We are Hanno Beck, Lindy Davies, Fred Foldvary, Mike O'Mara, Jeff Smith, and assorted volunteers, all dedicated to bringing you the news and views that make a difference in our species struggle to win justice, prosperity, and eco-librium.
This 2013 excerpt of Business Spectator, Dec 9, is by Steve Keen, University of Western Sydney and author of Debunking Economics and the blog Debtwatch.
Eight years ago, in December 2005, I began warning of an impending economic crisis that would commence when the rate of growth of private debt started to fall. Journalists throughout the world picked it up and publicised my views – as well as similar arguments from Nouriel Roubini, Dean Baker, Ann Pettifor, Michael Hudson, Wynne Godley, and a few others. But our arguments were ignored by the economics profession. Numerical evidence of what caused the crisis was and still is ignored by mainstream economists, while less numerate journalists latched onto it.
When an issue is politically neutral, a higher level of numeracy does correlate with a higher capacity to interpret numerical data correctly. But when an issue is politically charged – or the numerical data challenges a numerate person’s sense of self – numeracy actually works against understanding the issue. The reason appears to be that numerate people employed their numeracy skills to evade the evidence, rather than to consider it.
So much for democracy: both evidence and intelligence make precious little difference to how people will vote on contentious issues. The need to preserve a sense of identity matters more than the evidence – and this can’t be treated as “irrational” behavior either, because it’s quite rational to want to retain membership of a group that is immediately important to you.
Max Planck – the father of quantum mechanics – found it near impossible to convince his fellow physicists to accept his new – and empirically far more accurate – characterisation of the nature of energy. He ultimately concluded that: “A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”
In social conflict over empirical issues, each side tends to deride the other as lacking the ability to interpret the data – thus thinking they are more numerate than their opponents.
Ed. Notes: While Keen is better than the economists winning so-called “Nobel” prizes (no such thing in economics; the money actually comes from banks), he’s still not as penetrating and scientific as the topic requires. For instance, it’s not just private debt in general that triggers recessions but private mortgage debt or, more precisely, our spending for land (under houses). When that gets out of hand, it sucks up our spending that no longer can go to purchasing the goods and services produced by our neighbors, so they cut back, a vicious spiral ensues, and recession is under way. Not grasping the deeper phenomena at work, economists (even the nice ones) can’t see the deep policy shift that’s needed to correct economies — which would be geonomics.
These two 2013 excerpts on rent-seeking are from (1) the Seattle Times, Oct 7, by Jon Talton and (2) Telefriden, Dec 17, by Rob Frieden at Penn State U and author of Winning the Silicon Sweepstakes: Can the United States Compete in Global Telecommunications.
The McCutcheon Case is Bad for the Economy, too
The next big campaign finance case, McCutcheon vs FEC, is at least as bad as 2010′s Citizen’s United, which struck down more than a century of restraints on corporate and union money in elections and affirmed “corporate personhood.” With McCutcheon, the plaintiff is asking that limits on individual contributions to candidates be struck down. Even under current law, an individual could spread up to $3.5 million among candidates.
Both Citizens United and McCutcheon carry economic consequences. They ensure that America will be less fair and capitalism will be less competitive.
Today’s inequality was purchased by the already unprecedented money in politics. The increasing phenomenon of “rent seeking,” where giant corporations use their power to extract government subsidies and laws that allow for massive executive compensation, is a near free ride while profiting from environmental destruction, taxpayer backing of a risky financial sector, and thwarting competition.
Rent-seeking, which happens in myriad ways and on a vast scale, is the redistribution of income from one part of society to another. Thus vast sums are gambled in world capital markets rather than be used to expand existing companies, seed new ones, and create jobs. It mostly comes at the expense of wage earners and lower-income Americans. Think of the big banks and the recession: They are more profitable (and bigger) today than ever, while the median household makes less than it did in 1989.
Joseph Stiglitz: “Rent seeking makes nothing grow. Efforts are directed toward getting a larger share of the pie rather than increasing the size of the pie. But it’s worse than that: rent seeking distorts resource allocations and makes the economy weaker. It is a centripetal force: the rewards of rent seeking become so outsize that more and more energy is directed toward it, at the expense of everything else.”
Big money in politics has also helped create highly concentrated industries in numerous sectors, from finance to media. For them, it is a profitable loop: Money buys lax antitrust enforcement which allows for greater size which infuses ever larger amounts of money into passing legislation favorable to these quasi-monopolies, cartels, and oligopolies. The price of entry for new competitors is prohibitive. Business formation suffers. And it’s much easier to hold down job creation and keep people desperate just to hang onto their stagnant-wage jobs if they have them.
Inequality and a fixed market will only grow worse if McCutcheon becomes the latest piece of judicial activism from the Roberts court.
Stakeholders keen on working less hard and earning greater returns will resort to any political, legal and economic ideology and philosophy to support the desired outcome.
It is quite fine when the Federal Communications Commission (FCC) granted incumbent wireline telephone free spectrum for mobile services, but now denying these carriers the opportunity to bid for any and all spectrum is an abomination.
Let’s not underestimate the power of sponsored research where esteemed scholars grab lots of dollars for embracing a specific ideology and explaining how it serves the public interest. In a matter of days the very same economist might rail against the Herfindahl Hirschman Index (“HHI”) of market concentration as flawed and not predictive of anything. But when presented with an assignment and a generous retainer to show how robustly competitive a market is, that economist might quickly invoke the HHI to “prove” how competition can exist in a concentrated marketplace.
Ed. Notes: It’s encouraging that this sort of corruption gets covered by professors and in the biggest paper in the Pacific Coast Northwest. However, as usual, it’s almost all problem and no solution. The solution is not just to say “no” to rent-seeking but something far more fundamental. It’s as Abraham Lincoln said: “Nothing’s fixed until it’s fixed right.”
This sort of rent-seeking above won’t end until the classic sort of rent-winning — that is, absentee owners and lenders getting paid to permit others to use land — gets corrected. The correction to that basic injustice is to not pay them for a site or a resource but to pay your community. Nobody made land, everybody needs land, and all of us — the presence of community — is what gives locations their value.
We need to pay Land Dues into the public treasury and get Rent Shares back. But we don’t need to pay taxes on earnings, purchases, and buildings while getting bureaucratized “services”. Letting politicians decide how to spend public money only opens the Pandora’s Box of rent-seeking. Better to follow the basic principle of sharing Earth’s worth while de-legitimizing capricious taxation and subsidization — the geonomic reform.
This 2013 excerpt of the Huffington Post, Dec 17, is by Shahien Nasiripour and Michael McAuliff.
The nation’s biggest banks have quietly dodged a measure expressing Congress’s desire to eliminate the unfair advantages they may enjoy because they’re perceived as “too big to fail.”
The “sense of the Senate” measure did little more than convey lawmakers’ view that the federal government should somehow stamp out subsidies or taxpayer-conferred benefits. Aimed at institutions with more than $500 billion in assets, it was sponsored by Sen. David Vitter (R-La.), and passed the Senate in March by a 99-0 vote in a show of lawmakers’ reluctance to be tagged as big-bank sympathizers.
Though largely symbolic in nature, proponents of the measure used the vote to rally support for congressional and regulatory efforts to break up the biggest banks on the grounds that the subsidies amount to an unfair earnings advantage not available to smaller banks. Goldman Sachs, JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Morgan Stanley, American International Group, and General Electric Capital are the eight U.S. financial institutions with sufficient assets to fall under the measure.
Despite the unanimous vote in the Senate, congressional negotiators declined to include the control- Wall St. bill in the bipartisan budget deal. Sen. Sherrod Brown (D-Ohio): “Our amendment was approved 99-0 in the light of day, and then removed in the dark.”
Sen. Dick Durbin (D-Ill.) said, referring to the Senate, that banks “frankly own the place.”
Ed. Notes: Where do Wall Street banks get their money? Mostly from mortgages. What do these debts extract? Payments for land is the biggest part. So if we kept our payments for land (and resources) circulating locally, then such spending for nature could not engross Wall Street banks to the point where they appear too big to fail. We’d not have to worry about their fate at all. We’d have the money and the comfort that comes with it. All we have to do is institute Land Dues to direct the flow of spending into the local treasury and Rent Dividends to bounce it back out to residents as a fair share. It’s sort of like what Singapore already, and goes by the name of geonomics.
When the US Federal Government Shut Down, its Military Spent More.
This 2013 excerpt of Foreign Policy, Oct 7, is by John Reed.
The Pentagon pumped $5 billions of dollars into contractors’ bank accounts on the eve of the U.S. government’s shutdown that saw 400,000 Defense Department employees furloughed.
All told, the Pentagon awarded 94 contracts on its annual end-of-the-fiscal-year spending spree, spending more than five billion dollars on everything from robot submarines to Finnish hand grenades and a radar base mounted on an offshore oil platform. To put things in perspective, the Pentagon gave out only 14 contracts on September 3, the first workday of the month.
This goes to show that even when the federal government is shutdown and the military has temporarily lost half its civilian workforce, the Pentagon can spend money like almost no one else.
Ed. Notes: It goes to show me that we’re making a huge mistake letting government spend public money any way it wants. The discretionary power of funding must become severely curtailed. Limit political spending to the military and other means of defense and limit the source of those funds to a flat income tax or to citizenship dues. If people are going to still want to complain about taxes they’ll have to complain about war, too. As for domestic programs, such as schooling and medical attention, just pay the citizenry a dividend and let people choose their own teachers and doctors.
Get that money from the common wealth, from society’s surplus, from all the money all of us spend for all the nature we use. Use taxes, fees, dues, etc to redirect our spending for land and resources into the public treasury, and use rebates, vouchers, and dividends to disburse those funds back out to all of us.
Then it won’t just be military contractors and the rest of the war machine able to celebrate Christmas in style.
These two excerpts are of (1) Huffington Post, last year, Oct 3, by Mike Sandler on sharing the commons and (2) Web of Debt, 2013, Dec 7, on the Fed by Ellen Brown, rerun by Alternet as “Here’s an Idea! Let the Fed Drop Money into Your Bank Account Instead of Raining it Down on the Rich”
Citizen’s Dividends: Basic Income from your Share of the Commons
Cap & Dividend system: greenhouse gas emissions from upstream fossil fuel companies are limited, and the revenues generated by the sale of permits are returned to individuals as a dividend. The reasoning is that we all share the sky, and so as the now-scarce resource becomes valuable, we should all be given our share.
“Quantitative Easing” (QE) is a form of bailout where the central bank purchases bank assets with newly created money. By flooding Wall Street (big banks) with money, it may have prevented more bank failures, but it is unclear if any of that new money is being lent to the productive parts of the economy, or that it goes any farther than bonuses to the 1%, which may end up sitting in tax-haven accounts in the Cayman Islands.
If the Fed wants to really stimulate the economy, it needs the money to actually reach the actual people who will spend it into circulation and create the demand so that employers will begin hiring again. The answer is simple: send the money to the people as a citizen’s dividend. William Greider, in an article in The Nation: Roads and bridges are great, but with a citizen’s dividend some of the trillions would go straight to the people. Chairman Ben Bernanke just announced the third round of quantitative easing, QE3. He should make QE4 a citizen’s dividend.
December 23rd marks the 100th anniversary of the Federal Reserve.
The helicopter drop was proposed by Ben Bernanke in 2002 as a quick fix for deflation. He told the Japanese, “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.” Later in the speech he discussed “a money-financed tax cut,” which he said was “essentially equivalent to Milton Friedman’s famous ‘helicopter drop’ of money.” Deflation could be cured, said Professor Friedman, simply by dropping money from helicopters.
But there has been no cloudburst of money raining down on the people. The money has gotten only into the reserve accounts of banks. John Lounsbury, writing in Econintersect, observes that Friedman’s idea of a helicopter drop involved debt-free money printed by the government and landing in people’s bank accounts. “He foresaw the money entering the economy through bank deposits, not through bank reserves.”
The fatal flaw of QE is that it delivers money to the accounts of the creditors and does nothing for the accounts of the debtors. Bad debts remain unserviced and the debt crisis continues.
The Federal Reserve Act was drafted by bankers to create a banker’s bank that would serve their interests. A century after the Fed’s creation, a sober look at its history leads to the conclusion that it is a privately controlled institution whose corporate owners use it to direct our entire economy for their own ends, without democratic influence or accountability. For the central bank to become an institution that serves all the people, not just the 1%, the Fed needs fundamental reform.
Ed. Notes: The one thing the Fed should not have is a monopoly on issuing new money. If the Fed faced competition from other, sounder currencies, it could try any trick it wanted but none would work. As they printed too much new money and its currency lost its purchasing power, people would abandon it in favor of a currency that held its value by not being over-issued (more new notes than the output of new goods and services).
However, all of this becomes another non-issue in a just economy. Why would there be such a pressing need to constantly create new money if the cost of living were constantly falling? In a just economy, the advance of technology would ceaselessly shrivel the cost of new goods and services. People simply would not need as much money to mediate their exchanges.
What would make an economy just? No more corporate welfare. No more taxes on our efforts: on our earnings, purchases, and houses. And no more overlooking the common wealth, which is the worth of Earth. Instead, government would redirect all our spending for land and resources back to everyone. How? We’d pay land dues or land taxes into the public treasury and get rent shares or Citizen’s Dividends back.
It’s not necessary to print up new notes to grant people economic security. In fact, it’d probably only end up creating inflation. All that’s needed is to redirect the money that already exists and is spent to own or use some portion of Earth, and channel the flow to everyone.
It’d become the Citizen’s Dividend (a phrase I coined decades ago, good to see it catching on; maybe Huffington Post will soon help spread the rest of geonomic policy will, too) — the key feature of geonomics, and potentially regular Christmas gifts for everybody.
The US and state governments seem to be at war with everything. Much of what we do or own is prohibited, restricted, taxed, or mandated. It is puzzling why a country whose motto and creed are “liberty,” as inscribed in American coins, would be so restrictive. Part of the answer may be that people don’t understand freedom, and also that deep down, they don’t want it. The creed of liberty may itself be destructive of freedom, because Americans are seemingly satisfied with the slogan rather than the substance. There is always a seemingly good reason for restricting and penalizing acts that do not harm others, and that seems to be good enough for government officials, and presumably the public.
Now the government has extended its long list of wars to include teaching to play the piano. In the “Potomac Watch” article in the 28 November Wall Street Journal, Kimberly Strassel described the “Piano Sonata in FTC Minor.” In March 2013, the Federal Trade Commission sent a complaint to the Music Teachers National Association. The crime of this association was anticompetitive practices. It is the job of the FTC to prevent monopolies and collusion, no matter how tiny and insignificant.
The MTNA was founded in 1876 to promote learning and teaching music. The French writer Alexis de Tocqueville observed in his 1835 book De la démocratie en Amérique that Americans loved to form clubs. That was long before the US government officials regarded clubs as inherent collusion. When people organize, they cooperate, and evidently the US government regards cooperation and organization as illegal collusion.
The Music Teachers National Association is a 501(c)(3) non-profit organization with 22,000 members, nine-tenths of them piano teachers. Its crime was to have a politically incorrect code of ethics. Ethics evidently makes people do similar things, which is collusion, and illegal.
Specifically, the FTC was concerned with the ethics rule prescribing that music teachers honor their colleagues’ studios and students. Members are not supposed to recruit or solicit students from other teachers. The FTC regards this ethical rule as anticompetitive. They want piano teachers to try to grab away the students from other teachers. Perhaps negative advertising would make the FTC chiefs happy.
Economic theory tells us that when there are only a few firms in an industry, they have more pricing power. But there are thousands of music teachers, and students who seek music teachers can check the prices asked, so there is competition even if the teachers avoid engaging in fierce price wars.
The attorneys of the MTNA explained to the FTC chiefs that this ethical rule was never actually enforced. It is a matter of voluntarily honoring one another rather than expelling a member. Moreover, the FTC does not have explicit legal authority over nonprofit organizations. Nevertheless, the MTNA deleted this offending ethical rule. But the FTC responded that because the piano teachers had been dissonant in the past, they had to be investigated, evidently no matter how trivial the offense, and no matter how costly the compliance. It does not matter to the government officials if they bankrupt a business, destroy an organization, and eliminate jobs. They are at war on pianos, and war implies destruction.
The dozen staff members of the MTNA were forced to spend many months assembling thousands of documents for the FTC, anything relating to the ethics code. On October 2013, MTNA signed a consent decree. It must announce a statement at each national meeting and send the statement to all its members. The MTNA is also ordered to avoid affiliating with other associations which restrict “solicitation, advertising, or price-related competition.” The association must also submit reports to the FTC and appoint an antitrust compliance officer.
On December 16, 2013, the FTC published the settlement orders on its web site under the title “Professional Associations Settle FTC Charges by Eliminating Rules That Restricted Competition Among Their Members.” A final ruling will be made after 15 January 2014.
The whole concept of antitrust policy or government action against collusion is misguided. It is true that competition among firms keeps prices low, but all that is needed for competition is the ability of firms and individuals to enter and leave an industry. If prices are higher than what is needed for a normal profit, this is an opportunity for entrepreneurs to enter that industry to obtain those profits. There is always rivalry among sellers, even if they do not explicitly recruit customers away from other sellers.
The federal government has attacked firms such as Whole Foods for not being sufficiently competitive. The economic cost of attacking companies for cooperating or being too big has been more damaging than the social cost of possibly higher prices (see, for example, Dominick Armentano, Antitrust and Monopoly: Anatomy of a Policy Failure, 1982). A truly free market and free society avoids any governmental interference in human action other than to prohibit and penalize coercive harm to others. Coercive harm means a forceful trespass and invasion. That’s what we should understand about freedom.
This 2013 excerpt of Toronto’s The Star, Dec 17, is by L. Buxton, Bradford.
Re: How to get moving again, Business Dec. 7
Re: A better idea for transit funding, Letter Dec. 14
Further to the letter by Frank de Jong, I agree that the best way to finance subways would be to take the unearned increment from adjacent properties. This is quite reasonable if you consider what happens when a city builds a subway.
Consider two identical properties at opposite ends of a city, both identical in capital value and rentable value. Call them property A and property B. The city decides to build a subway to property A but not property B using tax and fare box money. As a result of this subway, property A becomes more desirable hence more valuable and commands higher rents or exchange value, which all goes to the owners of property A.
In effect, the main result of building the subway, which is intended to move people from place to place, actually results in moving tax and fare box money from the city to the owners of property A. Of course, the taxes are paid by everyone, including the owners of property B, who get no benefit at all.
This could be rectified by removing the unearned increment 100 per cent through the existing tax system.
Ed. Notes: Society’s agent — government — could levy a tax on the rental value of all locations in its jurisdiction, but it need not use taxation. Instead, it could charge a land use fee, or make the deed fee annual and set at full market value, or institute land dues. Further it need not leave all the recovered rents in the public treasury for politicians to spend as they see fit but could instead pay a dividend to residents so they could spend their own money as they see fit, a little like how Singpaore does it. Whatever method is used, it would make new subways self-financing, and that’d be a big step forward.
This 2013 excerpt of Great Britain’s Independent, Dec 5, about cabinet minister George Osborne is by Dominic Frisby, author of Life After The State, published by Unbound, and extend English coverage of this fundamental idea.
Our system of tax is too complicated. Our tax code is 11,000 pages long. That is too long. By about 10,990 pages I’d say. It makes blunders and fraud inevitable.
But it’s worse than that. Our system of tax is immoral, it is inconsistent, and it creates inequality.
So I am simplifying it. Here’s how.
Why should the multi-national corporation with an army of accountants employed solely to deal with the taxman receive better treatment than the local small businessman? Why should any group receive special favour? That is not social democracy — it is crony capitalism.
From now on, we will have a simple flat rate of tax across the board.
Excess taxation creates three Fs – Fight, Flight, and Fraud.
Government obligations will fall. With more money in their pockets, people will be able to buy for themselves the services for which they now depend on government.
People spend and invest their money better than governments do. We restore people’s moral right to keep the profits of their endeavour.
There shall be no more quantitative easing. We do not need to print money and give it to banks to lend out to get the economy turning. This is just giving banks special favour – more stuff of crony capitalism. Instead we let people keep the money they have earned. Their own spending and investment will grow the economy. And the growth will be genuine, not built on finance and malinvestment.
We live on just 7 per cent of the land. Only 2.5 per cent of land is actually built on. A decent house can be built for less than a £100,000. Yet the average age of the first-time buyer in London is now over 40. He or she’ll be a pensioner before they can start a family.
We introduce a simple land value tax. We do not tax their labour, we tax people on the land they use. We do not tax production, we tax consumption. If you are one of the 1 per cent who owns 70 per cent of the land in this country, you will pay tax on that land. If you do not wish to pay tax on it, then let the land pass to someone who will.
The unearned wealth that is the land shall be distributed fairly and equally. And people will be able to build houses for themselves.
We have drawn from the example of Singapore, whose tax rates are low and simple. It ranked the second most competitive country in the world, and it has the highest rank in terms of trust in politicians. It has the third highest GDP per capita, after Qatar and Luxembourg.
Low tax, flat tax, simple tax and land value tax. Why on earth has it taken us so long to het here?
Hormone-disrupting chemicals found in water at fracking sites, substances that have been linked to infertility, birth defects and cancer.
This 2013 excerpt of the Los Angeles Times, Dece 16, is by Neela Banerjee.
Water samples collected at Colorado sites where hydraulic fracturing was used to extract natural gas show the presence of chemicals that have been linked to infertility, birth defects and cancer.
The study also found elevated levels of the hormone-disrupting chemicals in the Colorado River, where wastewater released during accidental spills at nearby wells could wind up.
Tests of water from sites with no fracking activity also revealed the activity of so-called endocrine-disrupting chemicals, or EDCs. But the levels from these control sites were lower than in places with direct links to fracking.
Fracking involves injecting millions of gallons of chemical-laced water and sand deep underground to crack shale formations and unlock oil and gas. The process is exempt from some regulations that are part of the Safe Drinking Water Act, and energy companies do not have to disclose the chemicals they use if they consider that information a trade secret.
The fact that the domestic boom in oil and gas is driven by fracking has made discussions of its impact extremely fraught.
Independent scientists who reviewed the study countered that the researchers were cautious with their conclusions. The study does not state that fracking spills contaminated surface and groundwater. Rather, it shows a correlation between the Garfield County spill sites and greater activity of EDCs in the water.
The human endocrine system and that of wildlife is guided by very small fluctuations of hormones. Even low levels of anti-estrogenic or anti-androgenic activity could potentially alter development.
Ed. Notes: So whose side is the government on? Why exempt business instead of protect public health? You know why. Politicians get money from frackers who get to keep the share that belongs to the public and use some of that excess profit to contribute to the campaigns of politicians — i.e., to be brutally frank, bribe lawmakers.
To chop this misdeed off at its root, society would have to recover what is already ours — the worth of Mother Earth, our common natural heritage. That we can do by a strategy of land taxes or land dues and rent shares or Citizen’s Dividends, sort of like Alaska’s oil dividend. Then, if people got natural “rents” instead of business, then government could become independent enough to not cater to contributors but actually hold them accountable instead and protect both people and the planet.
This 2013 excerpt of MarketWatch, Oct 4, is by Claudia Assis.
The U.S. will end 2013 as the world’s largest producer of petroleum and natural gas, surpassing Russia and Saudi Arabia. The domestic energy boom is reshaping oil markets and chipping away at the political clout long held by petroleum-rich countries.
Combined U.S. petroleum and gas production this year will hit 50 quadrillion British thermal units, or 25 million barrels of oil equivalent a day, outproducing Russia by 5 quadrillion Btu.
Petroleum production includes crude oil, natural gas liquids, condensates, and biofuels.
U.S. and Russian energy production over the past two years have been roughly equivalent. Since 2008, U.S. petroleum production has increased 7 quadrillion Btu, with “dramatic” growth in Texas and North Dakota.
U.S. natural gas production has risen 3 quadrillion Btu over the same period, the agency said, while Russia and Saudi Arabia each increased their combined petroleum and natural gas production by about 1 quadrillion Btu since 2008, the EIA said.
Ed. Notes: Does this mean Americans now will pay less for oil and gas? No. Is this good news for the environment? No. Will this speed up the transition to renewable fuel? No. For these answers to be “yes”, the value of oil in the ground, before extracted, would have to paid as royalties to society. Then the public could enjoy the boom financially and investors would have less reason to stay with petroleum and more reason to switch to the next big thing. And that’d be good for nature.
How we make moral and political decisions may reshape our understanding of what morality is in the first place.
This 2013 excerpt of Mother Jones, Dec 13, is by Chris Mooney.
While we have innate dispositions to care for one another, they’re ultimately limited and work best among smallish clans of people who trust and know each other.
Feelings such as empathy and gratitude make it easy for us to be good; indeed, cooperation seems to come naturally and automatically. We have gut reactions that make us cooperative; f you force people to stop and think, then they’re less likely to be cooperative.
Gossip is our moral scorecard. We keep tabs and enforce norms through punishment. Two-thirds of human conversations involve chattering about other people, including spreading word of who’s behaving well and who’s behaving badly. Thus do we impose serious costs on those who commit anti-social behavior.
Just as we’re naturally inclined to be cooperative within our own group, we’re also inclined to distrust other groups (or worse). In-group favoritism and ethnocentrism are human universals. When it comes to us versus them, our gut reactions are the source of the problem. From an evolutionary perspective, morality is built to make groups cohere, not to achieve world peace.
Morality varies regionally and culturally.
Your brain is not in favor of the greatest good for the greatest number.
Humanity may be becoming more moral. It is far easier now than it ever was to be aware that your moral obligations don’t end where your small group ends. Witness the global response to the devastation caused by Super Typhoon Haiyan in the Philippines. What’s more, intergroup violence seems to be on the decline.
This 2013 excerpt of IRIN, Oct 4, is by Philippa Garson.
With the realization that corruption is undermining development and the achievement of the Millennium Development Goals (MDGs), a high-level panel, co-chaired by UNDP, Transparency International, and UNODC, are lobbying the UN to adopt goals and targets on good governance and transparency in the post-2015 development agenda.
The eight MDGs made no mention of fighting corruption. Yet in countries where there is more bribery, more women die during child birth and fewer children are in education, irrespective of how rich or poor a country is. In places where 30 percent of 100,000 women had to pay bribes, 57 died in childbirth, and where 60 percent of 100,000 had to pay bribes, 482 women died.
Few dispute that corruption blocks entry to services, erodes the quality of those services, and redirects resources from the poor towards the elite. Last year U.N. Secretary-General Ban Ki-moon said that one third of development aid never gets to its “final destination” because of corruption. The scale of corruption, particularly in weak and fragile states, is scaring many donors away.
As much as $1 trillion of illicit funds were being siphoned out of developing countries rather than being spent on them.
For the last 14 years, the Nigerian government has been trying to retrieve some US$200 million stashed in Liechtenstein during the regime of the late Sani Abacha, but had no powers to do so. Who is holding them [the banks and government officials concerned] accountable? No one.
It makes us feel good when we invent a framework, and then we think we’ve done it. We keep inventing and asking countries to join, but has this solved the problem? The answer is no. The key, instead, is to build up the institutions in developing countries that help implement government transparency and anti-corruption measures.
The UK’s Bribery Act was leading the way in anti-corruption legislation and had facilitated the recovery of 100 million pounds of assets stolen from developing countries.
Uganda’s auditor-general uncovered the disappearance of 85 million Norwegian kroner from donors, which had since been recovered. Norway is taking an approach of “zero tolerance to corruption”.
The 1.3 million people who participated in a public consultation process on the new development priorities ranked the need for honest and responsible government third highest of all priorities, after education and health care.
Ed. Notes: Other researchers have reported even a greater percentage of aid never benefits the poor. And some people in poor countries don’t want any more aid, since it only strengthens the corrupt government and elite. What some of them prefer is true free trade. Not so-called “free” trade that absolves corporations of all responsibility for the consequences of their actions but free in the sense of no more tariffs and quotas and fees, the same way trade is within nations.
What would greatly help would be a new morality about public revenue.
First, the state does not have the right to take anything from anybody that it wants; instead, the state only has the right to recover society’s common wealth on behalf of society and fall back on taxation in emergencies only as a last resort.
Second, the state does not have the right to give public revenue to insiders under any pretense; instead, the state has the duty to disburse the funds either as a dividend to citizens or as truly desired and widely beneficial services or a mix of both.
Third, the value of land and resources — how much people are willing to spend to own or use a location for whatever purpose — is a flow of funds that constitutes the common wealth and is not a source of fortune for owners or insiders; instead, everyone owes Land Dues to their community for the site they occupy. And …
Fourth, residents are not entitled to the rental income accruing to their own site but rather to a share of all the rental income of all the sites in their region; that’s what makes Earth’s worth our common wealth.
Once these ethical principles are adopted, then corruption will be no more and everyone will prosper in peace and in environmental harmony.
These two 2013 excerpts are from (1) Vindy, Dec 14, on current rents by Burton Speakman and (2) Cattle Network (undated) on calculating rents by Michigan State University Extension.
Agent to farmers: Budget now for 2014
“Bull markets in corn in 2011 and 2012 helped create a marked increase in land rent,” said Eric Barrett, Ohio State University extension agent.
Land rents are supposed to decrease along with decreases in corn prices, said David Marrison, extension agent. However, it’s unlikely that landowners are going to be willing to reduce rents.
“Once rates have increased, it’s difficult for them to go back,” he said. “It’s sort of like a business telling you in a bad year that they want to take back 20 percent of your salary.”
The typical rent for an acre went from $55 in 2012 to $76 in 2013.
Landowners are reading stories about rental rates going up on farmland all over the country, and they’re trying to get a better return on their investment. “It’s amazing how many calls we get about average land rents,” he said.
Many property owners try to estimate the yield on their property by counting the number of vehicles that leave the property during the harvest, Marrison said. Typical yield helps determine rent amounts.
Land values overall are increasing, so farmers pay more either to buy land. Real-estate debt for farmers also is increasing due in part to the low interest rates [enticing farmers to buy more before rates go up].
Pasture land has been in short supply in recent years throughout the Midwest primarily due to record high grain prices and other commodity pressures. It appears the trend has peaked for corn and is headed back to a “new normal” trading range for grain. Pressure may still be on grazing lands in the short term as livestock producers looking to expand or find new grazing opportunities stay competitive in the market and bid pasture prices higher than national averages.
Over time, pasture values tend to follow cattle and corn prices. Following those prices and local land rent for cropping systems will help determine pasture prices in your region. The main focus when leasing pasture is for both parties to receive a fair value for the land resource and grazing opportunity.
For Midwest producers to prosper in the cow-calf or stocker business, they must have access to reasonably priced pasture lands from May-October. National pasture land prices are generally benchmarked from the Flint Hills area and Kansas State University does a nice job of laying out the prices paid for pasture based on rental surveys.
Mike O’Mara, Progress Report board member, notes: Ed. Notes: As the price of pasture land gradually rises, that makes it harder for farmers who’re buying or leasing. Meanwhile, land speculators, including some farmers, obtain revenue from selling or renting out their land, which they didn’t produce — that’s different from selling or renting buildings or other improvements.
The cost of farmland could be lower, and food prices could also be lower, if there was a limit on land speculation, by requiring that land speculators and other major land users paid land dues, based on the value of the location, not the improvements. Some of the land revenue could even be used as a equal dividend for citizens, somewhat similar to Alaska’s oil dividend.
That would also have the additional nice effect of being a second way of helping people to be able to afford food and other necessities, as well as having something extra to make life more comfortable. After all, no person made the land, so how can it make sense for a few people to live off of it without compensating others who don’t own any land?
College in Sweden is free but students still have a ton of debt. How can that be?
This 2013 excerpt of Quartz, May 31, is by Matt Phillips.
Swedish colleges and universities are totally free. But students there still end up with a lot of debt. The average at the beginning of 2013 was roughly 124,000 Swedish krona ($19,000). Sure, the average US student was carrying about 30% more, at $24,800. But: College in Sweden is free.
That’s not even all that common in Europe anymore. While the costs of education are far lower than in the US, over the past two decades sometimes-hefty fees have become a fact of life for many European students. And yet, students in Germany and the UK have far lower debts than in Sweden.
About 85% of Swedish students graduate with debt, versus only 50% in the US. Worst of all, new Swedish graduates have the highest debt-to-income ratios of any group of students in the developed world — somewhere in the neighborhood of 80%. The US student debt average is more like 60%.
Costs of living in Sweden are high, especially in cities such as Stockholm, which regularly ranks among the world’s most expensive places to live. But again, this stuff isn’t free for students in other European countries either. So why do Swedish students end up with more debt? In Sweden, young people are expected to pay for things themselves.
Despite nonexistent tuition costs, Sweden has a virtually 100% uptake rate on student aid.
Swedes, like other Nordic Europeans, have an independent streak. They leave their parental homes earlier than almost all their southern neighbors. One study found that just 2% of Swedish men lived with their parents after the age of 30. In Spain, a quarter of 30-year-old men still are shacking up with mom and dad; in Italy it was around 32%.
In Sweden, students are viewed as adults, responsible for their own finances. Compare that to countries like Germany, where any aid from the state agency that doles it out, known as BAföG, is premised on parental income. In Sweden, the entire system is aimed at severing the financial link between parents and young adults.
Ed. Notes: The author did not break down the typical student’s budget but in places of high costs, the highest is usually the location on which sits one’s housing. But paying a lot for a residential site need not be a problem.
All the society has to do is recover its socially-generated value of its land. Then disburse the revenue back to citizens. Its government can levy a land tax or require Land Dues to redirect spending for land into the public treasury then pay out dividends to the citizenry as their share of the worth of Earth in their nation.
Already Aspen CO and Singapore do something similar. It’s sort of like Alaska’s oil dividend, but from the most widespread natural resource — surface land. In places of bountiful resources and few people like Sweden, the “rent” share could easily be enough to obviate student debt.
This 2013 excerpt of Computerworld, Oct 7, is by Patrick Thibodeau.
Daryl Plummer, a Gartner analyst at the research firm’s Symposium ITxpo: “What we’re seeing is a decline in the overall number of people required to do a job.” Plummer points to a company like Kodak, which once employed 130,000, versus Instagram’s 13.
Gartner sees social unrest movements, similar to Occupy Wall Street, emerging again by 2014.
Tom Seitzberg, director of international IT operations for Genomic Health in San Francisco: “If you get just a top level, a small amount of very rich people, and a very large piece of very poor people, it leads to social unrest.”
By 2016, the 3D printing of tissues and organs, called bioprinting, will cause a global debate. Said Plummer: “If you start printing products, distribution systems change, where the work is done changes.”
By 2018, 3D printing will result in the loss of at least $100 billion a year in intellectual property globally. This could be particularly hard on a small business. “It’s now easy to steal an entire business,” said Plummer.
By 2017, more than half of consumer goods manufacturers will get 75% of their consumer innovation and R&D capabilities from crowd-sourcing. Companies are already soliciting customer feedback in product design and direction.
By 2020, imagine training your replacement, a machine, to take over your job. Revenues earned by IBM from Watson, the Jeopardy-playing supercomputer, will account for 1.5% of IBM revenues by the end of 2015, and 10% by 2018.
Ed. Notes: In the past, vanishing jobs has meant some unrest but also the creation of other jobs, such as paper-pushing and salesmanship — not necessarily the most useful jobs but they do pay the bills.
One thing you can say with certainty — since it has always played out before — is that techno-progress will push up land values, as it has done in Silicon Valley. Higher site values can either widen the widening income gap or be a boon for all humanity. All people need do is recover those values — via taxes, fees, leases, dues — and disburse them back to citizens as a dividend.
Getting a fair share of our common heritage — which both land and knowledge are — should not only keep the peace but also liberate humans from so much concern about all things materialistic, letting us return to the lifestyle of hunter / gatherers. Such a rebirth could become the best blessing of progress.
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.
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.
a study of Earth’s economic worth, of the money we spend on the nature we use, trillions of dollars each year. We spend most to be with our own kind; land value follows population density. Besides nearness to downtowns, we also pay for proximity to good schools, lovely views, soil fertility, etc. These advantages, sellers did not create. So we pay the wrong people for land. Instead, we should pay our neighbors. They generate land’s value and deserve compensation for keeping off ours, as they’d pay us for keeping off theirs. It’s mutual compensation: we’d replace taxes with land dues – a bit like Hong Kong does – and replace subsidies with “rent” dividends to area residents – a bit like Alaska does with oil revenue. Both taxes and subsidies – however fair or not – are costly and distort the prices of the goods taxed and the services subsidized. By replacing them and letting prices become precise, we reveal the real costs of output, the real values of consumers. Then, just by following the bottom line, people can choose to conserve and prosper automatically. A community could start by shifting its property tax off buildings, onto land – a bit like a score of towns in Pennsylvania do; every place that has done it has benefited.
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.
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.
the annoying habit of seeing the hand of land in almost all transactions. In geonomics we maintain the distinction between the items bearing exchange value that come into being via human effort — wealth — and those that don’t — land. Keeping this distinction in the forefront makes it obvious that speculating in land drives sprawl, that hoarding land retards Third World development, that borrowing to buy land plus buildings engorges banks, that much so-called “interest” is quasi-rent, that the cost of land inflates faster than the price of produced goods and services, that over half of corporate profit is from real estate (Urban Land Institute, 1999). Summing up these analyses, geonomists offer a Grand Unifying Theory, that the flow of rent pulls all other indicators in its wake. Geonomics differs from economics as chemistry from alchemy, as astronomy from astrology.
not a panacea, but like John Muir said, “pull on any one thing, and find it connected to everything else.” Recall last month’s earthquake in El Salvador. We felt it and its formidable after-shocks in Nicaragua. Immediately afterwards, my host nation, one of the poorest in the Western Hemisphere, sent aid to its Central American neighbor. The Nica newspapers carried photos of the devastation. They showed that the cliff sides that crumbled had had homes built on them while the cliffs left pristine withstood the shock. Could monopoly of good, safe, flat land be pushing people to build on risky, unstable cliffs? If so, that’s just one more good reason to break up land monopoly. What works to break up land monopoly, history shows, is for society to collect the annual rental value of the underlying sites and resources. That’d spur owners to use level land efficiently, so no one would be excluded, forced to resort to cliffs. To prevent another man-induced landslide is yet another reason to spread geonomics.
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.
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.
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.