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California exempts solar energy equipment from its property tax. The exemption will last until 2025. The California Wind Energy Association has complained that this exemption puts solar energy at an artificial advantage relative to other renewables such as windmills. Biomass, the use of biological materials such as wood and leftover crops, is also at a relative disadvantage.
Rather than eliminate the solar tax exemption, the other energy industries should seek to eliminate the property tax on all energy capital goods. With this exemption, the government of California is recognizing that property taxes on capital goods – buildings, machines, equipment, inventory – impose costs that reduce production and innovation. Since this tax is toxic, the property tax should be removed from all improvements.
The best revenue neutral tax shift would be to increase the property-tax revenue from land value by the same amount as the reduction in the taxation of capital goods.
The other energy industry chiefs call the solar property-tax exemption a subsidy. We need to distinguish between absolute and relative subsidies. An absolute subsidy occurs when government provides grants to firms, or limits competition. A relative subsidy occurs when one firm or industry receives a greater subsidy than its competitors. All absolute subsidies are also relative subsidies, because they exist relative to the rest of the economy. But if the subsidy is not in funds or protection, but from lower rates on industry-destructive taxes, this is a relative but not an absolute subsidy.
Suppose that there are patients in a hospital suffering from continuous poisoning. The doctor stops poisoning one patient, and he recovers. But the other patients are still being poisoned. The other patients complain that it is not fair for one patient to be singled out for favored treatment. But the just remedy is not to resume poisoning the recovered patient, but to stop poisoning the others. The taxation of capital goods is economic poison, which the state recognizes would poison the solar energy industry they seek to promote. But why poison the other industries? The property tax should exempt all capital goods, all improvements.
A broader issue is the subsidies to energy. All forms of energy, except human muscles, are subsidized by the state and federal governments. Energy from oil and coal are implicitly subsidized by exempting them from the social costs of their environmental destruction. There is no economic need for any subsidies. But to obtain the true costs of energy, governments should also eliminate taxes not only on their capital goods but also on their incomes and sales. We cannot know whether renewable energy can stand on its own until we eliminate all the government interventions, including taxes, subsidies, and excessive regulations.
Since a radical restructuring of public finances is politically impossible today, a politically feasible reform would be to exempt all capital goods investments from the property tax. If this needs to be revenue-neutral, California could replace its cap-and-trade policy with levies on emissions. The relative subsidy to solar power is unfair to the other energy industries, but the real unfairness is the property tax on their investments.
This 2014 excerpt of Business Insider, Aug 12, is by Lucas Kawa.
Mayer Amschel Rothschild, original architect of that Jewish family fortune, was born in 1744. He lived above the family shop with up to 30 relatives in extremely cramped conditions.
Mayer’s father, Amschel Moses, worked as a money changer and silk cloth trader, and had Prince William of Hesse on his client list.
As with his father before him, Mayer was able to ingratiate himself with Prince William and make a decent living by collecting and selling rare coins. These “mail-order antique sales” served as the basis for the Rothschild fortune. In 1769, Mayer was granted the title of court agent, which would prove a boon to his money-making opportunities.
In 1770, Mayer married Gutle Schnapper and received a generous dowry from her father, who also worked as a court agent. The two would have five sons and five daughters.
In his will, Mayer outlined strict, controversial provisions regarding Rothschild marriages. Four of his granddaughters married grandsons (first cousins), while one married her uncle. The practice of inbreeding continued (still practiced by Arabs and others).
During the French Revolution, Mayer profited by providing supplies for the Austrian army with coin from the British.
The Rothschild coat-of-arms includes a fist clutching five arrows, a reference to Mayer’s five sons. At the turn of the 19th century, Mayer sent his sons to establish banks in Frankfurt, Naples, Vienna, France, and London.
Carl established a close (and profitable) relationship with the notorious ruling de’Medici family. His daughter Charlotte ended up marrying his nephew Lionel, the son of Nathan.
Salomon Rothschild founded S M von Rothschild in Vienna. He played a key role in the financing of the Nordbahn rail. His daughter Betty married his brother James, in accordance with family custom.
The Paris branch was among the most successful of the family’s banking branches, due in large part to James’ close relationship with King Louis Philippe. The house where his children grew up is now part of the American Embassy.
The former Prince William of Hesse, who did business with both Amschel Moses and Mayer, assumed his father’s title in 1785. After Napoleon invaded, he fled to Denmark after entrusting Mayer with a substantial portion of his wealth. Rothschild funneled the money to Nathan in England. Nathan’s shrewd investments grew the family fortune using the sovereign’s money. Eventually he returned the principal to William.
Nathan’s wife, Hannah Cohen, was the daughter of a prominent diamond dealer, one of Nathan’s business associates. The marriage increased his business connections and profits, and he opened N M Rothschild & Sons in 1811. He would lend to both sides during wartime and having the winner cover the loser’s debt.
Nathan was the first to hear the news of Wellington’s victory over Napoleon. He sold his stock to trick others into thinking that Britain had lost so they would sell their stock cheap. His agents bought it at discount in a huge profit-making day for the family.
During years of nearly chronic warfare, this strategy was implemented across the family branches. From 500,000 pounds in 1818, the Rothschilds’ wealth rose to 4,330,333 pounds in just a decade.
Ed. Notes: People may think that vast fortunes come from hard work or smart investment but neither is key (since many people do that). What is key is being a smooth talker, getting to be the one who is an insider, a “court agent”, handed lucrative contracts and bonds.
Being an insider also makes it possible to get profitable information before others. Called “insider trading”, it is now illegal but it still goes on.
The inbreeding probably would hinder families that are not minorities.
Another key is monopoly, not just getting to be an agent of the king but also holding a monopoly on a natural resource, like a diamond mine, or on a government-granted right-of-way, like a railroad.
What it all boils down to mainly is government spending, directed a little bit into infrastructure but a tremendous amount into humanity’s’ most vicious and irrational behavior — war. While others would probably have lent to belligerent governments if the Rothschild’s had not, that the money is tainted by blood does rile some people the wrong way. Yet many more wealthy people than the Rothschilds profit from today’s military/industrial complex and wars themselves, while war has not served non-rich Jews well.
Since some people have to die and others have to kill, it seems fair that war should not make anyone else rich. Let government raise taxes on everyone’s income and savings to pay for war in real time. And let the state draft the weaponeers, too, not just the grunts who march in the field.
Wars themselves could likely become a mania of the past if we all were to live in just and prosperous societies. And the way to do that is already known — geonomics. If only knowledge could get our juices flowing as does having enemies. Perhaps it’s a matter of feeling like we deserve justice.
This 2014 excerpt of the Financial Times, Aug 12, is by Matthew C. Klein.
A new working paper from the IMF suggests a “big push“ — government spending a lot of money on new roads, bridges, etc. — does more harm than good. Such major drives have been followed by slumps rather than booms.
Governments borrow money to spend on projects that aren’t worthwhile. At first, this boosts economic activity by putting more money in workers’ pockets — classic Keynesian stimulus. Once the projects are completed however, growth slows so much that the total average growth rate over the period is either the same or worse than it would have been without the bad investments.
Those loans would be easy enough to service if the investments boosted growth and tax revenues, but that usually doesn’t happen. So governments engage in growth-sapping austerity measures. Countries endure capital flights and lost decades.
When money is loose — government flush with fat loans — special interest groups press [for new infrastructure that rewards them]. Yet new roads have less impact than the initial roads that opened up access to major regions of the country.
Fast growth followed some investments — post-war reconstruction in Europe. However, during war, the bridges, roads, ports, and airports that were targeted tend to be those that are strategically and economically important. These structures tend to have high impacts when restored to operation.
Korea and Taiwan are two of the handful of formerly poor countries that managed to become rich in the 20th century. Contrary to popular perception, in Korea, “public investment has never boomed…staying at approximately 5 percent of GDP for several decades.” Taiwan did build out its infrastructure in the late 1960s and the early 1970s, but this was more in response to the needs of exporters facing capacity constraints after years of rapid growth than as an effort to jumpstart a weak economy.
Employing marginal people to build unneeded infrastructure might not be a great use of public funds, compared with giving money to people directly to spend on things they want.
Ed. Notes: All the exceptions, all the successful examples, relied on land reform, including Korea and Taiwan, indeed all the “Asian Tigers”. Taiwan even levied a significant land tax and enjoyed the most spectacular results. In Ethiopia, which in the 1990s performed well, its Regional Government, against the advice of the IMF, adopted a tax on land values and parcel size. The tax on structures inside city limits was drastically reduced.
If a nation were to recover all its rents for land and resources, it would not need to borrow to hand out cash to citizens; it would enjoy a surplus it could share as a dividend, a la oil-taxing Alaska or land-taxing Singapore.
What’s needed is not another study to conclude that waste and redundancy are worthless, but one to show that land justice is critical to success.
This 2014 excerpt of Salon, Aug 10, is by Henry Grabar.
In Miami, only one in 10 new apartments is purchased as a primary residence. Apartments aren’t places to live, even a few months out of the year, or to rent. They are simply unusually shaped deposit boxes where several million dollars (or pesos, or rubles) can be left in security and secrecy.
The “safe haven effect” drives up the cost of housing. And this with an obvious threat in the form of sea-level rise and storm surges looming on the horizon.
Over the past quarter-century, the Miami skyline has grown at a cornfield pace, fueled largely by buyers from South America. Most Miamians speak Spanish at home, and the metro area has the highest share of immigrant business ownership in the country, at 45 percent. This is why the city is sometimes called the “Capital of Latin America.”
Miami’s real estate clientele are looking to move cash reserves from South America’s teetering currencies into American real estate. Only a quarter of Miami condo buyers take out mortgages, versus 70 percent nationwide.
Bank tellers don’t receive a commission on the deposits they accept, so they are more likely to ask questions of a dubious customer than a real estate agent, who stands to make a huge commission on a multimillion-dollar luxury condo deal.
The average price of a unit in a current selling project is $662,439. It’s not pocket change; but it’s also less than half the average condo price in Manhattan. Median sale prices in San Francisco recently topped $1 million.
Is it crazy to add 23,000 units – the crop of the current cycle – to a market with scant local demand, in a metro area with the highest foreclosure rate in the United States? Is downtown Miami a bubble?
Ed. Notes: If only those foreigners would plow their surplus back into their own nations to win economic justice there, so they would not have to flee or to send their money into exile. But the money was probably ill-gotten gains in the first place, so it would not belong to the sort of person interested in either justice or his homeland.
If Miami could control its realtors, it could control its development fate: keep its housing affordable and its neighborhoods intact. How? By taxing land. Then land could not be such a safe haven.
Heck, the city could even get rid of all the other dumb taxes on buildings, sales, and incomes. After that, people would not come for the wrong reasons but to live in justice. And Miami could export a model that benefits everybody — geonomics.
This 2014 excerpt of NBCNews, Aug 12, is by Tony Kokopil.
Robin Williams’ death could push suicide awareness into the mainstream like AIDS after the death of Rock Hudson, or heroin after the overdose of Philip Seymour Hoffman.
Recently, self-harm has been taking more lives annually around the world than war, murder, and natural disasters combined. In more advanced countries, only three causes of death steal more years of life expectancy. In the U.S., suicide deaths now outnumber deaths by automobile accident.
The suicide rate—the number of people per 100,000 who kill themselves each year—dropped in developed countries between 1990 and 2010. In the United States, meanwhile, the rate has jumped almost 20 percent in the last decade. But take a longer view back to World War II and the American suicide rate has not changed much at all.
Heart disease, cancer, HIV, most infectious diseases, almost every kind of accident: they’re all in relatively steep decline, while suicide floats along, or even rises. It’s among the only major threats to get significantly worse in this century than in the last. And the reason is darkly profound: as more people survive into middle and old age, more people are left to die by their own hand.
The suicide rate among Americans 45 to 64 has jumped more than 30 percent in the last decade. Among white, upper-middle-aged men, the rate has jumped by more than 50 percent. Boomers have the highest suicide rate right now, but everyone born after 1945 had a higher suicide rate than expected —- and everyone is on pace for a higher rate than the Boomers.
Williams was depressed, and he has admitted to substance abuse problems, two notorious risk factors for suicide.
Despite his royalties from his hit movies, he also worried about money — after two divorces costing tens of millions of dollars — and so took a role in a TV show. The show got cancelled, and he had to downsize his lifestyle, two blows to his self-esteem. And without his family full-time, he may have lost the daily intimacy many human beings need.
Ed. Notes: Most guys want to have and take care of family. When they can’t, it hurts. When people hurt, some people hurt themselves more.
To correct the situation, there are things that the individual sufferer can do, things the people who care about someone can do, things professionals can do — and things we all can do together. I mean, let’s create an economy that does not foster insecurity and worthlessness any longer. That is, we can recover society’s surplus and share it equitably while leaving our earnings alone, untaxed. More precisely, we’d shift taxes off income, sales, and buildings, and onto pollution, extraction, and locations. We’d shift spending from corporate welfare and other favors for insiders, into a dividend paid to citizens.
Geonomic policy creates security, closes the gap in self-esteem, and lets people heal, families heal, and communities heal, creating a context in which self-harm would no longer be an issue.
This 2014 excerpt of BloombergView, Aug 4, by Edward D. Kleinbard
Some say inequality is an inevitable byproduct of free markets. Others that inequality is greatly overstated. Both claims are harmful and deceptive.
Some defend this as a consequence of rising demand for highly educated and exceptionally talented individuals to deal with technology and globalization. So one would expect similar rates of inequality growth everywhere. Instead, one sees the surge in U.S. inequality.
A more complete explanation includes “rent seeking” — shortcuts to wealth available to some, without creating new economic value, like a tax break. The CEO, lobbyist, and lawmakers are masters of rent-seeking. Much of what went on in the finance industry in the early 2000s was rent seeking. Vast fortunes can buy special relationships and privileges with government, which further act to turn today’s great fortunes into dynasties.
Ed. Notes: Like they say, the key to wealth is (a) to privatize your society’s wealth (dip into the public treasury and into the vast spending for assets never produced, such as land) and (b) to socialize your costs (make others pay for the damage you do, such as pollute). Government, of course, should reverse that. It should make polluters pay. And it should redirect our spending for nature and privilege into the public treasury then back out again as dividends for the members of the society. Extra bonus: doing that let’s you repeal counterproductive taxes and ruinous subsidies. It’s called geonomics and it’s good to see Bloomberg catching on.
This 2014 excerpt of the New York Times, Aug 9, is by Gretchen Morgenson.
Internal Revenue Service officials ruled that Windstream Holdings, a telecommunications company based in Little Rock, Ark, may spin off its copper and fiber network into a real estate investment trust (REIT). The REIT will lease the network to Windstream for $650 million a year. REITs are essentially tax-exempt entities, and because the $650 million will go to the REIT, it will not be taxable income to either company. Windstream will not pay taxes as a result of the company split.
Investors cheered the Windstream news; the company’s shares rose 12 percent on the day of the announcement.
Although the ruling is specific to Windstream, tax experts say it will exponentially broaden the pool of companies able to tap into the preferential tax treatment that was previously limited to real-estate-oriented trusts.
REITs are publicly traded entities that typically own commercial buildings, shopping malls, hotels or other properties. Mortgage REITs own bundles of loans. Both types allow small investors to participate in big-ticket real estate ownership.
A REIT trust must hold at least 75 percent of its assets in real estate and generate at least 75 percent of its income from property rents or interest on real estate financings or sales. Rather than retaining the income they earn and paying taxes on it, REITs pass along 90 percent of their income to shareholders (who then pay taxes). This means these companies have little in the way of taxable income.
Traditionally, REIT tax treatment could be applied only to assets with permanent structures. The new rules say real estate assets may include microwave transmission, cell, and broadcast towers as well as parking facilities, bridges and tunnels, railroad tracks, transmission lines, pipelines and storage facilities.
Electric utilities, cable operators and other telecoms would most likely join the REIT ranks as a result of the I.R.S. stance. Almost any company whose business involved real estate would be able to reduce its tax obligation by shifting taxable income derived from those assets to a nontaxable REIT entity.
Windstream will not have to pay taxes on $650 million in revenue. At the standard 35 percent corporate tax rate, the savings are nearly a quarter a billion per year. However, it could be less since telecom companies paid tax rates of 9.8 percent, on average, from 2008 through 2012.
Utilities paid just 2.9 percent over the period. These companies can pay so little because of tax breaks they receive.
Ed. Notes: Industries that don’t need any favors are those that get them, especially the real estate industry. Government policy is 180 degrees opposite what it should be. Our so-called stewards should auction off utility franchises (which are monopolies) to the highest bidder and renew the terms annually. Same goes for resource leases, broadcast licenses, patents and copyrights. Run government like a business — get as much as we can from corporate charters, banking charters, and other privileges. Even land titles should be granted for an annual rent at full market value.
At the same time, abolish taxes and subsidies and use the bulk of raised public revenue to pay citizens a dividend.
Simplify. Complexity is the enemy of equity. Without policy interfering, we can lock the hood on the economy and enjoy prosperity in liberty.
The basic concept of “profit” is simple: profit equals revenue minus costs. But “cost” is a complex concept, and “revenue” too is not all that simple, so the economic analysis of “profit” ends up being complicated.
A business typically calculates the appearance of profit rather than the economic reality. Most enterprises use money for purchases and sales, so for accounting, the appearance of profit is easy to understand. The revenue equals the proceeds from sales, and the costs are what is paid for the inputs: wages, rentals, interest, and materials. In economics, this is called “accounting profit,” which equals revenue minus the explicit costs, costs paid to others.
But the payments for inputs can include capital goods – inventory, buildings, machines and other tools – that last a long time. If an enterprise buys a machine that lasts for ten years, the cost is really spread out over the duration of the capital good. So in the accounting, rather than treat the purchase as a cost in the year purchased, the cost is the depreciation, the loss of value, in each year. For simplicity, the accounting can depreciate the tool in equal amounts each year, or, following tax laws, it could accelerate the depreciation, deducting more in the first years than the last years. The annual depreciation is an explicit cost, since the original purchase consists of funds paid to others.
This accounting convention ignores the effect of price inflation. Suppose a tool costs $100 and lasts for 20 years. Without inflation, the depreciation would be $5 per year. But if during that time, prices have doubled, it will cost $200 to replace the same tool. In the 20th year, the actual depreciation should be $10, but for the income tax in the USA, inflation is ignored, so the company has to record a $5 expense.
To get the real cost, we have to move from accounting profit, which only subtracts explicit nominal costs (not adjusted for inflation), to economic profit, which also subtracts the implicit costs, those which are not paid in money to others, but are nevertheless real.
The implicit costs include all the “opportunity costs,” the costs of giving up next-best opportunities. Suppose you are the sole owner of a business, and your accounting profit is $200,000 per year. Your next best opportunity would be to be employed at another firm for $80,000 per year. Since you give up a $80,000 wage by being self-employed, that is a cost of your business, and in effect you are paying yourself the $80,000 out of your accounting profit.
Suppose also that you own the real estate used by your firm. If you rented, the rental would be $60,000 per year. The opportunity cost of owing your business is the $60,000 you give up if you instead rented the place to a tenant. In effect, your business is paying you as property owner the $60,000 rent from your accounting profit.
Subtract $80,000 and $60,000 from your accounting profit, and your real gain is $60,000. That is the economic profit from your self-owned business.
The same concept applies to corporate profits. Suppose a corporation has an accounting profit of $10 million per year. It owns assets worth $100 million. If the assets were sold and converted into safe bonds, suppose the bonds would pay four percent interest, or $4 million annually. That foregone income is subtracted from the accounting profit, for an economic profit of $6 million. The firm obtains $4 million as an asset owner, and $6 million as an enterprise.
Another aspect of profit is honesty. If a thief steals $1000, this is not economic profit. True profit means that the gain came from voluntary enterprise and legitimately owned assets. Gains from force and fraud are not economic profit. From the viewpoint of the whole economy, profit also has to take into account costs imposed on others, such as from pollution. The absence of compensation for damages is really an implicit theft.
Accounting profit can include government subsidies. But since such subsidies are not from voluntary production, they are not included in economic profit, the real gain from production.
Profit can also consist of capital gains. If you buy shares of stock at $1000 and sell them later for $1500 (after paying the broker’s fee), the $500 capital gain is profit. If you instead had the $1000 in safe bonds and obtained $100 in interest, that would be the opportunity cost of the capital gain, so the economic profit from the asset is $400.
We can also look at opportunity cost from the point of view of society and the whole economy. The opportunity cost of government spending is what the taxpayers would have spent on. Land has an individual opportunity cost for the owner, but for the economy, land has no opportunity cost. The land is here by nature, and no more can be built or imported. Therefore, for the whole economy, all land rent is economic profit.
Economic profit has three origins. First there is entrepreneurial profit, the economic profit of an entrepreneur, due to his skills, insights, and talents. Second is monopoly profit, the economic profit that comes from a price greater than a competitive price, such as the profit from holding a patent. Third is the gains from asset appreciation.
Profit can be negative and zero. When an enterprise has costs greater than revenues, the loss constitutes negative profit. In a highly competitive industry, economic profits tend towards zero, as firms enter to gain profits and exit to avoid losses. But zero economic profit implies just enough accounting profit to pay for all costs, including normal returns on assets values.
If you want to be clear when talking about profits, you should not just say “profit” but indicate whether you mean accounting profit or economic profit. It gets a bit confusing, because when economists say “profit,” they mean economic profit, but when anyone else says “profit,” they mean accounting profit. It may be difficult to calculate economic profit, but we need to do it, because economic profit keeps it real.
This 2014 excerpt in Bitcoinx, Aug 8, is by Steve Shanafelt.
A site in Lake Tahoe sold for 2,739 BTC, or roughly $1.6 million. The 1.4 acre parcel on the California side of the lake is located in the private luxury resort of Martis Camp, and appears to be the single biggest bitcoin-backed property sale to date.
The buyer of the property is unknown, having purchased the land through a trust, but plans to build a home on the site.
The transaction was handled through Atlanta-based bitcoin payment processor BitPay. BitPay representatives said this was the largest land transaction they’ve processed thus far, although by no means the largest purchase.
Ed. Notes: While switching from statist money to cooperative money is a step forward, the same ol’ payment target — paying the individual who is abandoning the land rather paying the community — is not progressive at all. The ones we owe for land — since we can not pay whoever made Earth — are those whom we exclude, just as they owe us for excluding us from their lots. Once we take that step, the consequences will be far bigger than e-coin.
This 2014 excerpt of OpenSecrets, Aug 6, is by Sarah Bryner.
The Top Overall Federal Contributors list are the organizations and individuals donating the most money to federal campaigns and committees, including parties, federally-focused 527s, super PACs, and Carey committees.
Of the top 20 organizations, only two favor Republicans. The rest, with the exception of one “on the fence” trade association, all strongly prefer liberal policies and Democratic candidates. In addition, 11 of the top 20 organizations are unions.
As is the case with the top overall donors, the top outside money donors are dominated by liberal organizations; all five top donors are liberals.
Regressives do dominate a few categories.
This cycle, 18 of the top 20 organization donors to joint fundraising committees favor Republicans.
On the Top Individuals list, the top three overall donors are Democrats, while six of the top 10 and 11 of the top 20 favor Republicans.
What’s missing is the money that we can’t see: Donations to dark money groups are never disclosed and therefore organizations that choose to spend their money in the shadows will not appear as prominently on the list as we might expect.
Ed. Notes: Reformers rail against the influence of money in politics, against Citizens United (the Supreme Court ruling to allow unlimited campaign contributions), yet their side gives the most disclosed money. Is this preponderance a one-time anomaly in donations? Are these sums dwarfed by dark money and is that money conservative?
Why do progressives get so little in return for their gifts? Why is their party, the Democrats, so conservative? Why does their huge advantage in money not translate into a huge advantage in electoral victories?
Do they waste their millions on messages that fail to communicate convincingly?
This 2014 excerpt of The Ecologist, Jly 18, is by Nafeez Ahmed.
Israel’s defence minister is on record confirming that military plans to uproot Hamas’ are about securing control of Gaza’s gas reserves — the 1.4 trillion cubic feet of natural gas discovered in 2000 off the Gaza coast, valued at $4 billion.
Otherwise, Palestinian gas profits would fund attacks against Israel. The threat is not limited to Hamas. Some of the gas proceeds could reach other Palestinian groups.
If Palestinians develop their own gas resources, the resulting economic transformation could in turn fundamentally increase Palestinian clout.
Israel has made successive discoveries in recent years – such as the Leviathan field estimated to hold 18 trillion cubic feet of natural gas – which could transform the country from energy importer into energy exporter.
Much of the 122 trillion cubic feet of gas and 1.6 billion barrels of oil in the Levant Basin Province lies in waters where borders are hotly disputed between Israel, Syria, Lebanon, Gaza, and Cyprus.
With the depletion of Israel’s domestic gas supplies accelerating, and without an imminent rise in Egyptian gas imports, Israel could face a power crisis in the next few years. Electricity prices are reaching record levels, heightening the imperative to diversify supply.
Despite all formal agreements to the contrary, Israel continues to manage all the natural resources nominally under the jurisdiction of the Palestine Authority, from land and water to maritime and hydrocarbon resources.
Ed. Notes: While natural gas could be a motive, as resources often are, the same claim was made during the Vietnam War, that the US was motivated by a big oil field off the coast of Vietnam, but that purported bonanza never materialized, even after relations between the two government normalized.
That said, are the Jews in that part of the world safer when Arabs are poor and under siege or when they lead comfortable middle class lives in safety? Look at how other enemies quit their enmity, such as France and Germany. Could that have happened if they were not enjoying economic parity?
The strategy of violence, terror, and oppression — practiced by both sides — can not end well. Israel can not count on the American taxpayer forever, nor the European market for its exports. Something must give. Israel might try to “pay its dues” by establishing economic justice in its entire area of influence. That would make it harder for violent men to seize power and easier for rational people to provide leadership. Geonomics could deliver the necessary sustainable and equitable development.
This 2014 excerpt of the AP, Aug 5, is by Josh Boak.
An analysis by the rating agency Standard & Poor’s claims the widening gap between the wealthiest Americans and everyone else has made the economy more prone to boom-bust cycles and slowed the 5-year-old recovery from the recession.
The rising concentration of income among the top 1 percent of earners has contributed to S&P’s cutting its growth estimates for the economy to 2.8 percent rate to a 2.5 percent annual pace in the next decade.
S&P estimates that the U.S. economy would grow annually by an additional half a percentage point — or $105 billion — over the next five years, if the average the American worker had completed just one more year of school.
Income disparities hurt growth because consumers tend to become more dependent on debt to continue spending, thereby worsening the boom-bust cycle. Or they curb their spending, and growth improves only modestly, as it has during the current recovery.
Adjusted for inflation, the top 0.01 percent’s average earnings have jumped by a factor of seven since 1913. For the bottom 90 percent of Americans, average incomes after inflation have grown by a factor of just three since 1917 and have declined for the past 13 years.
Ed. Notes: There are better reasons than growth to justify closing the income gap and wealth gap. The main reason is the very rich are not earning all that money. They don’t have jobs packaging food or sewing clothes or driving buses. No, it’s not work they do but owning. Their companies get corporate welfare and society’s spending for land and resources, aspects of nature that nobody made. That belongs to everyone, not only to the 1% now getting it.
Not only is such skewed distribution bad, growth is not always good. Do we really want to spend more money on sprawl, divorce, prisons, weapons, ethanol, etc? GDP counts all spending: the good, the bad, the ugly.
And while a better educated or skilled workforce can grow growth, that workforce does not necessarily get higher wages, or at least not for long. You just create more competition among more competent workers. And under the current system, both taxes and inflation will rise, too.
The only growth really worth measuring is growth in leisure, in enjoying the same standard of living or better while working the same or less.
It would be possible to live comfortably, to work less, to study whatever captured one’s fancy, and to live in a less hierarchical, less class-ridden society if we were to adopt geonomics and share the worth of Mother Earth.
This 20124 excerpt of the Washington Post, Aug 1, by Rachel Feltman.
Even though modern humans started appearing around 200,000 years ago, it was only about 50,000 years ago that artistry and tool making became popular. New research shows that society bloomed when testosterone levels in humans started dropping. A paper published in the journal Current Anthropology, suggests that a testosterone deficit facilitated the friendliness and cooperation between humans, which lead to modern society. “Whatever the cause, reduced testosterone levels enabled increasingly social people to better learn from and cooperate with each other, allowing the acceleration of cultural and technological innovation that is the hallmark of modern human success,” says University of Utah biology graduate student Robert Cieri.
Ed. Notes: So, for civilization to really progress, beyond mere domestication which is all it is for most humans, does that mean the male sex hormone must fall again? Should people with too much testosterone be denied the right to vote or bear arms? Can people with abundant testosterone teach others how to deal with their hormonal mates? Should parents of a child with the DNA for high production be required to raise the child using certain techniques of nonviolent conflict resolution? What does it mean for reformers who try to advance sharing and the notion of a common wealth? Should they target the “fairer” sex?
This 2014 excerpt of Weekly Wastebasket, Aug 1, is by Taxpayers for Common Sense.
The effective tax rates of the 20 largest oil and gas companies based in the U.S. from 2009 through 2013 is 24 percent, well below the statutory corporate rate of 35 percent.
The deduction for intangible drilling costs (IDC) has been in the tax code since 1916, a few short years after the income tax was introduced.
Deducting all costs up front – instead of waiting for the asset to generate income and then expensing these costs over 5, 10, or 20 years, like other taxpayers – allows oil companies like ConocoPhillips to shelter more of its current income from federal taxation.
Also, able to defer payment of taxes means the amount the 20 companies in our study paid to the federal government during the last five years was equal to 11.7 percent of their U.S. pre-tax income. What small businesses wouldn’t be psyched to pay a federal income tax rate of less than 12 percent?
By the end of 2013, the 20 companies had accumulated $175.8 billion in total deferred tax liabilities. Depending on how much income they report in the future, it could take a decade or more to eventually pay it.
Ed. Notes: Are they ever forced to pay all of it? When they get caught not paying royalties, nothing happens to them.
This attitude of government toward oil is the complete reversal of sense and logic. Norway, for example, gets 80% of the world price for its oil. So should every nations, for every resource, and for every square foot of valuable surface land.
That’s because nobody made Earth and everyone together as society are the ones who create demand and generate the economic value of oil and the rest of nature we use.
What government should exempt from taxation is not “rent” but the actual earnings of anyone, whether a corporation or an individual. Don’t worry about the rich getting away with not pulling their weight. Their income, more than anyone else’s is “rent” of the money that society spends for the nature it uses.
That spending stream is so huge that oil-rich Alaska pays its residents a dividend and location-lucky Singapore pays its citizens one, too.
Vulture funds are hedge funds who buy from bondholders the debt of countries in economic crisis at very low prices and then when nations receive debt relief, or enter economic stability, they sue the country for repayment at face value. Vulture funds remain protected by the law, and generally win their lawsuits.
In 2005 under President Nestor Kirchner, Argentina exchanged US$62.3 billion of the US$81.8 billion in principal owed for a lower price.
A diverse group of holdouts representing US$18.6 billion did not tender their bonds and opted to litigate. Another US$12 billion was renegotiated in 2010 with most of the holdouts, but still around US$6 billion remained. Argentina was able to negotiate discounted repayment rates with the 92.4 percent of creditors but not hedge funds Elliott Management and Aurelius Capital Management.
As part of the struggle with the vulture funds, the Argentine navy frigate “Libertad” was impounded in Ghana in October 2012, at the request of U.S. hedge fund NML Capital Ltd, which says Argentina owes it US$300 million on bonds which have been in default since 2002. The International Maritime Organization (IMO) said the ship couldn’t be seized.
In a ruling by the U.S. Supreme Court this June, Argentina was ordered to pay the holdout vulture funds, who had demanded to be paid the face value of the bonds. The U.S. Federal Judge Thomas Griesa also ordered that the country could not pay its other creditors, without also paying the vulture funds, blocking the US$539 million payment made by Argentina in June 30 to the other 92.4 percent of creditors.
And Argentina is supposed to pay all its creditors the same. Therefore, if Argentine pays the vulture funds the full US$1.3 billion they are claiming, it could be forced to pay all the other creditors in full also.
Argentine President Cristina Fernandez de Kirchner said that the country would be forced into default if subject to pay this amount.
The IMF along with other international organizations and governments have supported Argentina on the grounds that the ruling could set a precedent, making the restructuring of unmanageable debt more difficult for struggling countries.
The vulture funds may be after Argentine natural resources, principally the second largest shale oil gas field in the world, Vaca Muerta, which is located in the Neuquen province of southwest Argentina.
Ed. Notes: Government bonds and debt in general is a trick as old as the hills. In the American Revolution, Congress paid soldiers with IOUs, which could not be used as real money, and never reimbursed the soldiers. So soldiers sold the scrip for pennies on the dollar to rich, insider speculators. Only then did the US Treasury, under the orders of Alexander Hamilton, pay the holders of the IOUs in full.
But why do governments borrow so much in the first place? Part of the answer is many are very corrupt; politicians and their business cronies steal from the public treasury. And they are wasteful, operating bureaucracies that are little more than welfare for the middle class.
Further, they hobble their economy — their small businesses and workers. They levy taxes on sales, incomes, and buildings. And they fail to recover the socially-generated value of land. That lets speculators under-use the best urban sites and when prime locations lie fallow, nobody can make any money there, so the economy is hobbled again.
Rather than borrow, all Argentina or any nation need do is look to its land for revenue.
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 new policy from a new perspective. Once your worldview shifts — so that vacant city lots are no longer invisible — then epiphany. “Of course! Why didn’t I see it before?” Once you do see the emptiness and what damage it does, how can you ever go back to the old paradigm?
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.
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.
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 POV that Spain’s president might try. A few blocks from my room in Madrid at a book fair to promote literacy, Sr Zapatero, while giving autographs and high fives to kids, said books are very expensive and he’d see about getting the value added tax on them cut down to zero. (El Pais, June 4; see, politicians can grasp geo-logic.) But why do we raise the cost of any useful product? Why not tax useless products? Even more basic: is being better than a costly tax good enough? Our favorite replacement for any tax is no tax: instead, run government like a business and charge full market value for the permits it issues, such as everything from corporate charters to emission allowances to resource leases. These pieces of paper are immensely valuable, yet now our steward, the state, gives them away for nearly free, absolutely free in some cases. Government is sitting on its own assets and needs merely to cash in by doing what any rational entity in the economy does – negotiate the best deal. Then with this profit, rather than fund more waste, pay the stakeholders, we citizenry, a dividend. Thereby geonomics gets rid of two huge problems. It replaces taxes with full-value fees and replaces subsidies for special interests with a Citizens Dividend for people in general. Neither left nor right, this reform is what both nature lovers and liberty lovers need to promote, right now.
in part the Great Green Tax Shift maxed out. Economically, taxing pollution and depletion does reduce pollutants and extracts – and thus the tax base; plus such taxes are regressive, requiring a safety net. On the other hand, collecting site rent is progressive and generates a revenue surplus payable as a dividend to residents, which can serve as the safety net. Environmentally, taxes on waste and extraction do not drive efficient use of land, as does getting site rent.
one of many words I coined over 20 years ago: geoism, geonomics, geonomy, geocracy, etc – neologisms that later others came up with, too. CNBC once had a Geonomics Show, and Middlebury College has a Geonomics Institute. If “economy” is literally “management of the household”, then geonomy is “management of the planet”. The kind of management I had in mind is not what CNBC was thinking – top-down. My geonomics is not hands-on, interfering, but hands-off, organic. It’d strive to align policy with natural processes, similar to what holistic healing does in medicine, what organic farming does in agriculture. Geonomics attends to two key components: One, the crucial stuff to track is fat — or profit, especially profits without production, such as rent, or all the money we spend on the nature we use. Society’s surplus is the sine qua non for growth, needed to counter death – not merely more, but sustainable development, more from less. Two, the basic process to respect is the feedback loop. These let nature maintain balance automatically and could do the same for markets, if we let them. Letting them would turn our economies, now our masters, into a geonomy, our servant, providing us with prosperity, eco-librium (to coin a term) and leisure, time off — a hostile environment for economan but a cradle for a loving and creative humanity.
the study of the money we spend on the nature we use. When we pay that money to private owners, we reward both speculation and over-extraction. Robert Kiyosaki’s bestseller, Rich Dad’s Prophecy, says, “One of the reasons McDonald’s is such a rich company is not because it sells a lot of burgers but because it owns the land at some of the best intersections in the world. The main reason Kim and I invest in such properties is to own the land at the corner of the intersection. (p 200) My real estate advisor states that the rich either made their money in real estate or hold their money in real estate.” (p 141, via Greg Young) When government recovers the rents for natural advantages for everyone, it can save citizens millions. Ben Sevack, Montreal steel manufacturer, tells us (August 12) that Alberta, by leasing oil & gas fields, recovers enough revenue to be the only province in Canada to get by without a sales tax and to levy a flat provincial income tax. While running for re-election, provincial Premier Ralph Klein proposes to abolish their income tax and promises to eliminate medical insurance premiums and use resource revenue to pay for all medical expense for seniors. After all this planned tax-cutting and greater expense, they still expect a large budget surplus. Even places without oil and gas have high site values in their downtowns, and high values in their utility franchises. Recover the values of locations and privileges, displace the harmful taxes on sales, salaries, and structures, then use the revenue to fund basic government and pay residents a dividend, and you have geonomics in action.
a study of a phenomenon David Ricardo noted going on two centuries ago. When wine grapes rise to $10,000 a ton from the very best land (last year, cabernet sauvignon commanded an average of $4,021 a ton in the Napa Valley), then vineyard prices soar from $18,000 an acre in the 1980′s to $100,000 an acre five years ago and now for a top pedigree up to $300,000 an acre (The New York Times, April 9, via Wyn Achenbaum). Pricey land does not make wine pricey; spendy wine makes land spendy. While vintners make their wine tasty, nature and society in general – not any lone owner – make land desireable. Steve Kerch of CBS’s MarketWatch (April 5) notes that much of what a home sells for on the open market is a reflection of intangible factors such as what school district the house sits in. The price the builder has to pay for the land also tends to be driven by the same intangibles. Because the value of land comes from society, and because one’s use excludes the rest of society, each user owes all others compensation, and is owed compensation by everyone else. Sharing land’s value, instead of taxing one’s efforts, is the policy of geonomics.
The difference between the right word and the almost right word is the difference between lightning and a lightning bug.
The best government is that which teaches us to govern ourselves.
Johann Wolfgang von Goethe
Always go to other people’s funerals, otherwise they won’t come to yours.
The real test of our values is not when things are going well but when things are not going well.
It is organized violence on the top which creates individual violence at the bottom.
Face the facts of being what you are, for that is what changes what you are.
Non violence leads to the highest ethics which is the goal of all evolution. Until we stop harming all other living beings, we are still savages.
What is faith worth if it is not translated into action?
Mohandas K. Gandhi
I want to be thoroughly used up when I die, for the harder I work the more I live. I rejoice in life for its own sake. Life is no brief candle to me. It is a sort of splendid torch which I have gotten hold of for the moment and I want to make it burn as brightly as possible before passing it to future generations.