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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.
This 2014 excerpt of The Guardian, Jan 13, is by George Monbiot.
Vast amounts of public money, running into billions, are spent every year on policies that make devastating floods inevitable.
Water sinks into the soil under trees at 67 times the rate at which it sinks into the soil under grass. The roots of the trees provide channels down which the water flows, deep into the ground. The soil there becomes a sponge, a reservoir which sucks up water and then releases it slowly. In the pastures, by contrast, the small sharp hooves of the sheep puddle the ground, making it almost impermeable, a hard pan off which the rain gushes.
Full reforestation would reduce flooding peaks by about 50%. That means – more or less – problem solved.
But the common agricultural policy says, if you want to receive your single farm payment – by far the biggest component of farm subsidies – land has to be free from what it calls “unwanted vegetation”. Land covered by trees is not eligible. The subsidy rules have enforced the mass clearance of vegetation from the hills.
The problem is not confined to livestock in the mountains. In the foothills and lowlands, the misuse of heavy machinery, overstocking with animals, and other forms of bad management can – by compacting the soil – increase the rates of instant run-off from 2% of all the rain that falls on the land to 60%.
Sometimes ploughing a hillside in the wrong way at the wrong time of the year can cause a flood – of both mud and water – even without exceptional rainfall.
River managers believed that the best way to prevent floods was to straighten, canalise and dredge rivers along much of their length, to enhance their capacity for carrying water. They discovered that this was not just wrong but also counterproductive. A river can, at any moment, carry very little of the water that falls on its catchment: the great majority must be stored in the soils and on the floodplains.
By building ever higher banks around the rivers, reducing their length through taking out the bends and scooping out the snags and obstructions along the way, engineers unintentionally did two things. They increased the rate of flow, meaning that flood waters poured down the rivers and into the nearest towns much faster. And, by separating the rivers from the rural land through which they passed, they greatly decreased the area of functional floodplains.
The result was catastrophic. In many countries, chastened engineers are now putting snags back into the rivers, reconnecting them to uninhabited land that they can safely flood and allowing them to braid and twist and form oxbow lakes. These features catch the sediment and the tree trunks and rocks which otherwise pile up on urban bridges, and take much of the energy and speed out of the river.
The Pitt Review, commissioned by the previous government after the horrible 2007 floods, concluded that “dredging can make the river banks prone to erosion, and hence stimulate a further build-up of silt, exacerbating rather than improving problems with water capacity”.
The drained and burnt moors of the grouse estates in England, though they serve only the super-rich, receive some £37m of public money every year in the form of subsidies. Much of this money is used to cut and burn them, which is likely to be a major cause of flooding. Though there had been plenty of rain throughout the winter, the river was already low and sluggish.
That’s the flipside of a philosophy that believes land exists only to support landowners and waterways exist only “to get rid of water”. Instead of a steady flow sustained around the year by trees in the hills, by sensitive farming methods, by rivers allowed to find their own course and their own level, to filter and hold back their waters through bends and braiding and obstructions, we get a cycle of flood and drought. We get filthy water and empty aquifers and huge insurance premiums and ruined carpets. And all of it at public expense. Much obliged to you guv’nor, I’m sure.
Ed. Notes: Critics see what’s wrong with certain subsidies but now with subsidies in general. Yet as long as you let politicians and bureaucrats spend Other People’s Money without any serious backlash for making mistakes, what’s to keep them from making mistakes? Makes much more sense to end subsidies in general and just pay everyone a Citizen’s Dividend.
Raise the funds via taxes, fees, dues, leases, etc on land and resources. Such charges will keep land affordable for actual farmers and everyone. And since society spends so much for land and resources and EM spectrum et al, redirecting that spending into the public treasury then out into everyone’s pockets (via Land Dues and Rent Dividends), the populace will enjoy a comfortable cushion indeed and won’t miss and de-funded public “services”.
Further, an enlightened jurisdiction could also lose the counter-productive taxes on earning, purchases, and buildings, which would let the value of locations bloom, feeding more funds into an even fatter dividend for the citizenry. It’s geonomics and wherever tried, to the degree tried, has worked every time. Time to implement it again.
This 2014 excerpt of Occupy Solidarity Network’s Theory Thursday by Micah White, Jan 16, is by Andy-Merrifield.
How can ordinary people develop civic immunity?
Long ago in Poverty and Progress (1879), Henry George proposed a novel idea that we might want to explore today. In order to “satisfy the law of justice,” George said, a rent tax seems the only alternative preventing parasitic anti-social wealth appropriation. “I do not propose either to purchase or to confiscate private property in land,” George wrote. “Let individuals who now hold it still retain, if they want to, possession of what they are pleased to call their land. Let them continue to call it their land. Let them buy and sell it, and bequeath and devise it. We may safely leave them the shell, if we take the kernel. It is not necessary to confiscate land; it is only necessary to confiscate rent.”
Thus that preeminent parasitic organism, expelling people from the earth as a dwelling-place, can be expunged, or at least democratized by a Community Land Trust that collects this rent tax, instigating another notion of the public realm, one not owned and managed by any centralized state but owned and run by a collectivization of people, federated, communal, and truly responsive to citizens’ needs.
Ed. Notes: It’s good to see Marxists like the social sharing of socially-generated values of locations and resources, just as it’s good to see followers of Adam Smith get on board, too. Both see merit in the reform — eventho’ it’s neither left nor right — because it’s fair, which the left likes, and it’s efficient, which the right likes. What sharing nature is is a third way, making markets cooperative and responsible, since it also incorporates getting rid of the taxes and subsidies that distort prices and choices. It’s geonomics and, having worked wherever tried, has a future on planet Earth.
This 2014 excerpt of Web of Debt, Jan 16, is by Ellen Brown.
More than eight million Californians struggle to meet their daily needs. One in four children lives in poverty. Income inequality is higher in the nation’s most populous state than in almost any other.
Governor Jerry Brown acknowledges that California faces a “wall of debt” amounting to $28 billion. Some analysts put it much higher than that.
Welfare payments, health care for the poor, and benefits for the elderly and disabled have been slashed. State workers have been downsized. School districts in need of cash have been reduced to borrowing through “capital appreciation bonds” bearing 300% interest. In one notorious case, the Santa Ana school district actually borrowed at 1,000% interest.
When tallied up at every stage of production, interest has been calculated to claim one-third of everything we buy.
California’s revenues are currently parked in those very largest of corporations, Wall Street banks. These out-of-state banks use our giant asset pool for their own speculative purposes, and the funds are at risk of confiscation in the event of a “bail-in.”
On the other hand, the state Bank of North Dakots is a major money-maker for the state, returning a sizable dividend annually to the treasury. Every year since the 2008 banking crisis, it has reported a return on investment of between 17 percent and 26 percent. The BND also provides what is essentially interest-free credit for state projects, since the state owns the bank and gets the interest back. The BND partners with local banks rather than competing with them, strengthening their capital and deposit bases and allowing them to keep loans on their books rather than having to sell them off to investors.
In the fall of 2011, a bill for a feasibility study for a state-owned bank passed both houses of the California legislature. But it died when Jerry Brown vetoed it.
I am therefore running for California State Treasurer on a state bank platform, along with Laura Wells, who is running for Controller.
We are running on the endorsement of the Green Party – along with Luis Rodriguez for governor and David Curtis for secretary of state.
Ed. Notes: Out of the two — a state bank vs. Wall Street — the former surely seems preferable. However, there are other options. Why not empower the state Treasury to perform some banking functions? You could open up an account there, if you like. Also, why not stop letting the central bank be the only one to create new money? Stop them, or make them compete with credit unions, or let local currency clubs be the ones to create new money, since they’re the ones in position to know how much is needed.
And while reforming banking and credit, society should also do something about land speculation. That’s what tanks economies, letting speculators inflate the price of locations, which is what happened in California after Prop 13. The way to fix that is to drop taxation and instead recover the annual rental value of locations by utilizing fees, dues, leases, etc. The raised revenue could fund any truly desired government or fund a dividend to residents — obviating welfare for the needy and greedy both — or fund a mix of both services and monthly share checks.
This 2014 excerpt of The Ecologist, Jan 2, is by Konstantin Rubakhin, coordinator of ‘Save Khoper National Park’. This article was first published by Open Democracy Russia under the title “Where there’s muck there’s brass.”
The local population in the heart of Russia’s Black Earth belt has called for a total ban on the mining of nickel and other non-ferrous metals in the zone known for centuries in this area as Russia’s ‘bread basket’.
The metal deposits, believed to be the last major nickel reserves in Europe, are only 20 kilometers away from one of the few untouched areas in Central Russia: the river Khoper (or Khopyor), a tributary of the Don, and the Khoper Nature Reserve, an important bird sanctuary. The reserve is also home to the almost extinct Russian desman, a small mammal belonging to the mole family.
The project is almost totally export-oriented. Indeed, 90% of the nickel mined in Russia ends up abroad, and the Ural Metal and Mining Company (UGMK), which won the tender, is – like most such companies operating in Russia – registered in Cyprus.
The protest against mining has been going on since March 2012, when the tender documents were released, and it is actively supported by up to 85% of local residents. Two rallies in Novokhopersk – a small town of 6,000 inhabitants – have attracted crowds of 5,000.
We handed President Putin our documentation, explaining that leading experts considered the Yelanskoye project unviable from an environmental, social and economic point of view; and that the region’s development should concentrate on tourism and agriculture.
Putin, however, UGMK’s owner is one Iskander Makhmudov, who has business connections with both Russia’s railway boss Vladimir Yakunin and billionaire businessman Gennady Timchenko – both known to be close to the president.
Since our meeting with Putin, there have been several dozen articles published, and TV reports broadcast, alleging that the Yelanskoye campaign is being manipulated variously by foreign agents, the American State Department, and perhaps even the Devil himself.
Ed. Notes: People who stand up for what’s right do sometimes win against those who wield power and seeks fortunes. Another argument demonstrators could add to the environmental and economic ones above is that the profit from Earth — which is what Putin and cronies are after — is not something for anyone to grasp for themselves but a flow of value that belongs to all the residents. Let’s not let the “rents” of Earth any longer be the low hanging fruit for the scrupulous but the common wealth for everyone.
This 2014 excerpt of Common Dreams, Jan 15, is by Jon Queally.
If not properly challenged, Tuesday’s ruling by a US appellate court allowing the nation’s largest telecommunication companies (ie, telecom giants like AT&T, Verizon, and Comcast) to create elite digital pathways for chosen content could spell the death of the internet as the world has come to know it.
If your cable company wants to make streaming video from its services lightning fast and free from data caps, while slowing down YouTube and counting that data against your monthly allotment, now it can do so.
Companies like Verizon can create tiered pricing structures with fast lanes for those who can afford the tolls — and slow lanes for everyone else.
The FCC could respond boldly to the decision by the three judge panel [judges are merely lawyers with immunity] by moving to reclassify broadband Internet access as in the public interest.
Little by little over the years, the pro-competitive rules, the pro-consumer rules were whittled away by the power of the telecom lobby which controls a sizable amount of votes, Democratic and Republican in the Senate and House.
AT&T and Verizon bought up the ‘old’ AT&T and MCI in 2006.
Critics say only decisive action and a groundswell of popular pressure aimed at the FCC, the White House, members of Congress, and the telecommunication giants now hoping to exert total control over the digital platform’s information highways can turn the tables.
Ed. Notes: People get rich either by growing the pie and getting a nice slice or by not growing the pie and just getting a bigger slice of existing wealth, like a troll under a bridge. We should make the latter way illegal, and de-tax the first way. Then fortunes will be earned and will measure contributions to society, not extractions from society, as the court ruling on the internet makes possible. I was hoping the internet would play a major role in transforming economies into systems that work right for everybody, not just a trough for the greedy insiders. Maybe the petition will keep the internet in our future as it has been in our past.
Ed. Notes: Must humans expand everywhere? Into the habitats of every other species? Could our species and others co-inhabitat? Should human populations shrink? If so, various populaces have slowed their growth, even stopped growing, when people become materially comfortable. So how do we help people prosper?
Basically we share the value of land; people in the country would get a share of the value of land in the city, just as cities get a large share of the resources of the country. When people in a region share the value of locations in the region, then they can get rid of the taxes and subsidies that are obstacles to attaining prosperity. Enjoying prosperity, people breed less, and without even thinking about they’d leave more room for other species.
Just as you see bison making a comeback in Europe, so we might see lions making a comeback in West Africa, geonomics is that powerful.
This 2014 excerpt of the Huffington Post, Jan 13, is by Emily Swanson.
A Rolling Stone rundown of “Five Economic Reforms Millennials Should Be Fighting For” roiled the Internet last week, sparking a multi-layered debate about the policies being proposed and the wisdom of proposing them at all. If the results of a new HuffPost/YouGov poll are any guide, rallying support won’t be easy.
While Americans were more likely than not to support guaranteeing a job for everyone, relatively few said they supported using an expanded Social Security program to guarantee a minimum income to every American. Fifty-four percent of all adults polled opposed the idea, compared to 35 percent overall who said they supported it. Among people under 30, 44 percent of respondents opposed the idea, while 40 percent supported it.
“All other taxes could be replaced by an assets tax on land ownership and financial wealth.” That idea was opposed by a 45 percent to 25 percent margin overall, and by a 36 percent to 22 percent margin among respondents under 30. Forty-two percent of those under 30 and 30 percent of respondents overall said they weren’t sure whether they supported the idea.
Ed. Notes: Rolling Stone’s 5 Reforms hit a nerve, showing once again humans are inherently conservative; “better the devil they know.” Plus, they’re influenced by their normalcy bias. And third, new ideas have to be explained but to win they have to be felt. Check out books like What’s the Matter With Kansas, which examined why people vote against their own self-interest. So it’s a real uphill battle for new ideas. How does something like women winning suffrage (they couldn’t vote) or protecting the whales (they can’t vote) or separation of church and state (the religious voted on it) ever win? How society does change is a science and probably someone somewhere has an answer. Would they please speak up?
This 2014 excerpt of Business Insider, Jan 9, is by Julia La Roche.
Third Avenue Management’s chairman/founder Martin Whitman blasted Nobel Prize Laureate Eugene Fama. “I am disappointed that a Nobel Prize was awarded to Eugene Fama.”
Fama, a professor at Chicago Booth, won the so-called “Nobel” Prize in Economic so-called “Science” [Alfred Nobel left no money for economics, a field that has a long way to go before becoming a science] last year with Lars Peter Hansen and Robert Shiller.
Whitman called Fama’s work on Modern Capital Theory (MCT) “utter nonsense”, “sloppy science”, “plain stupid”, and “unscholarly.”
MCT, the hedge fund manager said, is of little or no help to those involved primarily with making investment decisions: value investors, control investors, most distress investors, credit analysts, and first and second stage venture capital investors.
MCT, not only misdefines markets, but also seems to be sloppy science. MCT acolytes forget that many managed funds do tend to outperform relative benchmarks, over the long term, on average, and most of the time. No attempt is made to study what it is that outliers do that make them outliers, e.g., Berkshire Hathaway, since this would entail the detailed analysis of portfolio companies and the securities they issue. How unscholarly!
Ed. Notes: The problem is bigger than just this one theory. In particular, it’s dishonest to say there is a Nobel prize in economics, and in general, that field is not a science. It can’t be. It does not make any distinction between your spending that rewards the efforts of producers, such as when you buy goods and services, and your spending that rewards the standing of privilege-holders, such as when you buy land and resources (often indirectly in the price of gasoline, for instance). When you pay producers, then they go and produce more. But when you pay mere owners, then they just and seek more rents and privileges. Your former payments grow the economy and your latter payments shrink the economy. Differences can’t get any more basic than that.
This 2014 excerpt of Newsworks, Jan 14, is by Frank Iannuzzi at Temple University.
If the city council wants to make Philadelphia’s tax structure better for everyone, it should focus on reforming property taxes. Specifically, it should adopt what is commonly referred to as a “land value tax.”‘
This levy, which exists in more than a dozen municipalities and school districts across Pennsylvania, has three primary virtues.
First, this structure would penalize speculators who hold vacant land or abandoned buildings and give landowners an incentive to maximize the productive use of their property — or pay for the harm their underutilized land causes to the value of surrounding properties.
Second, redistributing taxes from improvements to land would effectively shift much of that burden from residents [since their locations are of lower value] to commercial properties [since their locations are of higher value].
Third, while it may seem counterproductive to burden commercial properties, focusing the tax burden away from privately-created improvement value in favor of recapturing the publicly-created value of land merely captures the excess now paid to landlords.
Ed. Notes: Great to see WHYY (the station of Terry Gross’ “All Things Considered”) join the discussion. Every time another rational voice calls for public recovery of publicly-generated land value, it brings the actuality of reform another day closer. Care to chime in?
This 2014 excerpt of Grist, Jan 13, is by Jaafar Rizvi.
From 2001 to 2010, the U.S. built roughly 13,000 miles of new interstate natural gas pipelines compared to just 748 miles of interstate high-voltage transmission lines. This gigantic mismatch is in part due to the fact that the Federal Energy Regulatory Commission lacks the authority to site transmission lines, but does have the ability to site pipelines. So FERC can approve a pipeline route, while a patchwork of local and regional regulators with competing interests must all agree on where an electric transmission line should be built. One broken link in that long and fragile chain of approvals can quash an entire project.
Take for example the Zephyr Power Transmission Project. This line, proposed in 2011, would take power from what could be the largest wind farm in the nation and perhaps the world, the Pathfinder Zephyr Wind project in Wyoming, and deliver it to Las Vegas in the Southwest. This wind farm is expected to generate between 2,000 and 3,000 megawatts of inexpensive, renewable energy — enough to power a million homes. But permitting and review is expected to take six years. The process could go longer and at any point it could be rejected.
Natural gas pipelines, on the other hand, are getting fast-tracked. For example, Spectra Energy, the owner and operator of a pipeline delivering fracked natural gas from the Marcellus Shale to Manhattan, applied for a permit with FERC on Dec. 20, 2010. Less than three years later, it’s bringing natural gas to Manhattan.
Ed. Notes: While bureaucracy may be too slow for power lines, those lines are above ground while pipes for gas are below, so the problems with views, bird flight patterns, etc, are different. Further, should clean energy renewables be centralized, as in a wind farm, or should they be decentralized, with windmills atop skyscrapers for example? Maybe the government shouldn’t necessarily speed up processing for power lines but slow it down for gas lines, and take into question such issues as the pollution from the burned natural gas.
This 2014 excerpt of Common Dreams, Jan 13, is by Bill Quigley.
There are actually thousands of tax breaks and subsidies for the rich and corporations provided by federal, state and local governments but these ten will give a taste.
One. State and Local Subsidies to Corporations.
Two. Direct Federal Subsidies to Corporations.
Three. Federal Income Tax Breaks for Corporations.
Five. Subsidy to Fast Food Industry. They pay wages so low that taxpayers must put up $243 billion to pay for public benefits for their workers.
Six. Mortgage Deduction benefits mostly homeowners with incomes over $100,000 per year.
Seven. The government bailout of Wall Street cost $32 to $68 billion, not including the takeover of Fannie Mae and Freddie Mac which alone cost more than $180 billion. The Federal Reserve made at least $7.6 trillion [others say double] available to banks, financial firms, and investors.
Eight. Each major piece of legislation; e.g., the emergency tax legislation passed by Congress in early 2013 contained 43 business and energy tax breaks worth $67 billion.
Nine. Lax enforcement. E.g., JPMorgan Chase made a preliminary $13 billion mortgage settlement with the US government but is allowed to write off $4 billion. Corporations paying fines to the government protect their officers from being prosecuted (you and I would be prosecuted).
Ten. Thousands of smaller special breaks. E.g: Fifty billionaires received farm subsidies in the past twenty years.
Special breaks in tax code is the reason there are thousands of lobbyists in the halls of Congress, hundreds of lobbyists around each state legislature and tens of thousands of tax lawyers all over the country.
Ed. Notes: Not just tax breaks but subsidies, too, and fat-cat contracts, are why there are lobbyists pulling down millions of bucks, getting passed into law welfare for the rich.
Back to the mortgage interest deduction. It does not save the homebuyer a penny because while the buyer’s tax burden might be less the purchased home’s price is higher. The deduction merely lets real estate, construction, and banking industries inflate land, buildings, and loans. Without the deduction, some wannabe buyers could not afford the house, so its price would have to come down. Canada does not allow interest deduction and it enjoys an even higher rate of home ownership than America.
Back to the Wall Street bailout. It also let them avoid mending their dishonest ways, gobble up smaller unlucky competitors, and created a false recovery (inflated asset values) that papered over the continuing recession for millions of Americans.
The author left out military contracts, perhaps the biggest part of corporate welfare, and the free funds to the oil industry, an industry which cheats on its royalty payments and never gets punished, for something as intangible as research, and the fact that corporations and multi-millionaires each year get refund checks back from the US Treasury in the hundreds of millions of dollars!
After all this, many people still don’t see anything wrong with subsidies, they just see something wrong with the payments going to the wrong people. And they don’t see anything wrong with vast fortunes, they just want to tax them, suggesting it does not matter how you accumulate your money as long as you give us a slice — not a pretty moral picture. And pragmatically, it’s hard to capture a slice downstream, after the tax target has already become rich and powerful, and much easier to capture the funds, the source of fortunes, upstream, while they’re still in flux.
Another part of the author’s analysis left out is that the recipients of state favors (of tax breaks and subsidies) are entities that have long been the recipients of natural “rents”, of the money that society spends for the nature it uses. With money comes power and those unearned rents have enabled the recipients to lobby and make campaign contributions for ever more favors. So to stop the abuse of pubic revenue we also have to turn off the primordial spigot — the titles, deeds, leases, and loans that channel our spending for land and resources into so few pockets.
To make a clean sweep of it, we should direct government to forget taxing and instead use fees, dues, leases, etc to redirect Earth’s worth into the public treasury, making this social surplus our common wealth, and to forget subsidizing and instead disburse the lion’s share of public revenue back to citizens as a monthly dividend. Since complexity is the enemy of equity, let’s follow the KISS principle. Life could be so much easier!
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 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.
a discipline that, compared to economics, is as obscure as Warren Buffett’s investment strategy, compared to conventional investment theory, about which Buffett said, “You couldn’t advance in a finance department in this country unless you taught that the world was flat.” (The New York Times, Oct 29). The writer wondered, “But why? If it works, why don’t more investors use it?”
Good question. Geonomics works, too. Every place that has used it has prospered while conserving resources. Yet it remains off the radar of many wanna-be reformers. Gradually, tho’, that’s changing. More are becoming aware of what geonomics studies – all the money we spend on the nature we use. Geonomics (1) as an alternative worldview to the anthropocentric, sees human economies as part of the embracing ecosystem with natural feedback loops seeking balance in both systems. (2) As an alternative to worker vs. investor, it sees our need for sites and resources making those who own land into landlords. (3)As an alternative to economics, it tracks the trillions of “rent” as it drives the “housing” bubble and all other indicators. And (4) as an alternative to left or right, it suggests we not tax ourselves then subsidize our favorites but recover and share society’s surplus, paying in land dues and getting back “rent” dividends, a la Alaska’s oil dividend. Letting rent go to the wrong pockets wreaks havoc, while redirecting it to everyone would solve our economic ills and the ills downstream from them.
People must learn to stop whining so much and feel enough self-esteem to demand a fair share of rent, society’s surplus, the commonwealth.
an alternative to conventional land trusts. Just as it seems some functions should not be left to the market – private courts and cops invite corruption (while private mediation is fine) – just so some land should not be left in the market. That said, sacred sites do not make much of a model for treating the vast acreage of land that we need to use. So the usual trust model, which is anti-use and counter-market, can not apply where it’s needed most. Trust proponents worry about ownership and control – two very human ambitions – but they’re not central. Supposedly, we the people own millions acres – acres that private corporations treat as private fiefdoms – and conversely, the Nature Conservancy owns wilderness the public can some places use as parks. So, the issue is not who owns but who gets the rent – ideally, all of us.
about the money we spend on the nature we use. It flows torrentially yet invisibly, often submerged in the price of housing, food, fuel, and everything else. Flowing from the many to the few, natural rent distorts prices and rewards unjust and unsustainable choices. Redirected via dues and dividends to flow from each to all, “rent” payments would level the playing field and empower neighbors to shrink their workweek and expand their horizons. Modeled on nature’s feedback loops, earlier proposals to redirect rent found favor with Paine, Tolstoy, and Einstein. Wherever tried, to the degree tried, redirecting rent worked. One of today’s versions, the green tax shift, spreads out of Europe. Another, the Property Tax Shift, activists can win at the local level, building a world that works right for everyone.
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.
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.
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 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 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.
I couldn’t wait for success — so I went ahead without it.
If opportunity doesn’t knock, build a door.
If we did all the things we are capable of, we would literally astound ourselves.
Thomas A. Edison
One should be able to see that things are hopeless and yet be determined to make them otherwise. This philosophy fitted on to my early adult life, when I saw the improbable, the implausible, often the “impossible,” come true.
F. Scott Fitzgerald
The hardest thing in the world to understand is the income tax.
Deeply earnest and thoughtful people stand on shaky footing with the public.
Johann Wolfgang von Goethe
The man who is not a socialist at twenty has no heart, but if he is still a socialist at forty he has no head.
Politics is the gentle art of getting votes from the poor and campaign funds from the rich, by promising to protect each from the other.
I am not a full devotee of Henry George but there is no one in the social world that I read with more intense interest.
John Kenneth Galbraith, Letter of October 30, 1998
My country is the world and my religion is to do good.