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This 2014 excerpt of News Alert, May 11, is by David Stockman.
The auto bailouts did not save or create a single new auto job. They just shifted 25,000-50,000 assembly plant and supplier jobs from south of the Mason-Dixon Line to the rust belt in Ohio, Michigan, Wisconsin, and Illinois. That is, the North American and global auto industries were drowning in excess capacity on the eve of the crisis, and the only question was whether consumer demand for new cars would be satisfied by the efficient foreign transplant suppliers located in Alabama or high-cost, long-in-the-tooth UAW dominated plants in the north.
Thus, the political decision of the Bush and Obama Administrations to allocate auto jobs based on electoral politics and crony capitalist coddling of the UAW and the Chrysler/GM business complexes did not add a dollar to GDP; it just reshuffled the given level of consumer spending on new cars among regions. And the ultimate result is that the free market was blocked from doing its job of liquidating excess investment and uncompetitive suppliers and plants. In short, true national wealth was reduced by the auto bailouts.
Yet the damage goes beyond dollars and cents. The bailouts have also enabled the rise of a whole generation of soap-salesmen CEOs who tout miracle “recovery” stories, thereby reinforcing the “all fixed” meme. Fiat-Chrysler is a standout case of the latter, and its CEO, Sergio Marchionne, is a bubble illusion merchant of the first rank.
Ed. Notes: Getting bailed out is just one of many subsidies that car makers get. They also get subsidies for “research” and tariffs on imports and exemptions on pollution. If it weren’t for these favors from taxpayers, Detroit probably could not sell one more car — unless they made it non-polluting and fuel-efficient. If they can’t, they should lose market share to those who can. That’s how the market would deliver techno-progress, and how such progress would deliver clean air. And that’s why economic policy should be off limits to politicians of any stripe.
This 2014 excerpt of the Associated Press, May 11, is by Jack Chang.
A protest in eastern China over a plan to build a waste incinerator turned violent, with state media reporting that at least 10 demonstrators and 29 police officers were injured in clashes.
Thousands of people turned out for the protest, which followed government assurances that the project would not pose a health threat, and blocked a highway.
Environmental protests have been on the rise in China, with the public becoming increasingly critical of pollution and health hazards from industry.
“People are losing confidence in the way the government is handling these projects,” said Wu Yixiu, head of environmental group Greenpeace’s toxics campaign in East Asia. “There’s more of a perception that people are not willing to sacrifice the environment and health in exchange for development.”
District government said construction on the incinerator would not begin until the project had won public support. Hangzhou law enforcement authorities also said that protesters could receive more lenient punishment.
Ed. Notes: Pollution is not deadly only in China. People should demand an end to it everywhere. It’s not like there aren’t any solutions. Most waste can be recycled. Even toxic waste can either be neutralized or not used in the first place as there are usually non-toxic alternatives. It seems China and other developing nations are determined to mimic both the West’s good ideas and the bad. If only one Western nation were enlightened enough to geonomize — to defend rights, especially our rights to a healthy environment, to a share of the common wealth, and to our own earning untaxed — then other nations could copy that successful model and their societies could conserve and prosper both. After those newly growing nations geonomize, then the older industrial countries would be the ones to have to play catch up!
This 2014 excerpt of the New York Times, May 9, is by Edward Alden and Rebecca Strauss of the Council on Foreign Relations.
Each year, state and local governments in the United States spend more than $80 billion, or roughly 7 percent of their total budgets, on tax breaks and subsidies to attract investments from auto companies, movie producers, aircraft makers, and other industries.
State governments would be better off if they collectively ended the handouts and competed for business in other ways, such as making investments in infrastructure or education or offering lower overall tax rates.
The World Trade Organization has rules that restrict government subsidies. The Organization for Economic Cooperation and Development has a longstanding arrangement to limit financing subsidies to exporters. These international models should be adapted to our states. Kansas and Missouri are trying to reach a truce to stop bribing businesses to move from one side of the Kansas City area to the other.
Ed. Notes: It’s not just when state politicians compete that opening loopholes is bad; it’s always bad. Either everybody pays or nobody pays; fair is fair. If any state or locality or nation wants to be a haven for business — as are Singapore or Hong Kong — all it has to do is geonomize — as did Singapore and Hong Kong. That is, cut taxes on people’s efforts — even eliminate them. Instead, recover the rental value of land. Land is something that a new business moving in has to pay for anyway, so if the local government gets the payment, it’s only sellers and lenders who’d lose, and the value of land is not theirs anyway.
The value of land is created by the presence of community while land itself is created by nobody. Ground rent makes the perfect common wealth. It’s our earnings and purchases and buildings — private wealth — that should never be taxed.
And if we did not tax what we should not in the first place, we’d have no excuse to open loopholes for favored insiders.
This 2014 excerpt of the Los Angeles Times, May 5, by Amina Khan.
Looks like good news may come in threes. The teenage pregnancy rate, birth rate and abortion rate have all dropped sharply since their respective peaks in the 1990s. Fewer teens are getting pregnant in the first place.
The teenage pregnancy rate dropped 51% between 1990 and 2010. The 2010 rate of 57.4 pregnancies per 1,000 teenage girls and women 15-19 also represents a drop of 15% since 2008 alone.
The teen birthrate also declined by 44%, from its peak in 1991 of 61.8 to 34.4 births per 1,000. The teen abortion rate experienced the steepest drop of 66%, from 43.5 abortions per 1,000 at its 1988 peak to just 14.7 per 1,000.
The declines were seen across racial and ethnic groups, declining 56% among white teenagers (from 86.6 to 37.8 per 1,000), 56% among black teenagers (from 223.8 to 99.5 per 1,000) and 51% among Latino teenagers (from 169.7 to 83.5 per 1,000).
Progress from state to state was uneven. New Mexico had the highest rate, with 80 pregnancies per 1,000, and New Hampshire had the lowest, with 28 per 1,000.
Ed. Notes: Nobody in-the-know knows why today’s teens are not playing Juno, altho’ perhaps a teen does. It amazes me that society can change so much yet sociologists haven’t got a clue, really; maybe it’s not hearing “education” from adults but seeing older sisters lose their fun time.
BTW, if someone could figure why and how society changes, then perhaps they could create the conditions to guide society to make positive changes for the good of all … and if they could predict a fad or fashion, they could probably make a fortune!
Meanwhile, having kids later should be better for the kid, the mom, and the planet which might need a breather from humanitis. More at Progress.org.
This 2014 excerpt of Vox, May 5, is by Matthew Yglesias.
Dentists’ participation in Medicaid means dentists see more publicly insured patients without decreasing the number of visits provided to privately insured patients. Dentists manage to pull this off without increasing the number of hours per week that they work. Dentists don’t do much work in a typical dental visit; dental hygienists are the people who do the vast majority of the work in a dental office — and as a result, more patients increase not dentists’ work time but their incomes.
Waiting times for patients waiting to get in to see a dentist go up modestly. The increased wait times are concentrated in states with relatively restrictive “scope of practice” laws. In some states, hygienists can clean teeth with considerable autonomy from dentists whereas in other states a hygienist can only clean teeth if she’s employed by a dentist.
An essentially parallel situation exists in mainstream medical care. Some states allow certified nurse-practitioners to evaluate patients, diagnose, order and interpret diagnostic tests, initiate and manage treatments. People with serious medical conditions still need to see doctors. But patients with routine care needs can get them taken care of by nurses. Other states, by contrast, create more of a financial windfall for MDs.
Proponents of restrictive licensing say that the issue is patient safety and not greed. But research says otherwise. As Health Affairs has noted, “studies comparing the quality of care provided by physicians and nurse practitioners have found that clinical outcomes are similar” while subjective measures of patient satisfaction indicate that nurse practitioners do better than MDs.
As the number of people with insurance rises thanks to Obamacare, that’s great news for doctors but a much worse result for patients than we could achieve if we changed these laws.
Ed. Notes: Competition among competent providers is one main way that markets are efficient and why they need to be free of statist interference. Let government handle cases of fraud. The law need not create oligopolies and monopolies but instead defend our rights.
Four newspapers last month recommended that the public recover the rental value of land. The reform might lack intuitive appeal — people don’t like taxes and do love land — but it is fair, since site value is generated by the surrounding populace, and it is efficient, since it prompts owners to quit speculating and build. These four 2014 excerpts are from: (1) The Independent, May 4, by Patrick Diamond, a former Downing Street adviser to Tony Blair and Gordon Brown; (2) The Guardian, May 19, by George Monbiot; (3) The Washington Post, May 20, by Emily Badger; (4) The Economist, May 24.
We Need a Radical Reform of the Tax System
Progressives should focus on shifting the burden of tax from incomes to land values, unearned capital receipts, and property.
After 15 years of devolution, Scotland, the nation with the rich world’s greatest concentration of land ownership remains as inequitable as ever.
Fifty per cent of the private land in Scotland is in the hands of 432 people – but who are they? Many of the large estates are registered in the names of made-up companies in the Caribbean.
Landowners seek to justify their grip on the United Kingdom by rebranding themselves as business owners. The Country Landowners’ Association has renamed itself the Country Land and Business Association. So why do they not pay business rates on their land? Tax exemptions inflate the cost of land, making it impossible for communities to buy.
Though the estates pay next to nothing to the exchequer, and though they practice little that resembles farming, they receive millions in farm subsidies.
It should list all the beneficial owners of the land; impose the taxes Westminster refuses to levy.
Investors Make Housing Expensive. OK to Tax Them For It?
Increasingly, the wealthy in Latin America are buying homes in Miami. Canadians are buying homes in Arizona. Seemingly everyone but Londoners is buying a home in London — and then leaving it empty. And the Chinese are flocking to Vancouver (or, at least, their money is). Vancouver’s real-estate market is tightly connected to what happens in the Chinese economy.
For many of them, property in Vancouver or Seattle is a safer place to put money than property at home.
We expect housing prices to reflect local fundamentals — above all, how much people earn. In a global market, that may not be the case. If there are enough rich people in China who want property in Vancouver, prices can float out of reach of the people who live and work there.
Absentee homeowners can price out people who are actually living in the area.
Urban Planner Andy Yan suggests: Make foreigners pay a premium to buy up local housing. Tax them for the privilege — beyond existing property taxes.
Having risen by 8% in the past year, British house prices are almost back to the double-digit pace that preceded the financial crisis.
Britons are stretching to meet ever-rising prices by borrowing more. Average loan-to-income ratios have passed their 2007 peak. With more pay devoted to mortgage repayments, consumption is bound to fall. That is bad news for firms, and, in turn, workers. Household debt also reduces the funds that could be channelled towards productive investment.
Shifting the burden of tax from income to property would reduce the flood of foreign cash. Taxing land rather than buildings would encourage speculative construction and would push those sitting on large stocks to build or sell up.
Ed. Notes: Three of the four newspapers were British. When will the rest of the world catch up to the United Kingdom? If we’re serious about solving our problems, we need to adopt these good ideas that work right now.
Ed. Notes: Wouldn’t it be nice if outsider critics could improve the performance of those who get criticized? For me, the worst abuse in the US is the cost of housing which is the cost of land. If Americans shared the value of land, life would be so much better in all the aspects noted above.
Everyone is reading Piketty wrong — including Piketty! Want to really shut down the chief engine generating inequality? Forget the author’s solution and do this instead.
This 2014 excerpt of Salon, May 1, is by Jesse Myerson.
Thomas Piketty’s 700-page economics tome “Capital in the 21st Century” is beating out Colton Burpo on Amazon.
He shows that the rate (r) of return (profits, dividends, interest, rents, royalties, etc.), to the people who own capital assets (stocks, bonds, real estate, land, patents, etc.) outpaces the growth of the full economy (g).
The liberal response to this conundrum (including Piketty’s) is to try to grow g through more egalitarian taxation and stimulus and whatnot.
But we can actually solve the conundrum.
It is not necessary for everybody to keep bending over backward to grow the economy, just in order to help one another survive. Instead …
Make sure the people who capture r is: everybody. If the stream of wealth flows to everyone, rather than Donald Trump and Mitt Romney, then the pressure’s off g to keep pace with r.
We can let r exceed g and focus on more meaningful things than sales (which GDP, i.e. “growth,” reflects) – things like availing ourselves of our inalienable right to the pursuit of happiness.
Stocks and bonds can be held by a sovereign wealth fund just as easily as by a hedge, trust, mutual, pension or any other kind of fund. The only difference is that instead of heirs and speculators, the people getting the dividends, profits and interest is everybody.
Rent and real estate value can flow to everyone by taxing (especially urban) land value.
By liberalizing the intellectual property regime (i.e. stopping handing out all these monopolies), and moving to a Creative Commons structure, we can make sure that our society’s ideas and artworks aren’t just a source of cash for pharmaceutical companies, media conglomerates, and litigious vultures.
Ed. Notes: Actually, you don’t have to take over ownership of stocks and bonds if you recover rents (both for nature and for privilege). Most of the value in a corporate stock or bond is not in the factory or product but in the facilities’ locations and in the products’ patents and copyrights. So, if you institute land dues (or land taxes) and charge full market value for monopolies on new ideas (p&c), then you can ignore capital (s&b) and still recover all of society’s surplus — which is plenty of money for paying all citizens a decent dividend.
If people got a share of all the rents we all now pay for the land and government-granted privileges we use, instead of that immense flow going mostly to the 1%, and if the 1% no longer got corporate welfare, and if taxes were removed from our earnings and morphed into fees for pollution and depletion, which would hit the 1%’s dirty and wasteful corporations especially hard, then everybody’s income would be much closer together, the extreme highs and lows would not be so extreme, and the gaps in wealth and income would become of human-scale.
The principle to follow is really quite simple. Respect private property (human-made stocks, buildings, purchases, etc) and don’t tax it. Respect common wealth (the value of nature and privilege, neither one being the result of human exertion) and do share it — land dues in, rent dividends back out. Doing so is not leftist, not rightist, but geoist. And wherever geonomics has been employed, it has worked. Try and top that!
This 2014 excerpt of Business Insider, May 1, is by Bryant Jordan.
Thirty retired generals are urging President Obama to declassify the Senate Intelligence Committee’s report on CIA torture, arguing that without accountability and transparency the practice could be resumed.
“After taking office, you showed decisive leadership by issuing an executive order banning torture and other forms of abusive interrogation,” the retirees say in an open letter.
But with former government officials claiming that so-called “enhanced interrogation” techniques were effective, a future president could rescind the ban unless facts in the committee report are known, the generals wrote.
The signees include retired Marine Gens. Joseph Hoar and Charles Krulak, Army Gen. David Maddox and Army Maj. Gen. Paul Eaton. All the signees are part of a larger nonpartisan group of retired generals and admirals who work with the organization to oppose torture and promote prisoner treatment policies consistent with the Geneva Conventions.
“As retired flag officers of the United States Armed Forces, we believe that our nation is on its strongest footing when our defense and security policies adhere to our values and obligations under domestic and international law,” the group said in the letter.
The Senate Intelligence Committee voted in early April to release its abbreviated — nearly 500-page — declassified report on the CIA program. The full report, which is more than 6,000 pages, is being held pending redaction and declassification. That process itself has come under criticism since it is the CIA that would be doing the redacting.
It is a conflict of interest to allow the CIA to redact a report that alleges its own officials, including some still on the job, “authorized [the] brutal interrogation methods and systematically misled the White House, Congress, Department of Justice, and American people about the facts and consequences of using those methods.”
The “best chance” of avoiding a scenario in which a future president rescinds Obama’s executive order banning torture, the group says, “is for the Intelligence Committee’s report — which calls into question the morality, legality, and effectiveness of the CIA program — to be made public with minimal redactions.”
The Senate report panned the CIA program and said the information gathered through torture could have been gotten through other means from the 20 cases it investigated.
Ed. Notes: Are Americans losing their traditional concept of human rights? Once that goes, will Americans be able to see at all their right to a healthy Earth and a fair share of her worth? Is loss of self-esteem what makes possible the loss of political rights? If so, Americans had better regain some moral fortitude, and demand equal rights for all.
This 2014 excerpt of South China Morning Post, Apr 26, is by their editors.
Law-enforcement bodies are likely to ignore violations if polluters have the right connections. When they do prosecute, fines are capped at a level that is an acceptable cost against gains to be made.
Those caps on penalties are lifted in a sweeping revision passed this week. The amendments, effective on 2015 January 1, are a legal landmark in Beijing’s declared war on pollution and follow a pledge to abandon a growth-at-all-costs economic model that has spoiled much of China’s water, air, and soil.
Toxic, heavy metals contaminate 16.1 per cent of China’s soil and 19.1 per cent of arable land.
The new rules:
introduce an ecological “red line” that will declare certain regions off limits to polluting industries,
loosened a ban on most environmental non-government organisations filing lawsuits against polluters,
ensure that information on environmental monitoring and impact assessments are made public,
formalise a system for assessing local officials on their environmental record, and
give the Ministry for Environmental Protection the authority to take stronger punitive action, such as shutting down persistent or serious polluters and confiscating their assets.
That said, the key still lies in effective enforcement, amid fears that it will still be patchy, and in respect for the environment ministry’s new powers, which need unequivocal backing from the highest level.
This 2014 excerpt of FutureSpeak, Apr 24, is by Futurist Thomas Frey.
China’s WinSun Decoration Design Engineering Company not only printed a house in a day, they completed 10 houses in a single day using a massive printer that was 490 feet long, 33 feet wide, and 20 feet deep.
The ‘ink’ used was made of recycled construction materials, industrial waste and tailings.
Each of these homes cost around $4,800.
These houses can be ground up a second, third, or fourth time, and be reprinted as an entirely new home. They are, in fact, disposable houses.
WinSun also printed its own headquarters building, a 10,000 sq meter facility that was printed a few months earlier and took 30 days to create.
With a little refinement, future houses may be printed in less than an hour, reducing labor costs to almost nothing. With a little engineering work, everything from fixtures, cabinetry, plumbing, electricity, and heating/air conditioning can be modularized and rapidly installed into houses much like the Plug-n-Play hardware systems of the of the PC era. Ductwork, plumbing, and wiring channels can be printed into the structure, and adding water, power, and heaters may become as easy as working with Legos.
Once we are able to remove the transaction costs from housing, our populations become infinitely more fluid. A fluid population is a fickle one, often moving on a whim, rather than the long drawn out process that it is today. City populations will expand and contract in dramatic fashion, often reflecting people’s changing attitudes associated with political decisions, local elections, increased criminal activity, changing tax rates, and much more.
Ed. Notes: Funny how some think they can see the future when they can’t yet see the land. There’s already fast, cheap housing — rammed earth, straw bale, etc — even free housing in places like Detroit and the rest of the Rust Belt. What a 3D printer can not fabricate is a location, and that is the stumbling block to affordable housing.
How do you make locations or land affordable? Counter-intuitively, you tax them or otherwise collect their rental value for public benefit. Levying a tax or deed fee or land dues removes the value of the land from the mortgage and puts it into the public treasury. Thus mortgages for buildings become far more affordable. And poor people are already paying the value of their location in the monthly apartment rent that they pay.
Choosing to build on a cheap location is no solution, either. As other people follow suit, the price goes up. That’s what happens in every city where the hip, artistic young people congregate in a certain neighborhood. Once its reputation gets established, its site values skyrocket. And all the hip people are back to square one. No, there really is no way to avoid paying for land. The best that people can do is pay each other. That is, pay land dues in and get rent dividends back.
This 2014 excerpt of Occupy, Apr 25, is by Ellen Brown.
How to get Wall Street banks before a California jury? How about charging them with common law fraud and breach of contract? That’s what the FDIC just did in its massive 24-count civil suit for damages for LIBOR manipulation, filed in March 2014 against sixteen of the world’s largest banks, including the three largest US banks – JP Morgan Chase, Bank of America, and Citigroup.
LIBOR (the London Interbank Offering Rate) is the benchmark rate at which banks themselves can borrow. It is a crucial rate involved in over $400 trillion in derivatives called interest-rate swaps, and it is set by the sixteen private megabanks behind closed doors.
The biggest victims of interest-rate swaps have been local governments, universities, pension funds, and other public entities. The banks have made renegotiating these deals prohibitively expensive, and renegotiation itself is an inadequate remedy. It is the equivalent of the grocer giving you an extra potato when you catch him cheating on the scales. A legal action for fraud is a more fitting and effective remedy. Fraud is grounds both for rescission (calling off the deal) as well as restitution (damages), and in appropriate cases punitive damages.
Banks are estimated to have collected as much as $28 billion in termination fees alone from state and local governments over the past two years. This does not even begin to account for the outsized net payments that state and local governments are now making to the banks…
Interest-rate swaps are sold to parties who have taken out loans at variable interest rates, as insurance against rising rates. The most common swap is one where counterparty A (a university, municipal government, etc.) pays a fixed rate to counterparty B (the bank), while receiving from B a floating rate indexed to a reference rate such as LIBOR.
If interest rates go up, the municipality gets paid more on the swap contract, offsetting its rising borrowing costs. If interest rates go down, the municipality owes money to the bank on the swap, but that extra charge is offset by the falling interest rate on its variable rate loan. The result is to fix borrowing costs at the lower variable rate.
The catch is that the swap is a separate financial agreement – essentially an ongoing bet on interest rates. The borrower owes both the interest on its variable rate loan and what it must pay on its separate swap deal. And the benchmarks for the two rates don’t necessarily track each other. The rate owed on the debt is based on something called the SIFMA municipal bond index. The rate owed by the bank is based on the privately-fixed LIBOR rate.
Public entities wound up paying substantially more than the fixed rate they had bargained for – a failure of consideration constituting breach of contract. Breach of contract is grounds for rescission and damages.
A sampling of swaps within California, involving ten cities and counties, one community college district, one utility district, one transportation authority, and the state itself, the collective tab was $365 million in swap payments annually, with total termination fees exceeding $1 billion.
Requiring UC Davis to pay $9 million in termination fees and other costs to several banks would have covered the tuition and fees of 682 undergraduates for a year.
Why has UC’s management not tried to renegotiate the deals? The revolving door between management and Wall Street. Current and former business and finance executives play a prominent role on the UC Board of Regents.
Why do our state and local governments continue to do business with a corrupt global banking cartel?
They could set up their own publicly-owned banks, on the model of the state-owned Bank of North Dakota.
Ed. Notes: Rather than establish yet another bureaucracy, why not just expand the powers of public treasuries so they can act like banks? Let them accept savers and lend to borrowers.
Bigger picture, why let so much money be concentrated into one entity, whether a big bank or any government? A lot of the money that banks are stealing legally are “rents” or the money that the members of society spend for land and resources and privileges like corporate charters. That spending could be re-directed — using taxes and/or fees — into public treasuries then back out again as dividends to those members of society (a la Alaska’s oil share). Thereby the “rents” would not be left lying around for unscrupulous bankers or politicians.
Further, if you got a Citizen’s Dividend — your share of society’s surplus — then you would not need to save so much for the future, nor would you need to borrow so much or accept investments to start a business. Plus, you’d not need to save or borrow so much if you didn’t have to pay taxes on your earnings, your purchases, and your buildings. Thus, the whole rationale for having a banking “industry” could be reduced to a negligible aspect of the economy and of society.
This 2014 excerpt of Weekly Wastebasket, Apr 25, is by Taxpayers for Common Sense.
The new fighter the Pentagon is buying at nearly $400 billion and rising is the most expensive weapon acquisition in history.
The the F-35, by Lockheed Martin, promises widely divergent missions: air-to-surface, air-to-air, Intelligence, Surveillance and Reconnaissance (ISR), Command and Control, and Electronic Attack.
For the fiscal year (FY) 2015, the Administration wants to spend on the F-35 more than $8 billion. This is just the money we could find in the budget that was readily identifiable as going toward the F-35. There probably is more, but it is not readily available in the unclassified portion of the budget.
The Pentagon originally stated that the Air Force version of the plane would be ready to fly and fight in FY05; now it is FY16. For the Marine Corp the date has slipped from FY06 to FY15. For the Navy the date has moved from FY08 to FY18.
The bottom line is that all three services could purchase more, modernized versions of aircraft currently in their inventories and save a lot of money over the currently projected costs of the F-35. And the U.S. would still enjoy air superiority over the rest of the world.
Ed. Notes: Should arming the US military make insiders into millionaires and billionaires? Or should the weaponeers be nonprofits, like Habit for Humanity or another outfit buildings homes for the poor? If war and preparing for war did not make some insiders rich and some engineers comfortable, how receptive to the rationale for war would those people be?
This 2014 excerpt of EUROPP (European Politics and Policy) of the London School of Economics, Apr 24, is by Johannes Wachs.
Hungary faces a greater corruption problem than other states in Central and Eastern Europe, such as the Czech Republic and Slovakia. Corruption is systemic, rather than associated specifically with particular governments or politicians.
EU funds are particularly susceptible to the problem; 33.8 per cent of EU funded projects received only one bid, compared to 29 per cent of those funded with national funds alone. Post-award contract modification was three times more likely when EU funds were involved. Besides the waste and damage corruption brings, the misuse of EU funds exacerbates tensions between Hungary and net-contributor states in the rest of the EU.
EU payments to Hungary in the 2007-2013 budget cycle amounted to a positive balance of 24 billion euros, or above 3 per cent of the country’s GDP every year. Given the anemic growth of the Hungarian economy in the last decade and low levels of investment, these funds are critical to Hungary’s development.
Bribes and similar interactions between lower level bureaucrats and private level individuals are rare. Instead there is an unspoken culture of ‘legal corruption’, a common understanding in the bureaucracy that connected firms should receive preference.
Many contracts are handed out by manipulation of the procurement process, and without competition. For example, an unattractive contract may be modified after a friendly firm secures the deal. Alternatively, limited advertisement or a short submission deadline can exclude firms that are out of the loop.
Groups of business elites connected to different political factions thrive or struggle based on who is in power. Prior to the 2010 Hungarian election, market leaders lost about 25-30 per cent of their market share, and were replaced by a new group of companies that saw a comparable increase in market share following the change of government. A high profile example is the success of Közgép Zrt, a construction company with many personal connections to the government.
Political capture of the bureaucracy because of incumbency is a serious problem in the region. Moreover, the increasing role of the state and domestic actors in the banking and utility sectors also raises the potential for new areas of corruption to emerge.
Ed. Notes: Most people all over the world suffer from the corruption of the well-connected. Only a few societies have managed to curb corruption. How did they do it? However they did it, can corrupt societies copy what worked elsewhere? To learn what works, political reformers might want to study sociology as well.
Personally, I think ordinary people must demand a Citizen’s Dividend just as boldly as insiders demand a huge slice of the action. It’s ironic normal citizens have a harder time demanding this fundamental justice than greedy insiders have demanding more than a fair share. But we can’t leave so much wealth on the table and expect the innately grasping to walk away from it.
We must capture and share society’s surplus so it won’t tempt the unscrupulous. Further, we must demand an end to taxation, replacing them with dues, and thereby elevate people from mere taxpayers — peons — to respected members of society with equal rights. Geonomics is how to do it.
Charges for renting the land on which wind farms are built is up to 10 times that of coal-fired power stations.
Wind turbine owners pay private land owners between €35,000 and €50,000 ground rent a year per turbine for contracts of between 15 and 20 years. This takes the total ground rent over the full contract to around €1m.
Millions of euros in government subsidies are disappearing into the pockets of land owners, forcing up the price of wind energy.
Currently just 4% of Dutch energy comes from sustainable sources.
The amount of solar power generated in the Netherlands by companies and private households has almost doubled over the past year.
Ed. Notes: Should we even have any economic policy? Politicians don’t know the first thing about economics. They don’t know that subsidies do very little in the way of benefitting the needy new industry (or whatever) and do very much in the way of benefitting whoever owns the land that the needy need. Long ago Winston Churchill pointed this out with his story about the do-gooders of his day who got the tolls for using bridge reduced — which resulted in the rent for apartments going up by the same amount.
Better than letting politicians subsidize anything, even good things like clean energy, is to instead pay everyone a dividend from society’s surplus, which is society’s spending for the land and nature it uses. Better than letting politicians tax anything, even bad things like pollution, is to instead charge everyone a fee or fine or rent for the values they take (doing that is what would redirect our spending for land, etc, into the public treasury).
If government made polluters pay, there’d be no supposed need to let non-polluters take handouts. And economies could operate as efficiently as nature designed them to. And politicians? They’d have to amuse themselves some other way.
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.
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 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!
an alternative to conventional land trusts. Just as it seems some functions should not be left to the market – private courts and cops invite corruption (while private mediation is fine) – just so some land should not be left in the market. That said, sacred sites do not make much of a model for treating the vast acreage of land that we need to use. So the usual trust model, which is anti-use and counter-market, can not apply where it’s needed most. Trust proponents worry about ownership and control – two very human ambitions – but they’re not central. Supposedly, we the people own millions acres – acres that private corporations treat as private fiefdoms – and conversely, the Nature Conservancy owns wilderness the public can some places use as parks. So, the issue is not who owns but who gets the rent – ideally, all of us.
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 way to have everybody pulling on the same end of the rope. Last summer’s expansive forest fires shed light on growing class resentment in the West. Old log-gers and ranchers rankled at the new urgency to stamp out the blazes that threatened the recent Aspenesque settlers. The newcomers expected working class firemen to make protecting their expensive homes top priority. (Chr Sci Mntr, Spt 7) The tinder for this envy? Rich people moving in bid up the price of land, making it hard to afford by people on the margin. The fault really lies with our system of privatizing land value. If this rising value were collected by land dues and shared by rent dividends – the essence of geonomic policy – who’d complain? The more people move in, the higher the land value, and the fatter the dividend paid to residents. Then people on the margin might go out of their way to invite rich outsiders in.
more transformation than reform; it’s a step ahead. Harvard economics students this year did petition to change the curriculum, in the wake of the English who caught the dissension from across The Channel. French reformers, who fault conventional economics for conjuring mathematical models of little empirical relevance and being closed to critical and reflective thought, reject this “autism” – or detachment from reality – and dub their offering “post-autistic economics”. Not a bad name, but again, academics define themselves by what they’re not, not by what they are, unlike geonomists. We track rent – the money we spend on the nature we use – and watch it pull all the other economic indicators in its wake. We see economies as part of the ecosystem, similarly following natural patterns and able to self-regulate more so than allowed, once we quit distorting prices. To align people and planet, we’d replace taxes and subsidies with recovering and sharing rents.
the policy that the earth’s natural patterns suggests. Use the eco-system’s self-regulating feedback loops as a model. What then needs changing? Basically, the flow of money spent to own or use Earth (both sites and resources) must visit each of us. Our agent, government, exists to collect this natural rent via fees and to disburse the collected revenue via dividends. Doing this, we could forgo taxes on homes and earnings and subsidies of either the needy or the greedy. For more, see our web site, our pamphlet of the title above, or any of our other lit pieces; ask for our literature list.
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)
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.
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