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This 2014 excerpt of USA Today, Jan 20, is by Kim Hjelmgaard.
Almost half of the world’s wealth is owned by just 1% of the world’s population, according to a report published just days before the start of the World Economic Forum’s annual meeting, where the topic of rapidly increasing income disparities will be a major focus.
In its study titled Working for the Few, the British-founded development charity Oxfam concludes that the $110 trillion wealth of the 1% richest people on the planet is some 65 times the total wealth of those floundering at the “bottom half” of the world’s population.
Further, this poorer “bottom half” now has about the same amount of money as the richest 85 people in the world, and the wealthiest grew their share of bounty in 24 out of 26 countries surveyed between 1980 and 2012, the study says.
“This massive concentration of economic resources in the hands of fewer people presents a significant threat to inclusive political and economic systems. Instead of moving forward together, people are increasingly separated by economic and political power, inevitably heightening social tensions and increasing the risk of societal breakdown,” the report says.
The World Economic Forum has identified income inequality as one of the greatest risks facing the world in 2014, and it will be a big topic of discussion during the organization’s annual meeting in Davos, Switzerland.
Ed. Notes: People own less than they need. To deal with that, Oxfam calls for redistribution, minimum wage, and more bureaucratic programs. But are those policies — which are already in place — actual solutions? Instead of “take from the rich to give to the poor” — a downstream strategy — maybe don’t create the undeserved rich in the first place. Humanity would be wiser to predistribute society’s surplus, thus precluding the amassing of undue fortunes — an upstream strategy.
What makes the rich rich and the poor poor is society’s spending for nature, for land and resources, for the very valuable goodies that nobody’s labor or capital brought into existence. Now, thanks to deeds and loans and other social contracts, we direct all that spending into the pockets of the very few. Using different social contracts, such as fees, dues, leases, even taxes, we could direct all that spending into the public treasury then pay it back out as monthly dividend checks to the citizenry.
It’s fair, since nobody made land, everybody needs land, and all of us — society in general — make land valuable, just by generating population density. And it’s efficient, because Earth’s worth is a social surplus. Since nobody had to be rewarded to create land (unlike producing goods and services), the receipt of “rent” is a bonus to lenders and absentee owners.
Along with “god-given” land, resources, EM spectrum, and ecosystem services, there are also government granted privileges, such as corporate charters and utility franchises. Together, nature and privilege are worth many trillions each in the US alone. It’s the stuff of vast inequality, presently, but it could become the extra income for everyone.
To cut to the root of the problem, we need to share Earth by sharing her worth. It’s a huge solution that fits a huge problem. It’s called geonomics and it’s something the Oxfams of the world need to look into.
These three excerpts are from: (1) P2P Foundation, 2014 Jan 14, on history by Pat Conaty; (2) Next City, 2013 Aug 5, on cities by Bill Bradley; and (3) Toronto Star letters, 2014 Jan 19, on jobs by Frank de Jong, President, Earthsharing Canada.
Land as a Commons in the Cooperative Tradition
Land became a growing political issue in the 16th and 17th centuries in the face of the first major wave of enclosures. Gerard Winstanley and the Diggers were early prophets of democratic land ownership in the mid 17th century. Their efforts were defeated and the loss of the commons intensified in the late 18th century as thousands of parliamentary acts of enclosure gathered pace.
In 1775 Thomas Spence, the son of a shoemaker from Newcastle-upon-Tyne, proposed a practical solution in a pamphlet: ‘Property in Land, Every One’s Right’. Spence argued that local parishes should own all land democratically and that rents collected should be used first to provide support for those unable to work and second to be shared to meet the needs of children and local residents equally. Spence called his solution the Parish Land Trust and this reform became known in the nineteenth century as Spence’s Plan. Both advocacy and pioneering spread and inspired other land reform thinkers like Thomas Paine.
American land reformer Henry George was active in the co-operative movement and he had a huge following in Great Britain and Ireland. His proposal for land taxation through a Single Tax was aimed at encouraging the steady and peaceful transfer of private land ownership for securing the substantial economic benefit and social security of the vast majority of households and businesses.
All these precedents gave Ebenezer Howard the confidence to develop the Garden City model and with important support from those active in the co-operative movement to develop Letchworth and Welwyn Garden Cities.
Six years after the founding of Letchworth Garden City, Lloyd George as Chancellor with the active backing of Winston Churchill as trade minister introduced the famous People’s Budget of 1909 that included a land value tax inspired by Henry George and set at 20% on any increases in value when land changed hands. This attempt by a Government to distribute “rents” to the people led to a twelve-month battle in Parliament. In April 1910 the land tax was dropped after the first House of Lords veto of a Government budget in two hundred years.
Why Don’t More Cities Tax Based on Value of Land Rather Than What You Put On It?
The Center for an Urban Future and NYU’s Wagner Innovation Lab released a report last month for the next mayor of New York City, “Innovation and the City”. Its Part II look at the split-rate property tax.
The majority of U.S. cities apply a singular property tax rate to both the land and the buildings. In several Pennsylvania cities, including Harrisburg, the land is taxed higher than improvements on the actual buildings. So developers can’t simply sit on land, unless they want to foot the bill for the taxes. The lower tax rate on improvements has incentivized more density.
Milton Friedman, free-market proponent, conceded that “the least bad tax is the property tax on the unimproved value of land.” I’d like to see other municipalities, especially the depopulated urban cores of cities (looking at you, Detroit), take a long, hard look at this tax rate. Dan Gilbert is sitting on so many properties in downtown Detroit right now it’s hard to keep track.
The best way for finance minister Jim Flaherty to reverse Canada’s disastrous de-industrialization is to stop taxing jobs, businesses, and sales. We tax cigarettes and alcohol to discourages their use, so it follows that income taxes are a tax on employment while sales taxes make products less affordable for many, translating into fewer local manufacturing jobs.
To address this job-killing double whammy, the federal government should shift taxation off of the productive economy and on to the non-productive economy. Most taxes should be on the use and abuse of nature, which would result in a double bonus of creating jobs plus conserving resources for future generations.
For example, Canada should collect the economic rent of oil, a policy that has effectively made all the citizens of Norway into millionaires, without discouraging their oil industry. Contrast this with Canada, where oil companies are allowed to pocket most oil super profits, putting Canadians, collectively, deeply in debt and out of work.
Every so often, the media reports on the smog made in China, blowing across the Pacific Ocean, into the lungs of Americans living on the West Coast.
These excerpts are from 2014, the Weather Channel, Jan 21; from 2011, Discover magazine, Mar 18 by David Kirby; and from the late 1990s in The Oregonian of (perhaps 1999, Mar 5 and 1997, Dec 12, but unclear)
Pollution from China Reaches U.S.
Air pollution from China is blowing across the Pacific Ocean to the U.S. West Coast and causing at least one extra day of smog each year.
The pollution that reaches the West Coast is largely a by-product of production of consumer goods for the U.S. and Europe.
It’s the first study to measure exactly how much of the Chinese pollution reaching the U.S. West Coast is from the production of items for the U.S., like cell phones, televisions, and electronics.
Even as America tightens emission standards, the fast-growing economies of Asia are filling the air with hazardous components that circumnavigate the globe.
None of the contamination we pump into the air just disappears. It might get diluted, blended, or chemically transformed, but it has to go somewhere. And when it comes to pollutants produced by the booming economies of East Asia, that somewhere often means right here, the mainland of the United States.
Carbon dioxide, the predominant driver of global warming, is not the only industrial by-product whose effects can be felt around the world. Prevailing winds across the Pacific are pushing thousands of tons of other contaminants —- including mercury, sulfates, ozone, black carbon, and desert dust —- over the ocean each year. Some of this atmospheric junk settles into the cold waters of the North Pacific, but much of it eventually merges with the global air pollution pool that circumnavigates the planet.
China now emits more mercury than the United States, India, and Europe combined. “What’s different about China is the scale and speed of pollution and environmental degradation. It’s like nothing the world has ever seen.”
Pollution Violating a New Ozone Limit Crossed Pacific
Even as America tries to slow down its emission, other nations are speeding up. People on the West Coast breathe a pollution a portion of which — 11% — that comes from China, found a University of Washington researcher.
To see the source, one must pay the newspaper.
Ed. Notes: The media is short on memory, long on news hooks. Unlike a modern journalist, if you were a student in college and wrote a paper on air pollution crossing the Pacific without doing any research on previous reports, your professor would not be pleased. So to get a bigger picture, both across time and into the facts, you have to rely on sites like this.
Whether or not reporting can be improved, can industry be cleaned up? Is it too late for the West to set a better example of industrial development? To use the cutting-edge technology sitting on shelves, awaiting use — clean fuels, efficient motors, solar powers, better batteries, lightweight vehicles, efficient mass transit, and settlement patterns that are compact (common destinations within walking and pedaling distance — that would generate heat and light cleanly? Is there still time to export what works (even if we’re not using it yet)?
No matter what lies over the time-horizon, it’s never too late to start doing the right thing. In this case, policy-wise, that means every jurisdiction should:
extend full liability to knowing polluters
quit subsidizing the old ways of burning fossil fuels
make polluters pay; i.e., shift taxes from goods to bads, and
level the playing field; i.e., shift subsidies from bads to goods, to everyone, paying the citizenry an extra income.
These policies would “internalize the externalities” (to use the jargon) and support the garage startups that are more creative than the cautious corporations. In such an open economy, great ideas would take over market share in record time. It’s the policy of geonomics, based on earth’s natural patterns of feedback and able to harmonize human desires with ecosystem constraints. So what’s the world waiting for?
This 2014 excerpt of MacroBusiness, Jan 21, is by Leith van Onselen.
In Australia as of 2013 Q4, personal loans enquiries have stabilised at a much higher level after a period of strong growth. This suggests ongoing challenging conditions for retailers of big ticket items and reflects a slowdown of car sales, which have shown no growth year on year, and a reduced demand for larger purchases among consumers in the mining states.
The December quarter is typically a strong period for credit demand, reflecting the seasonal peak in spending associated with the Christmas period. The relatively weak outcome in loans and credit cards suggests low interest rates are not leading to a significant lift in consumer borrowing as households remain cautious about rising unemployment.
It’s worth also pointing out that the latest credit aggregates data from the Reserve Bank of Australia revealed that the share of credit flowing to mortgages hit the highest level on record (60.2%), with the share of loans flowing to business (33.4%) hitting a record low.
Ed. Notes: Aussie debt is not a thing of beauty, as debt isn’t anywhere. There, personal borrowing has topped out, business borrowing has bottomed out, hopefully, while borrowing to buy housing with, especially, the land beneath it keeps expanding. So, Aussies spend more for something nobody made — land — and less for the goods and services that their neighbors make. That’s a recipe for a recession. So where in the business cycle is the Aussie economy? Perhaps they’re lagging seven or so years behind America’s.
This 2014 excerpt of IPS, Jan 20, is by Dennis Engbarth.
The Taiwan farmers victory in a landmark court case in a years-long battle has delivered a shock to government officials and given a morale boost to citizen campaigns.
The win followed a bitter resistance campaign against expropriation of farmland that has already cost two lives.
The dispute in Dapu in Miaoli county has been the most high-profile case in Taiwan of resistance to ‘zone expropriations’ in which large zones are subject to compulsory sale to government for projects which use part of the land for infrastructure and sell other portions to raise funds for construction or local government finance.
“Many large-scale zone expropriations of excellent farmland have taken place all over Taiwan usually under the pretext of creating new towns or industrial zones without consideration of actual need, and the land is often sold for speculation,” said Taiwan Rural Front (TRF) chairman Hsu Shih-jung.
The case in Dapu made international news in June 2010 after a Taiwan citizen reporter filmed Miaoli county government excavators, protected by hundreds of police, destroying hectares of green rice paddies ready for harvesting.
A protest sit-in was joined by more than 10,000 citizens.
Professor of land economics Tai Hsiu-hsiung of Taipei’s National Chengchi University told IPS that Taiwan’s excessively low tax rates had pushed local governments to use this method to first finance public infrastructure and then use zone expropriations get land for sale to improve their overall fiscal balance sheets.
Ed. Notes: So if government were collecting the annual rental value of land in Taiwan all along it would not need to sell off land that did not belong to them or the public. Government could also charge fees to the users of infrastructure, the utility bills everyone is familiar with. And government could cut its expenses by eliminating waste and graft. Like other governments in Southeast Asia, Taiwan could recover more site rent, as does Hong Kong, and pay citizens a dividend, as does Singapore — and get completely out of the insider land-trading racket.
This 2014 excerpt of Pacific Standard, Jan 17, is by Jim Russell.
When you look at the zoning regulations in Palo Alto, you learn that the tech companies have basically run out of room to build parking lots on their campuses — they can’t grow any further using the model of one parking spot per worker. So it’s logical that the tech companies would need to use shuttles to bring their workers to campus.
And where’s the densest place in the Bay Area, the place where the largest numbers of people can use the smallest numbers of buses? By this logic it’s not the youngsters that have chosen San Francisco to gentrify, but the Facebooks and the Googles who are incidentally causing this kind of development through the simple calculus of where they can house the most workers.
Cater to the wants and needs of talent and win the war for talent. Great, save that isn’t what the private bus map reveals. Cramming employees into San Francisco neighborhoods is a cost effective way to house talent while sparing dearer real estate for production.
Nonetheless, tech firms are moving to downtown San Francisco. The shift to urban headquarters favors cities such as Chicago, San Francisco, and Boston, destinations of choice for recent college graduates, while aging cities like Cleveland and Detroit struggle with corporate flight and economic decline.
IBM is interested only in recent college grads who are willing to work cheap in exchange for some tech experience. Dump the older and more expensive suburban-based employee. Plug in the millennial intern dazzled by the streetcar. Chicago is so cool I would work there for nothing.
Ed. Notes: Eventho’ downtown sites are the spendiest, for the trendiest workers and employers, it’s worth it, given the lower wages. Maybe the workers will see that they can make up for lower wages by getting a resident’s dividend, sort of like what they do in Aspen CO and in Singapore. There, they use a land tax to recover the socially-generated value of locations and an annual disbursement of the raised revenue to the local citizenry. It’s a reform even more transformative than the hi-tech they work on.
This 2014 excerpt of coastal South Carolina’s Chronicle, Jan 20, is by Joel Schlosberg.
An antipoverty program that empowers ordinary people to run their own lives would be both more respectful and more effective than the top-down approach. Martin Luther King approvingly quotes laissez-faire populist Henry George’s view that creative activity “is not the work of slaves, driven to their task either by the lash of a master or by animal necessities” and thus would be “enormously increased” in a post-poverty society.
A society-wide economic floor could, and should, be sustained by means consistent with free markets. Henry George’s single tax was the culmination of a line of classical liberal proposals to provide all members of society with a share of common natural resources.
This 2014 excerpt of The Atlantic, Jan 13, is by Barbara Ehrenreich.
Low-wage jobs are a trap: They pay so little that you cannot accumulate even a couple of hundred dollars to help you make the transition to a better-paying job. They often give you no control over your work schedule, making it impossible to arrange for child care or take a second job. And in many of these jobs, even young women soon begin to experience the physical deterioration —- especially knee and back problems —- that can bring a painful end to their work life.
It is actually more expensive to be poor than not poor. If you can’t afford the first month’s rent and security deposit you need in order to rent an apartment, you may get stuck in an overpriced residential motel. If you don’t have a kitchen or even a refrigerator and microwave, you will find yourself falling back on convenience store food, which —- in addition to its nutritional deficits —- is also overpriced. If you need a loan, as most poor people eventually do, you will end up paying an interest rate many times more than what a more affluent borrower would be charged.
A nonfunctioning car can mean lost pay and sudden expenses. A broken headlight invites a ticket, plus a fine greater than the cost of a new headlight, and possible court costs. If a creditor gets nasty, a court summons may be issued, often leading to an arrest warrant. No amount of training in financial literacy can prepare someone for such exigencies.
The criminalization of poverty has accelerated since the recession, with growing numbers of states drug testing applicants for temporary assistance, imposing steep fines for school truancy, and imprisoning people for debt.
We need to wake up to the fact that the underpaid women who clean our homes and offices, prepare and serve our meals, and care for our elderly—earning wages that do not provide enough to live on—are the true philanthropists of our society.
Ed. Notes: You may agree with the author that raising the minimum wage solves poverty, but does it? Actually, the whole notion that income must be tied to employment is damaging and must be jettisoned. The very rich are not employed and are the very richest. If they are worthy of welfare — the subsidies to big agri-business, the over-priced contracts with weaponeers, the tax breaks for oil companies, the lenient enforcement of polluters — then the all classes are worthy of fair welfare, a simple monthly check to the citizenry.
Indeed, the US Constitution was written and passed to “promote the general welfare”. The best way to do that is share common wealth. Our common wealth is all the money we spend for the nature we use, all our payments for land and resources that now go to the 1%. Instead, it should go to us all. Each of us should be getting a dividend from the worth of Earth. At the same time, we should not be paying taxes on wages, sales, or buildings. Government should just use fees, dues, licenses, auctions, etc, to redirect our spending for nature — our social surplus — into the public treasury then back out again as dividends to all.
Doing that will make life amazingly better for us all, especially the people who’d no longer be poor.
This 2014 excerpt of the New York Times, Jan 11, is by Thomas L. Friedman, reviewing a “fascinating new book, The Second Machine Age,” by Erik Brynjolfsson and Andrew McAfee.
Put all advances together, and you can see that our generation will have more power to improve (or destroy) the world than any before, relying on fewer people and more technology. But it also means that we need to rethink deeply our social contracts, because labor is so important to a person’s identity and dignity and to societal stability. Consider:
lowering taxes on human labor to make it cheaper relative to digital labor,
reinventing education so more people can “race with machines” not against them,
fostering the entrepreneurship that invents new industries and jobs, and
even guaranteeing every American a basic income.
We’ve got a lot of rethinking to do, they argue, because we’re not only in a recession-induced employment slump. We’re in a technological hurricane reshaping the workplace — and it just keeps doubling.
Ed. Notes: Better than lowering taxes on labor is to eliminate them. Get rid of them on capital, too. Heck, you could lose taxes altogether; just use fees, dues, leases, etc, to redirect all our spending for nature into the public treasury. That is, as your Land Dues were to go up, then the land prices you pay would go down. So people would not pay banks (in mortgages) or pay absentee owners (ground rent) for land but people would pay their community. Those funds, that revenue stream, is what could fund the extra income to everyone, called “basic income” or here “Citizen’s Dividend”.
This 2014 excerpt of the New York Times, Jan 9, is by Eric Lipton.
For the first time in history, at least 268 of the 534 current members of Congress had an average net worth of $1 million or more in 2012. The median net worth for lawmakers in the House and Senate was $1,008,767 — up 4.4 percent.
The wealthiest member of Congress, as has previously been the case, was Representative Darrell Issa, Republican of California, who had a net worth of between $330 million and $598 million, a significant chunk of which from the Viper car antitheft system sold by a company he owned.
The poorest was Representative David Valadao, Republican of California, who listed debts of about $12.1 million, mostly from loans on a family dairy farm.
Democrats and Republicans in Congress were about equally wealthy, with Democrats boasting a median net worth of $1.04 million, compared to $1 million for congressional Republicans. The averages in both cases were up compared with the previous year, when the numbers were $990,000 and $907,000.
Ed. Notes: So most in Congress are millionaires now. Stepping back for a big picture look, you see that government and the elite are returning to being the same institution in society, just as they were one a couple centuries ago: the aristocracy. So if you prefer democracy, then you better get serious about recognizing, popularizing, and sharing society’s surplus. What’s that? It’s the worth of Earth. It’s the money that society spends for the nature it uses, our mortgages for land, our payments for natural resources. Nobody made the planet, everybody needs this natural heritage, and all of us make it valuable. Hence, we should make this flow of revenue our common wealth (and not taxes on individual wealth) — and the sooner the better.
We have proceeded from a premise that poverty is a consequence of multiple evils: lack of education restricting job opportunities; poor housing which stultified home life and suppressed initiative; fragile family relationships which distorted personality development. The logic of this approach suggested that each of these causes be attacked one by one. Hence a housing program to transform living conditions, improved educational facilities to furnish tools for better job opportunities, and family counseling to create better personal adjustments were designed. In combination these measures were intended to remove the causes of poverty.
In addition to the absence of coordination and sufficiency, these programs have another common failing — they are indirect. Each seeks to solve poverty by first solving something else.
I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by the guaranteed income.
We have so energetically mastered production that we now must give attention to distribution. Those at the lowest economic level, the poor white and Negro, the aged and chronically ill, are traditionally unorganized and therefore have little ability to force the necessary growth in their income. They stagnate or become even poorer in relation to the larger society.
In 1879 Henry George anticipated this state of affairs when he wrote, in Progress and Poverty:
“The fact is that the work which improves the condition of mankind, the work which extends knowledge and increases power and enriches literature, and elevates thought, is not done to secure a living. It is not the work of slaves, driven to their task either by the lash of a master or by animal necessities. It is the work of men who perform it for their own sake, and not that they may get more to eat or drink, or wear, or display. In a state of society where want is abolished, work of this sort could be enormously increased.”
The poor transformed into purchasers will do a great deal on their own to alter housing decay. Negroes, who have a double disability, will have a greater effect on discrimination when they have the additional weapon of cash to use in their struggle.
Beyond these advantages, a host of positive psychological changes inevitably will result from widespread economic security. The dignity of the individual will flourish when the decisions concerning his life and in his own hands, when he has the assurance that his income is stable and certain, and when he know that he has the means to seek self-improvement. Personal conflicts between husband, wife and children will diminish when the unjust measurement of human worth on a scale of dollars is eliminated.
Two conditions are indispensable if we are to ensure that the guaranteed income operates as a consistently progressive measure. First, it must be pegged to the median income of society, not the lowest levels of income. To guarantee an income at the floor would simply perpetuate welfare standards and freeze into the society poverty conditions. Second, the guaranteed income must be dynamic; it must automatically increase as the total social income grows. Were it permitted to remain static under growth conditions, the recipients would suffer a relative decline. If periodic reviews disclose that the whole national income has risen, then the guaranteed income would hgave to be adjusted upward by the same percentage. Without these safeguards a creeping retrogression would occur, nullifying the gains of security and stability.
The program would benefit all the poor. I hope that both Negro and white will act in coalition to effect this change, because their combined strength will be necessary to overcome the fierce opposition we must realistically anticipate.
The contemporary tendency in our society is to base our distribution on scarcity, which has vanished, and to compress our abundance into the overfed mouths of the middle and upper classes until they gag with superfluity. If democracy is to have breadth of meaning, it is necessary to adjust this inequity. We are wasting and degrading human life by clinging to archaic thinking.
The curse of poverty has no justification in our age.
Ed. Notes: James Melvin Washington collected his favorite works of MLK into the book, Testament of Hope: the Essential Writings of Martin Luther King, Jr. and included the passage above, citing Henry George and noting the need to make the extra income dynamic, so it would “automatically increase as the total social income grows.” This is precisely what a Citizens Dividend does; as progress pushes up site values, one’s share of the resultant Rent rises, too.
This 2014 excerpt of EUROPP (European Politics and Policy) of the London School of Economics is by Jason Sorens of Dartmouth College and is based on an earlier blog post at Pileus.
Suppose I outsource some of my domestic production to a Bangladeshi subcontractor whose factory is a fire hazard. Is this any different from my importing Bangladeshi workers and putting them to work directly at home under hazardous conditions? From an economic standpoint, the answer is no. From an ethical standpoint, we may split some hairs, but the answer is also no to a first order of approximation. Why should trade allow me to do something that domestic regulations explicitly forbid?
However, Tufts researcher Dan Drezner has found no tendency for globalisation to undermine labour and environmental standards in developing countries.
Does democracy enact a society’s “values”? Arrow’s Impossibility Theorem tells us that it is impossible to aggregate individual preferences into social preferences in a fair and consistent way. Societies don’t have values. Regulations are determined either by the machinations of well-connected interest groups or by the preferences of powerful bureaucrats. Social control of regulations is impossible, even in democracies. The most we can hope for is something will “shuffle the deck” so that today’s insiders don’t remain insiders forever.
Developed countries spend hundreds of billions of dollars a year on agricultural subsidies, tariffs, and price supports, dwarfing what they spend on aid to poor countries. U.S. cotton subsidies alone cost Burkina Faso 1 per cent of its GDP, Mali 1.7 per cent of its GDP, and Benin 1.4 per cent of its GDP. These countries are among the poorest in the world.
Does footloose capital raise the relative bargaining power of capitalists against workers? Removing barriers to the free flow of workers can help solve this problem: let employers compete more intensely for workers. Beyond “free” trade is “free” migration; academics should do more to promote the benefits of open migration to all.
The European Union’s economic problems have come not so much from harmonizing too much (despite the occasional ridiculous overreach in this department) but from a poorly designed currency union. Overall, the single market has greatly benefitted Europe’s people.
Academics should not quail from the responsibility of communicating the advantages of open markets, even when openness is unpopular. Failure to develop can be solved with more globalization, not less.
Ed. Notes: Since so much of the developed gets copied, the richer socieites could also provide a better example of economic justice: geonomize. Replace taxes with dues and replace subsidies with dividends to all citizens. Then all the world could harmonize.
Many articles have recently appeared in magazines, web sites, and social media criticizing free markets and libertarian ideas. It seems to me that this opposition is a result of a growing interest in freedom. As people see continuing high unemployment, slow growth, ever greater government debt, environmental disaster, more turbulent weather, and endless wars, some folks seek solutions in greater freedom while others seek solutions in greater state control. The critics of free markets have fallen for several fallacies.
1. Critics confuse today’s mixed economies, a mixture of markets and government intervention, with a “free market.” A truly free market is an economy in which all activity is voluntary for all persons. Government intervention changes what people would otherwise voluntarily do. A pure market would not impose the taxation of labor and capital. It would not prohibit trade with Cuba. Free markets would not subsidize industry. Any peaceful and honest action would be free of restrictions and taxes. That is not the economy we have today in any country.
2. Critics use the term “capitalism” to falsely blame markets for economic trouble. Those opposed to private enterprise call today’s economies “capitalist.” They then note that the economy has trouble such as poverty, great inequality, unemployment, and recessions. The critics conclude that “capitalism” causes these problems. This illogic uses a sly change in meaning. They use the term “capitalism” as a label for the current economies and also to refer to free markets. It makes no sense to label the economy as XYZ and then say XYZ causes problems. The critics use the double meaning of “capitalism” to blame the non-existing free market for social problems. This confusion is often deliberate, as I have found that it is almost impossible to get the critics to replace their confusing use of the term “capitalism” with clearer terms such as either the “mixed economy” or the “pure market.”
3. Critics think that the “market” means “anything goes.” For example, they think that a free market allows unlimited pollution. They often call this, “unbridled capitalism.” But freedom stops at the limit of harm. In a pure market with property rights for all resources, pollution that crosses outside one’s own property is trespass and invasion. This violation of others’ property rights would require compensation, and that payment would limit pollution.
4. Critics confuse privatization with contracting out. They then blame private enterprise for problems such as occurs with private prisons. When government contracts with private firms to produce roads, it is still a governmental road. When governments hire private contractors to provide services in a war, it is still government’s war. Government sets the rules when firms do work under contract. Genuine privatization means transferring the whole ownership, financing, and operation to a private firm.
5. Critics overlook subsidies. Government distorts the economy with subsidies to agriculture, energy production, and other corporate welfare. The biggest subsidy is implicit: the greater land rent and land value generated by the public goods provided by government and financed mostly from taxes on labor and enterprise. Critics not only ignore this implicit subsidy but also overlook the explicit subsidies to agriculture and programs such as the promotion of ethanol from corn.
6. Critics do not understand the crowding out of private services because of government programs. The critics of libertarianism say that with less government, old folks and poor folks would starve and die because they would not receive social security and medical care. What they overlook is that the reason many of the elderly have little savings for retirement is that government took away half their income while they were working. Income taxes reduce their net wages, while sales taxes raise the cost of living. Low-income people pay little or no income tax, but they pay hefty sales and excise taxes, and they indirectly pay property taxes from their rental payments to landlords. Libertarians want to abolish poverty and have a society where all people have good medical care. They just want to accomplish this by letting workers keep their full pay, which would enable them to pay for their own medical services. Also, with no taxes on interest and dividend income, people would be better able to provide for their own retirement income, indeed to have much more than social security now provides.
7. Critics fail to understand contractual governance. A pure market would not consist of isolated individuals. Human beings have always lived in community associations. In a free market, communities such as condominiums, land trusts, and civic associations would provide the public goods that the members want.
8. The critics of market believe that corporations control the economy, exploit labor, and plunder the planet. Corporations do have power, but mainly because they obtain subsidies and monopoly privileges from governments. But labor unions and lawyers also lobby the government for power and favors. Rather than blaming private enterprise, the critics should examine how the structure of government enables special interest to obtain power and wealth.
Leo Tolstoy wrote in 1905 that nobody really argues with the economics and philosophy of Henry George and public revenue from land rent; the critics either misunderstand the concepts, or they create misinformation. The same applies to critics of libertarianism. The fact that the critics falsify the free market in criticizing it implies that the actual concept is sound, otherwise they would provide valid arguments.
Nobody has refuted the free market and the libertarian ethic of “live and let live”. The critics of liberty either misunderstand it or else falsify it. Even when their errors in logic, their false evidence, and their confused terminology are pointed out, the critics persist in their falsification. They are stubbornly anchored to their viewpoints. Why this is so is a problem I will leave to psychologists to figure out.
This 2014 excerpt of Macro Business, Jan 17, is by Leith van Onselen.
Rather than the Government funding urban renewal projects directly, surely a simpler and more cost effective solution would be to implement a broad-based land tax (in exchange for cuts to stamp duties), in turn penalizing land banking and vagrancy and encouraging the more productive use of sites.
A broad-based land tax would also help to 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 tax receipts. In turn, governments would be more likely to facilitate development, rather than act to restrict it in a bid to save on infrastructure costs.
Ed. Notes: Beyond solving urban blight, note that as owners get busy developing their sites that they had kept vacant or otherwise under-utilized, awaiting a higher offered price, they’d then attract investment and create employment. The new development in-fills cities, making walking, riding, and pedaling more efficient and cars less so. Good for the body and for the environment. Also, people’s demand for land in cities is so high, government could also easily fund a dividend. Policymakers could also delete other taxes, since they hobble production and drive down location values. More than just the policy of a city, geonomics could be the policy of an entire nation.
This 2014 excerpt of the Daily Mail, Jan 16, is by James Nye.
At huge digital commercial television screens across Beijing, the Chinese observe virtual sunrises, since actual ones can not be seen thru the smog.
The futuristic screens installed in the Chinese capital usually advertize tourist destinations, but as the season’s first wave of extremely dangerous smog hit and the air took on an acrid odor, residents donned air masks and left their homes to watch the LED screen show the rising sun in Tiananmen Square.
Smog reached as high as 671 at 4 a.m. at a monitoring post at the U.S. Embassy in Beijing. That is about 26 times as high as the 25 micrograms considered safe by the World Health Organization.
Coal burning and car emissions are major sources of pollution.
China has drawn up dozens of laws and guidelines to improve the environment but has struggled to enforce them in the face of powerful enterprises.
Ed. Notes: China could choose other ways to generate electricity and to transport people that don’t pollute. Probably not one fuel would replace coal and not one mode of transport would replace the car but mixes would. Electricity could come from sunlight, windmills, fuel cells, etc.
And cars could be decreased by sharing, similar to checking out books from a library, and by continuous mass transit. In such a system, major vehicles on major arteries never stop; instead, people board minor vehicles at transit stops and those little vehicles catch up to the bigger one, people get on and off, and then the small vehicle stops at the next transit stop.
Another reform is to pay citizens a dividend from the value of land and locations so that people don’t need to crowd into citizens to find jobs … and breathe poisoned air, nor watch sun rises on TV.
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.
shaped by reality. In the 1980′s, the Swedish government doubled its stock transfer tax. Tax receipts, however, rose only 15%, since traders simply fled to London exchanges. Fearing a further exodus, the Swedish government quickly rescinded the tax altogether. (The New York Times, April 20) That willingness to tax anything leads us astray. Pushing us astray is that unwillingness to pay what we owe: rent for land, our common heritage. Assuming land value is up for grabs, we speculate. We cap the property tax on both land and buildings and the rate at which assessments can go up; while real market values rise quicker, assessments can never catch up. Our stewards, the Bureau of Land Management, routinely sell and lease sites below market value, often to insiders, says the Government Accounting Office. Once we grasp that rent is ours to share, we’ll collect it all, rather than let it enrich a few, and quit taxing earnings, which do belong to the individual earner. That shift is geonomic policy.
a way to connect the dots. Making the cyber rounds is “The Cavernous Divide” by Scott Klinger, from AlterNet (posted March 21): “As the number of billionaires in the world expands, so does the number of those in poverty.” Duh. The yawning income gap is not news. Nearly every issue of our quarterly digest carries a similar quote. Yet the connection was worked out long ago by one of America’s greatest thinkers, Henry George, who labeled his masterpiece, Progress and Poverty. Techno- and socio-advances always enrich few and impoverish many. Yet progress also pushes up location values – the geonomic insight (is Silicon Valley cheaper now or more expensive?). Instead of taxing income, sales, or buildings, society could collect those values of sites, resources, EM spectrum, and ecosystem services via fees and dues, which would lower the income ceiling, and instead of lavishing corporate welfare, pay out the recovered revenue via dividends, which would jack up the income floor. Dots connected.
a 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.
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 way to redirect all the money we spend on the nature we use – trillions of dollars annually. We can’t pay the Creator of sites and resources and are mistaken to pay their owners this biggest stream in our economy. Instead, as owners we should pay our neighbors for respecting our claims to land. Owners could pay in land dues to the public treasury, a la Sydney Australia’s land tax, and residents could get back a “rent” dividend, a la Alaska’s oil dividend. We’d pay for owning sites, resources, EM spectrum, or emitting pollutants into the ecosphere, then get a fair share of the recovered revenue. The economy would finally have a thermostat, the dividend. When it’s small, people would work more; when it’s big, they’d work less. Sharing Earth’s worth, we could jettison counterproductive taxes and addictive subsidies. Prices would become precise; things like sprawl, sprayed food, gasoline engines, coal-burning plants would no longer seem cheap; things like compact towns, organic foods, fuel cells, and solar powers would become affordable. Getting shares, people could spend their expanded leisure socializing, making art, enjoying nature, or just chilling. Economies let us produce wealth efficiently; geonomics lets us share it fairly.
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.
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.
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.