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Renting – Britain’s social scandal that is being ignored
This 2014 excerpt of The Guardian, Jan 3, is by Patrick Collinson.
Young adults and families are being painfully stretched by private landlords, who are now often pocketing half or more of their tenants’ wages with threats of eviction if they don’t cough up another inflation-busting rent rise in the year ahead.
How many MPs have rented their family home all their lives from a private landlord? I’d wager almost none. How many heads of our banks and building societies would prefer to live under a six-month assured shorthold tenancy rather than own (and control) their home? None. There is a vast gulf between the experience of policymakers, many of them baby boomers who have benefited from property price rises, and what is happening to the generation following behind.
Tories, who tend to receive rather than pay rent, go apoplectic at the merest suggestion of rent control, but should heed Ed Miliband’s focus on the cost of living crisis. A cap on rent (let’s call it “stabilisation”) may be no less electorally successful than the proposed cap on energy bills, such is the level of despair so many UK tenants — young people and families are feeling.
Ed. Notes: Rent control appeals to political people, which most of us are, but economic people know something better: It’s not actually the building that becomes too spendy but the location, whose value is generated by the presence of the populace; so share the rental value of land. As locations rise in value, so would one’s share. No matter how high sites go, residents could always afford to live where they love.
And love where they live if the government shifts the property tax off the building (onto the parcel). Then owners could give structures loving, tender care without swelling their tax bill, as now would happen (their property assessment would rise).
Plus, the land charge would spur speculators to build on their under-used lots or sell to builders, which would increase the housing stock, and lower the housing cost. This is what’s happened wherever geonomic solutions have been utilized. See how much better big-picture solutions work?
Five Economic Reforms Millennials Should Be Fighting For
This 2014 excerpt of Rolling Stone, Jan 3, is by Jesse A. Myerson.
Here are a few things we might want to start fighting for, pronto, if we want to grow old in a just, fair society, rather than the economic hellhole our parents have handed us.
Social Security for All
As much as unemployment blows, so do jobs. What if the government would just add a sum sufficient for subsistence to everyone’s bank account every month. A proposal along these lines has been gaining traction in Switzerland.
We live in the age of 3D printers and self-replicating robots. Actual human workers are increasingly surplus. A universal basic income would provide everyone time to cultivate new pleasures, activities, senses, passions, affects, and socialities that exceed the options of working and saving, producing and accumulating.
Take Back The Land
Ever noticed how much landlords blow? They don’t really do anything to earn their money. They just claim ownership of buildings and charge people who actually work for a living the majority of our incomes for the privilege of staying in boxes that these owners often didn’t build and rarely if ever improve. In a few years, my landlord will probably sell my building to another landlord and make off with the appreciated value of the land s/he also claims to own – which won’t even get taxed, as long as s/he ploughs it right back into more real estate.
Think about how stupid that is. The value of the land has nothing to do with my idle, remote landlord; it reflects the nearby parks and subways and shops, which I have access to thanks to the community and the public. So why don’t the community and the public derive the value and put it toward uses that benefit everyone?
The most mainstream way of flipping the script is a simple land-value tax. We can make disastrous asset price bubbles impossible and curb Wall Street’s hideous bloat. TWe have to stop letting rich people pretend they privately own what nature provided everyone.
A Public Bank in Every State
The whole point of a finance sector is supposed to be collecting the surplus that the whole economy has worked to produce, and channeling that surplus wealth toward its most socially valuable uses. It is difficult to overstate how completely awful our finance sector has been at accomplishing that basic goal. Let’s try to change that by allowing state governments into the banking game.
There is only one state that currently has a public option for banking: North Dakota. When North Dakotans pay state taxes, the money gets deposited in the state’s bank, which in turn offers cheap loans to farmers, students, and businesses.
If any of these ideas sound good to you, there’s a bitter political struggle to be waged. Let’s get to work.
Ed. Notes: The author listed two other ideas but these three selected are more crucial and actually related. How do you fund an extra income for everyone? You use taxes, fees, dues, or leases to redirect all of society’s spending for land and resources and government-granted privileges like corporate charters (her LVT above) into the public treasury. Then you’d have a surplus for paying citizens a dividend.
How do you make banking unattractive to business so it’d evolve into a public utility organically? Again, you use taxes, dues, etc, to recover the annual rental value of sites, resources, and of little pieces of paper like patents and copyrights. Then, as the dues for land rises, the price for land falls, shrinking mortgages, spoiling their role as the gravy train for bankers. Also, with so much income from these charges, government no longer would need to borrow so much, again deflating the lust of lenders. Doing so would also deflate the cost of living, so people would have much less need for loans and credit cards. Bankers will become very unhappy so government may want to step up to the plate and provide whatever few financial services people may still want.
The economy would no longer be a major threat in anyone’s life.
This 2014 excerpt of Newsle, Jan 2, is by Sheldon Richman. The column originally appeared in the Future of Freedom Foundation.
Licensing is one way that freedom is limited on behalf of special interests. The licensing regime is overseen by the current practitioners, giving them the power to limit the number of their competitors. This is a double whammy: it locks people out of occupations, and it raises prices to consumers.
We’re told that licensing exists to protect consumers from shoddy work, but licensing does not protect consumers. Ask yourself: When you move to a new area and are looking for a physician, dentist, lawyer, hairdresser, plumber, mechanic, or electrician, do you randomly choose one from a list of licensed practitioners, or do you ask a neighbor or check a web-based rating service?
Licensing does not really filter out the cons and incompetents? If it did, who’d need Angie’s List? Thus, we can’t even claim that the loss of freedom from occupational licensing is compensated for by the elimination of poor products and services. Without licensing, independent rating and certification services would flourish.
By raising barriers to self-employment, occupational licensing reduces low-wage workers’ bargaining power and helps lock them into jobs they would rather escape. We see a good deal of lobbying on behalf of raising the minimum wage and facilitating union organizing, but what people need are real alternatives to working for someone else. A worker can cut a better deal with an employer if he or she can say, “Take this job and shove it,” and pursue self-employment instead.
But even the kind of independent work that would be accessible to most anyone — driving a taxi, say, or being a street vendor — is mired in special-interest government decrees if not outright prohibitions. Zoning and other kinds of land-use restrictions often rule out home-based income-producing activities. The dramatically falling cost of computers and software — and new technologies such as 3D printing — are opening up the prospect of highly decentralized small-scale manufacturing that could be done from a home or garage.
Taxes and regulations may formally apply across the board, but they take a greater toll on microbusinesses than on big businesses, which have accounting and legal departments expert at dealing with government-imposed burdens. As a result, small businesses remain small. Government ends up protecting the market share of established firms.
The working poor don’t need favors but freedom from confining rules.
Ed. Notes: We could not only help poor entrepreneurs get started, we could also trim the regulating bureaucracies, saving some tax dollars. We could help all businesses even more by shifting the property tax off buildings, onto locations, spurring current speculators to put their prime vacant lots to good use. Constructing new buildings attracts investment and generates jobs. And finally, we could pay people a share of the recovered land rents; getting a share of land rent is similar to getting a share of land in that people can use it to develop themselves, their ideas, as they would develop the land.
This 2014 excerpt of Natural News, Jan 2, is by Ethan A. Huff.
A new study published in the journal, Proceedings of the National Academy of Sciences, by scientists from the Monterey Bay Aquarium Research Institute (MBARI) in California recently discovered that the number of dead sea creatures blanketing part of the floor of the Pacific is higher than it has ever been in the 24 years that monitoring has taken place.
This sudden explosion in so-called “sea snot,” which is the name given to the masses of dead sea creatures that sink to the ocean floor as food, has skyrocketed since the Fukushima incident occurred.
At an ocean research station known as Station M, located 145 miles out to sea between the Californian cities of Santa Barbara and Monterey, masses of dead sea plankton, jellyfish, feces, and other oceanic matter drift to the ocean floor. “In March 2012, less than one percent of the seafloor beneath Station M was covered in dead sea salps,” writes Carrie Arnold for National Geographic. “By July 1, more than 98 percent of it was covered in the decomposing organisms. … The major increase in activity of deep-sea life in 2011 and 2012 weren’t limited to Station M, though: Other ocean-research stations reported similar data.”
Though the most significant increases were observed roughly a year after the Fukushima incident, the study makes mention of the fact that the problems first began in 2011.
Life depends upon healthy oceans, the life of which provides some of the oxygen that we all breathe.
This 2014 excerpt of Grist, Jan 3, is by John Upton.
Highlights in 2013 carbon-trading news included the launch of trading programs in China and Mexico. As for existing programs …
In a bleak year for carbon markets, North America was a rising star. Despite ongoing failure by the U.S. and Canadian governments to impose limits or taxes on greenhouse gas pollution, state and regional initiatives on the east and west coasts of North America moved forward. California and Quebec are now the most expensive places in the world in which to pump carbon dioxide into the air.
Still, the healthy growth in the North American markets was not enough to compensate for a stagnating European market and the collapse of UN-issued credits. For the first time since 2010, the global carbon markets receded year-on-year. The total value of the transactions was 38.5 billion euros [$52.3 billion], a 38 percent decrease from the 2012.
But in California and in the north-eastern states’ Regional Greenhouse Gas Initiative (RGGI) market, overall transactions rose to 390 million metric tonnes with a value of $2.8 billion (€2 billion) — a volume growth of 200 percent and a value growth of 262 percent.
North America still has a long way to go before it could rival the sheer size of the E.U. Emission Trading Scheme (which trades EUAs) or, to a lesser extent, the U.N.-run international market for certified emission reductions (CERs) and emission reduction units (ERUs).
Ed. Notes: Good to see humanity move forward, however slowly, along the lines of “polluter pays”. That principle fits into a bigger one: “Pay for what you take, not what you make.” Meaning, pay your community for the land and resources and ecosystem that you take or use, but don’t get forced to pay taxes on the goods you make and services you perform. That principle, in turn, fits into a bigger one still: “Share the worth of Earth, not the take of states.” That means, rather than get taxed and get subsidized programs you may not want or need, instead pay Land Dues into the public treasury and get rent shares back. Such a Citizen’s Dividend is the key component of geonomics.
Geoism begins with the three “factors,” categories of inputs: land as natural resources, labor meaning human exertion that creates value, and produced wealth or capital goods. Land yields rent, labor earns wages, and capital goods have a capital yield. Taxes on labor, interest, the profits of enterprise, and produced goods all have an excess burden on society beyond that of the taxpayers, as they increase prices, reduce output and income, and reduce growth. But a tax on land rent or land value does not have an excess burden or “deadweight” loss, because land does not hide, shrink, or flee when tapped for public revenue. A tax on the rent does not change the rent, but it does reduce the purchase price of land, because the title holders keep less rent.
Land rent arises from two sources. First, imagine an agricultural territory with one crop, corn, and lands of various productivity. Let us at first leave out capital goods, and image that all the workers have the same skill and labor hours. When the best land is available for free, all the output goes to wages. When the best land is fully claimed and worked on, new workers go to the next best free land, which is called the “margin of production.” The wage at the margin is the total output, but now, there is rent in the better land. Because workers can move, the wage at the margin becomes the wage at the better land, and the rest of the output becomes rent. The rent of a plot of land equals its output minus the normal costs of labor and capital goods, relative to the output at the margin of production.
The other source of rent is the greater productivity that arises from population density, along with its commerce, which increases the demand to use land there. With economic activity most intense in a city center, rents are highest there, because those at the fringes have to pay transit costs to obtain the same income. We can now put in the capital goods: better technology as well as more public works (streets, highways, transit, parks) and civic services (security, fire protection, street sweeping and lighting) make those locations more productive and attractive, which generates higher rentals and real estate prices.
When government provides such public goods, this generates higher rentals. Much of the gains from economic growth are captured by higher land rent. If the financing for public goods comes from taxes on labor, enterprise, and goods, the effect is that landowners receive a subsidy as higher rent and property value, while workers are double billed, paying both a higher rental and taxes. A tax on the site values pays back the value received by the land owners, preventing the subsidy.
Governments today subsidize land value in two ways: first with fiscal subsidies, taxes that are much lower than the extra rent generated by public goods, and secondly with monetary subsidies, when central banks expand the money supply to push down borrowing rates. These subsidies not only redistribute wealth from the poor to the rich, but also induce real estate speculation that becomes a bubble and then crashes into a steep recession, as happened in 2008.
The moral aspect of geoism is based on human equality. Because we are equal as human beings, each person fully owns his own life, body, and time. That implies the full ownership of one’s labor, wages, and the products one produces. Just as theft is morally evil, it is morally wrong for government to forcibly take away one’s wage by taxation. So taxes on labor, enterprise, and goods are not only economically damaging, they are morally wrong.
Since self-ownership does not extend to natural resources, human equality implies there should be an equal benefit from natural resources. That benefit is measured by land rent. Thus we can leave land possession and titles as is, because it is sufficient for justice for the rent to be collected and distributed to the people in equal shares, either in cash or in desired public services.
That rent that comes from population and commerce should be distributed to that local population in equal shares. The rentals that are generated by public goods should be paid to the providers, whether governmental or else to a private-sector producer by contract.
Professional appraisers and assessors have techniques to estimate land rent and land value, apart from the value of buildings and other improvements. Economists have estimated that the total land rent is about a third of national income, which should be sufficient to pay for the public goods. There is even a theory in public finance called the “Henry George theorem” that concludes that with the optimal provision of public goods, the cost of the goods equals the land rent. Payments for the use of land include pollution charges for dumping toxic waste into land such as rivers, the oceans, and the atmosphere.
A “prosperity tax shift” replaces the taxes that have an excess burden with public revenue from voluntary user fees, land rent, and pollution charges. This tax shift would reduce poverty and equalize income while also increasing productivity and economic growth, and preventing real estate bubbles. There are, of course, complexities in implementing geoism, but the actual practice of this policy in Taiwan, Denmark, and many localities has been successful. Geoism offers the best way to overcome poverty, unemployment, and other economic deprivations. With higher wages and no taxes, and an equal share of the land rent, families are better able to afford to pay for their medical services and retirement, reducing dependence on government.
Geoist tax policy also eliminates tax evasion and tax audits. Even a landowner benefits after the transition in paying much less for land, as the tax payment just replaces the mortgage payment. The payment of rent can also help solve territorial conflicts, as the party holding land compensates the other party by paying rent. Geoism offers hope for a better world, for it shows that today’s social problems have realistic solutions.
This 2014 excerpt of USA Today, Jan 1, is by Nina Rees, president and CEO of the National Alliance for Public Charter Schools.
In just one school year, the typical New York City charter school student gained about five additional months of learning in math and one additional month of learning in reading compared with students in traditional public schools.
These gains, repeated year after year, are helping to erase achievement gaps between urban and suburban students. Students who attend New York City¹s charter schools from Kindergarten through 8th grade will make up 86% of the suburban-urban achievement gap in math and 66% of the gap in English.
What makes these results so impressive is that charter schools are not elite private schools. They are tuition-free public schools, funded by taxpayers and open to any student.
New York has roughly 70,000 students enrolled in public charter schools, and the numbers are on the rise. This school year alone, 14,000 new students in the city enrolled in charter schools with the vast majority in low-income neighborhoods.
While just 30% of students citywide passed New York¹s new Common Core math exam, 97% of students passed the exam at Bronx Success Academy 2. The passage rate was 80% at Leadership Prep Ocean Hill in Brownsville, a community that has suffered academic failure for generations.
Like traditional public schools, some charters do under-perform, and the charter school movement is working hard to improve quality at every school. But study after study shows that high-quality charter schools are putting high school graduation and college within reach for many New York City students who once had bleak educational prospects.
Former New York Mayor Bloomberg introduced “co-location” as a way to turn unused classrooms into productive learning environments. Sharing space also tests the hypothesis that environmental factors make it difficult for children in certain neighborhoods to succeed in school. Charters quickly proved that theory wrong. For example, 88% of third and fourth graders at Success Academy Harlem 5 passed the state math exam. The traditional public school located in the same building only managed to attain a pass rate of 6%.
Charter schools are public schools. Traditional public schools in New York City don¹t pay rent for their classrooms, and they already receive more funding per student than charter schools do. New Mayor de Blasio wants them to pay rent in the city with the highest real-estate costs in the nation.
In his election night victory remarks, de Blasio called inequality “the defining challenge of our time,” and said, “we are all at our best when every child, every parent, every New Yorker has a shot.” There are 50,000 families who are on charter school wait lists in New York City. What better way to give every child a shot at success than to let schools that are doing a great job educating kids serve even more?
Ed. Notes: City charter schools give parents greater input, and parents are ultimately responsible for their kids. If choice is a principle that is good (as in the abortion debate), it seems worth adhering to in the schooling debate. The greater the participation, the healthier the society, no? Interestingly, many of our greatest thinkers who also saw the wisdom of making land value into common wealth — such as Einstein, Mark Twain, and George Bernard Shaw — also favored non-rigid, student-driven education. Maybe de Blasio will add his name to the list!
This 2013 excerpt of Ecowatch, Dec 31, is by Brandon Baker.
Some of China’s farmland is far too polluted with heavy metals and chemicals that it can’t be used to grow food, Wang Shiyuan, deputy minister of China’s Ministry of Environmental Protection said.
The country needs at least 120 million hectares of arable land to meet the large population’s needs. The nation began the year with 135 million hectares of arable land, but contamination and efforts to convert farmland to forests, grasslands, and wetlands dropped that amount to 120 million hectares.
Farmers are already prohibited from raising crops for humans in areas deemed too badly polluted, though tainted rice and other crops still wound up in the food supply.
Ed. Notes: When we must wait a long time for the negative consequences of our actions, it seems many of us go and commit the acts that will bring short-term gain and long-term loss. What might stop people from abusing their very own land? Perhaps if people did not feel so desperate for an income but felt materially secure, then they might be able to afford to look over the horizon. Such security could come in the form of an extra income apart from one’s labor. And if the source of that extra income were the value of land, then people would care about the health of land — the healthier the land, the heftier their share of the rental value of the land. While geonomics is not a panacea, it would solve the problems that the absence of sharing Earth’s worth — in lieu of ordinary taxes and subsidies — causes. Perhaps geonomics needs to be translated into Mandarin.
Why Is the IRS Fighting Efforts to Unmask Karl Rove and U.S. Chamber Political Money Laundering?
This 2013 excerpt of AlterNet, Dec 31, is by Steven Rosenfeld.
Robert Jacobson, a Tuscon, Arizona physician who brought the lawsuit, believes that a nonprofit created by the State Department in conjunction with the U.S. Chamber to build a much-ridiculed exhibition at the 2010 Shanghai Expo in China had another purpose —- diverting large slices of the $70-plus million in donations to Karl Rove for campaigns to retake the House. The idea was that money from GOP-friendly corporations and even the Chinese government would evade oversight by flowing through barely regulated nonprofits.
Rove’s link to the project was via one of his best friends, former Bush Undersecretary of Commerce, Frank Lavin, Jacobson said. Lavin chaired the Expo’s steering committee, he said, which put him atop the fundraising pyramid. “Frank Lavin was the expert at raising money and Karl Rove was the expert at spending it,” Jacobson said [leaving few funds for the actual expo itself].
Jacobson filed his case against Shanghai Expo three years ago. Between 2008 and 2012, the IRS received 33,064 whistleblower complaints and made 630 awards, recouping $1.46 billion and paying $180.1 million in awards. Last year, the IRS concluded that since the Shanghai Expo nonprofit had disbanded there was no point in pursuing a further investigation.
Jacobson is due back in Tax Court on January 6 to respond to an IRS motion for a summary judgment to dismiss his suit. He is hoping that an administrative law judge -— who is not yet named —- will step outside established precedents and allow discovery to continue, including using federal subpeonas to trace the Expo’s multi-millions in donations.
Ed. Notes: While this particular incident may be illegal, it is not anomalous. What the IRS is doing in particular is what governments have always done everywhere in general: serve the rich. Indeed, for most of history, the rich and the government have been the same entity — the aristocracy. In their deep structure, they still are one — laws come from the lobbyists of the rich. It’s only on the surface that the rich and government seem like different institutions.
This relationship is a normal feature an unequal society. Such favoritism can’t be stopped by bringing the isolated case to trial while leaving steep hierarchy in place. Conversely, if we were to topple hierarchy, then such crimes would only rarely be committed — the advantage of addressing system rather than symptom.
The way to topple hierarchy is to redirect all of society’s surplus that now lifts up the elite, into the pockets of everyone, raising them up into comfort instead. How to redirect such surplus, which is the money we spend for the nature we use? Simple. Geonomize. Replace counterproductive taxes with Land Dues and replace addictive subsidies with a Citizens Dividend. Doing that would put an end to the current concentration of wealth and the shenanigans they commit.
This 2013 excerpt of Pacific Standard, Dec 30, is by Jim Russell.
For Organization for Economic Cooperation and Development countries, cutting the median age by two years (like the difference between the younger U.S. and older U.K.) implies about a 10% increase in new business formation.
If a country gets younger (e.g. via immigration), then entrepreneurial activity will increase, right? Wrong. Age also correlates with geographic mobility. Young adults with college degrees are the most likely to migrate. Immigration also correlates with entrepreneurial activity.
Cities of innovation also correlate with high domestic in-migration and immigration.
The inevitable consequence of high-priced downtown locations is that diversity is being driven from the central city to its remote peripheries – a trend that is reflected in metropolitan areas around the world. The suburbs is where immigrants, along with artists, students, freelance writers, and others are increasingly moving because they can’t afford the alpine rents of downtown.
The affordability, diversity, and the space and time to take risks have migrated from the city center to the suburban periphery or out of the region entirely.
Ed. Notes: It’s actually an old story: High location rents have always driven the creative out of downtowns and the neighborhoods they once made hip and popular, into affordable neighborhoods, such as now days the suburbs. Yet even if some suburbs are becoming hip and popular, that’s still no excuse for sprawl and the waste of land and energy it entails. It is possible to have both efficient land use and affordable locales. All we must do is geonomize.
This 2013 excerpt of Slate, Dec 20, is by Matthew Yglesias, author of The Rent Is Too Damn High.
After yesterday’s post on the aggregate value of all the housing in America, a couple of correspondents noted to me that for recent decades you can actually compute the value of all the land in America from the Federal Reserve’s Flow of Funds report (PDF). The short answer is that all the privately owned land in America is worth about $14.488 trillion—which is a lot.
Now how good is the Fed’s data on this? I don’t know. When David Albouy and Gabriel Ehrlich tried to estimate the total value of residential land through an independent method, they came to the conclusion that “approximately one-third of housing costs are due to land, with an increasing share in higher-value areas, implying an elasticity of substitution between land and other inputs of about one-half.” That’s very similar to the residential piece of the Flow of Funds.
This number is high enough that it tends to confirm that view that taxation of land and other natural resources, supplemented by pollution fees and things like congestion charges, could replace all taxes on labor and investment and still fund an ample welfare state and public sector.
Ed. Notes: The above is based on selling price (“capitalized rent”), not on annual rental value. Rent would be one tenth or less of selling price. However, the total above might not be far off the actual mark.
Once the rental value of land gets recovered (whether by a tax or fee or lease or dues), then its amount will grow. To pay their Land Dues, owners will improve their land, which intensifies the economy and that raises location values. And if the government repeals other taxes, again the rental mount will grow, since de-taxing also stimulates the economy, raising site values.
Plus, the above focuses on the value of land. There’s still natural resources, the EM spectrum, and ecosystem services. Along with nature, there’s also the value of government-granted privileges, such as corporate charters, which are ow handed out for mere filing fees. Instead, government could charge full market value for, say, the privilege to print money, patents and copyrights, and utility franchises. Running government like a business could easily swell the total by at least 50%.
Further, the raised revenue need not fund the things that people don’t want, such as war, corporate welfare, drug war, bridges to nowhere, etc. Minus that waste, not only would the government enjoy a surplus, but also those businesses now not receiving such largesse could compete on a level playing field, profit, make the economy more efficient, and once again swell site values.
Thus, calculating value as rent rather than price, one still finds enough social surplus to fund the public services society may want plus pay citizens a dividend.
This 2014 excerpt of USA Today, Jan 2, is by their Editorial Board.
After 20 years of service, regardless of age, a military retiree can expect a pension equal to 50% of final pay. They can retire in their late 30s or early 40s and collect a pension — intended as old-age protection — in the prime of their working lives, with cost-of-living increases, for the rest of their lives.
This is accompanied by health coverage at $549 per year for a family.
40% of servicemembers have never seen a combat zone.
While the system encourages some people to consider the military who otherwise might not, it also encourages them to leave early, taking their first-rate training to go double-dip by moving into a civilian government job.
Proposed “cuts” come in the form of a reduction in cost-of-living adjustments by 1 percentage point each year until age 62.
The change would also make military pensions less wildly out of line with most Americans’ experience. Private-sector pensions, to the extent that they exist at all, are routinely scaled back or frozen in ways much more dramatic than these changes.
Ed. Notes: Are you obligated to fulfill a deal that you had no part in making? Perhaps you weren’t even born when the deal was negotiated. And one side of the negotiation did not even have their own resources on the table but were offering OPM (Other People’s Money, pronounced like “opium”), and that side — Congresspeople — were often elected by less than a majority, in a gerrymandered district, financed by big outside money. So how legit are these pension agreements? When enlistees accept these deals, they have to go into them with open eyes, just as anyone does when accepting any long-term deal. When circumstances change, deals have to change, too.
While some “retired” military personnel should quit demanding so much for having done so little — as they say in the army: “hurry up and wait” — there are ways to take the sting out of smaller military pensions.
One is to disburse a Citizen’s Dividend to the populace, which of course would include retired military.
Another is to earmark income tax revenue only to the military, meaning pensioned retirees would have to compete with those on active duty and over-stuffed military contractors for tax dollars, while citizens would have to use their dividend for programs like Medicare.
Also, make government quit inflating the money supply, which would halt inflation, and allow techno-progress to constantly lower the cost of living.
Ultimately, have government redirect all of society’s spending for land and resources into the public treasury, which would motivate owners and others to use sites and resources efficiently. In an efficient economy, everyone has the opportunity to prosper.
A rising tide really could lift all boats, ex-personnel included; military pension cuts are long overdue.
Ed. Notes: These bio blurbs, of course, are not thorough. So bear in mind that business success strongly favors a certain personality type, the salesman; not everyone has that competitive edge. And the role of luck is not little but huge, one needing to be in the right place at the right time.
Still, what can gleaned from these Horatio Alger tales? On the surface it seems most of these fortunes are owed not only to the entrepreneur’s determination but also to the size of the US economy, and being able to win a niche in this massive market.
Some examples: Selling your product to big buyers, such as car bumpers to Detroit’s Big Three or computers to the federal government. Another: Starting a fad or getting in on the ground floor, such as a clothing or cafe brand. Others are owed to government granted monopoly, such as a phone company getting a franchise or a software company getting exclusive patents. A few come from capturing the ground rents in big construction projects. And one, Oprah, is almost solely from selling one’s self, but her family were landowners, which is hugely stabilizing. Selling themselves is something they all had to do early on when winning over lenders and investors. So our hats are off to these people.
However, that said, would their fortunes still be as big in a just economy? What if there were no oligopolies as in car manufacturing, or boundless bureaucracy as in the federal government, or fresh, cheap credit for insider banks and big business, or stock-piling of patents for mere filing fees? Or a desperate workforce lacking leverage to negotiate higher wages? And what if people felt so good about themselves as unique individuals that they did not feel the need to belong to an immense faceless mass and preferred creative cafes and non-label clothes? Then you’d still see chains, but they couldn’t be so dominant.
If we did geonomize the economy, we’d create a level playing field, and while fortunes would be smaller, they’d be more numerous, too, so we’d hear many more stories of material success.
Homicides fell sharply in many leading US cities in 2013, plummeting by as much as 20 percent.
America’s biggest metropolises, such as New York, Chicago and Los Angeles, which witnessed sky-high murder rates in the 1990s, saw a continuation of the downward trend of recent years.
Chicago had been struggling to stem an epidemic of homicides, after gang violence pushed the murder toll there to 501 in 2012. Crime reports through December 27, 2013, showed 407 homicides, a nearly 20 percent drop.
Washington was an exception to the national trend, however, with 17 percent more murders committed last year than in 2012. Officials in the US capital explained that the rise was in part a statistical anomaly, since the previous year, 2012, registered an unusually low 88 killings.
Ed. Notes: If people are now behaving more sanely — fewer murders in major US cities — is now a good time to spend less on police and weaponry like drones and helicopters? And let’s make the economy more justice to keep the better times rolling. The way to do that is with geonomics.
This 2013 excerpt of the Washington Post, Dec 31, is by their Wonkblog Team.
Welcome to the third annual Wonky awards, where we recognize outstanding achievements — and spectacular disasters — in policy wonkery. Let’s get to them.
Most worthwhile yet hopeless policy crusade of the year: Land value tax
Most taxes — income taxes, property taxes, sales taxes, payroll taxes, investment taxes, wealth taxes, even consumption taxes — tax things we want to encourage. That’s perverse. So why not change this?
Taxing land would raise enough revenue to replace most all taxes. That’s especially true if you expand the definition of “land” to include other inherently scarce natural resources like oil, coal, natural gas, gems, and water, as UC Riverside’s Mason Gaffney has argued. And the great thing about land, as opposed to income or consumption, is that it doesn’t shrink in response to taxes. We’ve got the land we’ve got. So taxing it doesn’t destroy it. It’s a way to raise a ton of money from rich landowners without any economic distortions.
For more on the case for land taxes, see Jesse Myerson at Salon and Stuart Brittain at the Financial Times. It’s the rare non-trivial policy idea that really does have something in it for both sides, and it deserves more attention.
Ed. Notes: If you’re going to tax people, you really should tax the values that society as a whole generates, such as the value of locations, rather than tax the values that individuals generate, such as the value of their goods and services and efforts and enterprise. The reasons, and there are many, are both ethical and efficient.
But bear in mind you don’t have to tax at all in order to recover the rental value of locations and other components of our common wealth. You could use fees, dues, and leases. And you don’t have to hand over all the “rents” in the world to politicians to spend as they see fit (which is what taxes do) but instead could disburse the raised revenue back to residents as a monthly dividend, their share of the worth of Earth in their region.
And bigger picture still, once you start paying citizens a dividend, then you no longer have any sane reason to subsidize most of the programs that government now make you pay for. You could pare government down to human-scale at the same time you gear up dividends and cultivate the value of land in your region. Indeed, you could eradicate this mad notion of people serving the economy instead of having the economy serve us. Do this geonomic reform of the flow of public revenue and you will have made life on earth as utterly pleasant as possible.
a scientific look at how we divvy up the work and the wealth, how some of us end up with too much or too little effort or reward. That’s partly due to Ricardo’s Law of Rent, showing how wasteful use of Earth cuts wages. And it’s partly due to how a society’s elite runs government around like water boys, dishing out subsidies and tax breaks. While geonomists look political reality right in the eye, without blinking, conventional economists flinch. When Paul Volcker, ex-chief of the Federal Reserve, moved on to a cushy professorship at Princeton cum book contract, the crush of deadlines bore down. So Volcker asked a junior associate to help with the book. The guy refused, explaining that giving serious consideration to policy would ruin his academic career. The ex-Fed chief couldn’t believe it and asked the department chair if truly that were the case. That head honcho pondered the question then replied no, not if he only does it once. And economics was AKA political economy!
the Great Green Tax Shift maxed out”
Economically, taxing pollution and depletion does reduce pollutants and extracts – and thus the tax base; plus such taxes are regressive, requiring a safety net. On the other hand, collecting site rent is progressive and generates a revenue surplus payable as a dividend to residents, which can serve as the safety net.
Environmentally, taxes on waste and extraction do not drive efficient use of land, as does getting site rent. Better settlement patterns do reduce extraction upstream and pollution downstream.
Politically, green fees have less impact if applied locally; local is where grassroots movements have more impact. Yet getting rent usually entails shifting the property tax (or charging user fees), the province of local jurisdictions; both mayors and city voters have been known to adopt a site-value tax.
Ethically, putting into practice “tax bads, not goods” skirts the issue of sharing Mother Earth which collecting rent confronts head on. Since nothing is fixed until it’s fixed right, ultimately, greens must lead humanity into geotopia where we all share the worth of Mother Earth.
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.
about the money we spend on the nature we use. It flows torrentially yet invisibly, often submerged in the price of housing, food, fuel, and everything else. Flowing from the many to the few, natural rent distorts prices and rewards unjust and unsustainable choices. Redirected via dues and dividends to flow from each to all, “rent” payments would level the playing field and empower neighbors to shrink their workweek and expand their horizons. Modeled on nature’s feedback loops, earlier proposals to redirect rent found favor with Paine, Tolstoy, and Einstein. Wherever tried, to the degree tried, redirecting rent worked. One of today’s versions, the green tax shift, spreads out of Europe. Another, the Property Tax Shift, activists can win at the local level, building a world that works right for everyone.
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.
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 neologism for sharing “rent” or “social surplus” – the money we spend on the nature we use. When we buy land, such as the land beneath a home, we typically pay the wrong person – the homeowner. Instead, since land cost us nothing to make and is the common heri-tage of us all, rather than pay the owner, we should pay ourselves, our neighbors, our community. That is, we should all pay land dues to the public treasury, then our government would pay us land dividends from this collected revenue. It’s similar to the Alaska oil dividend, almost $2,000 last year. Indeed, the annual rental value of land, oil, all other natural resources, including the broadcast spectrum and other government-granted permits such as corporate charters, totals several trillion dollars each year. It’s so much that some could be spent on basic social services, the rest parceled out as a divi-dend, as Tom Paine suggested, and taxes (except any on natural rents) could be abolished, as Thomas Jeffer-son suggested. Were we sharing Earth by sharing her worth, territorial disputes would be fewer, less intense, and more resolvable.
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.
what you do when you see economies as part of the ecosystem, following feedback loops and storing up energy. Surplus energy – fat or profit – enables us to produce and reproduce. To recycle society’s surplus, the commonwealth, geonomics would replace taxes with land dues (charged to users of sites and resources, including the EM spectrum, and extra to polluters), and replace subsidies with rent dividends to citizens (a la Alaska’s oil dividend). Without taxes and subsidies to distort them, prices become precise, reflect accurately our costs and values; then, motivated by no more than the bottom line, both producers and consumers make sustainable choices. While no place uses geonomics in its entirety, some places use parts of it, most notably a shift of the property tax off buildings, onto locations. Shifting the property tax drives efficient use of land, in-fills cities, improves the housing stock, makes homes affordable, engenders jobs and investment opportunities, lowers crime, raises civic participation, etc – overall it makes cities more livable. Geonomics – a way to share the bounty of nature and society – is something we can work for locally, globally, and in between.
suitable for framing by Green Parties. When Greens began in Germany two decades ago, they defined themselves as neither left nor right but in front. Geonomics fits that description. The Green Parties have their Four Pillars; geonomists have four ways to apply them:
Ecological Wisdom. Want people to use the eco-system wisely? Charge them Rent and, to end corporate license, add surcharges. To minimize these costs, people will use less Earth.
Nonviolence. Want people to settle disputes nonviolently? Set a good example; don’t levy taxes, which rely on the threat of incarceration, to take people’s money. Try quid pro quo fees and dues.
Social Responsibility. Want people to be responsible for their actions? Don’t make basic choices for them by subsidizing services, addicting them to a caretaker state. Let people spend shares of social surplus.
Grassroots Democracy. Better have grassroots prosperity. Remember, political power follows economic. Pay people a Citizens Dividend; to keep it, they’ll show up at the polls, public hearings, and conventions.
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.
To err is human; to forgive, divine.
What is faith worth if it is not translated into action?
Mohandas K. Gandhi
The equal right of all men and women to the use of land is as clear as their equal right to breathe the air. It is a right proclaimed by the fact of their existence. For we cannot suppose that some men and women have a right to be in this world and others do not.
That government is best which governs least.
First they ignore you, then they laugh at you, then they fight you, then you win.
It has never been my object to record my dreams, just to realize them.
Educate and inform the whole mass of the people… They are the only sure reliance for the preservation of our liberty.
Courage is the power to let go of the familiar.
So many of our dreams at first seem impossible, then they seem improbable, and then, when we summon the will, they soon become inevitable.