We are Hanno Beck, Lindy Davies, Fred Foldvary, Mike O'Mara, Jeff Smith, and assorted volunteers, all dedicated to bringing you the news and views that make a difference in our species struggle to win justice, prosperity, and eco-librium.
A scion of one of America’s top fortunes has just exposed our “charitable-industrial complex.”
This 2013 excerpt of Other Words, Aug 7, is by Sam Pizzigati, author of The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class.
Some 97 percent of the world’s “high-net-worth individuals” do give annually to charity. Yet only one-third of these extremely wealthy folks give away over 1 percent of their net worth. The rich, in other words, could afford to give away far more than they actually do.
Peter Buffett runs a foundation his father Warren Buffett created. He says American philanthropy has become our “charitable-industrial complex.”
In elite philanthropic gatherings, notes the 55-year-old Buffett, you’ll see “heads of state meeting with investment managers and corporate leaders,” all of them “searching for answers with their right hand to problems that others in the room have created with their left.”
And the answers that do eventually emerge seldom discomfort the problem-creators. These answers almost always keep, Buffett charges, “the existing structure of inequality in place.”
Peter Buffett dubs this comforting charade “conscience laundering.” Philanthropy helps the wealthy feel less torn “about accumulating more than any one person could possibly need to live on.” They “sleep better at night while others get just enough to keep the pot from boiling over.”
This 2013 excerpt of the Guardian, Oct 20, is by Ian Sample.
A US scientist has discovered an internal body clock based on DNA that measures the biological age of our tissues and organs.
The clock shows that while many healthy tissues age at the same rate as the body as a whole, some of them age much faster or slower.
Researchers say that unravelling the mechanisms behind the clock will help them understand the ageing process and hopefully lead to drugs and other interventions that slow it down.
Tests on healthy heart tissue showed that its biological age – how worn out it appears to be – was around nine years younger than expected. Female breast tissue aged faster than the rest of the body, on average appearing two years older.
Diseased tissues also aged at different rates, with cancers speeding up the clock by an average of 36 years. Some brain cancer tissues taken from children had a biological age of more than 80 years.
The biological clock was reset to zero when cells plucked from an adult were reprogrammed back to a stem-cell-like state. The process for converting adult cells into stem cells, which can grow into any tissue in the body, won the Nobel prize in 2012 for Sir John Gurdon at Cambridge University and Shinya Yamanaka at Kyoto University.
New research finds that anxiety caused by the 2008 economic crash led many mothers to switch to a less-nurturing parenting style.
This 2013 excerpt of Pacific Standard, Aug 5, is by Tom Jacobs.
Stress and worry caused by the 2008 crash led many mothers to have less patience with their kids.
Harsh parenting was not positively associated with high levels of unemployment, but rather with increases in the unemployment rate and declines in consumer sentiment; the anticipation of adversity was a more important determinant of harsh parenting than actual exposure.
Mothers engaged in significantly more harsh parenting behaviors following a 10 percent increase in their city’s unemployment rate.
Unfortunately, this dynamic was not easily reversed: Improvements in the local economy “were associated with much smaller, statistically insignificant changes in harsh parenting.
These results were limited to the approximately 50 percent of the women studied —- those who fit a specific genetic profile that makes them more sensitive to changes in their environment. Their genetic variation has been linked to poorer efficiency of the brain’s dopamine system, which regulates aggression and impulsivity.
Some people are “orchids” who wilt in poor conditions, while others are “dandelions” who can survive no matter what.
Low on cash and tapped out on its credit limit, the federal government limped into an uncertain economic future after Congress failed to reach a deal to raise the federal debt limit.
This 2013 excerpt of the San Jose Mercury News, Oct 15, is by Dan Nakaso.
Q What happens if the debt limit is not extended?
A Without the ability to borrow more money and add to the nation’s $16.7 trillion debt, the Treasury will be left with about $30 billion to cover government spending that’s estimated at $60 billion per day.
Q What can I do to protect my finances?
A “There’s really not too much an individual can do in the short run,” said Fred Foldvary, a retired economics professor from Santa Clara University who now lectures in public finance and law and economics at San Jose State [and blogs at this site].
But there are a couple of tricks, including parking any cash in a savings account to avoid the possibility of stock market chaos. Those worried about a drop in the market can turn to bear market funds tied to the S&P 500 that rise in value when the stock market falls, he said. Of course, “there is always risk,” Foldvary added. “You would lose money if the stock market shot up.”
Otherwise, Foldvary recommends that people keep their money in their retirement accounts, which are designed to grow over the long haul.
“Don’t panic,” he said.
Q How will the federal government function if it defaults on its financial obligations?
A The U.S. already owes $1.3 trillion to China and $1.1 trillion to Japan. Without the ability to borrow even more, the Treasury will have to rely on taxes and fees to keep the lights on and continue to pay an estimated 68 percent of its bills. Goldman Sachs estimates that government spending almost immediately will drop by $175 billion — or about 1 percent of the overall U.S. economy.
The country’s vast estates are under threat of being broken up and sold to small farmers. The laird’s response? Get off our land.
This 2013 excerpt of the UK Independent, Aug 1, is by Jonathan Brown.
Scotland currently has the most concentrated pattern of private ownership in the developed world with just 432 individuals accounting for half of all non-public land.
Submissions by the aristocracy and their representatives to the Land Reform Review Group, which was set up by the Scottish Government to consider the stalled question of redistribution, reveal deep-seated opposition to change.
Among those to challenge the proposals was an estate belonging to the 10th Duke of Buccleuch – a title created in 1663 for the illegitimate son of Charles II – who is now Europe’s largest landowner with holdings valued at more than £1bn.
Mark Coombs, the manager of the Duke’s 33,000 ha Queensberry Estate said there was no call for the ownership structure to change.
It’s the first time they have addressed head on the fact that so much land is held in so few hands. They are denying it’s a problem but they are conceding it is one of the central issues which is very interesting because they cannot win in the long term.
This 2013 excerpt of Slate, Oct 17, is by Ashok Rao.
For a long time the economics profession has quietly noted that a land value tax — LVT — is economically efficient but left the subject for more intellectually rewarding pursuits. The result is a frustrating dearth of scholarship on the subject. The few detailed papers that do exist suggest land taxes can replace most levies on labor and capital.
The most comprehensive work on this subject I could find is Steven Cord’s 1985 paper in the American Journal of Economics and Sociology, “How Much Revenue Would a Full Land Value Tax Yield.”
What’s fascinating is that as I’ve argued before, the 1980s probably represented the trough of land rents relative to income of the rich. As inequality increased, the ultimate venue of conspicuous consumption is beachfront property or a panoramic view of Central Park. As Thomas Piketty and Gabriel Zucman document in an important paper, total wealth-to-income ratios have doubled over the past several decades to a level last seen since the Industrial Revolution.
This 2013 excerpt from Naked Capitalism, Jly 7, is by Yves Smith.
Michael Hudson has advocated taxing land much more heavily, since unlike taxing capital or labor, it does not burden the economy with higher costs . As he explains in a 2009 interview:
You want to phase out the “tollbooth” economy that adds unnecessary charges to the cost of living and doing business – charges that have no counterpart in actual necessary cost of production. You want to avoid monopoly rent of the sort that Mexicans have to pay Telmex. And you want to avoid having the tax collector lower property taxes, leaving more revenue available to be pledged to banks as interest on higher mortgage loans. To get a lower-cost world, you have to counter political pressure from real estate owners and their bankers to shift taxes off rent-yielding properties onto labor and capital. Income and sales taxes add to the price of doing business, and hence reduce their supply and competitiveness. Most economists – even Milton Friedman – recommend that the more efficient tax burden is one that collects economic rent – property rent, fees charged for using the airwaves, monopoly rent, and other income that is basically an access charge. If you tax land rent, for instance, this doesn’t raise the price of housing or office space. The rent-of-location is set by the market place. Taxes – or interest charges to buy such property – are paid out of the market price for using this space or natural resource.
Taxing economic rent doesn’t add to prices. It simply collects what nature or public infrastructure spending have provided freely – site value, the broadcasting spectrum, the rights to access the internet or other technology in cases where prices exceed the reasonable cost of production.
In 1930 about 75% of state and local finances came from the property tax. Last year it was down to 16%, so that’s from 3/4ths down to 1/6. Cities have shifted the property tax onto wages and salaries – income and sales taxes that increase the price of business. Taxes used to fall on property and hence were progressive, but now have turned regressive.
The Economist over the weekend published a great primer on the benefits of broad-based land taxes.
While I would not like to see a broad-based land values tax (LVT) implemented on top of Australia’s other taxes, there are strong arguments for improving the efficiency and equity of the tax system by replacing highly distorting taxes, like stamp duties, with an LVT in a revenue neutral manner.
LVT would help make infrastructure investments self-funding for governments, since any land value uplift brought about through increased infrastructure investment (e.g. new roads, trains, etc) would be partly captured by the government via increased LVT receipts. Accordingly, governments would be more likely to facilitate development, rather than act to restrict it in a bid to save on infrastructure costs. Second, an LVT would penalise land banking and vagrancy [sic], effectively increasing the supply of land in the process and bringing new homes to market more quickly.
Requiring any LVT liability to be paid in smaller regular installments (e.g. once a month), rather than in a large annual or biannual lump-sum, could also assist in gaining community acceptance, since it seem like less of a burden.
The arguments for LVTs are well known. It’s just a shame that Australian policy makers will not even consider reform.
This 2013 excerpt of Bloomberg, Oct 29, is by Hui-yong Yu.
The debut of Brixmor Property Group Inc. (BRX) is adding fuel to what is already the biggest year for U.S. real estate initial public offerings in almost a decade.
The No. 2 U.S. shopping-center landlord, owned by Blackstone Group LP, raised $825 million in its IPO today, excluding extra shares for underwriters, the largest IPO of a retail real estate investment trust since Simon Property Group Inc. (SPG) in 1993. Brixmor sold 41.25 million shares at $20 apiece after offering 37.5 million for $19 to $21 each.
Hilton is poised to be the largest hotel IPO ever. The company has increased room count in franchised and managed hotels by 39 percent since Blackstone bought it for $26 billion in 2007, expanding in Asia and other overseas markets, with plans to develop and build another 268,000 rooms, according to its IPO filing.
The U.S. economic recovery, falling commercial real estate vacancies, and low interest rates have primed the pump for public offerings, with REIT stocks at close to six-year highs.
Property-related IPOs, including REITs, real estate operating companies and mortgage trusts, have had their biggest year since 2004 by money raised. So far in 2013, real estate IPOs have raised $4.7 billion, compared with $3 billion in all of 2012. The total was $7 billion in 2004.
The Bloomberg REIT index — a 136-member gauge — has more than tripled from its 2009 low and in May reached the highest level since 2007. It has trimmed about 10 percent of those gains since then amid concern interest rates would rise and increase borrowing costs.
Blackstone (BX), based in New York, may take Hilton public as soon as December in what could be the year’s biggest real estate IPO. The McLean, Virginia-based hotel chain — which will have a traditional corporate structure rather than a tax-saving REIT — has filed to raise as much as $1.25 billion, a placeholder amount.
Companies do need compelling management, a growth strategy and value, whereas back in the ’03-’04 timeframe, a company could go public as a blind pool with just a strategy and no assets.
Since the last recession ended, the recovery in commercial real estate has spread from apartments to hotels, offices, and industrial properties.
Multifamily buildings have seen the biggest increase in average rents since the financial crisis, with effective rents, or the amount paid after any concessions, up 11.3 percent.
The real estate recovery has mostly been confined to primary markets such as New York and Chicago, with demand for assets in smaller cities lagging behind.
Private-equity real estate funds have been increasing distributions to investors as they sell holdings.
This 2013 excerpt of Alternet, Aug 1, is by Laura Gottesdiener.
Since 2007, the foreclosure crisis has displaced at least 10 million people from more than four million homes across the country. The displaced are young and old, rich and poor, and of every race, ethnicity, and religion. They add up to approximately the entire population of Michigan.
In many cities and towns, lots are filled with “Cheap Bank-Owned!” trailers. Cities hire contractors dubbed “Blackwater Bailiffs” to keep pace with the dizzying eviction rate. This type of militarized reaction is often the outcome when communities — especially those of color — organize to resist eviction.
Between 2009 and 2012 African Americans lost just under $200 billion in wealth, bringing the gap between white and black wealth to a staggering 20:1 ratio.
The crimes started at the top. Banks peddled toxic mortgages like crack, paying employees cash incentives to push them in African American neighborhoods. The loans exploded, so they forged millions of foreclosure affidavits to speed state-enforced evictions.
Once homes are vacant, bank contractors insufficiently seal and maintain them, allowing intruders to strip the houses of their copper wiring, plumbing, and sometimes even the furnace. The copper alone sells for anywhere from 50 cents to a dollar per pound. Finally, people dealing drugs begin to use the houses at night as distribution centers. The street-level crime drags down neighboring property values, spurring more foreclosures and evictions. And so the cycle continues.
These uninviting neglected houses, disproportionately located in communities of color, are most often being snapped up by investors rather than families. Overwhelmingly, the investor of choice is the Blackstone Group, one of the world’s largest private equity firms and now the nation’s largest owner of single-family homes. Since April 2012, Blackstone has spent more than $4.5 billion buying at least 30,000 houses concentrated in cities hard-hit by foreclosure; the company often makes its purchases in cash.
There’s big money to be made in rental properties these days, given that there are millions of displaced, former homeowners with wrecked credit scores looking for places to stay.
Declines in property tax revenues caused by vacancies have led cities to cut funding for public works, libraries, parks, recreation programs, and school districts. One city even cut a program intended to address vacant foreclosed properties, thanks to a tax revenue shortfall.
This 2013 excerpt of Open Secrets, Oct 4, is by Doug Weber and Russ Choma.
Twenty dissident Republican House members have little financial reason to heed the demands of their party’s leadership; they don’t receive much campaign money from the party’s fundraisers.
A top source of campaign cash for Republicans overall in recent years has been the securities and investment industry — Wall Street. In 2012, this industry gave more to candidates than any other except one, and 69 percent of its money went to Republicans.
And Wall Street is, by far and away, the top source of campaign cash for the Republican House leadership. In 2012, Boehner’s campaign and leadership PAC received $1.6 million from the industry; the industry that came in second (oil and gas) only gave about half that.
The trend appears to be that, by and large, these 20 dissidents are simply raising less money than their colleagues.
According to CRP data, Republican House members have raised an average of $331,000 in campaign funds so far this year. A review of these 20 dissidents shows that, on average, they have raised $301,000.
This 2013 excerpt of Reuters, Jly 8, is by Alister Doyle.
Air pollution is shortening the lives of people in northern China by about 5.5 years compared to the south, a disastrous legacy of a policy that provided free coal for heating in the north.
Environmental problems are a source of rising social discontent in China; last month Beijing promised new measures to crack down on air pollution, partly by hastening a shift to renewable energy from fossil fuels.
Burning coal meant more heart and lung disease among 500 million people living in the area.
About 2 million people die every year from air pollution, mostly in developing countries. Cities such as Karachi, New Delhi, Kathmandu, Beijing, Lima, and Cairo are among the most polluted.
Even in Europe air pollution shortens average life expectancy by 8 months.
This 2013 excerpt of The Guardian, Oct 24, is by Phillip Inman.
Few mainstream economists predicted the global financial crash of 2008 and academics have been accused of acting as cheerleaders for the often labyrinthine financial models behind the crisis. Now a growing band of university students are plotting a quiet revolution against orthodox “free” [confusing liberty and license] market teaching, arguing that alternative ways of thinking have been pushed to the margins.
Economics undergraduates at the University of Manchester have formed the Post-Crash Economics Society, which they hope will be copied by universities across the country. The organisers criticise university courses for doing little to explain why economists failed to warn about the global financial crisis and for having too heavy a focus on training students for City jobs.
Next month the society plans to publish a manifesto proposing sweeping reforms to the University of Manchester’s curriculum, with the hope that other institutions will follow suit.
The teaching of economics was increasingly confined to arcane mathematical models, he said. Students are not even prepared for the commercial world. Few know what is going on in China and how it influences the global economic situation. Even worse, some American students have never heard of Keynes.
In June a network of young economics students, thinkers and writers set up Rethinking Economics, a campaign group to challenge what they say is the predominant narrative in the subject.
In the decade before the 2008 crash, many economists dismissed warnings that property and stock markets were overvalued. They argued that markets were correctly pricing shares, property and exotic derivatives in line with economic models of behaviour. It was only when the US sub-prime mortgage market unravelled that banks realised a collective failure to spot the bubble had wrecked their finances.
In his 2010 documentary Inside Job, Charles Ferguson highlighted how US academics had produced hundreds of reports in support of the types of high-risk trading and debt-fuelled consumption that triggered the crash.
Adam Posen, head of the Washington-based thinktank the Peterson Institute, said universities ignore empirical evidence that contradicts mainstream theories in favour of “overly technical nonsense”.
A Manchester University spokeman said that, as at other university courses around the world, economics teaching at Manchester “focuses on mainstream approaches, reflecting the current state of the discipline”. He added: “It is also important for students’ career prospects that they have an effective grounding in the core elements of the subject.
This 2013 excerpt of Other Worlds, Jly 30, is by Beverly Bell and Tory Field.
In Cambodia, where government has handed 73% of Cambodia’s arable land, most of it belonging to small farmers, over to businesses, Prime Minister Hun Sen’s grip on society is threatened by public anger against land grabs.
The Colombian Ambassador to the US, Carlos Urrutia, was forced to resign after the exposé of a shady deal in which he helped sell land to the agribusiness giant Cargill and others.
The nation of Georgia banned the sale of land to foreigners.
An estimated 120 to 200 million acres of land have been sold in international investment deals in recent years, approximately two-thirds of them in Africa. Land is also being taken for biofuel plantations, mining, oil drilling, and other energy projects.
The deals may be flat-out illegal, or farmers may be forced to sell due to their dire economic circumstances. Peasant farmers and indigenous peoples are especially vulnerable, as they often lack paper deeds to land they have inhabited for centuries.
Small- and medium-sized farmers are at risk in the global North, too, sometimes forced to sell out because of financial instability. City-dwellers around the world face a parallel situation through foreclosures and corporate development of urban land and public housing.
More than 500 organizations worldwide have signed onto the Dakar Appeal Against Land Grabbing, which calls upon governments to immediately cease land grabs and return stolen land to communities.
In the US, organizations such as GRAIN and the National Family Farm Coalition are painstakingly tracing the flows of funding globally and documenting land grabs backed by investment companies. They are spreading the word that people may be investing their retirement savings in firms that finance land grabs, like TIAA-CREF, and encouraging the public to invest their savings elsewhere.
This 2013 excerpt of CNBC, Oct 1, is by Robert Frank.
As the wealthy get wealthier, they’re putting more of it into land.
America’s 100 largest individual landowners added 700,000 acres to their landholdings last year. Those 100 individuals or families now control more than 30 million acres, or 2 percent of America’s entire land mass.
Ranches and farmland have become a popular investment for the wealthy, who are looking for more stable and tangible stores of wealth. Many of the largest landowners also generate income from their land, from sustainable timber and agriculture.
The raw homeownership rate of 65.0% was unchanged from last quarter and 0.4% lower than a year ago. And on a seasonally adjusted basis (not sure why homeownership is adjusted for seasons: people who live in a house in the winter generally live under a bridge in the summer?), the percentage of Americans who have a house declined from 65.2% to 65.1%: the lowest since 1995 [eighteen years ago and 18 is the period in the land price cycle].
Meanwhile, the median asking rent for US vacant housing units hit an all time high of $735 per month.
So rents are soaring. Which should mean that so are wages and/or personal income right? Wrong. So how sustainable are the soaring rents shown above? We will let Blackstone and all those other Wall Street firms capitalizing on record low (until recently) rates to become America’s largest landlords answer that one.
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.
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!
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 way to have everybody pulling on the same end of the rope. Last summer’s expansive forest fires shed light on growing class resentment in the West. Old log-gers and ranchers rankled at the new urgency to stamp out the blazes that threatened the recent Aspenesque settlers. The newcomers expected working class firemen to make protecting their expensive homes top priority. (Chr Sci Mntr, Spt 7) The tinder for this envy? Rich people moving in bid up the price of land, making it hard to afford by people on the margin. The fault really lies with our system of privatizing land value. If this rising value were collected by land dues and shared by rent dividends – the essence of geonomic policy – who’d complain? The more people move in, the higher the land value, and the fatter the dividend paid to residents. Then people on the margin might go out of their way to invite rich outsiders in.
the study of the money we spend on the nature we use. When we pay that money to private owners, we reward both speculation and over-extraction. Robert Kiyosaki’s bestseller, Rich Dad’s Prophecy, says, “One of the reasons McDonald’s is such a rich company is not because it sells a lot of burgers but because it owns the land at some of the best intersections in the world. The main reason Kim and I invest in such properties is to own the land at the corner of the intersection. (p 200) My real estate advisor states that the rich either made their money in real estate or hold their money in real estate.” (p 141, via Greg Young) When government recovers the rents for natural advantages for everyone, it can save citizens millions. Ben Sevack, Montreal steel manufacturer, tells us (August 12) that Alberta, by leasing oil & gas fields, recovers enough revenue to be the only province in Canada to get by without a sales tax and to levy a flat provincial income tax. While running for re-election, provincial Premier Ralph Klein proposes to abolish their income tax and promises to eliminate medical insurance premiums and use resource revenue to pay for all medical expense for seniors. After all this planned tax-cutting and greater expense, they still expect a large budget surplus. Even places without oil and gas have high site values in their downtowns, and high values in their utility franchises. Recover the values of locations and privileges, displace the harmful taxes on sales, salaries, and structures, then use the revenue to fund basic government and pay residents a dividend, and you have geonomics in action.
a way to 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.
not a panacea, but like John Muir said, “pull on any one thing, and find it connected to everything else.” Recall last month’s earthquake in El Salvador. We felt it and its formidable after-shocks in Nicaragua. Immediately afterwards, my host nation, one of the poorest in the Western Hemisphere, sent aid to its Central American neighbor. The Nica newspapers carried photos of the devastation. They showed that the cliff sides that crumbled had had homes built on them while the cliffs left pristine withstood the shock. Could monopoly of good, safe, flat land be pushing people to build on risky, unstable cliffs? If so, that’s just one more good reason to break up land monopoly. What works to break up land monopoly, history shows, is for society to collect the annual rental value of the underlying sites and resources. That’d spur owners to use level land efficiently, so no one would be excluded, forced to resort to cliffs. To prevent another man-induced landslide is yet another reason to spread geonomics.
more transformation than reform; it’s a step ahead. Harvard economics students this year did petition to change the curriculum, in the wake of the English who caught the dissension from across The Channel. French reformers, who fault conventional economics for conjuring mathematical models of little empirical relevance and being closed to critical and reflective thought, reject this “autism” – or detachment from reality – and dub their offering “post-autistic economics”. Not a bad name, but again, academics define themselves by what they’re not, not by what they are, unlike geonomists. We track rent – the money we spend on the nature we use – and watch it pull all the other economic indicators in its wake. We see economies as part and parcel of the ecosystem, similarly following natural patterns and able to self-regulate more so than allowed, once we quit distorting prices. To align people and planet, we’d replace taxes and subsidies with recovering and sharing rents.
close to the policy of the Garden Cities in England. Founded by Ebenezer Howard over a century ago, residents own the land in common and run the town as a business. Letchworth, the oldest of the model towns, serves residents grandly from bucketfuls of collected land rent (as does the Canadian Province of Alberta from oil royalty). A geonomic town would pay the rent to residents, letting them freely choose personalized services, and also ax taxes. Both geonomics and Howard were inspired by American proto-geonomist Henry George. The movement launched by Howard today in the UK advances the shift of taxes from buildings to locations. A recent report from the Town and Country Planning Association proposes this Property Tax Shift and their journal published research in the potential of land value taxation by Tony Vickers (Vol. 69, Part 5, 2000). (Thanks to James Robertson)
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.