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A new study by researchers at the London School of Economics found that for some creative industries, copyright infringement might actually be helping boost revenues.
Internet-based revenues have been a significant component of the music industry’s growth since 2004 as the industry has slowly adopted methods of distributing and consuming content modelled on those used by file-sharing services and sites such as BitTorrent, Pirate Bay, and the now defunct Napster, which pioneered music file sharing in the 1990s.
While it acknowledges that sales have stagnated in recent years, the report points out that the overall revenue of the music industry in 2011 was almost $60 billion US, and in 2012, worldwide sales of recorded music increased for the first time since 1999, with 34 per cent of revenues for that year coming from digital channels such as streaming and downloads.
Had the record companies adapted to a digital environment earlier, rather than resisting it, they could have witnessed growth much earlier, the authors say.
The same holds true for the movie industry, the researchers suggest. While sales and rentals of DVDs have declined — by about 10 per cent between 2001 and 2010 — global revenues have increased by five per cent in that same period. The U.S. film industry alone was worth a healthy $93.7 billion in 2012, the authors said.
The video game and book publishing industries have also been successful at finding new revenue streams within the digital space and are making healthy profits, the report said. In 2013, the global book publishing industry was worth $102 billion, more than any of the other entertainment industries.
“Although revenues from print book sales have declined, this has been offset by increases in sales of e-books, and the rate of growth is not declining despite reports lamenting the ‘end of the book’,” the researchers write in their report.
The researchers make the argument that the digital culture that has sprung up around the file sharing of music, video games, movies, and other content has spawned new models of producing and distributing creative content that don’t rely on exclusive ownership of that content.
Creative Commons licences, for example, which allow artists to specify how their work is shared by the public, are increasingly being used by some musicians to release their content on music-sharing sites like SoundCloud, the report said.
The report points to the 10 million user-generated videos of Gangnam Style by South-Korean musician Psy that were created on YouTube after the original song was released and went viral as evidence that digital culture thrives on the ubiquitous sharing of digital content.
The report points to the results of a consumer tracking study by the U.K. communications regulator Ofcom that found that file sharers in the U.K. spent more on content than those who only consumed legal content.
The LSE researchers urge countries like the U.K. and the U.S. to reform their copyright enforcement regimes, which they say are out of step with such developments and with online culture generally and do not necessarily even serve the interests of the creators they claim to be protecting.
“Insisting that people will only produce creative works when they can claim exclusive ownership rights ignores the spread of practices that depend on sharing and co-creation and easy access to creative works; this insistence privileges copyright owners over these creators,” the report says.
Ed. Notes: This is good news. Now my conscience is relieved after excerpting so much from the original article. And if government is to grant patents and copyrights, it should charge full market value (as would any business) for those exclusive monopolies. Then use the revenues to fatten a Citizen’s Dividend, compensating people for being excluded from exploring where others have already patented or for not being allowed to replay a story or song as one would retell a joke. Some things are just meant to be shared.
This 2013 excerpt of Xerox’s Real Business, Dec 13, was rerun by Business Insider, Dec 16.
In my home country of the United States, the average workweek is 38 hours, after factoring in for part-time jobs. I know what you’re thinking: “I work way more than 38 hours a week!” Believe me, I did too when I lived in New York. The most standard U.S. workweek is 40 hours, which is fairly average compared to other countries around the world.
European countries generally work shorter weeks, with France (where I now live and work) famously defending a 35-hour week. Side note: as I have discovered since working in Paris, most French employees actually work much longer weeks, they just get extra vacation days to balance things out at the end of the month.
Productivity is lost if an employee works too few hours but also if an employee works too many hours and “burns out.” Tom Walker, of the Work Less Institute agrees, stating, “that output does not rise or fall in direct proportion to the number of hours worked is a lesson that seemingly has to be relearned each generation.”
In the early 1990s, the famous industrialist Henry Ford decreased the lengths of working weeks from 45 to 40 hours, to the surprise and mockery of his competitors. Over the next decade, Ford’s business boomed and, in 1937, the 40-hour workweek was enshrined in Franklin D. Roosevelt’s New Deal.
Not only do longer working weeks fail to bring proportionate gains in productivity, they also engender negative consequences such as workplace accidents and the inevitable lawsuits that follow. This argument is perhaps best outlined in a 2012 Salon article entitled “Bring back the 40-hour workweek.”
Data from other countries suggests that perhaps even a 40-hour workweek is too long and that the optimum number of hours lies in the 30s. The French, with their legally enshrined 35-hour week and lengthy holiday period (the entire country more or less shuts down every August), work the least amount of hours per year in the world.
For the hours the French do work, though, they are much more productive than workers almost anywhere else. France’s total economic output divided by the number of hours worked is among the highest in the world, even higher than in Germany. Quality over quantity seems to be the French philosophy, working less but working better.
In Germany, the average workweek is also only 35 hours, and the notoriously efficient German economy is the fourth largest in the world. Working fewer hours could also be one of the reasons that Germany has maintained such a low unemployment rate (currently sitting at 5.2%) compared to the United States (7.3%).
The British New Economics Foundation say the optimum number of hours in a workweek would be 30. In their book “Time On Our Side,” they argue that the 30-hour week would safeguard natural resources, reduce greenhouse gases, undercut unemployment by creating new jobs and benefit workers’ general health.
Ed. Notes: The length of the workweek does not have to be mandated. Instead, empower people to work as much as they like, as little as they like. The way to do that is to pay everyone a non-work income, an extra income derived from the value of nature and privilege in a region. Every society pays a lot for land and resources and to holders of government-granted privileges such as banking charters. Get government to charge full-market value (as would any business) for the little pieces of paper it grants and get it to recover the socially-generated value of sites and resources via taxes, fees, leases, and dues. Then disburse the raised revenue to the citizenry in equal shares. Enjoying that cushion, employees will be on a level playing field with employers and can decide how much to work.
Further, government could fatten the Citizen’s Dividend if it doesn’t tax people’s income, sales, and buildings. Out from under such taxes, people will produce more and more efficiently, which drives up land values. Government would funnel those “rent” increases into the dividend.
Once we’re liberated from often meaningless labor, will we define ourselves by what we do for work or what we do for play? “Hi. I pet cats and row across oceans. And you?”
This 2013 excerpt of Occupy, Spt 26, is by Steve Rushton. Truthout reran it Oct 3.
Along with the financial crash that hit the island hard in 2008, Icelanders’ trust in politicians also crashed. So two eDemocracy pioneers created the online platform, Your Priorities. During the 2009 elections for mayor of Iceland’s capital, each candidate was given an equal space to use the site. The Best Party used it most widely, and went on to win an election in which 10% of voters took part and created some 1,000 policy initiatives. Since then, the new mayor has continued to implement citizen-led legislation.
Better Reykjavik was started by Gunnar Grímsson and Róbert Bjarnason of the Citizens Foundation. They identified themselves as both entrepreneurs and activists. “It just felt right using our extensive IT knowledge and experience to be proactive for a better world instead of being reactive in protests.”
The Your Priorities platform has also been used elsewhere in Europe, such as Estonia, as part of a people’s assembly project to create new legislation following numerous political scandals in the small Baltic nation in 2012. Grímsson and Bjarnason explained: “Close to 60,000 people participated, over 1,500 ideas were submitted and the best ideas were prioritized.”
Within representative democracies, “generally politicians won’t listen to the people unless there’s a lot of participation. But the people won’t participate unless they believe they will be listened to.”
“Changing your world takes time and persistence,” they added. “Crowd-source the highest priorities, organize through ideas and speak with one voice. Get media attention and work with it instead of being frustrated about it. Also, use social media to promote eDemocracy and organize open meetings offline.”
“You need to animate the general public to participate, whichever way you can,” they continued. “Many fragmented voices achieve little, but united we can change the world. We need to find the most important ideas for every community and mobilize to support those ideas.”
“Some people are good at expressing themselves in writing, others in person. Some look good in photos or TV, many get really nervous during any kind of broadcast,” they said. “This obviously does not excuse leaving older people behind, but to be brutally honest, that problem will solve itself in time. As for leveling the playing field for people that lack internet knowledge and confidence, we definitely need to make eDemocracy as simple as possible.”
Ed. Notes: Once we win economic justice we won’t need to debate and argue so much, so our good ol’ democracy could become a fondly remember anachronism; but until we do win a fair share for everyone we do need an aroused and demanding public and electorate, something tools such as crowd sourced democracy could deliver.
This 2013 excerpt of OpEdNews, Nov 27, is by Ellen Brown.
In at least 26 countries — including Switzerland, Australia, Austria, China, India, France, Germany, Hungary, Luxembourg, Greece, Bulgaria, Poland, Italy, Mexico, and Russia — GMOs are totally or partially banned; and significant restrictions on GMOs exist in about sixty other countries. In US supermarkets, sixty to seventy percent of the foods are genetically modified.
Often known as Roundup after the best-selling Monsanto product of that name, glyphosate poisons everything in its path except plants genetically modified to resist it. Glyphosate is an essential partner to the GMOs that are the principal business of the burgeoning biotech industry. Glyphosate-based herbicides are now the most commonly used herbicides in the world.
Roundup-resistant crops escape being killed by glyphosate, but they do not avoid absorbing it into their tissues. Herbicide-tolerant crops have substantially higher levels of herbicide residues than other crops. In fact, many countries have had to increase their legally allowable levels–by up to 50 times–in order to accommodate the introduction of GM crops. In the European Union, residues in food are set to rise 100-150 times if a new proposal by Monsanto is approved. Meanwhile, herbicide-tolerant “super-weeds” have adapted to the chemical, requiring even more toxic doses and new toxic chemicals to kill the plant.
Human enzymes are affected by glyphosate just as plant enzymes are: the chemical blocks the uptake of manganese and other essential minerals. Without those minerals, we cannot properly metabolize our food. That helps explain the rampant epidemic of obesity in the United States. People eat and eat in an attempt to acquire the nutrients that are simply not available in their food.
Glyphosate enhances the growth of fungi that produce aflatoxin B1, one of the most carcinogenic of substances. Fungi growths have increased significantly in US corn crops. We’ve gone from a pretty healthy population to one with a high rate of cancer, birth defects and illnesses seldom seen before.
The endocrine-disrupting properties of glyphosate have been linked to infertility, miscarriage, birth defects, and arrested sexual development. Animals fed GM soy were sterile by the third generation. Vast amounts of farmland soil are also being systematically ruined by the killing of beneficial microorganisms that allow plant roots to uptake soil nutrients.
The US Food and Drug Administration allows biotech companies to determine if their own foods are safe.
The Obama administration is trying to fast-track the Trans-Pacific Partnership. Negotiations have been kept secret from Congress but not from corporate advisors, 600 of whom have been consulted and know the details. The TPP would give multinational corporations unprecedented right to demand taxpayer compensation for policies that corporations deem a barrier to their profits.
In 2011, 40% of Russia’s food was grown on dachas (cottage gardens or allotments). Russia only has 110 days of growing season per year. In the US, only about 0.6 percent of the total agricultural area is devoted to organic farming. The area taken up by lawns is two times greater than that of Russia’s gardens — and it produces nothing but a multi-billion-dollar lawn care industry.
Ed. Notes: If people are to win against corporations, then they’re going to have to have a fair fight. Right now it’s Big Money vs. little money, and that’s not fair. For the battle to be fair, the many little people need more economic power, at the expense of Big Business. That means, shifting government spending out of corporate welfare, into a dividend paid to the citizenry in general. Where would the money come from? From all of society’s spending for the nature it uses — mortgages for land, utility bills for oil, etc. Using taxes and fees and rebates and dividends, redirect all that spending for things of great value that nobody made away from the coffers of corporations and into the pockets to citizens and then people can win these struggles.
This 2013 excerpt of BBC News, Oct 3, is by James Morgan.
Five physics discoveries with the potential to transform the world have been selected by Physics World for its 25th birthday issue:
Hadron therapy – targeting tumours with miniature, table-top particle accelerators.
Quantum computers – potentially able to simulate new drug molecules.
Nanoscopic “superlenses” using evanescent light.
Power on the go – kinetic energy harvesting using triboelectrics that could enable shoes to charge a mobile phone.
Graphene – for electronics and super-strong materials.
Graphene’s strength, flexibility, and conductivity make it a potentially ideal material for bendable smartphones and superior prosthetic limbs. Despite being just one atom thick, it is impervious to almost all liquids and gases. Generating holes in sheets of graphene could therefore create a selective membrane – “the ultimate water purifier” – which might someday create drinking water from the sea.
The magazine also picked its top five breakthroughs of the last 25 years:
Quantum teleportation (1992)
The creation of the first Bose-Einstein condensate (1995)
The accelerating expansion of the universe (1997)
Experimental proof that neutrinos have mass (1998)
The sighting of the Higgs boson at Cern (2012)
The magazine’s 25th anniversary issue also highlights five images that have allowed us to “see” a physical phenomenon or effect. In all, the publication compiled five lists of five to examine different aspects of physics.
Physics World is the monthly magazine of the Institute of Physics and was first published in October 1988.
Ed. Notes: Physics gets real results while most economic conclusions can’t even reach the standard of accuracy. No wonder economists suffer from “physics envy”. And when physicists make mistakes, after a while of competing physicists arguing and providing counter evidence, then the truth usually wins out.
None of this is true for economics, mainly because economics must confront profit and property in order to become a science, and those topics are way too controversial for most people, economists included.
Because economics is not a science, mainstream economists can not predict accurately, while geonomists can. Yet these scientific geonomists are ignored by the conventional economists. What will it take for the paradigm to shift?
This 2013 excerpt of MoneyWeek, Dec 11, is by Merryn Somerset Webb, and continues earlier British press coverage of the proposal.
We’ve written here several times before about how useful a land/location value tax (LVT) might be.
If you build a bypass around a village, the price of houses in the village goes up. And if the taxpayer has put up the cash for the bypass, why should the owners of this tiny group of houses reap a windfall of tax-free cash? Makes no sense really.
But what of the people who can now see and hear the bypass where before they lived in peace? Some of them will have ended up with a little compensation. Most will have had none. Yet they will have suffered one way and another, so why shouldn’t they be compensated via the tax system – paying less tax on their now devalued land than those inside the village in their newly desirable homes?
Imagine if a new wind farm were going up in clear sight of your hill-top cottage, or perhaps that fracking was about to ruin your sense of rural idyll. Would you complain so hard if your compensation came in the form of zero council tax for ever?
The current compensation system for those living around new infrastructure projects is geared to paying out as little as possible. That pretty much guarantees that people will oppose it, and do so for as long as possible.
In the Autumn Statement was a decision to “run a pilot project that will share some of the benefits of the development directly with the individual households adversely affected by it.”
There have been a good many hints since the last election that the coalition is unusually interested in the LVT. This is another one.
Ed. Notes: Bigger picture, all of us should be compensated for being excluded from everyone else’s private property on Earth, our common heritage, just as each of us should compensate everyone else for our excluding them. That means, we’d all pay Land Dues into the common kitty and get Rent Dividends back. Those who claim more desirable locations would pay more while all citizens would get back an equal amount. Compensation could go a long way to taking the sting out of nuisances such as above, plus people might not mind so much when they must move to make way for progress. And extra money in the pocket would undoubtedly help pass the land tax or land dues into law.
These three 2013 excerpts on banking and money are from the New York Times, Oct 2, by (1) Ellen Brown on public banks and (2) James K. Galbraith, U. of Texas, author of Inequality and Instability on public currency; and (3) Consent Chronicle, Dec 18, on currency competition by James Wilson.
Public Banks Are Key to Capitalism
To ask whether public banks would interfere with free markets assumes that we have free markets, which we don’t. Banking is heavily subsidized and is monopolized by Wall Street, which has effectively “bought” Congress. Banks have been bailed out by the government, when in a free market they would have gone bankrupt. The Federal Reserve blatantly manipulates interest rates in a way that serves Wall Street, lending trillions at near-zero interest and pushing rates so artificially low that local governments have lost billions in interest-rate swaps.
Public banks lend countercyclically, providing credit when and where other banks won’t. This does not crowd out private banks. Germany and Taiwan, which have strong public banking sectors, are among the most competitive banking markets in the world.
In North Dakota, the only state with its own “mini-Fed,” the state-owned Bank of North Dakota routes its public lending programs through community banks. The Bank of North Dakota cooperates rather than competes with local banks, aiding with capital and liquidity requirements. Its deposit base is almost entirely composed of the revenue of the state and state agencies. North Dakota has more banks per capita than any other state, because they have not been forced to sell to their Wall Street competitors. The North Dakota Bankers’ Association endorses the Bank of North Dakota, which has a mandate to support the local economy.
The Bank of North Dakota takes almost no individual deposits, but a national postal bank would, just as postal banks have done routinely in other countries without destabilizing markets. One-fourth of American families are unbanked or underbanked. With $3 trillion in excess deposits, Wall Street doesn’t want these small depositors.
By providing inexpensive, accessible financing to the free enterprise sector of the economy, public banks make commerce more vital and stable.
Could the Treasury pay its bills without bonds? Well, the Fed does have regulations governing “overdrafts”.
Yet under present law, Secretary of the Treasury Jack Lew could pay off public debt held by the Federal Reserve by issuing a high-value, legal-tender coin – so long as the coin happened to be platinum. A coin is not debt, so that simple exchange would retire the Fed’s debt holdings and lower the total public debt below any given ceiling.
Legally, the president’s officers have the power to use one gimmick to deflate the other.
The Zero Aggression Project and DownsizeDC urge Congress to pass the Free Competition in Currency Act (HR 77).
For 100 years, the Fed notes have robbed the dollar of over 95% of its value. This money inflation led to and perpetually higher prices and devalued savings and overheated stock markets.
HR 77 ends the Fed’s monopoly on issuing new currency; it allows we the people to choose better, non-inflationary forms of money, such as gold or silver. If it becomes law the Fed will either have to stop inflating or lose customers.
Free market money would mean my savings would be protected and prices would stabilize and Congress couldn’t borrow so much.
Send Congress a letter using DownsizeDC.org’s Educate the Powerful System. Please share your letter with friends. Ask them to take the same action.
Ed. Notes: Like most people, these writers can see money but can’t see land. Money we touch every day but land, eventho’ we can’t go anywhere without stepping on it, has faded away into the background.
Yet why do banks lend most of their money? So people can buy land and the building upon it. Why are governments continually in debt? Because they refuse to recover the socially-generated value of land and resources, a value that’d make an ideal tax base.
Society’s spending for land is plenty of money, and unlike other tax targets — income, sales, buildings — the value of locations actually grows when recovered by the community. That’s because the land tax or land dues prompt landowners to quit speculating in land and instead put their sites to good use, which raises the value of all parcels in a region.
If government were to tap this growing flow of funds and keep itself out of debt, it’d have no reason to over-issue new money. Instead of inflation, as technology advances then the cost of living would fall. And if government paid surplus public revenue to citizens as a dividend, then people would not have to borrow so much.
Even without reforming the creation of new money — and the process sure deserves to be corrected — you could turn money, banking, and debt into non-issues by recovering and sharing the value of land and natural resources.
This 2013 excerpt of Business Standard, Dec 10, is by Hrusikesh Mohanty.
Salt manufacturers in the state of Odisha suffered major blow to their business couple of months back because of cyclone Phailin and subsequent floods.
Now the central government has increased the ground rent on salt fields from Rs 5 to Rs 120 per acre per annum. It has also increased the assignment charge on the manufacturers from Rs 4 to Rs 100 per tonne of salt per annum, retroactive to last January.
The salt manufacturers’ association will ask the government to reconsider its decision.
Ganjam is the major salt producing district in the state having around 5,000 acres of lands. There are 43 manufactures, including private ones and two cooperative societies engaged in making salt from the sea water. They produce 15,000 to 20,000 tonnes of salt every year. The salt farming land is leased to cooperative and private sector firms by the central and state governments.
While the infrastructure facilities like the sheds, pump sets, iodization godowns, and electric transformers were damaged in the cyclone, there was heavy siltation in the fields due to heavy rains and floods following the storm. At least Rs 10,000 per acre is needed to de-silt the salt fields to revive the production.
Ed. Notes: While it is fair for those who use land to pay their community for excluding everyone else from the land, and fair for government to collect such rent for community use, it is not fair for government to collect more than the annual market value of the land. After a devastating storm, wouldn’t the land be worth less? Wouldn’t lowering the rent make more sense? However, perhaps in this case, where the rent had been so low, the increase is still not much, only raising the amount to a fair amount. It’s not possible for us to judge without knowing how much profit the salt farmers make on public land each year. If only the reporter would complete the story!
This 2013 excerpt of Pacific Standard, Oct 2, is by Michael Todd.
Last year, research suggested that the idea of people not being able to look in the eyes when they were lying was fundamentally wrong. Your eyes don’t indicate your honesty, although your hands are a different story.
Not only does looking someone in the eye not convince them, it may actually harm your case. Eye contact, especially if someone is predisposed to disagree with you and you’re pushing them to look you back, is not persuasive at all.
If this sounds at odds with past research that’s found speakers who looks at their audience more are rated as more persuasive, understand that their outward gaze isn’t the same as making eye contact. That’s a two-person activity.
Spontaneous gaze at a speaker’s eyes is associated with greater prior agreement and (sometimes) greater receptiveness, but also with less attitude change.
Not all eye contact is created equal — when you’re with friends or loved ones, looking into their eyes generates trust. But when there’s conflict, it may suggest an effort to intimidate and or dominate, and so hurt your argument.
Ed. Notes: Don’t lock your gaze onto another’s may be sound advice but isn’t it also common sense? Along with how much you gaze at the person you’re talking to, your listener will probably also take into account how you appear to them — your smile, your words, your voice, your gestures, your dress, your subconscious aroma that humans can’t pick up consciously, etc. If there’s a shortcut to changing the minds of others, probably nothing works better than appearing as a posse of powerful individuals.
This 2013 excerpt of USA Today, Oct 2, is by Cal Thomas, a conservative columnist, and Bob Beckel, a Democratic strategist — longtime friends.
CAL: The $80 billion federal auto bailout was such a big mistake. Now to make matters worse, the Obama administration is bailing out the Motor City with $300 million. That’s $400 for every resident of the city. The federal government subsidizes failure.
BOB: But the federal assistance to General Motors and Chrysler saved the companies, many GM and Chrysler workers’ jobs, and hundreds of thousands of jobs at companies that make auto parts far beyond Detroit.
CAL: That’s what people who support bailouts say, but Ford didn’t take the money and it is doing much better. A company focused on giving drivers what they want instead of courting help from Washington is going to thrive in a free market. When businesses that fail get government handouts, more companies will come asking in the future.
BOB: I didn’t notice outrage among many conservatives when the federal government bailed out Wall Street and the big banks. That was over a trillion dollars and hardly a whimper from Republicans about their fat-cat banker buddies.
CAL: I was outraged! People and companies (and cities) that make bad decisions should be allowed to fail as a lesson to others. Without fixing the underlying cause of urban blight — people and businesses fleeing the city’s high taxes, poor services and corruption — the blight will just return. Politicians there don’t seem as interested in fixing problems as much as lining their own pockets. Many have gone to prison.
BOB: Most major cities have suffered from corruption and urban blight at some point. In the 1990s, New York went into high-crime neighborhoods and replaced broken windows and streetlights and tore down vacant buildings used by criminals. The results were staggering. Crime dropped, and law abiding citizens reclaimed control of their streets. It’s a model being widely followed.
CAL: Detroit defaulted on $600 million in bonds, twice as much as their bailout. What is needed is a shakeup in the one-party rule that has gripped Detroit for more than 50 years. The last Republican mayor, Louis Miriani, was elected when Eisenhower was president.
BOB: He was convicted of federal tax evasion and sentenced to prison in 1969, keeping up a less-than-proud and bipartisan Detroit “tradition.”
CAL: The city needs to pay 100,000 creditors. That breaks down to $28,000 per resident. In 1950, Detroit had 296,000 manufacturing jobs and, 10 years later, the nation’s highest per capita income. Today, manufacturing employment is down 90%. You can buy a house in Detroit for $500 or less.
BOB: The city became too dependent on one industry.
CAL: Times change, and people must change with them.
BOB: Detroit needs to attract technology and manufacturing jobs. The days of overly generous contracts in the manufacturing and civil service sectors are over.
CAL: Spending as if there is no tomorrow guarantees there won’t be a tomorrow for Detroit.
Ed. Notes: Now do you know what we should do: bailout Detroit or any city or company? These guys above who get millions of readers do make a degree of sense (for thinking within the box) but woefully lack the understanding of analysts who get far fewer readers (such as our contributors). Why won’t mainstream media give equal time to the structural reforms that have proven themselves to work? Would fixing the economy so that it works right for everyone, would that dethrone the powers that be?
The Mason Gaffney Reader: Essays on Solving the Unsolvable (so-called)
Most economists neither really understand their subject nor love its history. Mason Gaffney’s love of truth and the history of economics pervades what he has written. One of my few regrets in life is not having been closer than 7,650 miles away from Mason Gaffney to discuss in detail crucial derailments in economic thought and tax policy, such as John Bates Clark’s (absurdly successful) fraudulent attempt to pretend that land is merely man-made capital.
— Dr. Terry Dwyer, Economist, lawyer, Former Tax advisor to the Australian Prime Minister
If you have ever wondered why big cities have empty lots while development sprawls far into what was once farmland, Mason Gaffney’s essays will explain it all in clear and upbeat terms. For decades Gaffney has led the Georgist movement that seeks to tax land, but not buildings, to foster the best use of land while ending the subtle, and corrosive, redistribution of wealth to owners of real estate. Even if you disagree with Mase his insights will bring new clarity to economics.
— David Cay Johnston, Pulitzer Prize winning tax journalist
Mason Gaffney is a national treasure. He boldly treads where few other economists even dare to peek: at the extraction of rent from the many by the few. Such rent extraction is now massive and threatens to destroy our democracy. To those who wonder how to stop it, my advice is simple: read Gaffney.
— Peter Barnes, author of Capitalism 3.0 and The Sky Trust
The scope, scale and quality of Prof. Mason Gaffney’s anthology are truly breathtaking. This little gem will be on my students’ required reading list with a note: “They don’t make economists this way anymore.” Yes, unfortunately, when they made Mase, they broke the mold.
— Steve H. Hanke, The Johns Hopkins University
Mason Gaffney is an ideal “liberal arts” economist: Question everything, especially your own views; use common sense; be open about your judgments, and encourage debate by stating your conclusions boldly. I don’t always agree with him, but I always learn from him.
— David Colander, Middlebury College
Mason Gaffney has taught generations of urban planners and economists to appreciate how taxing land can improve cities, the economy, and the environment. His rare combination of theoretical rigor, political passion, and clear writing impressed me early in my own academic career. This wonderful collection of his incisive essays will educate and entertain everyone who wants to know more about land and taxes.
— Donald Shoup, Distinguished Professor of Urban Planning, UCLA
In 1970, I was an uppity Nader’s Raider, on the trail of giant California land barons. I stumbled on a hilarious account of California’s preposterous irrigation system with its crisscrossing canals. I just had to meet the author, so I tracked Mason down in Washington, DC, where he then worked for Resources for the Future. He invited me and my ex to dinner, fried us up hamburgers with soy sauce, sang Gilbert and Sullivan tunes with his own words, and sent us on our way with reprints and the dictum, “Tax capital and labor and you drive them away; tax land and you drive it into use!” That meeting led me to study economics in Mason’s old department at UC Berkeley, and into a lifetime of learning from him.
— Mary M. Cleveland, Columbia University
Mason Gaffney is the rare economist who looks for practical solutions. Gaffney explains how taxing land rather than buildings can generate local government revenue and promote urban infill development, greater employment, and overall urban revitalization — results urban planners have long advocated. Gaffney also lays out ways to counteract leapfrogging sprawl, the nation’s leading land use problem, through removing public subsidies. He shows why cities should also adopt land value taxation as an incentive to create more compact and economically robust communities.
— Thomas Daniels, University of Pennsylvania
While too much his own man to be a disciple, Mason Gaffney is widely known as the leading active Georgist economist. This selection of his extensive writings provides an excellent introduction to his body of thought. All apply economics to the design of a more productive economy and a fairer society, and most discuss how expanding land taxation can go far in achieving these goals. These stimulating and thought-provoking articles are written with flair, elegance, and erudition.
— Richard Arnott, University of California, Riverside
Mason Gaffney is the greatest economist the world has never heard of. Professor Gaffney supplies a theory of public finance that shows why Western economies overexploit natural resources, underemploy labor, lurch from crisis to crisis and are prone to ever-widening disparities of wealth. He explains why neither “liberal” demand-side stimulus nor “conservative” supply-side fiscal policies have suceeded. Mason Gaffney’s analysis has never been refuted; it has simply been ignored. Somehow, remarkably, he has maintained his cheery optimism and side-splitting humor, so evident in these essays.
— Kris Feder, Bard College
Mason Gaffney’s insightful writings on public finance, the structure of capital goods, and the business cycle are a bolt of enlightenment, in contrast to the dreary and almost useless mainstream thought that treats symptoms rather than causes. You cannot find better economic writing than that of Professor Mason Gaffney.
— Fred Foldvary, San Jose State University
Prof. Gaffney writes about important questions, with elegance, clarity and wit. I always enjoy reading his papers. When I refer to one of them to check on a point, I often find myself re-reading the whole paper, because I find it so engaging. When I read other economists I find errors in their thinking. That doesn’t seem to happen when I read Mason Gaffney’s work.
— Nicolaus Tideman, Virginia Polytechnic Institute
Here is an economist that the vast majority of our tribe is too defectively educated to understand. Economics is not the dismal science; it is we economists who are dismal, because we have lost our imagination. One need not agree with everything that Mason says to marvel at the depth of his mind and the reach of his wit. We have here marvelous observations and comments upon the timeless necessity of “getting and spending.”
— Daniel Bromley, Professor Emeritus, University of Wisconsin-Madison; Editor, Land Economics
Gaffney’s instructive case histories brilliantly probe beneath the surface of economic phenomena to expose what modern economic analysis has lost by downplaying land values as the primary source of unearned riches. He reveals how current fiscal regimes increasingly privilege unearned income and wealth while penalizing production and harming the poor with regressive sales taxes.
— Roger Sandilands, Emeritus Professor of Economics, University of Strathclyde, Glasgow, Scotland
Gaffney is the preeminent scholar of what’s ailing our economy and how to revitalize it with job opportunities and decent living standards for all Americans.
— Walt Rybeck, Director, Center for Public Dialogue; author of Re-Solving the Economic Puzzle
If the Nobel Prize Committee ever returns to its original mission of awarding prizes for research that benefits society, they should give serious consideration to the life’s work of Mason Gaffney. He has shown how to create a peaceful, prosperous economy that does not depend on imperialism or exploitation.
— Clifford Cobb, author, historian
Mason Gaffney recently retired from active teaching at the University of California, Riverside, at age 90 — with his wits fully intact: three of the essays in this collection were written this year. Prior to Riverside, he was a Professor of Economics at several Universities, a journalist with TIME, Inc., a researcher with Resources for the Future, Inc., the head of the British Columbia Institute for Economic Policy Analysis, which he founded, and an economic consultant to several businesses and government agencies.
Given the radical insights that Gaffney has propounded throughout his career, it’s amazing that he rose as high in the profession as he did. Over the years he found that the subjects that most interested him were precisely the ones best left unexplored by young economists seeking advancement. In a recent essay he recalled being invited to join an Air Conservation Commission in the late 1950s. Hardly any economists at that time had any interest in air pollution; they dismissed it and like matters as “externalities,” outside their narrow realm of markets for “commodities.”
Mason Gaffney doesn’t accept error without complaint, but his (mostly) judicious corrections are offered without condescension. It’s a sort of unassailable, humble authority that comes from really, really knowing what one is talking about.
His essay “Europe’s Fatal Affair with the Value-Added Tax” is far more than an explanation of the economics of sales taxes. It becomes a meditation on the age-old question of what belongs to individuals, and what belongs to communities. He shows how the views of the Physiocrats, the French economistes of the 18th century, had far-reaching influence on the US’s founding fathers, and on the American economy to this day. Public, societal choices with regard to this question have consequences, and Gaffney’s long historical view shows that these consequences are more predictable than many (particularly modern economists) would have you believe.
His “Reverberations” is the best — bar none — brief exposition of the mechanics of macroeconomic cycles, and should be required reading for every econ major.
Mason Gaffney’s work as an economist is deeply important, but he gives you more: his work as a wordsmith, and as a whimsical, eclectic historian, is delightful. There’s deep wisdom here, snazzily expressed.
This 2013 excerpt of Fortune Magazine, Nov 21, is by Vivienne Walt.
Early last year a Brazilian music producer named James Cesari hopped onto the back of a motorbike taxi and roared up to the top of one of Rio de Janeiro’s favelas. There on a hillcrest in Vidigal, an area that had suffered years of gang violence, he found his dream home. Set amid a tangle of electrical wires, potholed roads, and small eateries, Cesari’s one-bedroom cost 15,000 reais (about $7,500), plus about 50,000 reais (about $25,000) to renovate. Now the living room has a view of Ipanema’s beaches and the tropical islands beyond. Cesari, who is 36, gazes out at the view from his couch and says, “This place is priceless.”
The Vidigal shantytown in Rio is gentrifying, and prices of housing are soaring.
Ed. Notes: As always, what matters most in real estate? Hint: it’s not the buildings, in this case favelas or hovels. It’s the land, or, the location, over and over and over.
Brazil being the host of the next World Cup of Futbol is causing lots of investment in the country which is driving up the value of locations, so the poor must move again.
What might make it fair would be compensating the poor for their move. That is, paying them and everyone a share of the region’s or nation’s land value. People on the most desirable sites would pay the most, and the people with the least income would benefit the most.
Plus, collecting the ground rents would spur owners to develop their under-utilized sites (in order to afford the land tax or land dues). As they build up, they must hire people, so the formerly poor could get jobs and afford to live in higher quality dwellings.
And if government also removed the counterproductive taxes on earnings, purchases, and structures, then people would be more productive and that’d drive up location values, fattening everyone’s dividend. Everyone would be better off — both the people moving up and the people moving out.
These two 2013 excerpts on agri-biz subsidies are from (1) the BBC, Spt 26, by Chris Morris, and (2) Weekly Wastebasket (Volume XVIII No. 48) Nov 27, by Taxpayers for Common Sense.
Members of European Parliament Slam Funding Sofa Farmers
The direct payments to farmers – known as the Common Agricultural Policy (CAP) – make up most of the EU’s agriculture budget. Nearly 40% of total EU spending is allocated to agriculture.
The current payments system is largely based on land area and past subsidy levels, meaning that landowners like airports and sports clubs, which do not farm, have been getting subsidies on the basis of their grasslands or other eligible land areas.
Protection of wildlife and other environmental measures generally come under the rural development budget – called “pillar two”. Direct payments to farmers – “pillar one” – dwarf such spending and Europe’s big agricultural firms and landowners are major beneficiaries.
MEPs’ calls to set an upper limit on farm subsidies were rejected. Under the new deal, EU member states can transfer 15% of rural development funding to pillar one. But that can reach 25% in countries where direct farm payments are below the EU average.
The plan is to spend about 50bn euros (£42bn; $65bn) annually on agriculture in 2014-2020.
As the USDA reported, net farm income for 2013 is set to be a record $131 billion. That’s 15% more than last year and, after adjusting for inflation, the best year since 1973.
Covering everything from loan guarantees for biofuels facilities and grants for drinking water wells to food assistance and crop insurance, the farm bill is a nearly $1 trillion buffet of special interest dishes. And it’s a spread that routinely costs more than expected – the last two farm bills are on pace to cost $400 billion more than was estimated when they were adopted. With our nation now $17 trillion in debt, the agriculture committees are being forced to change their ways.
One of the richest parts of the farm bill is the federally subsidized crop insurance entitlement program. Producers of everything from almonds to oysters receive taxpayer subsidies to buy insurance, not just on their crops, but also on the revenue they expect from those crops. It’s extremely (overly) generous, on average more than 60% of the premium is covered by taxpayers, and the program cost $14 billion last year – in a year with the best profits in more than a generation!
Ed. Notes: Why do governments subsidize farm owners? People need food, much more than other products which don’t get subsidies. How can farming be a losing business? How can real farmers and farmworkers make so little money while sofa farmers, lenders, seed sellers, tractor manufacturers, fertilizer & insecticide makers, harvest brokers, and shippers make so much money? If government stayed out of agriculture — no subsidies, no tax breaks — and just recovered the socially-generated ground rents then distributed them to citizens — would growing crops finally become a normal enterprise? Probably. And the organic, no-till farmers would probably profit the most.
Ed. Notes: Just a reminder that what you’re paying for is not land as dirt (the island) but land as location (where sits a London flat). And until we geonomize, who you’re paying is the wrong person. Owners don’t create land or its value; nobody by themselves does that. It’s the presence of society who creates the value of sites. Hence it is they — your neighbors — whom you should pay, just as they’d pay you. That’s how we could share the socially-generated value of locations: pay Land Dues into the public treasury and get rent dividends back from your local government. And that’s how we could get over imposing all those taxes on workers and bestowing all those subsidies for insiders … soon!
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.
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.
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.
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.
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!
not a panacea, but like John Muir said, “pull on any one thing, and find it connected to everything else.” Recall last month’s earthquake in El Salvador. We felt it and its formidable after-shocks in Nicaragua. Immediately afterwards, my host nation, one of the poorest in the Western Hemisphere, sent aid to its Central American neighbor. The Nica newspapers carried photos of the devastation. They showed that the cliff sides that crumbled had had homes built on them while the cliffs left pristine withstood the shock. Could monopoly of good, safe, flat land be pushing people to build on risky, unstable cliffs? If so, that’s just one more good reason to break up land monopoly. What works to break up land monopoly, history shows, is for society to collect the annual rental value of the underlying sites and resources. That’d spur owners to use level land efficiently, so no one would be excluded, forced to resort to cliffs. To prevent another man-induced landslide is yet another reason to spread geonomics.
as unfamiliar as geo-economics. The latter is a course some universities offer that combines geography and economics. A UN newsletter, Go Between (57, Apr/May ’96; thanks, Pat Aller), cited an Asian conference on geopolitics and “geoeconomics”. The abbreviated term ‘geonomics” is the name of an institute on Middlebury College campus and of a show on CNBC. Both entities use the neologism to mean “global economics”, in particular world trade. We use geonomics entirely differently, to refer to the money people spend on the nature they use, how letting this flow collect in a few pockets creates class and poverty and assaults upon the environment, and how, on the other hand, sharing this rental flow creates equality, prosperity, and a people/planet harmony. This flow of natural rent, several trillions dollars in the US each year, shapes society and belongs to society.
close to the policy of the Garden Cities in England. Founded by Ebenezer Howard over a century ago, residents own the land in common and run the town as a business. Letchworth, the oldest of the model towns, serves residents grandly from bucketfuls of collected land rent (as does the Canadian Province of Alberta from oil royalty). A geonomic town would pay the rent to residents, letting them freely choose personalized services, and also ax taxes. Both geonomics and Howard were inspired by American proto-geonomist Henry George. The movement launched by Howard today in the UK advances the shift of taxes from buildings to locations. A recent report from the Town and Country Planning Association proposes this Property Tax Shift and their journal published research in the potential of land value taxation by Tony Vickers (Vol. 69, Part 5, 2000). (Thanks to James Robertson)
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.
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?