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This 2013 excerpt of The Huffington Post, Oct 31, is by Mark Gongloff.
Bill Gross, the billionaire founder and chief investment officer of Pacific Investment Management Co., the world’s biggest bond fund, wrote to his wealthy investors: “Having gotten rich at the expense of labor, the guilt sets in and I begin to feel sorry for the less well-off.”
We in the magnificent ’1%’ grew up in a gilded age of credit, where those who borrowed money or charged fees on expanding financial assets had a much better chance of making it to the big tent than those who used their hands for a living.
Economies work best when inequality of incomes are at a minimum. Right now, the U.S. ranks 16th on a Gini coefficient for developed countries, barely ahead of Spain and Greece.
The 1 percent now take up 20 percent of U.S. income, up from 10 percent in the 1970s.
The wealthy have gotten all of the benefit of the explosive rise of the financial sector over the past several decades.
Acknowledge your good fortune at having been born in the ‘40s, ‘50s or ‘60s, entering the male-dominated workforce 25 years later, and having had the privilege of riding a credit wave and a credit boom for the past three decades. You did not create that wave. You rode it. And now it’s time to kick out and share some of your good fortune.
Gross jabs at financial muckraker Carl Icahn, who lately has been agitating for Apple to pay its shareholders a bigger dividend.
If X can’t grow revenues any more, if X company’s stock has only gone up because of expense cutting and stock buybacks, what does that say about the U.S. or many other global economies? Has our prosperity been based on money printing, credit expansion, and cost cutting, instead of honest-to-goodness investment in the real economy?
Property Tax Laws Allow Agricultural Rates for Commercial Land
This 2013 excerpt of WIBW, Jul 18, is by Melissa Brunner.
Rounded bales of hay are a common site around the Kansas countryside. But they recently turned up, dotting the landscape of a the decidedly urban lots around the WIBW-TV studios.
The land was being baled. The move turned the lots into land being used for agricultural purposes. The less-intense use has a lower property tax rate.
In the case of the 11 acres between WIBW and the Kansas Bankers Assocation, it brought the bill down to just $23.11, a difference of $34,578.49 to Shawnee County. For all five lots around WIBW-TV, the agricultural use tax totals $58.70, instead of the market value rate of $83,443.40.
Land value taxation could help to finance low-carbon infrastructure projects in cities suffering from austerity budgets.
This 2013 excerpt of London School of Economics, Oct 10, is by Blanca Fernandez.
In view of the current environment of budgetary austerity in Europe, municipalities require new local funding methods independent from freezing higher levels of governance funds. Under the present conditions of rapidly rising public debt, loans-based or bonds-financed infrastructure investments do not seem like a feasible option in the years ahead.
However, property values are increasing in most European cities, influencing urban development and urban liveability.
Taxation should not be seen only as a source of revenue for the community but also as a powerful tool to encourage development of desirable locations, to exercise a controlling effect on the land market, and to redistribute to the public at large the benefits of the unearned increase in land values.
UN-HABITAT published in 2011 “Innovative Land and Property Taxation”, in which land and property taxation is described as an effective mechanism for urban transformation.
Land based taxation is increasing its followers worldwide, and especially in Europe. Ireland, Scotland, England and Lithuania are examples of European countries where extensive analysis and discussions have taken place.
If there is institutional will, sustainable transport can be financed locally, accessibility can be improved, and economic potential can be fostered by land-based taxation.
This 2013 excerpt of New Economic Perspectives, Oct 28, is by Dr. William K. Black.
Economics does not have a true Nobel Prize, so a central bank decided to create a near-beer variant. The central bankers have frequently awarded economists who got it disastrously wrong.
Economists are blind to conflicts of interest and eagerly seek out such conflicts to enrich themselves. Economists are blind to ethics, even disdainful of it.
Economists do not study fraud. They have a primitive tribal taboo against using the word. Economists do not study the criminology literature on elite white-collar crimes.
Accounting fraud produces fraudulent accounting data that economists and finance scholars treat as facts. During the expansion phase of a bubble the traditional econometric study will lead economists to support the worst possible policies. Competent bank examiners never forget that accounting data can be the product of accounting control fraud.
Economists, in the rare cases where they mentioned fraud, claimed that fraud posed no risk in “sophisticated” financial markets. Economists did not simply fail to warn about the fraud epidemics – they recommended doubling down on the criminogenic policies (deregulation, desupervision, and de facto decriminalization) that Akerlof and Romer warned were “bound to produce looting.”
From 2000 to 2007, a coalition of appraisal organizations … delivered to Washington officials a public petition; signed by 11,000 appraisers…. [I]t charged that lenders were pressuring appraisers to place artificially high prices on properties [and] “blacklisting honest appraisers” and instead assigning business only to appraisers who would hit the desired price targets.
What was the reaction of many of the Fed’s senior economists to the facts of mortgage lending? They were enraged at the messengers. Their reaction was “emotional” and “heated” and directed against the supervisory messengers rather than at the fraudulent banks.
This 2013 excerpt of Slate, July 16, is by Matthew Yglesias, author of The Rent Is Too Damn High.
Well-heeled universities receive huge implicit tax subsidies often for activities with little relationship to education. In New York City, for example, the tax benefit that Cooper Union gets from owning the land beneath the Chrysler building works out to $18,200 per enrolled student.
Of all the ways you can come up with subsidizing a worthy nonprofit organization, a property tax exemption has just about the worst incentive structure you can imagine. If you look at the list of things that churches and other religious institutions spend money on, “acquiring land and buildings” has got to be one of the least socially beneficial and worthy of encouragement. And the tendency of administrators and the fundraising-donor complex to plow more and more money into more and more buildings is something policymakers should be looking to restrain not encourage.
Property taxes encourage land owners to transform valuable parcels of land into high-value uses that generate useful economic activity throughout the city. George Washington University is using prime land at the corner of 20th and H NW as an open air parking lot.
This 2013 excerpt of Rolling Stone, Oct 25, is by Matt Taibbi.
This $13 billion settlement, which is actually a $9 billion settlement, came very close to never happening. In fact, this deal is actually quite a gift to Chase. It sounds like a lot of money, but there are myriad deceptions behind the sensational headline.
First of all, the settlement, may wipe out between $100 billion and $200 billion in potential liability – meaning that the bank might just have settled “for ten cents or so on the dollar.” The Federal Housing Finance Agency alone was suing Chase and its affiliates for $33 billion. The trustee in the ongoing Bernie Madoff Ponzi scandal was suing Chase for upwards of $19 billion.
Obviously, those plaintiffs may never have gotten that kind of money out of Chase. But just settling the mere potential of so much liability has huge value for the bank. It’s part of the reason the company’s share price hasn’t exactly cratered since the settlement was announced.
Moreover, the settlement is only $9 billion in cash, with $4 billion earmarked for “mortgage relief.” We’ve seen settlements with orders of mortgage relief before, and banks seem to have many canny ways of getting out of the spirit of these requirements.
There’s also the matter of the remaining $9 billion in fines being tax deductible (meaning we’re subsidizing the settlement), and the fact that Chase is reportedly trying to get the FDIC to assume some of Washington Mutual’s liability.
But overall, the key to this whole thing is that the punishment is just money, and not a crippling amount, and not from any individual’s pocket, either. People who committed essentially the same crimes as Bernie Madoff will walk away without paying any individual penalty.
Madoff’s operational fiction was his own personality. He used his charm and his lifestyle and his social status to con rich individuals into ponying up money into an essentially nonexistent investment scheme.
In the cases of both WaMu and especially Bear (both acquired by Chase), the operating fictions were broad, carefully-crafted infrastructures of bogus guarantees, flatlined due diligence mechanisms, corrupted ratings agencies, and other types of legal chicanery. These fake guarantees and assurances misled investors about what they were buying. Most thought they were investing in home mortgages. What they were actually investing in was a flow of cash from new investors that banks like Bear and WaMu were pushing into a rapidly-overheating speculative bubble.
Bernie Madoff ultimately caused about $18 billion in losses. When he got caught, the state threw the book at him, giving him a 150-year jail sentence. Meanwhile, just the subset of Bear Stearns defendants, according to a complaint against Chase filed last year by Eric Schneiderman, caused $22.5 billion in losses in just two years, 2006 and 2007.
And while it is true that the federal government in this latest $13 billion settlement is ostensibly reserving the right to continue to pursue criminal charges, don’t hold your breath. The arc of this story suggests that the whole purpose of this agreement has been to find the highest price Chase is willing to pay to a) stay in business b) keep employees out of jail.
So again, $13 billion sounds like a lot of money. But Bernie Madoff is doing 150 years, and nobody in this cast of characters will personally pay a dollar in fines. Nobody will do one day in jail. That’s a huge, huge discrepancy.
Of course, Bernie Madoff today is reviled on Wall Street, even by papers like the Wall Street Journal. This is mainly because he ripped off other finance-sector hotshots, but also because he gave Wall Street a bad name.
Post-2009 coverage of Madoff from the financial press has focused intently on the failure of the government (and in particular the SEC) to aggressively investigate the scandal in a timely fashion. This has followed a rhetorical line that frequently emanates from the finance sector, in which white-collar crime is somehow less the fault of criminals than of the police who failed to stop it.
These “Where were the regulators?” cries generally never show up in financial-press coverage of Wall Street scandals until those same pundits have first exhausted all attempts to argue that no crime was ever committed by the bank/broker/hedge fund in question.
Only then do they blast the financial cops of the world for failing to protect Madoff’s investors and the good name of honest Wall Street business.
Ten years from now, they will be denouncing everyone from Eric Holder to Lanny Breuer to the SEC and DOJ officials in the Bush administration for failing to protect investors from predatory companies like Bear Stearns, Washington Mutual, and their parent, JP Morgan Chase.
A few more notes on the deal. This latest settlement reportedly came about when CEO Jamie Dimon picked up the phone and called a high-ranking lieutenant of Attorney General Holder, who was about to hold a press conference announcing civil charges against the bank. The Justice Department meekly took the call, canceled the presser, and worked out this hideous deal, instead of doing the right thing and blowing off the self-important Wall Street hotshot long used to resolving meddlesome issues with the gift of his personal attention.
Only on Wall Street does the target of a massive federal investigation pick up the telephone and call up the prosecutor expecting to make the thing go away – and only in recent American history would such a tactic actually work.
Considering the scale of the offenses, the state could have taken the hardest of hard lines. Instead, they once again took a big fat check to walk away.
Papers like the Journal have particularly complained that Chase should not be held responsible for the offenses committed by companies long before Chase acquired them. What they forget is that Chase has made a fortune off its acquisitions of Bear and Washington Mutual, two purchases which were massively subsidized by the state. Nobody complained about potential liability back when all those two deals were doing for Chase was helping its executives buy overpriced art and summer homes.
And remember, this sort of liability was basically the only risk Chase took in these deals. The government took on most of the rest, in order to make the acquisitions happen.
Chase got to buy Bear Stearns with $29 billion in Fed guarantees, with the state setting up a special bailout facility, Maiden Lane, to unwind all of the phony-baloney loans created through Bear’s Ponzi-mortgage-mechanism described above. So Chase got to acquire one of the world’s biggest investment banks for pennies on the dollar, and then got the Fed to buy up all the toxic parts of the bank’s portfolio, essentially making the public the involuntary customer of Bear’s criminal inventory.
Later on, Chase took $25 billion in TARP money, bought Washington Mutual and its $33 billion in assets for the fire-sale price of $1.9 billion, and then repeated the Bear scenario, getting another Maiden Lane facility to take on the deadliest parts of Washington Mutual’s portfolio (including, for instance, a pool of mortgages in which 94 percent of the loans had limited documentation).
Incidentally, the notion that Chase was somehow dragged kicking and screaming by the government and forced to buy these two massive companies essentially for free is almost as laughable and ridiculous as the oft-cited explanation for the financial crisis, that the government forced banks to lend to the poor.
Chase, as has been reported by multiple outlets, had already tried on its own to buy both companies before the state arranged its infamous shotgun weddings. Only after both firms collapsed, the economy was in crisis, and Chase was able to get the Fed to eat the toxic portfolios of both companies did these already-longed-for acquisitions take place.
Chase was too big to fail before the crash, but it’s even Too-Bigger-To-Failier now, thanks to the expanded market share afforded by these two Fed-sterilized acquisitions. Bloomberg reported that Bear’s book value has soared by $36 billion since it swallowed up those two firms with the public’s help. Its retail banking earnings have soared nearly 1000 percent. It has more than doubled the size of its banking deposits. Chase didn’t have a single branch in Florida or California before this deal: It’s now a top-5 banking presence in both states.
So nobody should be crying for poor Chase now, just because it’s no longer able to simply sit back and collect gobs and gobs of essentially free cash from the ill-gotten market share “won” by its two crooked acquisitions.
Now they’ll have to write a big check, which sucks for them, but what about the victims? Shouldn’t Chase merely be required to pay back every dollar to those investors wiped out by these schemes? That would be a hell of a lot more than $13 billion.
No-jail, no-individual-penalty settlements, just companies using shareholder money to pay fines at huge discounts relative to the actual damage they caused.
This 2013 excerpt of Seattle PI, July 17, is by Neil Vigdoor.
Copper Beech Farm, a 50-acre compound on the waterfront of Greenwich CN, has been listed for $190 million, believed the be the highest listing in the United States. The property boasts a carriage house with a clock tower, co-joined heptagonal pools, a greenhouse, wine cellar and grass tennis court.
When John Rudey, the owner of the expensive residential property, procured a designation for most of his Greenwich CN compound as forestland, he — a timber tycoon and known as Copper Beech Farm — was able to reduce his real estate tax liability by more 80 percent, or $720,000 annually.
“I knew that it was a way of dodging taxes, realizing that some day he would sell it for a subdivision and make a fortune on it,” said Ted Gwartney, Greenwich’s assessor from 2003 to 2012.
In a May interview with the newspaper, Ogilvy said that the ability to subdivide the estate for future development factored into the property’s jaw-dropping listing price.
With the discount, the town’s valuation of Copper Beech Farm has plummeted from $84.6 million to $21.3 million.
The forestland designation on 40.6 acres of the property’s 50 acres goes back to 1984, when Rudey bought the compound from Carnegie Steel scion Harriet Lauder Greenway.
Gwartney is no fan of the law, but said he couldn’t unilaterally strip the property of the tax exemption. “I would have loved to have assessed it for its future value as a subdivision.”
This 2013 excerpt of OpEd News, Oct 26, is by Scott Baker.
With few exceptions, videos on the economy have landed with a thud. Though heavily applauded by the already converted, even the most well argued and cogent videos fail to reach people. Are the concepts so arcane and difficult that the masses just recoil? Or is the form the problem, not the content?
Four videos by malekanoms, totaling 700,000 views together support the latter view. They are short, simple, animated, funny, and full of insight. What can serious reformers learn from cartoon bears?
The Rich Get Richer Explained
Gas Prices Explained
Quantitative Easing Revisited
Bank Bailouts Explained
This 2013 excerpt of CityLand, July 16, is by Alexander Garvin, Adjunct Professor of Urban Planning and Management at Yale University and President & CEO of AGA public Realm Strategists.
Owners tried to protect their property by erecting planters, bollards, and other obstructions to easy access to their buildings. Thereby property owners have taken possession of substantial amounts of public sidewalk (which they do not own). It has become difficult for the increased numbers of pedestrians to pass through supposedly public space quickly and conveniently.
Property owners have appropriated public property for private use. In exchange for taking this property, they should pay rent to the City of New York. The payment to the city should be equal to the average price per square foot that they are charging in rent to building occupants.
Once private owners have to pay for using public property, they will begin to eliminate planters and bollards that are not needed to provide security to building occupants. More important, the public will either regain the benefit of the open space it paid for by allowing added noise, traffic, and density to city streets and sidewalks or enjoy the cash payments they have earned by allowing private use of public space by building owners.
This 2013 excerpt of The New Statesman, Oct 24, is by Russell Brand, an actor, comedian, and social commentator.
Like most people I regard politicians as frauds and liars and the current political system as nothing more than a bureaucratic means for furthering the augmentation and advantages of economic elites. Billy Connolly said: “Don’t vote, it encourages them,” and, “The desire to be a politician should bar you for life from ever being one.”
Total revolution of consciousness and our entire social, political and economic system is what interests me, but that’s not on the ballot. Is utopian revolution possible? The freethinking social architect Buckminster Fuller said humanity now faces a choice: oblivion or utopia. We’re inertly ambling towards oblivion, is utopia really an option?
There’s little point bemoaning this apathy. Apathy is a rational reaction to a system that no longer represents, hears or addresses the vast majority of people. A system that is apathetic, in fact, to the needs of the people it was designed to serve.
Righteous rage surfaces rarely only in the most galling of circumstances, the riots or the Milly Dowler intrusion, where a basic taboo was transgressed.
Along with the absolute, all-encompassing total corruption of our political agencies by big business, this apathy is the biggest obstacle to change. We can’t alter the former without removing the latter.
How dare I, from my velvet chaise longue, in my Hollywood home like Kubla Khan, drag my limbs from my harem to moan about the system? A system that has posited me on a lilo made of thighs in an ocean filled with honey and foie gras’d my Essex arse with undue praise and money.
It’s been said that: “The right seeks converts and the left seeks traitors.” This moral superiority that is peculiar to the left is a great impediment to momentum.
For an ideology that is defined by inclusiveness, socialism has become in practice quite exclusive. Plus a bit too serious, too much up its own fundament and not enough fun. The same could be said of the growing New Age spiritual movement, which could be a natural accompaniment to social progression. First and foremost I want to have a laugh.
Serious causes can and must be approached with good humour, otherwise they’re boring and can’t compete with the Premier League and Grand Theft Auto. Social movements needn’t lack razzmatazz.
The right has all the advantages, just as the devil has all the best tunes. Conservatism appeals to our selfishness and fear, our desire and self-interest; they neatly nurture and then harvest the inherent and incubating individualism.
I imagine that neurologically the pathway travelled by a fearful or selfish impulse is more expedient and well travelled than the route of the altruistic pang. In simple terms of circuitry I suspect it is easier to connect these selfish inclinations.
This natural, neurological tendency has been overstimulated and acculturated. Materialism and individualism do in moderation make sense. If you are naked and starving and someone gives you soup and a blanket your happiness will increase.
These problems that threaten to bring on global destruction are the result of legitimate human instincts gone awry, exploited by a dead ideology derived from dead desert myths. Fear and desire are the twin engines of human survival but with most of our basic needs met these instincts are being engaged to imprison us in an obsolete fragment of our consciousness. Our materialistic consumer culture relentlessly stimulates our desire. Our media ceaselessly engages our fear, our government triangulates and administrates, ensuring there are no obstacles to the agendas of these slow-thighed beasts, slouching towards Bethlehem.
Buckminster Fuller outlines what ought be our collective objectives succinctly: “to make the world work for 100 per cent of humanity in the shortest possible time through spontaneous co-operation without ecological offence or the disadvantage of anyone”. This maxim is the very essence of “easier said than done” as it implies the dismantling of our entire socio-economic machinery. By teatime.
The price of privilege is poverty.
At the top of the pyramid larceny is rewarded with big bonuses.
How beautiful it would be to see rioters’ passion utilised and directed at the source of their grievances.
The system is adept at turning our aggression on to one another. We condemn the rioters. The EDL condemns immigrants. My new rule for when I fancy doing a bit of the ol’ condemnation is: “Do the people I’m condemning have any actual power?” The wrath is directed to the symptom, not the problem.
We require a change that is beyond the narrow, prescriptive parameters of the current debate, outside the fortress of our current system.
We are still led by blithering chimps, in razor-sharp suits, with razor-sharp lines, pimped and crimped by spin doctors and speech-writers. Well-groomed ape-men, superficially altered by post-Clintonian trends.
We now must live in reality, inner and outer. Consciousness itself must change. Like a tanker way off course due to an imperceptible navigational error at the offset we need only alter our inner longitude.
To genuinely make a difference, we must become different; make the tiny, longitudinal shift. Meditate, direct our love indiscriminately and our condemnation exclusively at those with power. We should include everyone, judging no one, without harming anyone.
Sharing is a spiritual principle, respecting our land is a spiritual principle. May the first, May Day, is a pagan holiday where we acknowledge our essential relationship with our land.
Our young people need to know there is a culture, a strong, broad union, that they can belong to, that is potent, virile and alive.
I take great courage from the groaning effort required to keep us down. Propaganda, police, media, lies. Now is the time to continue the great legacy of the left, in harmony with its implicit spiritual principles.
This 2013 excerpt of Huffington Post, Oct 22, is by Adam Grant.
In the U.S., economics professors gave less money to charity than professors in other fields — including history, philosophy, education, psychology, sociology, anthropology, literature, physics, chemistry, and biology. More than twice as many economics professors gave zero dollars to charity than professors from the other fields.
Economics students in Germany were more likely than students from other majors to recommend an overpriced plumber when they were paid to do it.
Economics majors and students who had taken at least three economics courses were more likely than their peers to rate greed as “generally good,” “correct,” and “moral.”
Students were given $10 and had to make a proposal about how to divide the money with a peer. If the peer accepted, they had a deal, but if the peer declined, both sides got nothing. On average, economics students proposed to keep 13 percent more money for themselves than students from other majors.
In another experiment, students received money, and could either keep it or donate it to the common pool, where it would be multiplied and divided equally between all participants. On average, students contributed 49 percent of their money, but economics students contributed only 20 percent. When asked what a “fair” contribution was, the non-economists were clear: 100 percent of them said “half or more” (a full 25 percent said “all”). The economists struggled with this question. Over a third of them refused to answer it or gave unintelligible responses. The researchers wrote that the “meaning of ‘fairness’… was somewhat alien for this group.”
But maybe studying economics doesn’t change people. It could be self-selection: students who already believe in self-interest are drawn to economics.
Along with directly learning about self-interest in the classroom, because selfish people are attracted to economics, students end up surrounded by people who believe in and act on the principle of self-interest. Extensive research shows that when people gather in groups, they develop even more extreme beliefs than where they started. Social psychologists call this group polarization. By spending time with like-minded people, economics students may become convinced that selfishness is widespread and rational — or that giving is rare and foolish.
When faced with choices between cooperating and defecting, overall, 60 percent of economics majors defected, compared with only 39 percent of non-economics majors. Further, non-economists became less selfish as they matured; economists didn’t.
Business is now the most popular undergraduate major in the U.S., and it’s growing in market share. Business degrees are right behind education as the most common graduate degrees conferred in the U.S.
This 2013 excerpt of StartUp News of July 16 is by Lachlan Hornell.
Describing Rent Seekers as “the landlords of the status-quo”, Steve Blank, a Silicon Valley entrepreneur and academic, says they are the businesses that have already exceeded and are now charging others for existing, rather than creating new wealth, using government and lobbyists to stifle competition and innovation.
Startup companies like Bitcoin, Square, and Airbnb challenge the status quo of big businesses by innovating and creating new market spaces.
Blank says their opposition comes not from “direct competitors, but from groups commonly referred to as ‘rent seekers.’”
These individuals or organisations attempt to wring more money out of existing markets instead of constructing new products and experiences, as their lobbyists use every trick in the book to shut down innovative startups.
Essentially, laws are passed, government officials are bribed, and companies are extorted.
An example of this is when Tesla Motors attempted to sell their electric cars in North Carolina, New York and Texas. The National Auto Dealers Association used its lobbyists to make sure Tesla could not offer up any competition to the oil guzzling giants.
Rent seeking is the opposite of profit seeking. It’s the seeking of favours, not from the ‘simple’ people, but from government. Rent seeking doesn’t create wealth, it just shuffles it around.
Worse, resources get chewed up rent seeking. People spend time and money lobbying both to seek rent – and to defend it. Rent seeking doesn’t just redistribute wealth; it destroys it.
One instance of rent seeking in New Zealand was when student lobbyists called for the compulsory student membership (CSM) to remain in opposition of voluntary student membership (VSM).
VSM was largely seen to be a better choice for students as it allowed more freedom. However, there were those who gained greatly from students being forced to join a singular association, and lobbied against the move to VSM.
This 2013 excerpt from the Los Angeles Times of Oct 22 is by Jenn Harris.
Credit Suisse, the Zurich-based financial holdings firm, has released a report and video that raises the common concern about diabetes rates and obesity and its impact on the global economy.
Sugar is added to almost everything.
America is leading the world in excess sugar consumption. On average, Americans consume 40 teaspoons of sugar per day. The world average is 17 teaspoons per day. Following close behind America are Brazil, Argentina, Mexico, and Australia with 30 teaspoons on average per person per day. To put this in perspective, the American Heart Assn. recommends no more than 6 teaspoons of sugar for women and 9 teaspoons of sugar for men per day.
Taxation, similar to the tax placed on tobacco, may be one solution that could help combat the healthcare costs and reduce daily sugar intake.
a scientific look at how we divvy up the work and the wealth, how some of us end up with too much or too little effort or reward. That’s partly due to Ricardo’s Law of Rent, showing how wasteful use of Earth cuts wages. And it’s partly due to how a society’s elite runs government around like water boys, dishing out subsidies and tax breaks. While geonomists look political reality right in the eye, without blinking, conventional economists flinch. When Paul Volcker, ex-chief of the Federal Reserve, moved on to a cushy professorship at Princeton cum book contract, the crush of deadlines bore down. So Volcker asked a junior associate to help with the book. The guy refused, explaining that giving serious consideration to policy would ruin his academic career. The ex-Fed chief couldn’t believe it and asked the department chair if truly that were the case. That head honcho pondered the question then replied no, not if he only does it once. And economics was AKA political economy!
a new policy from a new perspective. Once your worldview shifts — so that vacant city lots are no longer invisible — then epiphany. “Of course! Why didn’t I see it before?” Once you do see the emptiness and what damage it does, how can you ever go back to the old paradigm?
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 and parcel of the ecosystem, similarly following natural patterns and able to self-regulate more so than allowed, once we quit distorting prices. To align people and planet, we’d replace taxes and subsidies with recovering and sharing rents.
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.
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, in-cluding 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.
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.
an answer to a rarely asked question. If price is a reward for production, why do we pay for land, never produced by any of us? What is land price a reward for? Good behavior? How much money do we spend on the nature we use? Who gets it? What do they do with it? (If you answer all these correctly, you’re not a genius but a geoist.) The worth of Earth is enough that were we to collect and share it, we could abolish taxes on the goods we do produce. For example, San Francisco’s Redefining Progress has calculated that Cali-fornia could abolish all state and local taxes were it to collect the values of resources and of using na-ture as a dump. By exorcising the profit motive from depletion and pollution, rent collection could replace bossy regulation. Economies could self-regulate, as the rest of the eco-system does. See how big problems yield to big answers when we ask the right questions?
a way to redirect all the money we spend on the nature we use – trillions of dollars annually. We can’t pay the Creator of sites and resources and are mistaken to pay their owners this biggest stream in our economy. Instead, as owners we should pay our neighbors for respecting our claims to land. Owners could pay in land dues to the public treasury, a la Sydney Australia’s land tax, and residents could get back a “rent” dividend, a la Alaska’s oil dividend. We’d pay for owning sites, resources, EM spectrum, or emitting pollutants into the ecosphere, then get a fair share of the recovered revenue. The economy would finally have a thermostat, the dividend. When it’s small, people would work more; when it’s big, they’d work less. Sharing Earth’s worth, we could jettison counterproductive taxes and addictive subsidies. Prices would become precise; things like sprawl, sprayed food, gasoline engines, coal-burning plants would no longer seem cheap; things like compact towns, organic foods, fuel cells, and solar powers would become affordable. Getting shares, people could spend their expanded leisure socializing, making art, enjoying nature, or just chilling. Economies let us produce wealth efficiently; geonomics lets us share it fairly.
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.