAFTA’s Chapter 11 investment provisions.
The conventional wisdom on economic integration is changing. In response to the hard facts, a wide range of Latin American governments, prominent economists, and civil society organizations are questioning the U.S. approach to economic integration. A vibrant debate among these actors will be occurring both inside and parallel to the official meetings in Quito. These critics do not deny that trade and investment are essential tools for development–the question is what kind of trade and investment, by what rules, and to what end. NAFTA’s track record in Mexico certainly does not bode well for Latin American and Caribbean nations desperate for change after over a decade of slow growth and worsening poverty.
Kevin Gallagher and Timothy Wise are researchers at the Global Development and Environment Institute of Tufts University.
The facts are in, and it is clear that NAFTA and similar special-privilege accords are destructive and harmful to community economies and individual freedom. What would a smarter, sounder trade agreement look like? Tell your views to The Progress Report!
Below is a response to Federal Reserve chair Alan Greenspan’s recent remarks, in which he said that Bush’s deficit was so big that drastic action needed to be taken. Greenspan got that part right, but then he recommended, instead of less war or less corporate welfare, a cut in old age pensions.
by Sam Smith
Alan Greenspan has given the effort to scare Americans out of Social Security another boost, aided as always by a non-critical press. NPR even reported falsely this morning that the Social Security trust fund would go broke in 2018 when in fact that date is only when it is estimated that expenses will exceed revenues. Here, once again, are a few facts to keep in mind as the robber barons try to steal your old age pension:
1. The trustees make three long-term estimates. The one that politicians and the media invariably use is the most pessimistic which assumes economic growth so low that you certainly wouldn’t want your Social Security invested in the stock market because it wouldn’t be going anywhere.
Using the more reasonable intermediate projection, the trust fund will not run out until after 2040.
2. The trust fund is an artificial accounting creation. If it runs out, then Social Security can be funded from other sources including the incredibly bloated military budget. To understand this game, imagine the defense budget came out of a trust fund. Would we stop defending ourselves when this fund was drained thanks to typical defense cost overruns?
3. While it is true that there will be an increase in older Americans in coming decades, there will also be a smaller percentage of younger Americans to educate and take care of. In considering public costs, it is the combination of these two — the so-called dependent population — that matters. Here is what you are not being told: the dependent population was larger during the Kennedy administration than it will be in 2020 during the Great Social Security Crisis. Here are the actual percentages of total population:
Children: 36% Seniors: 9% Total dependent population: 45%
Children: 24% Seniors: 16% Total dependent population: 40%
Incidentally, as of 2000, the total dependent population was 39%, so we’re talking about a one point increase.
In short, you are being conned on Social Security and the media is doing nothing to defend you.
Americans, except members of Congress, are forced to pay into the Social Security system. It is not voluntary. Is it fair then to change the terms of their payouts from the system? What’s your opinion? Tell your views to The Progress Report!
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.
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.
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.
a way to connect the dots. Making the cyber rounds is “The Cavernous Divide” by Scott Klinger, from AlterNet (posted March 21): “As the number of billionaires in the world expands, so does the number of those in poverty.” Duh. The yawning income gap is not news. Nearly every issue of our quarterly digest carries a similar quote. Yet the connection was worked out long ago by one of America’s greatest thinkers, Henry George, who labeled his masterpiece, Progress and Poverty. Techno- and socio-advances always enrich few and impoverish many. Yet progress also pushes up location values – the geonomic insight (is Silicon Valley cheaper now or more expensive?). Instead of taxing income, sales, or buildings, society could collect those values of sites, resources, EM spectrum, and ecosystem services via fees and dues, which would lower the income ceiling, and instead of lavishing corporate welfare, pay out the recovered revenue via dividends, which would jack up the income floor. Dots connected.
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.
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.
a way to redirect all the money we spend on the nature we use – trillions of dollars annually. We can’t pay the Creator of sites and resources and are mistaken to pay their owners this biggest stream in our economy. Instead, as owners we should pay our neighbors for respecting our claims to land. Owners could pay in land dues to the public treasury, a la Sydney Australia’s land tax, and residents could get back a “rent” dividend, a la Alaska’s oil dividend. We’d pay for owning sites, resources, EM spectrum, or emitting pollutants into the ecosphere, then get a fair share of the recovered revenue. The economy would finally have a thermostat, the dividend. When it’s small, people would work more; when it’s big, they’d work less. Sharing Earth’s worth, we could jettison counterproductive taxes and addictive subsidies. Prices would become precise; things like sprawl, sprayed food, gasoline engines, coal-burning plants would no longer seem cheap; things like compact towns, organic foods, fuel cells, and solar powers would become affordable. Getting shares, people could spend their expanded leisure socializing, making art, enjoying nature, or just chilling. Economies let us produce wealth efficiently; geonomics lets us share it fairly.
the policy that the earth’s natural patterns suggests. Use the eco-system’s self-regulating feedback loops as a model. What then needs changing? Basically, the flow of money spent to own or use Earth (both sites and resources) must visit each of us. Our agent, government, exists to collect this natural rent via fees and to disburse the collected revenue via dividends. Doing this, we could forgo taxes on homes and earnings and subsidies of either the needy or the greedy. For more, see our web site, our pamphlet of the title above, or any of our other lit pieces; ask for our literature list.
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.
close to the policy of the Garden Cities in England. Founded by Ebenezer Howard over a century ago, residents own the land in common and run the town as a business. Letchworth, the oldest of the model towns, serves residents grandly from bucketfuls of collected land rent (as does the Canadian Province of Alberta from oil royalty). A geonomic town would pay the rent to residents, letting them freely choose personalized services, and also ax taxes. Both geonomics and Howard were inspired by American proto-geonomist Henry George. The movement launched by Howard today in the UK advances the shift of taxes from buildings to locations. A recent report from the Town and Country Planning Association proposes this Property Tax Shift and their journal published research in the potential of land value taxation by Tony Vickers (Vol. 69, Part 5, 2000). (Thanks to James Robertson)
England and America are two countries separated by a common language.
George Bernard Shaw
So many of our dreams at first seem impossible, then they seem improbable, and then, when we summon the will, they soon become inevitable.
Everything that you are against weakens you; everything that you are for empowers you.
Happiness is the absence of the striving for happiness.
To prevent government from becoming corrupt and tyrannous, its organization and methods should be as simple as possible, its functions be restricted to those necessary to the common welfare, and in all its parts it should be kept as close to the people and as directly within their control as may be.
To know oneself, one should assert oneself.
If God is just, I tremble for my country.
It is not the voice that commands the story; it is the ear.
Clothes make the man. Naked people have little or no influence on society.
Life is not a problem to be solved, but a reality to be experienced.