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This 2014 excerpt of TakePart, Feb 18, is by Willy Blackmore.
The fight over GMO labeling isn’t the first regulatory battle Monsanto has engaged in over the course of its 112 years in business. From PCBs to DDT to Agent Orange, the chemical company turned ag giant has manufactured numerous products that ended up all but disappearing — if not being banned outright — following high-profile public debates about environmental and health concerns.
You don’t have to look much farther than the boardroom to see how deeply entrenched Monsanto’s ties to the rest of the food industry are: Janice L. Fields, a former president of McDonald’s USA, and C. Steven McMillan, a former CEO of Sara Lee Corporation, both sit on the board of directors. Other board members have ties to Procter & Gamble, Lockheed Martin, and Microsoft.
Monsanto’s board members have worked for the EPA, advised the U.S. Department of Agriculture (USDA), and served on President Obama’s Advisory Committee for Trade Policy and Negotiations. They presided over multiple universities in various senior positions, including South Dakota State University (with whom Monsanto has a significant research agreement), Arizona State’s Biodesign Institute and Washington University in St. Louis…. The prevalence of Monsanto’s directors in these highly influential positions begs a closer look at how they’re able to push the pro-GE agenda within the government and influence public opinion.
Ed. Notes: Monsanto is hardly the exception. Every major corporation has its directors serving as directors on other company boards, rich foundation boards, executive advisory councils, as university trustees, intermarrying themselves and their children, etc. It’s the way of the world. It’s well documented in Who Owns America by G. William Domhoff.
It has its roots — both historically and even today — in capturing the vast stream of money paid for land and resources. If ever the hierarchy is to be toppled, then reformers will have to redirect that flow of “rents” to the accounts of everybody. Government would have to quit being the handmaiden of the elite and instead use its powers to tax or charge fees or institute dues or lease public resources at full market value in order to recover these socially-generated values then disburse the raised revenue as dividends to the citizenry in general.
More equitable distribution of society’s surplus will provide a foundation for a more equitable society, minus the concentration of wealth and power.
BTW, there is a petition to pass a law to require truth in the labeling of food which would require Monsanto’s customers to reveal the GMOs on shelves in grocery stores, in case you’d like to know what your eating.
This 2013 excerpt of Clawback, Feb 17, is by Greg LeRoy.
A large national poll of independent business owners finds that cutting taxpayer subsidies to big business is their top-rated public policy priority. And a smaller survey of high-growth entrepreneurs finds that the last things they are concerned about are low taxes or business-friendly regulations.
Nationwide, of 2,602 small business owners said the public policy change that would most help their business was “eliminate subsidies for big companies.”
Of the fastest-growing companies in the United States, only five percent cited low taxes and only two percent cited regulations as a reason for choosing their location. Before starting their company, they moved to a city of one million or more because of personal connections and quality of life. Their most critical business reason for staying was a pool of talented labor, followed by access to customers and suppliers.
Ed. Notes: In the US, regulations are not as big a problem as in the nations listed by deSoto in his work on capitalism where people must wait years for permits. That said, even if most businesses here don’t run into trouble, some still do, and none should.
Instead of regulate and permit (or not) and otherwise interfere, governments could instead get out of the limited liability business. To minimize liability and ruinous lawsuits, business would conduct its affairs safely and buy sufficient insurance coverage.
And to attract talented labor, customers, and suppliers, there is something any town can do to make itself such a destination city. It’s something cities across the Pacific used to help themselves become the Asian Tigers. And that is, shift the property tax off buildings, onto locations. Then to pay the higher “land dues”, the owners quit speculating and develop their sites. The development stimulates the local economy and the second wave of businesses that fill the new structures keep the good growth going.
This property tax shift does not directly fall on new businesses but it does create a context that favors start-ups. Indeed, in the recession before last, the Australian towns that taxed land not only did not lose businesses but actually added them! Good ol’ geonomics worked again!
So smart taxes and efficient land use matter, as does eliminating the financial favors for bigger insiders.
This 2014 excerpt of Seeking Alpha, Feb 16, is by Craig Pirrong.
Elon Musk is the founder of PayPal, Tesla Motors, and SpaceX (space exploration). All of his companies were heavily dependent on government subsidies and support. This support socialized the potential losses, and allowed Musk (and other major investors, notably Goldman) to capture the upside.
If his products and business models were so great, visionary Musk could succeed on his own, by attracting private capital.
SpaceX is dependent on government contracts, given that a very large fraction of space launches carry government payloads. This is something different from Solar City and Tesla, where the government is providing subsidies but not receiving any product or service in return. But still, it means that Musk depends crucially on cultivating government support.
A firm does not succeed or fail at winning big ticket contracts on the basis of the superiority of its product, but instead on the basis of its ability to influence politicians and bureaucrats. And a lack of scruple is often a feature, not a bug in that regard.
SpaceX was looking for a commercial launch site, and seeking state subsidies in order to build it. The company has been playing states off against one another, looking for tax benefits. Musk focused on one of the poorest parts of Texas – Brownsville – and dangled the prospect of a mere 600 jobs, in exchange for $20 million dollars or so in tax benefits. Some of which will come from the taxpayers of that very poor community. The state legislature has succumbed.
Ed. Notes: There’s long been a refrain in economics and business: The way to make a fortune is to rake in the public’s money and to slough off your costs onto the public. Don’t pay for your pollution; let others do that. And, classically, capture the socially-generated rental value of land, while unconscious society sits idly by not even aware of what they’re losing.
Ordinary people will fight each other over wages and jobs but not over locations and their rents (only the elite know enough to wage those battles). In this regard, regular people are much like the species of lizards that live on the cliffs of South America overlooking the Pacific Ocean, but in reverse. The lizards fight each other over nesting spots but when a seagull comes and eats the eggs, the lizards don’t defend their own offspring; they just blithely sit there watching the next generation go down the gullet of the seagull. The lizards are not evolved enough to understand what’s happening to their progeny, to their species.
Similarly, humans are not hardwired to be able to see the flow of rent, to see their loss of rent, to see who captures it, to see how social conventions like property, mortgages, subsidies, and tax breaks direct the flow of rent into the pockets of favored insiders. Hopefully, humans will acquire the ability to become conscious of rent out of innate curiosity and a sense of justice without having to wait for evolution to deliver the needed new neural connections in the brain. Which is the mission of this site, to somehow make rent and geonomics obvious to the curious and caring.
This 2014 excerpt of AP, Feb 16, was from Williston Herald and was circulated by ABC.
The rapidly growing North Dakota oil patch city of Williston has the highest average rent for an apartment in the United States. Oil field workers receive six-figure salaries that can bear inflated rent.
A 700-square-foot, one-bedroom apartment in Williston costs an average of $2,394 a month. The same apartment would cost $1,504 in the New York area, $1,411 in the Los Angeles area or $1,537 in the Boston area. Nearby Dickinson, N.D., ranks fourth on the list at an average of $1,733 a month. Chicago didn’t even crack the Top 10.
The population of Williston, in the northwest corner of the state not far from the Montana border, has more than doubled since the 2010 Census.
Many of the new apartment buildings feature mudrooms, where workers can remove dirty shoes before entering.
The oil boom may be around for the next 20 years because of the different levels of oil they now have access to through fracking.
Ed. Notes: What sets how much you must pay for land, something you usually pay for when paying for housing? It’s not the cost of land, since land has no cost, not being created by anyone. Instead, it’s how much users or occupants are willing and able to pay. It’s all laid out in the old Ricardo’s Law of Rent.
Also, the oil boom could bust any time, turning those boom towns into ghost towns. If fracking uses up to much water, or pollutes too much water, or burning oil worsens climate change to the point where people have had enough, then petroleum could go the way of whale oil.
That day of switching to clean, renewable energy could come sooner if governments were to switch to geonomics right away.
This 2014 excerpt of CounterPunch, Feb 15, is by Mike Whitney. It also appeared in OpEdNews.
Economic fundamentals played no part in the so called housing rebound. The economy stinks as bad today as it did four years ago when the government number-crunchers announced the end of the recession. The reason prices have been rising is because of the Fed’s fake rates and QE, inventory suppression, bogus gov mortgage modification programs, and speculation by Private Equity and investors groups.
The big PE firms made a killing, since prices soared 12 percent in one year. In some of the hotter markets, investors represented upwards of 50 percent of all purchases.
Sales are down, purchase applications are down, and the country’s homeownership rate has slipped to levels not seen since 1995, 18 years ago.
The Fed’s $1 trillion purchase of mortgage backed securities (MBS) and zero rates have done nothing to stimulate “organic” consumer demand. No “trickle down” at all. All the policy has done is generate a temporary surge of speculation that’s distorted prices.
Household growth of 448,800 in 2013 represents a 48 percent drop in household growth relative to that from 2012 and marked the lowest annual household growth measure since 2008, in the depths of the Great Recession.
Nearly half of college grads have been scrubbed from the list of potential buyers due to their burgeoning student loans which now exceed $1 trillion. These kids will probably never own a home, let-alone have a positive impact on sales in 2014.
The number of “seriously delinquent borrowers” has actually gone up in the last year. Not only that, but many of these people haven’t made a payment in more than four years.
The banks have been dragging their feet for 40 months now, slowing down the foreclosure process (that adds to the shadow supply of distressed homes) in order to push up prices hoping to ignite another boom. Now — after three and a half years of blatant collusion — they’ve done a 180 and started speeding up foreclosures. Why?
They think that “institutional investors” are going to call-it-quits and move on to greener pastures. That’s going to push down prices, which means they’re going to lose money. So they want to get ahead of the curve and dump more houses on the market before the stampede. That way, they lose less money.
Ed. Notes: Foreclosures are sad for families but part of banking as is but maybe shouldn’t be. Maybe banking should change. But change how?
First, trends in economies are not smooth, rising or falling evenly; it’s more like two steps forward, one back, or vice versa. What the writer above is noticing is a temporary correction that won’t last more than a few months. It fits right into the more regular 18 year cycle business cycle, or more precisely, the land-price cycle. That cycle could be flattened so there’d be no more recessions and foreclosures. How?
Remove the value of land from the price of housing. How? Get government to recover the socially-generated value of land. How? Tax locations. Institute land dues. Raise the deed fee. However. Just do it.
Then housing — minus any price for land — would no longer attract speculators, no more inflating its price. Land and housing would only reflect “organic” demand, to use the jargon above.
And BTW, while recovering the value of locations and resources, don’t tax anyone’s labor or capital. Those taxes are not fair and merely counterproductive. Sans such taxes, the value of land will be high in a healthy way, able to fund a dividend to everyone, the key feature of geonomics.
This 2014 excerpt of Weekly Wastebasket, Feb 14, is by Taxpayers for Common Sense.
Congress mandated these sweetheart deals:
Agriculture Committee leaders jammed a trillion dollar farm bill through Congress last week that will increase taxpayer subsidies for agribusinesses coming off several years of record profits.
Shipbuilders want to build more ships or, at the very least, they want to modernize the current ships. Congress directed the Secretary of the Navy to upgrade one of the cruisers starting immediately.
Taxpayers across the nation spend more than $200 million each year so that a privileged few in just 117 communities can be guaranteed convenient air service. Taxpayers spend $3.9 million annually to subsidize air service from Presque Isle, Maine to Boston. Every time somebody flies from Lewistown, Montana to Billings, Montana, it costs taxpayers $1,905. A taxi for the two hour drive – at New York City taxi cab rates – would be less than $350.
Some BLM offices let coal companies explain their low bids, and then accept them. The BLM collects lower royalty payments for coal because it doesn’t consider foreign markets, where coal is more expensive.
Such largesse is certainly not the way into any taxpayer’s heart.
Ed. Notes: Don’t you wish you could put a stop to such wasteful favors for insiders? To fix this problem, it’s not enough to criticize such subsidies in particular. Citizens must criticize the validity of subsidizing in general.
There’s never been a government that didn’t favor insiders. Indeed, that’s what government is for, to fleece the flock and feed the wolves. It’s always been that way and always will, until citizens demand a wholesale transformation of public revenue policy.
We need to make taxing and subsidizing relics of the past. Instead, our governments must recover and share society’s surplus, which is all of society’s spending for land, resources, and other natural assets that come into existence without the contribution of anyone’s labor or capital. It’s called geonomics and it would save citizens one heck of a lot of money!
This 2014 excerpt of Grist, Feb 14, is by John Upton, based on articles in Science and in Stanford News.
A new mega-analysis of 20 years worth of research suggests that the EPA is underestimating the fossil fuel’s climate impacts by 25 to 75 percent.
The problem with the EPA’s math doesn’t concern the burning of natural gas, which produces less carbon dioxide than other fossil fuels (but way more than solar panels or wind turbines). The problem is in the leaky systems that extract and transport the fuel.
The EPA is severely underestimating the amount of natural gas that leaks into the atmosphere during drilling, processing, and distribution. Atmospheric tests covering the entire country indicate emissions around 50 percent more than EPA estimates. And that’s a moderate estimate.
Natural gas is basically just methane. Methane is responsible for perhaps a fifth of global warming since the 18th century. Levels of methane detected in the atmosphere have been rising rapidly since 2007.
Ed. Notes: A huge hullaballoo is made about the discovery of fire but burning has been too easy for humanity for way too long. These natural gas leaks are just another reason for our species to change how it harnesses energy. We must use
sunlight for electricity to make artificial light,
fuel cells for electricity to power motors, thereby
reducing the need to burn whatever fuel to heat homes to a bare minimum.
Technologically, we could make such a shift today. What’s in the way is not a lack of new gizmos but the presence of political opposition. Government subsidizes the old ways and taxes the new ways, albeit inadvertently by making both labor and entrepreneurship more expensive than they would be sans taxes.
Thus if we shifted our revenue policy we could shift our energy technology and score another one for geonomics.
Ed. Notes: As usual, the problem is people assuming that the rental profit from locations belongs to the landowner when in a moral universe it belongs to those creating it, which is the surrounding society. Further, nobody made the earth, everybody needs some part of her, and enjoying an equal right to life we all have an equal right to land. If we were to use government to recover then disburse equitably the socially-generated value of land — and to not tax and subsidize willy-nilly — then the rise in site value would be a boon to us all, no matter what its cause: tourists, Air(mattress)BnB, or locals hitting the jackpot.
One of the key concepts in classical economics, which was lost when it changed into the neoclassical school of thought, was the extensive margin of production. I have written previously on the margin of production at <http://www.progress.org/fold97.htm>, but because in recent discussions the existence of the margin has been questioned, it is time to revisit the topic.
Imagine a agricultural territory with one crop, corn, and areas of various productivity because of the natural fertility, the climate, and the rainfall. We can number the output in bushels in a range from zero to ten. If the land is not populated or claimed, the first settlers will go to the most productive land, where the output per period of production is ten bushels. When the ten-bushel land is filled, the next settlers go to the nine land, and then the eight-bushel land.
The least productive land in use is called the “margin of cultivation,” or more generally, the extensive margin of production. If land cannot be claimed unless used, the margin is also the best land available for free, hence without rent. The margin is called “extensive” because people keep extending or moving it out to lands of ever lesser quality as the better lands get claimed.
The significance of the margin of production was its role in the determination of rent and wages. The classical law of rent is that the rent of a plot of land equals its output minus what the same quality of labor and capital goods will yield at the margin of production. The law of wages is that the wage level for the economy is set by the wage at the margin of production. The margin of production itself is determined by the supply of labor and the amount of super-marginal land that is unproductively being held by speculators waiting for land values to rise further.
When workers are completely mobile, and not emotionally attached to any location, they will move to the land that provides the highest wage. Competition among equally skilled workers will result in a common wage, because if one area pays more, workers move there, and drive the wage down. The law of wages applies to unskilled labor, and workers with more human capital obtain a premium above that to compensate them for their greater productivity.
There is another margin of production, the intensive margin. In the best lands, another worker can contribute more to output than he earns in wages, and so labor will be hired so long as the extra output (marginal product) of the next worker is greater than the wage. Hiring stops when the marginal product of labor at the intensive margin equals the marginal product at the extensive margin where the wage level is set.
In the early 1800s, the classical economist David Ricardo developed this model of the relationship between land and labor, the original and ultimate factors or inputs of production. In the latter 1800s, Henry George, the last of the classical economists, added land speculation to the model. If land at the margin can be claimed even if not used, it will get fully claimed, and new settlers will have to go to less productive land, which, by the law of wages, drives down the wage for all workers.
In the prevailing mainstream neoclassical school of economic thought, land disappears, and theory only uses labor and capital goods. The margin of production also vanishes from theory – you will not find it in any economics textbook other than my Science of Economics. The wage level in neoclassical economics comes from a simple economy-wide supply and demand model. What today’s economists do not realize is that the area in the graph between the demand for labor curve and the wage line is land rent. You can see this illustrated in the lower left graph at <http://www.foldvary.net/ec2/four-graph/morris.doc>, where the rent is the area between the demand curve labeled D and the horizontal real wage line labeled R. The rent in that neoclassical model is the same as the rent in the classical model, illustrated at <http://www.foldvary.net/images/RentWages.jpg>.
But some followers of Henry George now question whether the margin of production exists in today’s economy. All solid surface land today has been claimed either by private title or by governments. There is bare land that is not being used, but is it possible to have any production there at all?
If the margin of production is no longer relevant, then the classical economic theory of wage determination no longer applies. Then how is the wage level determined? The output is produced by a combination of land, labor, and capital goods, and the distribution of the wealth depends on how much is going to rent. A ten-bushel plot of land will yield a wage of ten if it is rent-free, while it will yield a wage only of four if the margin is at four, with the same amount and skill of labor. Therefore it is not just the exertion and skill of a worker alone that determines his wage, and it is not the intensive margin of extra workers in the same place that determines the wage, because the typical firm is a wage taker, paying the wage that the market has determined.
The margin of production has to be lurking somewhere in the shadows. The margin is not visible and not obvious and not self-evident. It is the task of economic theory to enable people to understand the implicit reality beneath superficial appearances. The margin of production has no superficial appearance today, as it had in more primitive economies.
The ocean provides one rent-free margin. Another rent-free margin is the edge of cultivation, grazing, or residential land, beyond which is land that is not being used. Today, such land will be claimed, and may have a positive price, such as from speculation that this plot will be developed later, but if such land is submarginal, not being used, with no expectation that it will soon be used, then that implies that there is some marginal border, even if the rent and price are not zero. The essence of the margin is not that the land is unclaimed, or that the land is free, or that the worker is self-employed, but that it is the least productive land in use, beyond which lies submarginal land.
All cities have a margin of production in the top stories of buildings, because another story on top of the existing ones would use the same site surface. Building one more story will not increase the ground rent, so the extra use of that space is rent free, free of extra rent.
The extensive margin of production lurks unrecognized in the neoclassical model. The supply of labor is the least that workers will accept, and that would be close to zero if not for some margin where they can get a subsistence wage. The demand for labor is based on the marginal product of labor at various quantities of labor, and the share of output going to labor depends on the share going to rent due to the productivity of land at the least productive land in use. Of course the wage also depends on the productivity of complementary capital goods.
The margin of production is an implicit reality. We cannot observe the law of wages directly, because the wage of unskilled labor has become distorted by taxes, minimum wage laws, restrictions on employment and self-employment, and mandates such as required medical insurance. We cannot also observe the law of rent directly because of interventions. We need to understand economic theory to mentally envision the hidden economic reality.
The margin of production can no more disappear from the economy than can gravity disappear just because an iron bar is being held up by a magnet. The fact that government interventions alter prices, profits, and output does not imply that supply and demand have stopped working. If theory says there is a margin of production, it must be there, and our task is to uncover its implicit reality.
This 2014 excerpt of CorpWatch, Feb 12th, is by Pratap Chatterjee and it also appeared at OpEd News.
Three top executives at Anglo Irish bank are on trial for a secret scheme to buy their own bank’s shares. The bankers allegedly hatched the plan to cover up bets made by Sean Quinn, once Ireland’s richest man.
What the executives were doing had “potentially disastrous consequences for the entire Irish financial system.”
Ireland attracted a phenomenal amount of investment in its Celtic Tiger boom days after it set up an “offshore” tax haven named the International Financial Services Centre with a special limited-time tax rate of 10 percent. Among the beneficiaries was Anglo Irish bank, a property finance bank founded in 1964, which gained a reputation for lending quickly for risky local projects at a higher rate of interest that in turn swelled its profits. One of the ways that Anglo was able to grow exponentially was because it often accepted one mortgaged property as collateral for the next, a scheme not unlike a house of cards.
Over the course of a decade, beginning in 1994, house prices in Ireland rose five fold and by 2007 even Irish farm land was worth €66,000 ($88,000) per hectare, the highest in Europe. Ireland was soon building more than seven times as many houses per capita as the U.K. and the Irish had borrowed twice as much as their gross national product. At the time one in five workers in Ireland was employed in the construction industry, and lending to the sector totaled 28 percent of all lending (compared to 8 percent in the rest of Europe).
One notable beneficiary of this was Irish entrepreneur Sean Quinn, who started his career in 1973 quarrying gravel on his family farm, who eventually built a fortune in manufacturing by undercutting his competitors. In 2008, Quinn was the wealthiest man in all of Ireland, worth €4.722 billion ($6.13 billion)
At the time, Quinn had quietly built up a 29.3 per cent ownership stake in Anglo Irish by buying an exotic financial instrument called contracts for difference (CFD) that essentially involved gambling that the bank’s share price would rise. Quinn made his bets in secret, using a bank registered in Madeira to invest a total of €3.2 billion ($4.4 billion) in Anglo Irish beginning in 2006.
When share prices in the bank started to fall in March 2008, bank executives discovered that Quinn was effectively the biggest shareholder in the bank. Panic stricken, they decided to lend money to ten wealthy people – who have been dubbed the Maple Ten based on the name for the scheme drawn up by Morgan Stanley – to buy a large chunk of Quinn’s shares from him in the hope that would stabilize their value.
The problem was that since the Maple Ten had borrowed money from the bank itself so when the share price continued to collapse, the bank lost its own money.
They had legal opinion from MOP (law firm Matheson Ormsby Prentice) and that the financial regulator was aware of it, and the Central Bank, everyone, was aware of it, and they wanted it done.
When Anglo Irish teetered on the brink of complete collapse later that year, the Irish government pumped €30 billion ($33.8 billion) of taxpayers’ money into it. The following year, Anglo Irish was nationalized and in February 2013, the bank was liquidated, essentially writing off the taxpayer’s money. Meanwhile the government of Ireland has been forced to borrow €67.5 billion from the European Union and International Monetary Fund to cover the losses caused by the collapse of the national economy.
Ed. Notes: Good to see some top dogs face jail time potentially. But what’s overlooked is such scams happen every business cycle. The problem, this cycle — which is really the real estate cycle — is too long for most people to notice, being 18 years. What’s also overlooked is that the value is not in any building but in the land or location. And finally, most people don’t notice that the value of locations is generated by the presence of society, so it’s fair for society’s government to recover this surplus value. If government we to tax land value or charge land dues or recover site value by whatever mechanism, then it’d no longer be available for speculators, and such scams could not occur; why would any speculator bother? So, instead of one billion grabbing for all that rising land value, society should, and put an end to both such scandals and a roller-coaster real estate cycle.
The Economics of Star Trek — The Proto-Post Scarcity Economy
This excerpt of Medium, either late 2013, late December, or early 2014, January or February, is one of their Editor’s Picks by Rick Webb.
People can get paid doing zero work. We have the capacity to feed everyone, even if we don’t have the will. It’s not a matter of scarcity; it’s a matter of the organization of labor and capital.
In today’s terms, a ‘healthy’ economy now is one at or near full employment. A healthy economy now is one where everyone has a job. But in abundance, jobs are actually unrelated to a healthy economy. Everyone’s fed and housed and tons of people simply don’t need to work. Right now, we have them working making stuff we don’t need. Is that any better than them not working?
It seems pretty clear cut that jobs are optional. The Federation is based on a philosophy of self improvement and cultural enrichment. We’ve never seen people who sit around and literally do nothing, but then why would we?
The big challenge here is how does society get someone to do the menial jobs that cannot be done in an automated manner. Why would anyone? There are really only two options: there is some small, incremental increase in your hypothetical maximum consumption, thus appealing to the subconscious in some primal way, or massive societal pressure has ennobled those jobs in a way that we don’t these days.
Private ownership still exists — the biggest examples are Sisko’s restaurant and Chateau Picard. The Maquis routinely refer to “our land,” which they presumably owned. Some spaceships were privately owned. Finally, Captain Kirk says in the Nexus, “This is my house. I sold it years ago.”
Star Trek is, essentially, European socialist capitalism vastly expanded to the point where no one has to work unless they want to. The amount of welfare benefits available to all citizens is in excess of the needs of the citizens. Therefore, money is irrelevant to the lives of the citizenry, whether it exists or not. Resources are still accounted for and allocated in some manner, presumably by the amount of energy required to produce them (say Joules). And they are indeed credited to and debited from each citizen’s “account.” However, the average citizen doesn’t even notice it, though the government does, and again, it is not measured in currency units — definitely not Federation Credits.
If robots do all the dirty work, and the US is hugely rich, does every single person really need a job? Are we going to let all of that money pile up in the 0.1% ruling elite, or can it be distributed to everyone? Does wealth being distributed to the people in an equal manner mean communism absolutely? What happens when the surplus is more than enough?
Ed. Notes: Outsiders buying up homeland happens all the time in Africa and elsewhere. America is not exempt from that and, actually, never has been. Because we humans are land animals and have the instinct of ownership, and feel upset by trespassers, our hackles rise when the rich land-grabber is a foreigner but don’t even care when the absentee owner is a fellow countryman. Nationality (the horizontal dimension) matters but class (the vertical dimension) doesn’t count.
But in reality, investor owners won’t make different decisions; being from here or there won’t change any minds about preferring big agri-business, factory farms, selecting crops that travel well and can sit on shelves for long periods, using GMOs, mechanizing and automating with hot fertilizers, over-irrigating and thereby depleting the ground water, etc.
If people could care as much about sharing rents, making land value into our common wealth, rather than about the home address of absentee owners, then these downstream issues would no longer plague us. So how do we tie instinct to geonomics?
This 2014 excerpt of iranian.com, Feb 12, is by Reza Varjavand of Saint Xavier University in Chicago.
Rent seeking is often carried out through exorbitant lawsuits against business firms and the costs are passed on to consumers. Mighty corporations like pharmaceutical companies are also shielded by the patent system. In a recent lawsuit, the jury awarded Apple $1 billion in damages to be paid by Samsung for allegedly copying some aspects of Apple’s iPhone and iPad.
Lawyers will gain handsomely regardless of the outcomes. They may also encourage companies to file even more lawsuits in anticipation of monetary gain as well as monopoly of power. Propagation of such cases can divert companies’ attention away from focusing on their products and redirect it toward gaining easy money at the expense of their rivals.
There are more than 3100 lobbyists working for the healthcare industry alone (nearly 6 for every congressperson), and 2100 lobbyists working for the energy and natural-resources industries. Physicians are represented by more than 750 lobbyists in Washington spending nearly $80 million every year to safeguard their interests.
The U.S. ranks at the top when it comes to the number of licensed lawyers. There are currently 1,143,358 of them, one per every 265 people. The inverse correlation between economic growth and the number of lawyers has been documented.
Despite oversupply, the costs of legal service keep rising at usually twice the rate of inflation. The mounting spending on legal services is partially due to additional demand created through vigorous advertising by lawyers seeking to find lucrative targets for possible lawsuits. Such solicitation efforts have been proliferating in the mass media – via commercials aired during the shows watched by most susceptible people – and particularly in the form of billboard advertising that is proliferating especially in the aftermath of Great Recession of 2008.
Lawyers, just like medical doctors, have to go through rigorous training and a time-consuming licensing process. They incur an immense amount of debt upon graduation. Once they finally begin practicing, they feel the need to generate as much money as possible to pay off that debt and make up the opportunity cost of the time they have invested in education and demanding internships.
The proliferation of specialists has caused massive increase in the number of surgeries performed in the US, “400% in a little over a decade”. Like many other business people, lawyers often tend to create a market for real or imaginary problems because they have already a solution for them. Lawyers, like doctors, earn income when things go wrong.
Ed. Notes: Most politicians are lawyers. Lawyers have persuaded politicians to pass laws that make it a punishable offense for a non licensed legal expert to perform even a routine task. Lawyers have erected insider court proceedings that if anyone representing themselves fail to follow can be found in contempt of court. None of this is to facilitate justice for society but to fatten the pockets of lawyers.
Doctors use the same tactics of requiring licenses, punishing non conformists, and winning other laws to maintain their oligopoly.
What can the rest of society do? Get its government out of the licensing racket. Get rid of automatic limited liability so people in business would have to become responsible personally for their decisions to cheat. And, basically, share society’s surplus so it can’t be concentrated onto few major owners and corporations that hire the unscrupulous minions to do their dirty work. If people feel materially secure, perhaps those now tempted will be able to resist a career in lawyering.
This 2014 excerpt of Quartz, Feb 12, is by Matt Phillips.
In the wake of the financial crisis, US companies have socked away a record $1.93 trillion in cash or liquid securities. So if they’re not investing it, what are they doing?
And paying dividends. At the end of January, some 420 out of the 500 companies that comprise the benchmark S&P 500 stock index paid dividends. That’s the most since 1998. And S&P companies say they plan to pay out roughly $330 billion in dividends this year—a new record high.
They’re buying back their stock.
The cash at these companies belongs to shareholders, not the management of the firms. Returning it either via dividends or buybacks is the right thing to do, if executives don’t see a productive place to invest that money.
Money floating around keeps interest rates low — regardless of the fact that the Federal Reserve continues to cut back on its bond-buying programs (QE).
Ed. Notes: Yes, that excess does belong to stockholders. So how long does management get to keep it? How is the delay legal, not theft? Why doesn’t the government enforce shareholder rights? The “recovery” may have been a boon for those corporations but for some penny investors a dividend check could come in handy right about now.
This 2014 excerpt of UPI, Feb 11, is by Brooks Hays.
According to a new survey by the National Science Foundation, nearly half of all Americans say astrology is either “very scientific” or “sort of scientific.”
By contrast, 92 percent of the Chinese public think horoscopes are a bunch of baloney.
Skepticism of astrology hit an all-time high in 2004, when 66 percent of Americans said astrology was total nonsense. But each year, fewer and fewer respondents have dismissed the connections between star alignment and personality as bunk.
Not surprisingly, those with less science education and less “factual knowledge” have become increasingly willing to accept astrology as legitimate science.
Young people are also especially inclined to offer astrology scientific legitimacy, with a majority of Americans ages 18 to 24 considering the practice at least “sort of” scientific, and the 25-34 age group is not far behind them.
Ed. Notes: How do old, non-scientific ideas gain popularity while new, provable ideas are so hard to sell to people? One saving grace may be the fact that good new ideas don’t need everyone behind them, or even a majority, but just a critical mass. And whatever else those early adherents believe, that’ll be quite alright.
RichDiesal writes: The new report (PDF) from the National Science Foundation that states that roughly 40% of Americans believe astrology to be scientific turns out to be false; most of those apparently astrology-loving Americans have actually confused astrology with astronomy. In a 100-person Mechanical Turk study with a $5 research budget, I tested this by actually asking people to define astrology. Among those that correctly defined astrology, only 10% believe it to be scientific; among those that confused astrology for astronomy, 92% believe ‘astrology‘ to be scientific.
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.
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!
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 manual. The world did not come without a way for people to prosper, and the planet to heal and stay well; that way is geonomics. Economies are part of the ecosystem. Both generate surpluses and follow self-regulating feedback loops. A cycle like the Law of Supply and Demand is one of the economy’s on/off loops. Our spending for land and resources – things that nobody made and everybody needs – constitutes our society’s surplus. Those profits without production (remember, nobody produced Earth) can become our commonwealth. To share it, we could pay land dues in to the public treasury (wouldn’t oil companies love that?) and get rent dividends back, a la Alaska’s oil dividend. Doing so let’s us axe taxes and jettison subsidies. Taxes and subsidies distort price (the DNA of exchange), violate quid pro quo by benefiting the well-connected more than anyone else, reinforce hierarchy of state over citizen, and are costly to administer (you don’t really need so much bureaucracy, do you?). Conversely, land dues motivate people to not waste sites, resources, and the ecosystem while rent dividends motivate people to not waste themselves. Receiving this income supplement – a Citizens Dividend – people can invest in their favorite technology or outgrow being “economan” and shrink their overbearing workweek in order to enjoy more time with family, friends, community, and nature. Then in all that free time, maybe we could figure out just what we are here for.
a new field of study offered in place of economics, as astronomy replaced astrology and chemistry replaced alchemy. Conventional economics, in which GNP can do well while people suffer, is a bit too superstitious for my renaissance upbringing. If I’m to propitiate unseen forces, it won’t be inflation or “the market”; let it be theEgyptian cat goddess. At least then we’d have fewer rats. Meanwhile, believing in reason leads to a new policy, also christened geonomics. That’s the proposal to share (a kind of management, the “nomics” part) the worth of Mother Earth (the “geo” part). If our economies are to work right, people need to see prices that tell the truth. Now taxes and subsidies distort prices, tricking people into squandering the planet. Using land dues and rent dividends instead lets prices be precise, guiding people to get more from less and thereby shrink their workweek. More free time ought to make us happy enough to evolve beyond economics, except when nostalgic for superstition.
a neologism for sharing “rent” or “social surplus” – the money we spend on the nature we use. When we buy land, such as the land beneath a home, we typically pay the wrong person – the homeowner. Instead, since land cost us nothing to make and is the common heritage of us all, rather than pay the owner, we should pay ourselves, our neighbors, our community. That is, we should all pay land dues to the public treasury, then our government would pay us land dividends from this collected revenue. It’s similar to the Alaska oil dividend, almost $2,000 last year. Indeed, the annual rental value of land, oil, all other natural resources, including the broadcast spectrum and other government-granted permits such as corporate charters, totals several trillion dollars each year. It’s so much that some could be spent on basic social services, the rest parceled out as a dividend, as Tom Paine suggested, and taxes (except any on natural rents) could be abolished, as Thomas Jefferson suggested. Were we sharing Earth by sharing her worth, territorial disputes would be fewer, less intense, and more resolvable.
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.
of interest to Dave Lakhani, President Bold Approach (Mar 8) and Matt Ozga (Jan 29): “I write for the Washington Square News, the student run newspaper out of New York University. Geonomics seems like it has great significance, especially in this area. When was geonomics developed, and by whom?”
About 1982 I began. Two years later, Chilean Dr Manfred Max-Neef offered the term geonomics for Earth-friendly economics. In the mid-80s, a millionaire founded a Geonomics Institute on Middlebury College campus in Vermont re global trade. In the 1990s, CNBC cablecast a show, Geonomics, on world trade as it benefits world traders. My version of geonomics draws heavily from the American Henry George who wrote Progress & Poverty (1879) and won the mayoralty of New York but was denied his victory by Tammany Hall (1886). He in turn got lots from Brits David Ricardo, Adam Smith, and the French physiocrats of the 1700s. My version differs by focusing not on taxation but on the flow of rents for sites, resources, sinks, and government-granted privileges. Forgoing these trillions, we instead tax and subsidize, making waste cheap and sustainability expensive. To quit distorting price, replace taxes with “land dues” and replace subsidies with a Citizens Dividend.
Matt: “This idea of sharing rents sounds, if not explicitly socialist, at least at odds with some capitalist values (only the strong survive & prosper, etc). Is it fair to say that geonomics has some basis in socialist theory?”
A closer descriptor would be Christian. Beyond ethics into praxis, Alaska shares oil rent with residents, and they’re more libertarian than socialist. While individuals provide labor and capital, no one provides land while society generates its value. Rent is not private property but public property. Sharing Rent is predistribution, sharing it before an elite or state has a chance to get and misspend it, like a public REIT (Real Estate Investment Trust) paying dividends to its stakeholders – a perfectly capitalist model. What we should leave untaxed are our sales, salaries, and structures, things we do produce.
the annoying habit of seeing the hand of land in almost all transactions. In geonomics we maintain the distinction between the items bearing exchange value that come into being via human effort — wealth — and those that don’t — land. Keeping this distinction in the forefront makes it obvious that speculating in land drives sprawl, that hoarding land retards Third World development, that borrowing to buy land plus buildings engorges banks, that much so-called “interest” is quasi-rent, that the cost of land inflates faster than the price of produced goods and services, that over half of corporate profit is from real estate (Urban Land Institute, 1999). Summing up these analyses, geonomists offer a Grand Unifying Theory, that the flow of rent pulls all other indicators in its wake. Geonomics differs from economics as chemistry from alchemy, as astronomy from astrology.
a 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.