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Ed. Notes: Must humans expand everywhere? Into the habitats of every other species? Could our species and others co-inhabitat? Should human populations shrink? If so, various populaces have slowed their growth, even stopped growing, when people become materially comfortable. So how do we help people prosper?
Basically we share the value of land; people in the country would get a share of the value of land in the city, just as cities get a large share of the resources of the country. When people in a region share the value of locations in the region, then they can get rid of the taxes and subsidies that are obstacles to attaining prosperity. Enjoying prosperity, people breed less, and without even thinking about they’d leave more room for other species.
Just as you see bison making a comeback in Europe, so we might see lions making a comeback in West Africa, geonomics is that powerful.
This 2014 excerpt of the Huffington Post, Jan 13, is by Emily Swanson.
A Rolling Stone rundown of “Five Economic Reforms Millennials Should Be Fighting For” roiled the Internet last week, sparking a multi-layered debate about the policies being proposed and the wisdom of proposing them at all. If the results of a new HuffPost/YouGov poll are any guide, rallying support won’t be easy.
While Americans were more likely than not to support guaranteeing a job for everyone, relatively few said they supported using an expanded Social Security program to guarantee a minimum income to every American. Fifty-four percent of all adults polled opposed the idea, compared to 35 percent overall who said they supported it. Among people under 30, 44 percent of respondents opposed the idea, while 40 percent supported it.
“All other taxes could be replaced by an assets tax on land ownership and financial wealth.” That idea was opposed by a 45 percent to 25 percent margin overall, and by a 36 percent to 22 percent margin among respondents under 30. Forty-two percent of those under 30 and 30 percent of respondents overall said they weren’t sure whether they supported the idea.
Ed. Notes: Rolling Stone’s 5 Reforms hit a nerve, showing once again humans are inherently conservative; “better the devil they know.” Plus, they’re influenced by their normalcy bias. And third, new ideas have to be explained but to win they have to be felt. Check out books like What’s the Matter With Kansas, which examined why people vote against their own self-interest. So it’s a real uphill battle for new ideas. How does something like women winning suffrage (they couldn’t vote) or protecting the whales (they can’t vote) or separation of church and state (the religious voted on it) ever win? How society does change is a science and probably someone somewhere has an answer. Would they please speak up?
This 2014 excerpt of Business Insider, Jan 9, is by Julia La Roche.
Third Avenue Management’s chairman/founder Martin Whitman blasted Nobel Prize Laureate Eugene Fama. “I am disappointed that a Nobel Prize was awarded to Eugene Fama.”
Fama, a professor at Chicago Booth, won the so-called “Nobel” Prize in Economic so-called “Science” [Alfred Nobel left no money for economics, a field that has a long way to go before becoming a science] last year with Lars Peter Hansen and Robert Shiller.
Whitman called Fama’s work on Modern Capital Theory (MCT) “utter nonsense”, “sloppy science”, “plain stupid”, and “unscholarly.”
MCT, the hedge fund manager said, is of little or no help to those involved primarily with making investment decisions: value investors, control investors, most distress investors, credit analysts, and first and second stage venture capital investors.
MCT, not only misdefines markets, but also seems to be sloppy science. MCT acolytes forget that many managed funds do tend to outperform relative benchmarks, over the long term, on average, and most of the time. No attempt is made to study what it is that outliers do that make them outliers, e.g., Berkshire Hathaway, since this would entail the detailed analysis of portfolio companies and the securities they issue. How unscholarly!
Ed. Notes: The problem is bigger than just this one theory. In particular, it’s dishonest to say there is a Nobel prize in economics, and in general, that field is not a science. It can’t be. It does not make any distinction between your spending that rewards the efforts of producers, such as when you buy goods and services, and your spending that rewards the standing of privilege-holders, such as when you buy land and resources (often indirectly in the price of gasoline, for instance). When you pay producers, then they go and produce more. But when you pay mere owners, then they just and seek more rents and privileges. Your former payments grow the economy and your latter payments shrink the economy. Differences can’t get any more basic than that.
This 2014 excerpt of Newsworks, Jan 14, is by Frank Iannuzzi at Temple University.
If the city council wants to make Philadelphia’s tax structure better for everyone, it should focus on reforming property taxes. Specifically, it should adopt what is commonly referred to as a “land value tax.”‘
This levy, which exists in more than a dozen municipalities and school districts across Pennsylvania, has three primary virtues.
First, this structure would penalize speculators who hold vacant land or abandoned buildings and give landowners an incentive to maximize the productive use of their property — or pay for the harm their underutilized land causes to the value of surrounding properties.
Second, redistributing taxes from improvements to land would effectively shift much of that burden from residents [since their locations are of lower value] to commercial properties [since their locations are of higher value].
Third, while it may seem counterproductive to burden commercial properties, focusing the tax burden away from privately-created improvement value in favor of recapturing the publicly-created value of land merely captures the excess now paid to landlords.
Ed. Notes: Great to see WHYY (the station of Terry Gross’ “All Things Considered”) join the discussion. Every time another rational voice calls for public recovery of publicly-generated land value, it brings the actuality of reform another day closer. Care to chime in?
This 2014 excerpt of Grist, Jan 13, is by Jaafar Rizvi.
From 2001 to 2010, the U.S. built roughly 13,000 miles of new interstate natural gas pipelines compared to just 748 miles of interstate high-voltage transmission lines. This gigantic mismatch is in part due to the fact that the Federal Energy Regulatory Commission lacks the authority to site transmission lines, but does have the ability to site pipelines. So FERC can approve a pipeline route, while a patchwork of local and regional regulators with competing interests must all agree on where an electric transmission line should be built. One broken link in that long and fragile chain of approvals can quash an entire project.
Take for example the Zephyr Power Transmission Project. This line, proposed in 2011, would take power from what could be the largest wind farm in the nation and perhaps the world, the Pathfinder Zephyr Wind project in Wyoming, and deliver it to Las Vegas in the Southwest. This wind farm is expected to generate between 2,000 and 3,000 megawatts of inexpensive, renewable energy — enough to power a million homes. But permitting and review is expected to take six years. The process could go longer and at any point it could be rejected.
Natural gas pipelines, on the other hand, are getting fast-tracked. For example, Spectra Energy, the owner and operator of a pipeline delivering fracked natural gas from the Marcellus Shale to Manhattan, applied for a permit with FERC on Dec. 20, 2010. Less than three years later, it’s bringing natural gas to Manhattan.
Ed. Notes: While bureaucracy may be too slow for power lines, those lines are above ground while pipes for gas are below, so the problems with views, bird flight patterns, etc, are different. Further, should clean energy renewables be centralized, as in a wind farm, or should they be decentralized, with windmills atop skyscrapers for example? Maybe the government shouldn’t necessarily speed up processing for power lines but slow it down for gas lines, and take into question such issues as the pollution from the burned natural gas.
This 2014 excerpt of Common Dreams, Jan 13, is by Bill Quigley.
There are actually thousands of tax breaks and subsidies for the rich and corporations provided by federal, state and local governments but these ten will give a taste.
One. State and Local Subsidies to Corporations.
Two. Direct Federal Subsidies to Corporations.
Three. Federal Income Tax Breaks for Corporations.
Five. Subsidy to Fast Food Industry. They pay wages so low that taxpayers must put up $243 billion to pay for public benefits for their workers.
Six. Mortgage Deduction benefits mostly homeowners with incomes over $100,000 per year.
Seven. The government bailout of Wall Street cost $32 to $68 billion, not including the takeover of Fannie Mae and Freddie Mac which alone cost more than $180 billion. The Federal Reserve made at least $7.6 trillion [others say double] available to banks, financial firms, and investors.
Eight. Each major piece of legislation; e.g., the emergency tax legislation passed by Congress in early 2013 contained 43 business and energy tax breaks worth $67 billion.
Nine. Lax enforcement. E.g., JPMorgan Chase made a preliminary $13 billion mortgage settlement with the US government but is allowed to write off $4 billion. Corporations paying fines to the government protect their officers from being prosecuted (you and I would be prosecuted).
Ten. Thousands of smaller special breaks. E.g: Fifty billionaires received farm subsidies in the past twenty years.
Special breaks in tax code is the reason there are thousands of lobbyists in the halls of Congress, hundreds of lobbyists around each state legislature and tens of thousands of tax lawyers all over the country.
Ed. Notes: Not just tax breaks but subsidies, too, and fat-cat contracts, are why there are lobbyists pulling down millions of bucks, getting passed into law welfare for the rich.
Back to the mortgage interest deduction. It does not save the homebuyer a penny because while the buyer’s tax burden might be less the purchased home’s price is higher. The deduction merely lets real estate, construction, and banking industries inflate land, buildings, and loans. Without the deduction, some wannabe buyers could not afford the house, so its price would have to come down. Canada does not allow interest deduction and it enjoys an even higher rate of home ownership than America.
Back to the Wall Street bailout. It also let them avoid mending their dishonest ways, gobble up smaller unlucky competitors, and created a false recovery (inflated asset values) that papered over the continuing recession for millions of Americans.
The author left out military contracts, perhaps the biggest part of corporate welfare, and the free funds to the oil industry, an industry which cheats on its royalty payments and never gets punished, for something as intangible as research, and the fact that corporations and multi-millionaires each year get refund checks back from the US Treasury in the hundreds of millions of dollars!
After all this, many people still don’t see anything wrong with subsidies, they just see something wrong with the payments going to the wrong people. And they don’t see anything wrong with vast fortunes, they just want to tax them, suggesting it does not matter how you accumulate your money as long as you give us a slice — not a pretty moral picture. And pragmatically, it’s hard to capture a slice downstream, after the tax target has already become rich and powerful, and much easier to capture the funds, the source of fortunes, upstream, while they’re still in flux.
Another part of the author’s analysis left out is that the recipients of state favors (of tax breaks and subsidies) are entities that have long been the recipients of natural “rents”, of the money that society spends for the nature it uses. With money comes power and those unearned rents have enabled the recipients to lobby and make campaign contributions for ever more favors. So to stop the abuse of pubic revenue we also have to turn off the primordial spigot — the titles, deeds, leases, and loans that channel our spending for land and resources into so few pockets.
To make a clean sweep of it, we should direct government to forget taxing and instead use fees, dues, leases, etc to redirect Earth’s worth into the public treasury, making this social surplus our common wealth, and to forget subsidizing and instead disburse the lion’s share of public revenue back to citizens as a monthly dividend. Since complexity is the enemy of equity, let’s follow the KISS principle. Life could be so much easier!
Following Argentina’s economic crisis in 2001, the country leaned heavily on mining and large-scale agribusiness (especially soy) to reinvigorate its ailing economy. The expansion of these industries requires the accumulation of new lands and the violent displacement of rural communities. Many farmers and indigenous communities don’t have titles to their lands, leaving them vulnerable to displacement or criminal charges for squatting.
Nationally, nearly a quarter of Argentina’s farming families are engaged in some kind of dispute over their land, 64 percent of which began within the last 20 years. There are 857 distinct conflicts over land, affecting 63,843 family farms, covering nearly 23 million acres.
In the past three years 11 farmers and indigenous people have died, all of whom opposed the incursion of large-scale developments on their lands. Some were murdered in cold blood, while others died in mysterious traffic accidents that their families claim were also premeditated.
Six corporations (Cargill, Bunge, Dreyfus, AGD, Vicentín and Molinos Río de la Plata) control 90 percent of soy production and its derivatives, making record profits.
In the neighborhood of Ituzaingó in Córdoba province, the activist group of concerned mothers Las Madres de Ituzaingó claims 500 of the 2,000 residents have reported some form of cancer from pesticides for soy cultivation.
Communal land use for animal grazing, for instance, is crucial to many peasant farmers’ survival. However, the Argentine judicial system does not easily recognize commons and is prone to a lack of political accountability.
Peasant movements like Argentina’s National Peasant and Indigenous Movement (MNCI) are resisting this assault on their lands and fighting to transform the system. These two strategies —- 1) demanding communal land titles and 2) appealing to international human rights instruments for collective territorial rights —- go beyond the typical strategy of occupation in that they seek broader systemic transformation.
Ed. Notes: Such bloody disputes are not uncommon in Latin America. Elsewhere and earlier, they’ve been settled by charging people for claiming land. Then they claimed no more than they could individually use, and huge plantations were broken up. Could Land Dues work again?
This 2013 excerpt of the Hampton Institute, Dec 27, is by Jeriah Bowser. In 2014 the full article appeared at Truthout, Jan 12.
Unless I purchase a piece of land, I will forever be a serf to a landowner, forever paying “rent” to another person who “owns” the land I am living on. And even if I do manage to acquire a parcel of land, I will be forced to pay taxes to the government in which ‘my’ land is located in, or I will have ‘my’ land forcibly taken from me. There is simply nowhere to live for free, no public areas, no “commons” with which one can live simply and quietly without having to participate in industrial society.
Completely foreign to humanity for over 200,000 years was the concept of private property while sacred land was familiar.
For those of us who are not landowners and don’t have the economic means to purchase and then free land, there are still many actions we can participate in: squatting, eviction-resisting, and communal housing. Participating in or starting a land conservancy is a great way to preserve and reclaim land. Engaging in direct-action to protect land-grabs by government and corporate powers is another way that you can participate in this movement.
Ed. Notes: Is owning land wrong? Don’t people need a place to call their own? A tribe of hunter/gatherers in Africa, the Ik, have the custom of a “di”, a place reserved for just one person where he can sit in full view of others and be ignored, just as if he were in a private home. Perhaps the actual problem is absentee ownership.
Further, even before the planet got crowded, people have always competed for the same parcel or region. Often they settled claims by killing. Now where there isn’t much room for commons — and even within commons people long for the right to a particular site — isn’t paying money for some land an improvement on violence?
Happily, having to pay for land can also force absentee ownership to retreat and owner occupancy to expand. Where societies levy a land tax, or a property tax which contains the land tax, having to pay for land on an ongoing basis makes it not profitable to be a middleman. So the grasping landlords who had too much sell off their excess and speculators don’t even bother to accumulate an excess of land.
Far better than paying site rent to the government, however, is paying it to one’s community. Then residents would not only pay Land Dues for the parcel one claims but also get paid a fair share of the amassed dues that all one’s neighbors pay: Land Dues into the public treasury, Rent Dividends back out to residents, somewhat similar to what Aspen CO and Singapore do. It’s a third-way alternative to renting land, to buying land, or to paying land (or property) taxes.
One would expect this sharing of socially-generated land values to strengthen one’s ties to both community and to the earth.
This 2014 excerpt of Pacific Standard, Jan 11, is by Jim Russell.
Large companies, universities, and other anchor institutions help spread the fixed costs of research (think buildings, suppliers, etc.). And by massing large numbers of research and development workers together in large organizations, they give the capacity to capitalize on new inventions. The presence of just one large-scale firm can be a huge advantage in providing the institutional heft behind a fledgling innovative economy.
But these big companies tend to focus on things that relate to their existing products and may overlook inventions in other areas. Regions with large numbers of smaller, more entrepreneurial companies can gain an edge in capitalizing on these innovations that larger companies might pass over. The story of Steve Jobs’ trip to Xerox’s Palo Alto Research Center — walking away with a whole host of ideas Xerox hadn’t brought to market — is perhaps the most legendary example of this.
The population-weighted density approach reveals that the areas with people living at the highest density levels —- metro areas with 5,000 or more people per square mile —- were clustered mainly in California and along the corridor stretching from Boston to Washington. Other very dense metro areas included Chicago, Honolulu, Laredo, Las Vegas, Miami, Milwaukee, and San Juan. Low-density metro areas, on the other hand — those with fewer than 1,000 people per square mile -— were generally clustered in the South.
While we usually think of the knowledge economy as having a strong bi-coastal orientation, most of Lumosity’s top 25 brainiest places are in the Midwest. Milwaukee is the highest-ranked large metro. Minneapolis-St. Paul is second, Boston third, Pittsburgh fourth, and Indianapolis fifth. Kansas City, Rochester, Seattle, Cincinnati, and Austin round out the top 10 among large metros. San Francisco is 11th, San Jose (the Silicon Valley) 13th, and D.C. 14th among large metros.
Milwaukee is the brainiest. Milwaukee is also among the most dense. Yet Milwaukee isn’t the most innovative.
Take a look at Portland, Oregon, and Rochester, New York. Both have about 1,000 inventors apiece. But Portland had twice the number of quality-adjusted patents per inventor. Though both metros had similar numbers of large labs, Portland registered a whopping five times as many smaller labs as Rochester. Having a diverse firm base — with at least one large lab and many smaller labs — can increase innovation by 17 percent.
Migration matters. Portland is a destination for ambition. Rochester is the place the prodigal daughter leaves. The more parochial a place, the more ineffective the talent.
Ed. Notes: Wherever people go they bring their land values with them. And the more the gather in one spot, the more they push up the value of locations, and do so exponentially. Eventually those high site values, unless recovered and shared, will drive away the original innovators, a phenomenon seen in every hip neighborhood in every city.
The burning issue in Britain is the cost of living. Prices have outstripped wages for the past six years. The thing that is really out of control is the cost of housing [land]. In the past year wages have risen by 1%; property [location] prices are up by 8.4%. This is merely the latest in a long surge. If since 1971 the price of groceries had risen as steeply as the cost of housing, a chicken would cost £51 ($83).
By subsidising mortgages, and thus boosting demand, the government is exacerbating the problem. Driven by a baby-boom, immigration, and longer lives, Britain’s population is growing by around 0.8% per year. Foreign wealth, meantime, is pouring into London.
New British homes are smaller than those anywhere else in Europe, household size is rising in London, and slums are spreading as immigrants squash into shared houses (and, sometimes, garden sheds). Inequality is growing, because the higher property prices are, the greater the advantage that accrues to those own homes.
Though land prices can soar 200-fold when planning permission is granted, councils cannot extract much of the increased value to spend on services.
The ideal solution would be a tax on the value of land. This would be low or zero for agricultural land and would jump as soon as permission to build is granted. It would prod builders to get to work quickly. It would also help to capture the gains in house [site] prices that result from investment in transport or schools.
Ed. Notes: The British press does a great job of promoting this fundamental and effective reform: public recovery of publicly generated location values. Let’s hope the public can’t be far behind. And soon after that may the “leaders” get on board.
One of the topics that has not received enough attention in economics is the effect of economic growth on the distribution of income. So if you want to understand it, you should get a piece of paper. I’ll wait until you have it …
Now on the lower left side, draw a rectangle with a height longer than the width. The top half of the paper should still be blank. We will use an agricultural model with one product, corn. At first, the only factors are land and labor. Now draw small circles of equal size in the rectangle. These are farms of equal size. The yield is ten bushels of corn per farm per period of production. As long as there is free land available, land rent is zero, and the entire yield of ten goes to wages.
Now draw another rectangle to the right of the first one, three-fifths as high. Label this “six,” because the output in that land is six bushels of corn. All the farm workers are equally skilled and work the same number of hours, so the lower yield is due to its being less productive land. With rent at zero because there is free land, the wage is six. The wage in the ten-bushel land has now fallen to six, because workers are mobile and equally skilled. The extra four bushels in the ten-bushel farms are now land rent.
For rent and wages, it does not matter whether the owner is also the worker, or whether he hires labor at six bushels, or whether he rents out the land to a tenant at four bushels. The economic rent is the difference in the productivity of the two lands, regardless of who are the owners, tenants, and workers. If the landlord happens to charge only three bushels from a tenant, the economic rent is still four: three go to the landlord, while one bushel is the yield as rent kept by the tenant.
In classical economics, the least productive land in use is called the “margin of production.” There is a “law of wages,” which states that the wage level for the economy is the wage at the margin of production. There is a “law of rent” which states that the rent of a plot of land is its output minus the normal costs of labor and capital goods, such as, in our simple model, the difference between the output of the lands yielding ten and six.
Now add a third rectangle to the right of the six-bushel land, and label this “four,” because this is the new margin of production yielding four bushels. Wages there are four, making the wage also four at the lands yielding ten and six. Now rent in the ten-bushel land has risen from four to six, and rent at the six-bushel land has risen from zero to two. You can see that as the margin of production moves to less productive land, wages fall and rent rises.
Now let us introduce a plow, which represents both more capital goods and better technology. The plow costs two bushels and completely depreciates each period, requiring a new plow for the next period. The plow doubles production at each plot of land. So on the rightmost rectangle, draw another rectangle just above the first one, attached to it, with an equal size, representing the doubling of output.
Is it worth buying the plow? Yes! The farms at the margin, having yielded four, now yield eight. After paying for the capital good, the plow, the output is six, which all goes to wages. Wages there have risen by 50 percent. By the law of wages, wages in the other farms have risen to six.
With the plow, the farms that yielded six now yield twelve. Draw a rectangle above the middle one, with equal size. Now the distribution of the twelve-bushel output is two to capital goods, six to wages, and the remainder, four bushels, to rent. Rent there doubled from two to four bushels.
Now do the same for what was the ten-bushel land, which now yields twenty. The distribution is two to capital goods, six to wages, and the remainder, twelve bushels, to rent. Rent there also doubled, from six to twelve bushels. (A similar graph of the factors).
Now we can see the effect of the economic growth caused by more and better capital goods. Wages have risen by fifty percent, while rent doubled. We can calculate this in bushels. Suppose there were ten farms in each grade of land. Write this down: before the plow, for the three lands, output was 100 + 60 + 40 = 200. Wages were 40 times 3 = 120. Rent was 60 + 20 = 80. So wages were 60 percent and rent was 40 percent of income.
With the plow, output doubles to 200 + 120 + 80 = 400. Are you writing this down? Wages are now 60 times 3 = 180. Capital yields are 2 bushels per plow times 30 farms = 60 bushels. Land rent is 120 + 40 = 160. Wages are now 180/400 = 45 percent of income. Capital yields = 60/400 = 15 percent of income. Rent = 40 percent of income. Wages rose by 60 bushels, while rent has risen by 80 bushels.
The portion of income going to wages has fallen from 60 to 45 percent, but the portion of rent stayed the same, 40 percent. The doubling of output doubled the rent, but because the plow has a cost, wages could not double, but they did rise by 50 percent. Labor benefits from the greater productivity, but landowners benefit more. If new technology and capital goods were to similarly double production again, the distribution of income would keep the same proportions.
If the ownership of the land value is concentrated, then much of the gains from economic expansion is distributed to a few landowners. The greater rent going to a few owners explains much of the inequality of income today throughout the world. These landowners do nothing to generate the growth. Usually, better capital goods also requires better human capital, greater skills. So the economic growth and development is caused by entrepreneurship and investment in capital goods and human capital, and the yields properly go to a return on the capital goods, the capital yield, and to greater wages, including the gains to the entrepreneurs. But the greater rent is a surplus windfall to the owners of land that obtain the rent just by holding title.
If we believe in human equality, the land rent should be distributed to all the people equally. Then all the people would equally benefit from the greater productivity. The effect of greater productivity on the input-factor distribution of income has been neglected, so this model should be taught in all courses on the principles of economics.
This 2014 excerpt of Pacific Standard, Jan 9, is by Noah Davis.
Between July 1 and December 15 along the American Mid-Atlantic Coast, 996 dolphins were “stranded,” which is marine-biology speak for a much darker reality. Compare that figure to the 117 average during the same period between 2007 and 2012.
This isn’t the first one. Between June 1987 and May of 1988, more than 700 bottlenose dolphins died in the Mid-Atlantic. It’s estimated that the figure represented roughly half of the Mid-Atlantic population. Marine biologists discovered that cetacean morbillivirus, which is in the same genus as measles, killed the dolphins.
Morbillivirus is also to blame for the recent deaths.
Morbillivirus is endemic to the dolphin environment. It’s always floating around, waiting to be passed through the air via exhalation from a dolphin’s blowhole. So why are they dying off in 2013?
One theory, according to Erin Fougeres, a marine biologist with NOAA Fisheries, is that outbreaks are cyclical. “Those bottlenose dolphins that don’t die develop natural antibodies,” she told me over the phone. “As those animals slowly die out of the population, herd immunity drops which can lead to an outbreak. That’s what we think it’s happening.”
Dolphins act like the proverbial canaries in a coal mine. “We will continue to look and see if there are any underlying causes that might make them more susceptible to the virus this year versus other years,” she said. “Something like global warming.”
There was an unrelated UME in Louisiana’s Barataria Bay, an area affected by the BP Deepwater Horizon oil spill. All the deaths aren’t linked but.
Ed. Notes: With power comes responsibility, supposedly. Human industry has the power to harm nature, so where is the responsibility not to? We humans need to strengthen our ties to the natural world. Perhaps a share of the worth of Mother Earth would do that. The healthier the ecosystem, the fatter our “rent” dividend. The old bottom line would be pulling on the same end of the rope with stewardship. It’d align the interests of people and planet both.
Thousands of homes can’t be sold because of private ground rent
A 2014 excerpt of Dutch News, Jan 9.
In 2011, it emerged that banks had suddenly all but stopped giving mortgages to people who want to buy property situated on another private owner’s land and therefore subject to ground rent (erfpacht).
The banks consider it too risky to do so, because the land owner can increase the ground rent at will. This, they say, could mean people default on their mortgages.
‘The aim of the new procedure was to make it possible to sell houses on land owned by third parties,’ said Piet van Buuren from a lobby group representing people unable to sell their homes. ‘In some cases, the notaries are being demonstrably tougher than was agreed.’
Ed. Notes: Is what the bankers get the media to repeat true? Don’t leases cover things like how often rents can be raised? And can’t leasees buy insurance to cover jumps in rents? And if site rents were rebated back as resident’s dividends, would any of this even matter? Maybe bankers don’t like rents going to anyone but themselves via mortgages? Didn’t journalists used to ask penetrating questions?
Why Karl Marx Hated the Land Value Tax and Why He’s Wrong
This 2014 excerpt of Keystone Politics is by Jon Geeting.
Rightists and conservatives calling Jesse Myerson a Communist for supporting ideas like Henry George’s land value tax is pretty amusing since Karl Marx himself described Georgist politics as “capitalism’s last ditch.”
Henry George differs from Marx in this important respect: whereas Marx’s politics envisioned a bifurcated struggle between labor and capital, George’s politics placed labor and capital on the same side, with landowners on the other.
George’s idea is that you work for a living, and (contra Marx) that the honest-to-God investors who make stuff like buildings and machinery and national telecommunications networks and politics blogs make an honest living too.
But your landlord doesn’t really work. He makes money by sitting around owning stuff, repairing your dishwasher sometimes, while you toil doing real work to pay him a third of your income or more.
What if we stopped taking so much money in sales, wage, and investment taxes from the people who work and invest for real, and started funding more of our public services with wealth expropriated from people who just own stuff. Rent hikes would stop eating into wages so much, workers and businesses would have more disposable income to spend and invest in the real economy, and this would all create a much stronger economic foundation for cities.
Ed. Notes: Paying your community for your land instead of an individual is not only fair, since it’s the community who generate that value, but also efficient, because drives efficient use of land and, as noted above, makes possible deleting the ruinous taxes. And psychologically, Land Dues ought to strengthen our identity with both community and Earth. Long run, that should help.
This 2014 excerpt of the BBC, Jan 7, is by Julia Carneiro.
Rio dos Macacos, home to 67 families, is one of Brazil’s quilombos – communities started by former slaves who went to live in hiding, surviving as best as they could by working the land, before forced labour was prohibited in Brazil in 1888.
According to Fundacao Palmares, a government-funded cultural organisation, there are more than 2,400 quilombos across the country.
Many still keep alive the traditions of their ancestors, such as African dance forms and forms of worship.
But even after slavery was abolished, elders say their ancestors had few rights. For a long time, they continued to work the sugarcane fields not for pay, but in return for food and housing.
It was only after the local farms went into decline, that the quilombolas – as quilombo residents are known – were allowed to harvest some of the fields and keep the proceeds for themselves.
But no land was ever formally given to them – an omission which is at the root of at their current problems.
Brazil’s constitution – signed in 1988, 100 years after slavery was abolished – ruled that quilombolas were entitled to the land they had historically occupied.
A navy built a naval base in the area in the 1950, and as the base grew, the area where quilombolas lived shrank. Today, the Aaratu Naval Base is the second largest in the country. One of the oldest residents, Maria de Souza Oliveira, 86, remembers how 70 families were moved to make way for a village built for the families of navy personnel in the 1970s. Nowadays, some 450 families live in the navy village, just across the Macacos river from the quilombo.
Community leader Rosimeire dos Santos Silva says the community has had its crops pulled out. “They harass our children on their way to school. And if we try to work the soil, we’re beaten up.”
Ed. Notes: Ironic, isn’t it, that the institution that’s supposed to defend the people instead attacks them when it wants what the people have. And nobody is going to attack Brazil. What do they want with an expanding military anyway? They could abolish it, as Costa Rica did, as any nation could. Just use geonomics to settle and disputes both within and beyond national borders.
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.
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 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.
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.
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 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.
a scientific look at how we divvy up the work and the wealth, how some of us end up with too much or too little effort or reward. That’s partly due to Ricardo’s Law of Rent, showing how wasteful use of Earth cuts wages. And it’s partly due to how a society’s elite runs government around like water boys, dishing out subsidies and tax breaks. While geonomists look political reality right in the eye, without blinking, conventional economists flinch. When Paul Volcker, ex-chief of the Federal Reserve, moved on to a cushy professorship at Princeton cum book contract, the crush of deadlines bore down. So Volcker asked a junior associate to help with the book. The guy refused, explaining that giving serious consideration to policy would ruin his academic career. The ex-Fed chief couldn’t believe it and asked the department chair if truly that were the case. That head honcho pondered the question then replied no, not if he only does it once. And economics was AKA political economy!
the Great Green Tax Shift maxed out”
Economically, taxing pollution and depletion does reduce pollutants and extracts – and thus the tax base; plus such taxes are regressive, requiring a safety net. On the other hand, collecting site rent is progressive and generates a revenue surplus payable as a dividend to residents, which can serve as the safety net.
Environmentally, taxes on waste and extraction do not drive efficient use of land, as does getting site rent. Better settlement patterns do reduce extraction upstream and pollution downstream.
Politically, green fees have less impact if applied locally; local is where grassroots movements have more impact. Yet getting rent usually entails shifting the property tax (or charging user fees), the province of local jurisdictions; both mayors and city voters have been known to adopt a site-value tax.
Ethically, putting into practice “tax bads, not goods” skirts the issue of sharing Mother Earth which collecting rent confronts head on. Since nothing is fixed until it’s fixed right, ultimately, greens must lead humanity into geotopia where we all share the worth of Mother Earth.
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.
suitable for framing by Green Parties. When Greens began in Germany two decades ago, they defined themselves as neither left nor right but in front. Geonomics fits that description. The Green Parties have their Four Pillars; geonomists have four ways to apply them:
Ecological Wisdom. Want people to use the eco-system wisely? Charge them Rent and, to end corporate license, add surcharges. To minimize these costs, people will use less Earth.
Nonviolence. Want people to settle disputes nonviolently? Set a good example; don’t levy taxes, which rely on the threat of incarceration, to take people’s money. Try quid pro quo fees and dues.
Social Responsibility. Want people to be responsible for their actions? Don’t make basic choices for them by subsidizing services, addicting them to a caretaker state. Let people spend shares of social surplus.
Grassroots Democracy. Better have grassroots prosperity. Remember, political power follows economic. Pay people a Citizens Dividend; to keep it, they’ll show up at the polls, public hearings, and conventions.