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This 2013 excerpt of Naked Capital, Spt 20, is by Yves Smith.
US Congress has ordered the US Postal Service to prepay retiree benefits 75 years in advance. USPS has to fund benefits now for workers who haven’t even been hired. It is the only agency subject to this requirement. If that were eliminated, and the Post Office stopped pricing business mail (meaning all that junk you get) at a loss, the USPS would be profitable.
The forces against the Post Office include DHL, Federal Express, UPS, and USPS supplier Ursa Major.
The husband of powerful Senator Diane Feinstein (DiFi chairs the Senate Intelligence Committee), Richard Blum, is the chairman of C.B. Richard Ellis (CBRE) which has the exclusive contract to handle sales for the Post Office’s $85 billion of property.
• CBRE has sold valuable postal properties to developers at prices that appear to have been steeply discounted from fair market values, resulting in the loss of tens of millions of dollars in public revenue.
• In a series of apparently non-arm’s-length transactions, CBRE negotiated the sale of postal properties all around the country to its own clients and business partners, including to one of its corporate owners, Goldman Sachs Group.
• CBRE has been paid commissions as high as 6 percent by the Postal Service for representing both the seller and the buyer in many of the negotiations.
• Senator Feinstein has lobbied the Postmaster General on behalf of a redevelopment project in which her husband’s company was involved.
In June 2013, Postal Service Inspector General David C. Williams published a scathing audit of CBRE’s exclusive contract to manage all the sales and leasing of postal real estate.
Ed. Notes: This corruption could not happen without the land. Grasping for the profit from locations long ago became an obsession. The only rule is to get as much as you can, any way you can — until the geoist vision spreads.
These stories keep the pot boiling and offer vital information.
These eight 2013 excerpts are from: (1) and (2) Pennsylvania’s Reading Eagle, Spt 25 on city data and Oct 9 on consultants, both by Don Spatz; (3) New York’s capitol city, Albany’s Times-Union, Oct 14 on the Green Party by Bryan Fitzgerald; (4) On the Commons, Oct 17 on shaping cities by Mason Gaffney & Rich Nymoen; (5) Bank of International Settlements Working Paper No 433, November on non-interest rate policies by Kenneth N Kuttner & Ilhyock Shim; (6) Truthout, Dec 10 on unearned income by Karl Fitzgerald; (7) Sacramento Bee, Dec 13 on property taxes by Peter Schrag; and (8) New Hampshire’s Concord Monitor, Dec 15, on MONOPOLY by Grant Bosse.
Detailed data for how the proposed land-value tax will affect every Reading property now is available on the city website, and property owners are checking whether they’ll pay more or less compared with existing property taxes.
The administration says the land-value tax promotes economic development and the new jobs that come with it; it discourages owners from sitting on a vacant lot. Pittsburgh has been using the land-value tax since 1913.
Allentown has it. So do more than a dozen cities such as Coatesville, Harrisburg, Lock Haven, Aliquippa, McKeesport, and Scranton.
Consultants Give Qualified Endorsement to Land-Value Tax
The outside consultants who coordinate the city’s Act 47 recovery moves have given what Mayor Vaughn D. Spencer calls a qualified endorsement for his plan to shift the property tax to a land-value tax over five years.
In an eight-page report, the consultant team led by Philadelphia-based Public Financial Management said: “PFM supports the administration’s proposal to the extent that it can be demonstrated not to have disproportionately negative impacts on Reading’s low-income residents.”
The outside consultants are one of three groups that must support the tax shift in writing before Council President Francis G. Acosta said he’d allow it to come up for a vote.
The other two are the Reading-Berks Association of Realtors and the Greater Reading Chamber of Commerce & Industry.
Green Party Albany mayoral candidate Theresa Portelli announced her economic agenda for the city of Albany. It includes switching to a land value tax to help spur development of Albany’s abandoned building, investment in local worker-owned co-ops, a local income tax, and to curtail Albany’s landfill revenue loss by becoming a zero-waste city.
An historical undercurrent in the campaign for economic justice in the U.S. has been the ideas of economist Henry George and the Single-Tax movement, which wielded considerable influence during the Progressive Era of the early 20th Century.
Put into practice through local property taxes, this idea helped shape the growth of leading cities like New York, Chicago, Milwaukee, Cleveland, San Francisco, Pittsburgh, and Detroit.
The formula for growing and revitalizing cities seems to be the same, whether under a “socialist” mayors like Milwaukee’s Hoan or a colorful populist like Cleveland’s Johnson: supply infrastructure, keep user-rates low, raise land taxes, attend to the details of assessment, and go easy on taxing buildings.
Population growth is not always a goal of civic policy. But it is vital to the interests of labor to have cities vie to attract people by fostering good use of their land. That is, indeed, the main point of Henry Geroge’s thesis in Progress and Poverty.
A healthy economy generates surpluses that belie the Chicago School slogan that “There is no free lunch.” Land rents are the free lunch. Perhaps Connecticut’s move this year indicates that this time-proven wisdom is beginning to spread once again.
Can Non-interest Rate Policies Stabilise Housing Markets?
Among the policies considered, a change in housing-related taxes is the only policy tool with a discernible impact on house price appreciation. The evidence suggests that an increase in housing-related taxes can slow the growth of house prices.
Unearned income is the cornerstone to the wealth gap and is highlighted by the capital gains one sees in property, where the value of a location can jump $30,000 – $50,000 in one year – more than many people earn. The great tragedy of modern economics is that the concept of unearned income is rarely taught at university. Nor is the advantage of location. But “location, location” remains the number one rule in real estate investment.
Blackstone Capital has bought up swathes of property for $35,000. Council appraisers valued them at $60,000, but the rents charged are akin to a $173,000 property. At $60,000 they should be charging $250 per month, not $720. This extra $470 in rental payments is an unearned income.
Neo-classical economics has kept this story under wraps by removing the analytical tools from the syllabus. This happened not in the 1980s, but in the 1880s. Robber barons were concerned about the rising understanding of how they derived their magic money. Henry George’s Progress and Poverty had spelt out the natural advantages that the owners of the earth had over anyone needing some earth: those trying to run a business or earn a wage.
The barons moved to fund the first American Economics Association (1886).
They paid academia to remove land, from the three factors of production (with labor and capital). Thus came the transition from Classical to Neo-Classical Economics. It was as if we no longer needed a place on the earth to work, play or run a business. The influence of high land prices on consumer spending and small business resilience are expected to be ignored.
Adding to this obfuscation is the poor quality of data in many jurisdictions. The USA’s National Incomes and Products Accounts conflates house and land valuations. This is part of the plan to focus on “housing” bubbles, ignoring the locational value of land. It also amplifies depreciation write-offs.
Australia is one of the few remaining nations with a decent data system. This allowed the quantification of unearned income in the Total Resource Rents of Australia report. This found the economic rents of all monopolies at 23.6% of GDP. This is twenty three times greater than neo-classical economists such as Paul Krugman dismiss it at.
This misinformation demonstrates the mastery of economic deception. It provides the barrier to analysis into companies like Blackstone making so much money “in their sleep” (as John Stuart Mill famously once said).
The quantification of unearned incomes is important because society could decide to do what economists have pointed to for hundreds of years – make monopolists pay for the running of government.
Rather than taxing our hard work, gather up monopoly profits in water trading, cyber squatting, geo-satellite orbits, the electromagnetic spectrum, forestry, gambling, banking licenses, and privatized utilities. Owners of such property do little productive work, but claim enormous, lightly taxed profits.
Consider cyber squatter Michael Kovatch, who had the good fortune to be first to buy the domain name www.iphone.com. He sold to Apple for a reported $1 million.
Are those economic rights valued yearly and taxed for their economic potential? The ability of VeriSign to exercise its monopoly power by increasing domain name registration fees at will is ‘overlooked’ as a cost to society. At present, such insiders have the best of both worlds – privatizing monopoly rights while driving through loopholes in a tax system incapable of tracing tax havens.
The state could lay claim to some 40% of this unearned income and use this to remove damaging payroll or sales taxes.
The “invisible hand”‘ was mentioned just once in Smith’s ‘The Wealth of Nations’, as was the ‘free market’. Monopoly was mentioned 64 times, land, 87, tax, 96, and rent, 102 times. For this reason it is time we looked back to the classical era to focus on the unearned incomes (rents) found in land and monopoly. This natural bounty acts as a source of government income while stabilizing the inequities derived from dominion over the earth.
Every economist, Lenny Goldberg, who heads the California Tax Reform Association, says, would agree that the best tax is a tax on land value only and, to the extent possible, doesn’t tax new investment.
Monopoly is the world’s best-selling board game, and I don’t know why. It’s an awful game. It takes too long, it relies almost entirely on luck; the player has almost no real decisions to make. As a real estate simulation game, Monopoly is preposterous.
That’s due to its origin as a protest against greedy landlords. In 1904, Elizabeth Magie of Brentwood, Md., received a patent for The Landlord’s Game. Magie was heavily influenced by the writing of Henry George.
George advocated that all government revenue come from a tax on the value of unimproved land, arguing it was the least intrusive tax possible. Under a Georgian tax code, you’d pay local, county, state, and federal property taxes, not on the value of your house, but on the land itself. If you built a shack or a skyscraper, your tax wouldn’t change, so the tax would not discourage investment and improvement. Of course, the value of your land would itself increase based on how much improvement was going on around you.
Ed. Notes: So revenue reform does get some press coverage, tho’ it could use quite a bit more. Even these fine articles had some holes.
The Reading articles noted the need to consider the poor; a dividend paid to residents from the recovered rents could easily handle that.
The Green candidate called for a tax on income but that only drives residents away and lowers land values, which she proposed to use as the city’s tax base.
The old cities authors recalled a popular movement of a bygone era; perhaps what’s needed is a diagnosis which would reveal how a reform could spur a popular movement today.
The bankers’ economists used the usual stilted jargon; were they too cowed to come out and say “property tax” or “land tax”?
The unearned income article (in Truthout, where I had a half dozen articles) connected a lot of dots for me. But why not for the mass of readers?
The California article addressed commercial property for political reasons, leaving out residential, but shifting the property tax is good for both.
The Monopoly article did a nice job of correcting the urban myth on the game’s origins.
We’ll probably have to see many more such articles on the tax/subsidy system before we see a well informed movement demanding fundamental reform. Good press coverage, yes, but what else will make sharing Earth’s worth popular?
The vast majority of Americans — 91 percent of Democrats, but also 76 percent of Independents and even 58 percent of Republicans — are in favor of raising the minimum wage.
Minimum wage laws are a price control. They dictate the minimum level that a company can pay a worker. If the minimum wage is $10, and a company wants to take on a new employee that they determine will be worth $8 an hour, they have a choice — either pay $10 an hour, or not hire the employee. Sometimes, the company will accept a hit to their profit margin, and pay the employee $10 an hour. Sometimes they will just not hire a new employee at all. Or, increasingly, sometimes they will go overseas and hire an employee elsewhere — like China — where wages are far lower.
Right now, America has over three jobseekers for every available job. And worker productivity in America has risen, yet the minimum wage has not.
I propose abolishing the minimum wage, and replacing it with a basic income policy.
A basic income is basic. It does not make you rich or successful — it simply ensures a minimum standard, with a minimum of bureaucracy and without setting any price controls. People would still have many personal and financial incentives to work and to become entrepreneurs. If anything, the fact that there is no longer a minimum wage would probably create more employment, not less.
Ed. Notes: With progress, the workweek is supposed to be shrinking, people are not supposed to be addicted to jobs. What else is an economy for, if not to lavish upon us great amounts of leisure?
The second writer proposes taxing the rich. But that accepts great fortunes, no matter how they’re made, and just demands a slice of them … hmm.
If you don’t want the rich to have so much money, don’t give it to them. It’s not theirs anyway. What they’re getting rich off of is common wealth, or society’s surplus, which should be common wealth, a wealth stream we should all share.
The way to turn off the spigot is to redirect all of society’s spending for nature and privilege, all the money we spend for the land and resources we use, and the money we must spend due to some corporation with a government-gratned privilege, like a patent monopoly on drugs, squeezing the consumer. Instead, use taxes, fees, dues, and leases to suck those immense flows into the public treasury. Then have government disburse the lion’s share of those funds back out to the citizenry.
Such spending is plenty of money — the biggest stream in the GDP — and it will only get bigger as technology advances and society prospers. Sharing society’s surplus is sort of like the Alaska oil dividend or Singapore’s land dividend or Aspen Colorado’s housing assistance to all working families. Just as a basic income is a more humane idea than a minimum wage, so is a Citizen’s Dividend a vastly more fair and efficient form of an extra income for everyone. Help it along at Progress.org.
This 2013 excerpt of Common Dreams, Dec 10, is by Lauren McCauley.
One day after Canada laid claim to the North Pole in a bid to out-maneuver other nations in the land grab for the resource-rich Arctic, Russian president Vladimir Putin issued orders to “concentrate on building up infrastructure and military units in the Arctic,” including the restoration of a number of Soviet-era Arctic bases.
The bid comes as Arctic-bordering nations race to establish gas and oil drilling in the region, greenlighting what environmental groups call reckless operations that risk spoiling the pristine Arctic ecosystem. Rapidly melting ice has also opened up new shipping channels through the Arctic which neighboring countries have been eager to exploit.
Canada’s official submission to the UN is due this month. Last week, Canada applied to increase its nautical borders by roughly 1.2m square kilometers beyond the current boundary, 200 nautical miles from the northern coast, which is allotted to all neighboring Arctic nations including Canada, Denmark, Norway, Russia, and the U.S.
Ed. Notes: If governments can’t wage a Cold War over ideology, they must revert to threatening war over good ol’ fashioned territory and resources? Isn’t any society over petty land grabs? Not even developed Canada? Can’t this species progress?
It doesn’t matter who owns the Arctic. It only matters who gets its “rent” or royalties. If everybody got them, a good-sized number of us — those living nearby the extraction sites — then there’d be no “rents” leftover to flow into the deep pockets of a few insiders.
To prevent these conflicts, it really is up to us to declare loudly, clearly, and often that the worth of Earth is a common wealth for all of us to share.
This 2013 excerpt of the Huffington Post, Spt 23, is by Mary Manning Cleveland of Columbia University.
A carbon tax would operate much like a diamond tax, for reasons both of demand and supply.
Demand: The wealthy actually consume a disproportionate amount of carbon. Discussions of a carbon tax usually focus on the price of gasoline — a significant cost to low-income commuters and small truckers. But the rich fly planes, including private jets; drive to low-density suburbs; occupy and heat multiple houses and hotels; and buy lots of stuff. Clearly the rich consume much more carbon per capita than the poor.
Supply: In the short run, it’s hard for people to cut energy consumption, especially if they must drive to work. But oil production takes decades and billions in capital investment; producers cannot quickly increase or decrease supply. Second, oil producers form an international cartel, an organized mega-monopoly, which holds down production to drive up prices. Since they’re already charging what the traffic will bear, they can’t much raise prices to cover a tax.
Because most of the tax falls on suppliers, it will generate plenty of revenue to help those unfortunate long-distance commuters and small truckers, to build more public transportation, to invest in renewable energy, and even to cut super-regressive taxes like the payroll tax.
Who owns the suppliers, anyway? According to Edward Wolff, in 2007, the top 1 percent in the U.S. owned 43 percent of non-home wealth, mostly securities, including of course energy company stocks and bonds. The top 10 percent of wealth holders owned 83 percent. The same folks who own DeBeers also own Exxon, Shell, and BP.
Ed. Notes: And if you want to really be sure that a tax on carbon spares the poor polluting a little and targets the rich polluting a lot, all you have to do is do what British Columbia do: they use some of the revenue raised by their carbon tax to fund a dividend to the lower income earners.
Besides using that payback to get a tax on emissions passed, you could also use it to pass a tax on extraction, even to pass a tax or fee on exclusion, on monopoly use or ownership of a location. Whether it’s the atmosphere, or buried resources, or desirable land, if you use it, you owe for it.
And while recovering these values of nature, ideally, at the same time government would quit taxing the values we do individually create, such as our income, purchases, and buildings. Reduced to a slogan of bumper sticker size: “Pay for what you take, not what you make.”
De Blasio tells lot owners to put up or pay up. His bid to close a tax loophole could force landlords to build new housing on their vacant plots or sell out to those who will.
This 2013 excerpt of Crain’s New York Business, Nov 24, is by Joe Anuta.
Prime vacant lots spurred Public Advocate Bill de Blasio in April to push for tax hikes on vacant land to force owners either to put theirs to use and build housing or to sell it to those who will. As mayor-elect, Mr. de Blasio is pledging to carry out his idea, which today would affect more than 10,500 lots in the five boroughs.
“It would drive the price of land down and increase development, to the extent the tax increases are significant,” predicted Robert Knakal, chairman of Massey Knakal Realty Services. “The more expensive [vacant land becomes to hold], the less of it you will get—that’s Economics 101.”
The plan could also provide a significant jolt of new revenue for the city that could go toward an affordable-housing program. Mr. de Blasio estimated his plan would eventually generate $162 million annually.
Upping the cost of inactivity for landowners would pay dividends by reducing the number of empty lots, which not only become magnets for crime, garbage and vermin, but also drive down neighboring property values—and city tax revenue.
“It doesn’t hurt developers like me,” one businessman said. “I’ll gladly pay the higher taxes for the few years I hold a property if it helps to stop long-term speculation.”
Mr. de Blasio’s plan is nearly identical to a campaign that was successfully waged in Manhattan in 2007 by Borough President Scott Stringer and state lawmakers, which resulted in the tax change being made to all properties north of 110th Street.
Will Mr. de Blasio have any luck in persuading Albany to pass it without the help of Gov. Andrew Cuomo, who has not weighed in on the issue?
This 2013 excerpt of The Guardian, Spt 22, is by Robert Newman, a comedian.
The rate of population growth has been slowing since the 1960s, and has fallen below replacement levels half the world over. But what about the other half? The UN Population Division’s world fertility patterns show that, worldwide, fertility per woman has fallen from 4.7 babies in 1970–75 to 2.6 in 2005-10. As Peoplequake author Fred Pearce puts it: “Today’s women have half as many babies as their mothers … That is not just in the rich world. It is the global average today.”
Today’s population panic goes on as if the Earth’s temperate grasslands are straining under the weight of supporting voracious humans rather than voracious Big Ag. According to the National Corn Growers Association, 30% of US corn ends up as fuel ethanol, while 5% is grown as corn syrup for junk food sweeteners and fizzy pop. Ain’t it grand that we’d sooner say there are too many human beings in the world than too much Coca-Cola, Honey Nut Cheerios, or Special K?
Food security and ecological sustainability are impossible without democratic control of land. Only through land nationalisation can we introduce the connected landscapes, smart cities and wildlife corridors that will let ecosystems bend, not break. As with homelessness a century ago, the problem facing a population of 7 billion is not too many people crowding too small a piece of land, but too few people owning too much world.
Ed. Notes: Actually, you don’t have to nationalize land. All you have to do is share land’s rental value. You see, members of society spend piles of money for land, natural resources, ecosystem services, and government-granted privileges like utility franchises which grant monopolies over certain regions. People’s spending for nature and privilege is by far the biggest flow within the GDP. So you’d get your government to redirect that flow with user fees, Land Dues, maybe land taxes, so to fill up the public treasury, the disburse it back out again as dividends to citizens.
When owners must pay Land Dues to compensate their neighbors for excluding them from their private property (as their neighbors would do for them), then owners lose any reason to own more land than they can use, land that others need. Why bother collecting rent from tenants if you just have to turn around and hand it over to your community? So you don’t bother. That’s how the tax on land value broke up humungous land holdings in nations all over the world and widely spread ownership of land to most of the population.
Taiwan did it and when former tenant farmers became family farmers, they rooted out hunger and — lo and behold — cut population growth by 40% in one generation. So economic justice is a win/win for both issues — ownership and population growth. Geonomics can be that powerful.
Perhaps the most basic reform possible is public recovery of the socially-generated values of land, locations, and natural resources. Collecting those values of assets not made by anyone’s labor or capital not only makes it possible to eliminate the counterproductive taxes on income, sales, and buildings (property). It also gives everyone, even the poorest among us, the opportunity to prosper and live lives of dignity. Plus, by streamlining the economy, our new efficient ways of producing and consuming would remove the pressure on the environment.
So it’s great news when other writers and publications cover this crucial topic. Previously the British press touted the idea. This time the roundup is from the Australian press.
These seven 2013 excerpts of Aussie coverage of a tax on land value are from:
(1) Australian Property, Dec 10, by Leith van Onselen;
(2) Herald Sun, Oct 8, by Jessica Irvine;
(3) Australian Financial Review, Nov 19, by Robert Carling;
(4) The Australian, Nov 22, by James Pawluk;
(5) Property Observer, Nov 25, reprinted in Macrobusiness, by Catherine Cashmore, a market analyst with extensive experience in all aspects relating to property acquisition; then our own cohorts, Prosper Australia:
(6) Media Release, Nov 19, by David Collyer; and
(7) Research Report, Dec 3, by Karl Fitzgerald who also recently had an op-ed in America’s Truthout, Dec 10 (more on that later).
Speculators Run Wild in Housing Finance
If you’re wondering what’s primarily driving up house price at the moment, look no further. Investor [speculator] finance commitments [to buy a house] were up by 8% in October, 29% over the year, and hit the highest level on record.
Various government-initiated tax reviews, including the Henry review, have recommended replacing stamp duty with broader and less distorting taxes, including land tax. However, land tax attracts much more political protest than stamp duty.”
The tax on land value (LVT) is best advocated by American political economist and author, Henry George, who wrote Progress and Poverty - an enlightened and impassioned read. George noted that land is in fixed supply, therefore we can’t all benefit from the ‘best’ sites without effective taxation of the resource.
New York’s Central Park is the highest generator of real estate wealth. The most expensive homes in the world surround the park with apartments selling in excess of $20 million, and newer developments marketed in excess of $100+ million.
Economist Michael Hudson has recently assessed land values in New York City alone to exceed that of all of the plant and equipment in the entire country, combined.
Currently more than 30 countries around the world have implemented land value taxation – including Australia – to varying degrees. In Pennsylvania 19 cities use land value tax with Altoona being the first municipality in the country to rely on land value tax alone.
Bringing about reform is never easy. The increased tax burden falls on those who have significant influence across the political spectrum. Strong leadership is essential. I do see a time when all the chatter around affordability, will finally evolve into real action – and a broad based LVT should form an important part of that debate.
State governments wring their hands over funding infrastructure, yet ignore the direct link between civic facilities and land prices. Houses close to transport, schools, libraries, and parks are simply worth more.
Dr Gavin Wood et al of the Australian Housing and Urban Research Institute: “Land prices have broken from their fundamental connections. We are in speculative frenzy, bidding up the price of land and shouldering a staggering debt burden to do so. This departure from common sense and good economics will destroy the finances of all who borrow heavily to buy property.”
The influence of monopoly is 10 times greater than mainstream economists acknowledge.
Economic rents are a significant component of the Australian economy, comprising 23.6% of GDP.
Almost half of all government revenues could be delivered by channelling the property boom to more productive purposes.
Income, company and sales taxes, along with 122 present taxes could be scrapped.
90% of taxes are distortionary, adding 23% to prices of goods and services.
The Total Resource Rents of Australia report finds monopoly rents are capable of replacing taxation at all levels of government. In 2011-12, local, state and federal governments required $390.067 billion in operating revenue. The most efficient form of government revenue-raising, the taxation of economic rents, can raise 87% ($340.719 billion) of revenue needed. By including ‘sin taxes’ and non taxation revenue, a fairer, more equitable tax base is possible.
This 2013 excerpt of Naked Capitalism, Spt 4, is by Lambert Strether of Corrente.
Christopher Alexander’s A Pattern Language (1977). From Pattern #79, Your Own Home:
People cannot be genuinely comfortable and healthy in a house which is not theirs. All forms of rental — whether from private landlords or public housing agencies — work against the natural processes which allow people to form stable, self-healing communities. …
This pattern is not intended as an argument in favor of “private property” or the process of buying and selling land. Ineed, it is very clear that all those processes which encourage speculation in land, for the sake of profit, are unhealthy and destructive, because they invite people to treat houses as commodities, to build things for “resale,” and not in such a way as to fit their own needs.
And just as speculation and the profit motive make it impossible for people to adopt their houses to their own needs, so tenancy, rental, and landlords do the same. Rental areas are always the first to turn to slums. The mechanism is clear and well-known. The landlord tries to keep his maintenance and repair costs as low as possible; the residents have no incentive to maintain and repair the homes — in fact, the opposite — since improvements add to the wealth of the landlord and even justify higher rent. And so the typical piece of rental property degenerates over the years.
This requires, then, that every house is owned — in some fashion — by the people that live in it; it requires a form of ownership which discourages speculation.
In Germany, “just 45% of homes in Germany are owner-occupied, one of the lowest rates in Europe.” Are 55% of Germans not, then, genuinely comfortable and healthy in their living quarters?
Still: Renting works against “stable, self-healing communities.”
The degree to which the housing “recovery” has been driven by speculators isn’t fully appreciated. Some sources have said that cash buyers have accounted for as much as 50% of the activity in the hottest states, and those would also have a bigger impact in the national estimates of home price appreciation.
They might have had some cash from a previous life on Wall Street, and raised a bit more money overseas, mainly from the Middle East and China. They may call themselves hedge funds as a way of glamorizing their strategy and justifying asking for hedgie-type fee structures. They often simply hold the houses for expected appreciation.
It was “not a coincidence” that more Americans than at any time since the Great Depression were being forced out of their homes just as records of home ownership and mortgages were transferred wholesale to a privatized database.
Ed. Notes: The key is to realize that the rent for the building and the rent for the land are two very different rents. The value of the building belongs to whoever built or owns the structure. The value of the location belongs to those who created it, which is the surrounding community.
As they say, the three most important things in real estate are location, location, location (the actual answer to an actual question on the California Real Estate Exam). People pay for good views, nearby shops, schools, accessible open space — things not made by any lone owner but by society as a whole.
Our mistake is having people pay lone owners instead of paying the neighbors. That is, we should pay the seller for the home (or other building) but pay the local government — which in turn would disburse the revenue to residents — for the land.
Government could require Land Dues, levy a land tax, or shift the property tax off buildings, onto locations. Places that have done this have de-motivated speculators. When speculators back out of the property game, then the price for land and improvements falls.
And more people become homeowners, as happened in Pittsburgh from 1980 to 2000 when they taxed land six times as much as buildings. They enjoyed the most affordable housing and highest owner occupancy rate of any major US city and twice was named America’s Most Livable City.
The writers above are looking for a solution. Geonomics is it.
These two 2013 excerpt about de-criminalizing a weedy mood-alterant are from (1) the BBC, Dec 11, by Ignacio de los Reyes, and (2) AlterNet, Spt 19, by Jodie Gummow.
Uruguay Marijuana Move ‘Illegal’ – UN Drugs Watchdog
Hundreds of young people gathered outside Congress in Montevideo to follow the vote on a giant screen. Many shared a joint of marijuana with their friends. They partied amid reggae music and some waved marijuana leaves.
Presenting the bill to fellow senators, Roberto Conde said it was an unavoidable response to reality, given that the “war” against drugs had failed.
After nearly 12 hours of debate, senators gave the government-sponsored bill their final approval — it was passed by 16 votes to 13 — making Uruguay the first country in the world to legalise the production and sale of marijuana.
The project had already been approved by Uruguay’s lower house in July.
A group of former presidents and influential social figures, including Brazil’s Fernando Henrique Cardoso, Mexico’s Ernesto Zedillo, and Colombian ex-leader Cesar Gaviria, have called for marijuana to be legalised and regulated.
President Mujica asked why the former leaders only spoke out about the legalisation of marijuana after they had left office.
The INCB is an independent body of experts established by the United Nations to monitor countries’ compliance with international drug treaties. It claims that de-criminalization violates international law.
Ed. Notes: The most important part of this story has little to do with drugs and more to do with the fact that people in power can make a rational decision some times. If they can go by the facts when dealing with drugs, perhaps they can use the clear-cut evidence in favor of turning land value into common wealth by taxing site rent or charging ground rent in lieu of the typical counterproductive taxes on income, sales, and buildings (property). One sensible step might lead to another and eventually all the way to geonomics.
10 Farm Subsidy Recipients Who Voted to Cut Food Stamps
This 2013 excerpt of Alternet, Spt 20, is by Derek Pugh.
Ten of the members of Congress who receive those agriculture subsidies, either directly or indirectly through trusts or businesses held by themselves or their spouses, voted to cut funding for feeding low-income people.
Last year food stamp benefits (SNAP) lifted 4 million people out of poverty, including 1.7 million children. A total of 47 million Americans have relied on SNAP benefits this fiscal year. The Congressional Budget Office estimated that the House’s legislation would deny 3.8 million people, who are already living on an average of $1.33 per meal, access to SNAP. This includes 177,000 veterans who rely on the program.
SNAP costs $4 billion per year while Congress gives hundreds of billions of dollars to big corporations that don’t need them.
$7 billion per year subsidizing the oil industry.
Over $20 billion per year on farm subsidies.
$600 billion — 15 times the value of proposed food stamp cuts — over a decade by allowing corporations to stash cash overseas.
$1 trillion over a decade be allowing special tax exemptions and loopholes for multinational corporations and wealthy households.
$137 billion over a decade by not negotiating prescription drug prices.
The $10 million that was cut from Meals on Wheels due to sequestration will end up costing the federal government $479 million due to the rise in Medicaid costs because less-well-fed seniors will end up getting sicker. The $40 billion in SNAP cuts would no doubt generate their own costly consequences.
Ed. Notes: Some people can feel no shame. Without a hitch in their voice, they dip into the public trough to fatten themselves while worsening hunger in one of the richest nations in the history of humanity. Talk about having a lot of gall.
What’s to be done? Stop letting politicians spend our money and start spending it ourselves. That is, we’d pay ourselves a Citizen’s Dividend. From whence comes the funding? From all of society’s spending for all the nature it uses. Use taxes and fees to redirect that immense flow of revenue from owners and lenders, into the public treasury, then back out again as that dividend.
While using the state’s power to collect revenue from legitimate sources — the worth of Earth is a socially-generated value — quit using said power to take money from illegitimate sources, such as people’s earnings and purchases. The pile of public revenue won’t shrink. Indeed, it will even expand. Places where dumb taxes are not levied, there people work harder and that pushes up site values. So if society recovers those values, there’ll be plenty of revenue to share. It’s the geonomic solution.
This 2013 excerpt of Bloomberg, Dec 9, is by Peter Coy.
Since the 1980s, rents (right scale) have risen, while incomes (left scale) have fallen. Both series are adjusted for inflation
If you can’t afford to own, you can rent. But what if you can’t afford to rent, either? Millions of Americans are in precisely that situation. The availability of apartments, especially cheaper ones, hasn’t nearly kept up with demand, and the problem has worsened since the 2007-09 recession.
In 1960, about one in four renters paid more than 30 percent of income for housing. Today, one in two are cost burdened.
“Cost-burdened” means you’re paying more than 30 percent of income for housing and “severely cost-burdened” means you’re paying more than half. By 2011, 28 percent of renters paid more than half their incomes for housing, bringing the number with severe cost burdens up by 2.5 million in just four years, to 11.3 million.
Foreclosed homes have become rental properties. However, soaring demand was more than enough to absorb the 2.7 million single-family homes that flooded into the rental market after 2007.
From a record high of 10.6 percent in 2009, the vacancy rate turned down in 2010 and has continued to slide, averaging 8.4 percent in the first three quarters of 2013.
With little else in their already tight budgets to cut, those with incomes under $15,000 a year spend about $130 less on food — a reduction of nearly 40% relative to those without burdens.
Deterioration is another problem; more than one in five mobile homes was removed from the housing stock from 2001 to 2011.
Ed. Notes: Eventho’ we don’t have enough affordable housing, we still tax it. How much sense does that (property tax) make? And scattered around those stuffed apartment buildings are plenty of vacant lots, kept vacant by speculators and sluggish governments. All those sites could support more housing, which would increase the supply and bring down the cost of residing.
Government should shift the property tax off improvements, onto locations. That’d cut the cost of construction and making improvements. It’d also prod owners to put their land to use. Besides bringing down the cost of putting a roof over one’s head, it’d also create job opportunity in construction and in the businesses that’d occupy some of the new buildings. So the poor could climb up into the middle class.
Try smart tax policy. You’d both raise the amount of housing. And you’d lower the amount of poverty. Now, if only the Harvards of the world had what it takes to point out the obvious. But they’re still stuck in the blind spot regarding land. They still talk about housing when it’s the land — the location — that climbs (then collapses) in value.
This 2013 excerpt of WorldStage Newsonline, Spt 19, is by Abel Krabee.
Delta State Government has announced plans to start collecting ground rent from property owners across the state.
Commissioner for Lands, Mr. Patrick Ferife said the decision to fully enforce the payment of ground rent was reached in Asaba at a meeting between officials of the state internal revenue board and officials of the Ministry of Lands, Housing and Urban Development.
Each property/plot owner was required by law to pay rent to the governor.
According to him, the focus for now will be on urban centres of the state even as he spelt out the rates for both commercial and residential plots/property.
Ferife said ground rent was not new but that property/plot owners have continued to default in their civic responsibility, insisting that the practice must stop as government was going all out to enforce the law to the letter.
“Like I said, we are setting up a task force to move from house to house to collect the rent. One of the challenges we have been having is that those that pay ground rent are those whose properties are registered and you find out that a very high percentage of property owners have not registered their properties or plots.
“But we are going to change that. Whether you register your property with the ministry or not, we are coming to you with the demand notice.”
Ed. Notes: Let’s hope that the government does not demand more than the annual rental value of a location as some businessmen fear.
And however much the Governor receives, let’s hope he uses the recovered rents for the benefit of the whole society.
It’d also be nice if the Governor used some of the public revenue to pay citizens a dividend, so they’d need not fear registering their land and paying the owed rent.
Further, it’d be wonderful if the Governor simultaneously repealed the counterproductive taxes, such as those that fall on income, sales, and buildings. With those taxes off their backs, people would become so much more productive, they’d enjoy greater income, and bid up the price or rent for locations. So government could retrieve plenty of revenue, even without its counterproductive taxes.
Take all these geonomic steps and Nigeria could cure itself of its resource curse.
This 2013 excerpt of The Guardian, Dec 6, is by Decca Aitkenhead.
Peter Higgs, the physicist who laid the groundwork for the discovery of the Higgs boson subatomic particle and winner of the 2013 Nobel Prize in Physics, says he doubts any university would give him a job today.
Higgs says universities wouldn’t consider him productive enough — though the papers he published were important and of high quality, he didn’t have the volume necessary for serious consideration in today’s competitive employment environment. He doubts a similar breakthrough could be achieved in today’s academic culture, because of the expectations on academics to collaborate and keep churning out papers.
He said: “It’s difficult to imagine how I would ever have enough peace and quiet in the present sort of climate to do what I did in 1964.” Higgs, 84, said he would almost certainly have been sacked had he not been nominated for the Nobel in 1980.
Ed. Notes: If conventional schooling stifles progress, why are we subsidizing it? If, instead, we were to pay ourselves, the whole citizenry, a dividend from surplus public revenue — and for sure there’d be a surplus after we recover all the socially-generated values of sites, resources, and government-granted privileges — then the minds like Higgs’ (deep thinking, creative, and useful) would be liberated from the judgments of smaller minds. And as a society and species we’d be so much further along!
Mathematicians propose using the “Lévy flight” model to reveal and police hotspots of crime.
This 2013 excerpt of Pacific Standard, Spt 17, is by Lauren Kirchner.
Lévy flight is a pattern of movement that consists of short, frequent steps all clustered in one area, and is then punctuated by long walks to a separate area. Picture wild animals foraging for food in a field, or searching an ocean for prey: they’ll slowly use up all the resources in one small area, and then move to a new area and start eating or hunting again there.
The Lévy flight, named after French mathematician Paul Lévy, has been used to describe phenomena as wide-ranging as financial markets, earthquakes, and a child’s game of hide-and-seek. In recent years, it has even been used to analyze patterns as dreary as the Web-surfing habits of online consumers, and as fascinating as the drips and streaks of Jackson Pollock’s paintings.
Now mathematicians argue that the Lévy pattern may mapping — and potentially prevent — crime.
A burglar might try to break into a group of homes in one localized area over the course of several days, and then, after a while, might travel to a new neighborhood for another cluster of break-ins. Short steps, long leap, short steps: the Lévy flight model.
While law enforcement agencies normally record information about the location and times of discrete crimes in an area, they don’t yet have a widely-accepted method for tracking — let alone predicting — the movement of individual criminals.
“Certain policing efforts concentrate on known offenders’ home territories as a predictor of future crimes,” Kolokolnikov and McCalla said. “If the relationship between a burglar’s movement and choice of targets becomes better elucidated, then the police will be better informed when they schedule their nightly patrols.”
Ed. Notes: Imagine if some mathematical formula could predict future behavior; then maybe it could predict a new fad or fashion. And wouldn’t it be nice if Levy flight described a real-world workweek? We’d do a bunch of short activities to make money then take a long time off just to relax, back and forth.
Actually, there is an economic reform that could make workweeks more humane and at the same time fight crime — that is to recover and share the socially-generated values of land and resources.
When Pittsburgh used to tax the rental value of locations in the city, it had the lowest crime rate of any major US city, by far. The tax kept speculators at bay, so land and housing was affordable and neighborhoods enduring — that cut crime. And if any place were to pay a “rent” dividend — bigger than Alaska’s oil share or Singapore’s land dividend — then people would have the cushion that’d allow them to work and play in a healthier balance.
not exactly Georgism, the Single Tax on land value proposed by Henry George. He did, tho’, inspire most of the real-world implementations of the land tax that some jurisdictions enjoy today, and modern thinkers to craft geonomics. While his name and our remedy both begin with “geo” since both words refer to “Earth”, the two have their differences. (a) George pegs land monopoly as the fundamental flaw while geonomics faults Rent retention. (b) To fix the flaw, George was content to use a tax, while geonomics jettisons them in favor of price-like fees. (c) George focused on the taking while geonomics headlines the sharing. George envisioned an enlightened state judiciously spending the collected Rent while geonomics would turn the lion’s share over to the citizens via a dividend. (d) And George, as was everyone in his era, was pro-growth while geonomics sees economies as alive, growing, maturing, and stabilizing. Despite these differences, George should be recognized as great an economist as Euclid was a geometrician.
a way to connect the dots. Making the cyber rounds is “The Cavernous Divide” by Scott Klinger, from AlterNet (posted March 21): “As the number of billionaires in the world expands, so does the number of those in poverty.” Duh. The yawning income gap is not news. Nearly every issue of our quarterly digest carries a similar quote. Yet the connection was worked out long ago by one of America’s greatest thinkers, Henry George, who labeled his masterpiece, Progress and Poverty. Techno- and socio-advances always enrich few and impoverish many. Yet progress also pushes up location values – the geonomic insight (is Silicon Valley cheaper now or more expensive?). Instead of taxing income, sales, or buildings, society could collect those values of sites, resources, EM spectrum, and ecosystem services via fees and dues, which would lower the income ceiling, and instead of lavishing corporate welfare, pay out the recovered revenue via dividends, which would jack up the income floor. Dots connected.
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 neologism for sharing “rent” or “social surplus” – the money we spend on the nature we use. When we buy land, such as the land beneath a home, we typically pay the wrong person – the homeowner. Instead, since land cost us nothing to make and is the common heritage of us all, rather than pay the owner, we should pay ourselves, our neighbors, our community. That is, we should all pay land dues to the public treasury, then our government would pay us land dividends from this collected revenue. It’s similar to the Alaska oil dividend, almost $2,000 last year. Indeed, the annual rental value of land, oil, all other natural resources, including the broadcast spectrum and other government-granted permits such as corporate charters, totals several trillion dollars each year. It’s so much that some could be spent on basic social services, the rest parceled out as a dividend, as Tom Paine suggested, and taxes (except any on natural rents) could be abolished, as Thomas Jefferson suggested. Were we sharing Earth by sharing her worth, territorial disputes would be fewer, less intense, and more resolvable.
of interest to Dave Lakhani, President Bold Approach (Mar 8) and Matt Ozga (Jan 29): “I write for the Washington Square News, the student run newspaper out of New York University. Geonomics seems like it has great significance, especially in this area. When was geonomics developed, and by whom?”
About 1982 I began. Two years later, Chilean Dr Manfred Max-Neef offered the term geonomics for Earth-friendly economics. In the mid-80s, a millionaire founded a Geonomics Institute on Middlebury College campus in Vermont re global trade. In the 1990s, CNBC cablecast a show, Geonomics, on world trade as it benefits world traders. My version of geonomics draws heavily from the American Henry George who wrote Progress & Poverty (1879) and won the mayoralty of New York but was denied his victory by Tammany Hall (1886). He in turn got lots from Brits David Ricardo, Adam Smith, and the French physiocrats of the 1700s. My version differs by focusing not on taxation but on the flow of rents for sites, resources, sinks, and government-granted privileges. Forgoing these trillions, we instead tax and subsidize, making waste cheap and sustainability expensive. To quit distorting price, replace taxes with “land dues” and replace subsidies with a Citizens Dividend.
Matt: “This idea of sharing rents sounds, if not explicitly socialist, at least at odds with some capitalist values (only the strong survive & prosper, etc). Is it fair to say that geonomics has some basis in socialist theory?”
A closer descriptor would be Christian. Beyond ethics into praxis, Alaska shares oil rent with residents, and they’re more libertarian than socialist. While individuals provide labor and capital, no one provides land while society generates its value. Rent is not private property but public property. Sharing Rent is predistribution, sharing it before an elite or state has a chance to get and misspend it, like a public REIT (Real Estate Investment Trust) paying dividends to its stakeholders – a perfectly capitalist model. What we should leave untaxed are our sales, salaries, and structures, things we do produce.
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?
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.
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.
shaped by reality. In the 1980′s, the Swedish government doubled its stock transfer tax. Tax receipts, however, rose only 15%, since traders simply fled to London exchanges. Fearing a further exodus, the Swedish government quickly rescinded the tax altogether. (The New York Times, April 20) That willingness to tax anything leads us astray. Pushing us astray is that unwillingness to pay what we owe: rent for land, our common heritage. Assuming land value is up for grabs, we speculate. We cap the property tax on both land and buildings and the rate at which assessments can go up; while real market values rise quicker, assessments can never catch up. Our stewards, the Bureau of Land Management, routinely sell and lease sites below market value, often to insiders, says the Government Accounting Office. Once we grasp that rent is ours to share, we’ll collect it all, rather than let it enrich a few, and quit taxing earnings, which do belong to the individual earner. That shift is geonomic policy.
a study of Earth’s economic worth, of the money we spend on the nature we use, trillions of dollars each year. We spend most to be with our own kind; land value follows population density. Besides nearness to downtowns, we also pay for proximity to good schools, lovely views, soil fertility, etc. These advantages, sellers did not create. So we pay the wrong people for land. Instead, we should pay our neighbors. They generate land’s value and deserve compensation for keeping off ours, as they’d pay us for keeping off theirs. It’s mutual compensation: we’d replace taxes with land dues – a bit like Hong Kong does – and replace subsidies with “rent” dividends to area residents – a bit like Alaska does with oil revenue. Both taxes and subsidies – however fair or not – are costly and distort the prices of the goods taxed and the services subsidized. By replacing them and letting prices become precise, we reveal the real costs of output, the real values of consumers. Then, just by following the bottom line, people can choose to conserve and prosper automatically. A community could start by shifting its property tax off buildings, onto land – a bit like a score of towns in Pennsylvania do; every place that has done it has benefited.