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No matter what else he has done, what conservative radio host and author Mark Levin does in his new book The Liberty Amendments has made him a hero for me. For many years I have been writing articles on using something in the US Constitution that offers a path to urgently needed reforms of the political system. I also co-founded the national nonpartisan group Friends of the Article V Convention. Mark Levin has become the most notable, highly visible person to also come out loudly, advocating the first time use of the Article V convention option.
He forcefully makes the case for a convention of state delegates that would have the same constitutional authority as Congress has for proposing constitutional amendments. And just like all the amendments that now exist and which originated with Congress, those coming from a convention would still have to be ratified by three-quarters of the states. Levin recognizes that this high hurdle pretty much rules out truly nutty amendments, from either a conservative or liberal perspective, from ever becoming a reality. Nor can a convention totally rewrite our Constitution.
Levin has come to the same conclusion that rather than fear a convention Americans should more fear sticking with the current corrupt, dysfunctional system. Levin sees no hope for Republicans or Democrats, both ruled by rich corporate elites. More than 40 percent of political campaign contributions now come from the top 0.01 percent, the super-rich.
There have been many years when one of the two major parties controlled both the presidency and both houses of Congress, including two years under President Obama, four years under President George W. Bush, two years under President Clinton, and four years under President Carter, for example. Even with such dominance, neither party truly reformed the system. Nor did Supreme Court decisions.
Levin argues for a large number of specific constitutional amendments. Yet earlier attempts to use the convention option that were based on advocacy for specific amendments all failed. No matter how sensible any specific amendment may appear to most people, there will always be many people and groups willing to fight against it and using the convention option.
Already a sufficient number of state have applied to Congress for a convention (two-thirds of states), but Congress has intentionally violated the Constitution by not calling for the first convention, as Article V requires. Someone with so much celebrity as Levin needs to forcefully inform the public and his many supporters that Congress has long stood in the way.
There has been an incredible amount of brain washing from the right and left against using the convention option. Look at what we have now: a truly delusional democracy with each branch of the federal government failing, robbing citizens of their money, liberty, and hope.
As a former professor who had to publish or perish, I took note that President (aka Barry) Obama lacked any record of academic publications. As Ed Lasky summed up: “Notwithstanding an apparent eleven-year teaching career in constitutional law at a top-flight law school, not one single article, published talk, book review, or comment of any kind, appears anywhere in the professional legal literature, under Barack Obama’s name.”
To me, someone who held high level positions inside the Washington, DC political system for some twenty years, it seems Obama merely took advantage of his color, personality, unusual political opportunities, and an innate talent for sometimes being able to give a great (but not necessarily honest) speech.
Just over 50 percent of eligible voters vote and the presidential winner obtains just over 50 percent of voter support, so not much more than 25 percent of Americans actually support this or any other President. Factor in that nearly all incumbent members of Congress get reelected despite dismal overall public support, most recently just 10 percent for Congress.
Obama did not swiftly end the incredibly costly wars in Iraq and Afghanistan. His Department of Justice indicted of the criminal people and companies in the banking, mortgage, and financial sectors.
Seems pretty hopeless, don’t you think? Unless millions of Americans join together and demand that Congress obey the Constitution, honor the many hundreds of state requests for a convention and convene the first one.
This 2013 excerpt is from TruthOut on July 8 by Ellen Brown
EU finance ministers agreed on a plan that shifts the responsibility for bank losses from governments to bank investors, creditors, and uninsured depositors. Insured deposits (those under €100,000, or about $130,000) will allegedly be “fully protected.” But protected by whom? The national insurance funds designed to protect them are inadequate to cover another system-wide banking crisis, and the court of the European Free Trade Association ruled in the case of Iceland that the insurance funds were not intended to cover that sort of systemic collapse.
In Cyprus, the confiscation of depositor funds was not only approved but mandated by the EU, along with the European Central Bank (ECB) and the IMF. They told the Cypriots that deposits below €100,000 in two major bankrupt banks would be subject to a 6.75 percent levy or “haircut,” while those over €100,000 would be hit with a 9.99 percent “fine.” When the Cyprus national legislature overwhelming rejected the levy, the insured deposits under €100,000 were spared; but it was at the expense of the uninsured deposits, which took a much larger hit, estimated at about 60 percent of the deposited funds.
While the insured depositors escaped in Cyprus, they might not fare so well in a bank collapse of the sort seen in 2008-09. Even though it wasn’t adopted, the extraordinary proposal that small depositors should lose a part of their savings — a proposal that had the approval of the Eurogroup, ECB, and IMF policymakers — raises the question: Is there any credible protection for small-bank depositors in Europe?
[T]he precedents set in Cyprus and Iceland show that deposit insurance is only a legal commitment for small bank failures. In systemic crises, these are more political than legal commitments, so the solvency of the insuring government matters.
If funding is inadequate to cover a systemic collapse, taxpayers will again be on the hook; and if they are unwilling or unable to cover the losses (as occurred in Cyprus and Iceland), we’re back to the unprotected deposits and routine bank failures and bank runs of the 19th century.
In the US, as of June 30, 2011, every $10,000 in deposits was protected by only $6 in reserves. Derivatives claims have “super-priority” in bankruptcy, meaning they take before all other claims. In the event of a major derivatives bust at JPMorgan Chase or Bank of America, both of which hold derivatives with notional values exceeding $70 trillion, the collateral is liable to be gone before either the FDIC or the other “secured” depositors (including state and local governments) get to the front of the line.
Nationalization of bankrupt, systemically-important banks is not a new idea. It was done very successfully, for example, in Norway and Sweden in the 1990s. Real nationalization occurs when governments act in the public interest. The Treasury would become the source of new money, replacing commercial bank credit.
When it comes to decision-making, researchers find that money matters.
This 2013 excerpt is from the Los Angeles Times, October 18, by Robert M. Sapolsky.
Many factors favor the rich getting richer while the poor stagnate. The wealthy benefit from economies of scale, as the best prices and lowest interest rates are more readily available to those who least need them. The poor are perpetually in reactive mode, lurching from one crisis to another. The wealthy, on the other hand, can act proactively, spending smaller sums in advance to prevent costly crises later. And, of course, the U.S. taxation system makes it possible, as Warren Buffett has decried, for America’s wealthiest investors to pay a lower tax rate than their secretaries.
But there has always been an additional factor in the mix. Study after study has suggested that poor people are more likely than wealthy people to behave in ways that are imprudent and counterproductive. An extensive literature search shows that lower socioeconomic status is associated with a range of self-defeating behaviors, including more risk-taking (not using seat belts, for example), worse adherence to protocols (such as failing to complete a full course of a medicine) and poorer financial management (impulse buying, for example, or buying on credit, which adds considerably to an item’s cost).
Why is this? One obvious explanation might be that those cognitive traits are what gave rise to poverty in the first place. But a recent paper in the prestigious journal Science suggests a novel contributor to this phenomenon.
The brain’s frontal cortex has a finite capacity. Extensive research shows that “frontal function” is impaired in people who increase their cognitive load with things such as distracting tasks, stress, sleep deprivation, pain or even resisting temptation (for example, if you make someone’s frontal cortex work hard in order for them to resist eating chocolate, they are less capable immediately afterward of performing frontal cognitive tasks). Poor people, in general, have a greater cognitive load than rich people. Having to reflect on tight finances increased cognitive load for poor people.
This 2013 excerpt is from Dissent, October 22, by Joanne Barkan
Progressive presidential candidate Theodore Roosevelt claimed that “no amount of charity in spending such fortunes [as Rockefeller’s] can compensate in any way for the misconduct in acquiring them.”
When a foundation project fails – when, say, high-yield seeds end up forcing farmers off the land – the subjects of the experiment suffer, as does the general public. Yet the do-gooders can simply move on to their next project.
Less than 10 percent of all charity in the United States addresses basic human needs. The wealthiest donors devote an even tinier portion of their giving to these needs. Most major donations go to universities and colleges, hospitals, and cultural institutions, often for highly visible building projects carrying the donor’s name.
Right now, big philanthropy in the United States is booming. Major sources of growth have been the wealth generated by high-tech industries and the expanding global market. In September 2013 there were sixty-seven private grant-making foundations with assets over $1 billion. The Rockefeller Foundation, once the wealthiest, now ranks fifteenth; the Carnegie Corporation ranks twentieth.
The business-style philanthropy is often called “venture philanthropy” or “philanthocapitalism.”
Mega-foundations also devote substantial resources to advocacy —- selling their ideas to the media, to government at every level, and to the public. They also directly fund journalism and media programming in their fields of interest.
The power relationship between grantor and grantee has always been one-sided in favor of the grantor. Sycophancy is built into the structure of philanthropy: grantees shape their work to please their benefactors; they are perpetual supplicants for future funding. As a result, foundation executives and trustees almost never receive critical feedback. They are treated like royalty, which breeds hubris—the occupational disorder of philanthro-barons. By taking over the roles of project originator and designer, by exercising top-down control over implementation, today’s mega-foundations increasingly stifle creativity and autonomy in other organizations.
Some mega-foundations even mobilize to defeat grassroots opposition to their projects. When they do, their vast resources can easily overwhelm local groups. This, too, weakens civil society.
Private grant-making foundations in the United States numbered 73,764 in 2011. Most are small. In the last fiscal year, only 1,293 of them (1.8 percent) had assets of $50 million or more. Small foundations don’t have the resources to mount massive social experiments, dominate the national debate on issues, or suffocate citizen activity. If its program fails, the foundation should repair any damage. Mega-foundations could operate in this way, and some do fund small-scale independent projects. But the size and culture of big philanthropy now militate against this.
One reform would require private foundations to “spend down” their endowments over a designated number of years. They would no longer exist in perpetuity. This idea has some promise of success: the living donors of several mega-foundations, including Bill and Melinda Gates, have already decided to spend down and are recruiting others to do the same.
The mainstream media are, for the most part, failing miserably in their watchdog duties. They give big philanthropy excessive deference and little scrutiny. Public television and radio live on big philanthropy’s largess. Collaborative programming with mega-foundations has undermined the credibility of major for-profit news organizations as well as public media.
Guinean officials granted exploration permits for half of its iron deposit to Beny Steinmetz Group Resources. Yet B.S.G.R. had no experience exporting iron ore.
Beny Steinmetz, who made his name in the diamond trade, is, by some estimates, the richest man in Israel; according to Bloomberg, his personal fortune amounts to some nine billion dollars. The corporate structures of his various enterprises are so convoluted that it is difficult to assess the extent of his holdings.
Well-connected foreigners often purchase lucrative assets in Africa at prices far below market value, by offering inducements to predatory local élites. “Africa’s resource wealth has bypassed the vast majority of African people and built vast fortunes for a privileged few.”
The government in Conakry had a Potemkin quality: a profusion of bureaucrats showed up for work at crumbling administrative buildings, but there was little genuine institutional capacity. “The central bank, they were printing counterfeit money,” President Condé said.
“I can’t task my gendarmerie to do the investigation,” President Condé observed. “They’ll come up with members of their own families.”
B.S.G.R.’s agent, Cilins, became friendly with the staff in the business center of the main Guinea hotel, and persuaded them to hand him copies of all incoming and outgoing faxes. In this manner, he learned details about the regime’s frustration with competitors.
Each time that Cilins flew from France to Guinea, he brought gifts—MP3 players, cell phones, perfumes—which he disbursed among his contacts. They came to think of him as “Father Christmas.”
Cilins hired a brother-in-law of the President, then secured an introduction to one of his wives. Not long afterward, Cilins and several associates from the company obtained an audience with the President. At this meeting, they gave General Conté a watch that was inlaid with Steinmetz diamonds. At another meeting, they presented the Minister of Mines with a model of a Formula 1 race car that was similarly encrusted with Steinmetz bling.
Many countries aggressively prosecute domestic corruption but are much more permissive when it comes to bribes paid abroad. Until fairly recently, French firms that gave bribes in order to secure business in foreign countries could declare them as deductible business expenses.
When you disembark from a plane in Conakry, the corruption hits you almost as quickly as the heat. At the airport, a uniformed officer will stop you, raising no specific objections but making it clear, with his body, that your exit from the situation will be transactional. Out on the rubble-strewn streets, which are perfumed by the garbage that clogs the city’s open sewers, at night insouciant young soldiers position themselves at intersections, holding submachine guns; they lean into passing cars and come away with cash.
A high official, Thiam, would meet a B.S.G.R. corporate jet at Conakry airport, unload suitcases full of cash, then distribute bribes to the junta’s leaders. Before he left office, in 2011, he bought an apartment on the Upper East Side of Manhattan, for $1.5 million, and an estate in Dutchess County, for $3.75 million. He paid for both properties with cash.
There are often three parties to a corrupt deal: the briber, the bribed, and the lawyers and financial facilitators who enable the secret transaction. The result is “a web of corporate opacity” that is spun largely by wealthy professionals in financial capitals like London and New York. The easiest country in which to establish an untraceable shell company is not a tropical banking haven but the United States.
Asher Avidan, the head of B.S.G.R.’s Guinea operations, and a former member of Israel’s internal security service, Shin Bet, signed contracts with a wife of President Conté. An American lawyer involved in the case said, “I’ve been involved in corporate corruption work for thirty years, and I’ve never seen anything like this. A contract for bribery that’s actually signed by a senior executive? With corporate seals?”
Steinmetz alleged that George Soros had perpetuated the rumor that Steinmetz tried to have President Condé killed, by backing the mortar attack on his residence in 2011. B.S.G.R. maintains that this rumor is entirely unfounded. B.S.G.R.’s lawsuit against PR firms that quit working for them was recently settled out of court, with no admission of wrongdoing by Malloch-Brown or F.T.I.
Patients continue to be wheeled into operating rooms tens of thousands of times a year for operations they simply don’t need. Whether it’s cardiac stents, knee replacements, hysterectomies, or dozens more procedures, too often there is no medical reason to do them and a simpler, less invasive way to treat the problem.
At worst, such surgeries can kill or disable patients, or leave them in chronic pain. An unnecessary pacemaker cost Jonathan Stelly, one of the people featured in USA TODAY’s report, his baseball career. Even when unneeded operations go well, they cost money that patients and insurers don’t need to spend, further stressing a health care system that’s already riddled with waste and costs too much.
The most notorious unneeded surgeries are done by physicians who are so greedy, incompetent, or crooked that they shouldn’t have a medical license. State medical boards can be lax about cracking down on them, and this should change.
More pervasive are the unnecessary surgeries (and tests and other procedures) that occur every year. This fee-for-service model rewards volume rather than outcomes. The more procedures that physicians, hospitals and other providers perform, the more money they make.
There are effective fixes. Some health care organizations — the Mayo Clinic, the Cleveland Clinic, Kaiser Permanente, and the Veterans Administration, for example — pay doctors salaries, which can eliminate the incentive to do more than necessary for a patient.
The same is true for accountable care organizations (ACOs in medical jargon) and “patient centered medical homes,” where providers can be paid a flat rate for a group of patients and judged by how well their patients do. ObamaCare includes provisions designed to make new models like these more common.
One of the most effective ways to cut down on unnecessary operations is for doctors to share the decision-making with their patients by pointing out alternatives and encouraging second opinions.
Governments should make more use of property taxes
The Economist, 2013, the Jun 29th print edition
Property taxes loom largest in Anglo-Saxon economies. In America they still account for 17% of all government revenue; in Britain and Canada the figure is around 12%. Only 2% of revenues come from annual property taxes in Germany and Italy; in Switzerland it is a mere 0.4%.
A small share of national tax revenue can belie the importance of property taxes for the local governments that tend to levy them. In Australia and Britain taxes based on property are the only source of local-government tax revenue. America’s local authorities get around 70% of their revenue from property taxes. But, overall, property taxation plays a relatively small role.
That’s a pity. Taxing land and property is one of the most efficient and least distorting ways for governments to raise money. A pure land tax, one without regard to how land is used or what is built on it, is the best sort. Since the amount of land is fixed, taxing it cannot distort supply in the way that taxing work or saving might discourage effort or thrift. Instead a land tax encourages efficient land use. Property developers, for instance, would be less inclined to hoard undeveloped land if they had to pay an annual levy on it. Property taxes that include the value of buildings on land are less efficient, since they are, in effect, a tax on the investment in that property. Even so, they are less likely to affect people’s behaviour than income or employment taxes. A study by the OECD suggests that taxes on immovable property are the most growth-friendly of all major taxes. That is even truer of urbanising emerging economies with large informal sectors.
Property taxes may even restrain housing booms by making it more expensive to buy homes for purely speculative purposes.
Almost 20 countries that have recently introduced new property taxes, or are considering doing so. Namibia recently introduced a land tax on agricultural land; Ireland is reintroducing a tax on residential property that was abolished in 1997.
Yet these taxes are wildly unpopular, often spawning opposition quite out of proportion to their scale. Mario Monti, Italy’s former technocrat prime minister, lost the election earlier this year for many reasons but his much-loathed decision to raise a tax on property played a substantial part. Asked in surveys what is the worst or least fair tax, Americans consistently cite property taxes.
Most American homeowners pay their property taxes in one or two lump sums during the year. Around a third (mainly those with mortgages) have their tax payments bundled in with monthly mortgage payments. For property taxes to become a much bigger source of revenue, governments must apparently ensure people don’t realise how much they are paying.
Logically, an “exception” means a subset of characteristics excluded from the set in which the subset otherwise exists. Some aspect of the items are not included in the general category, although other aspects are included. For example, if we say that all citizens may vote except those under the age of 18, the general set is citizens, and the characteristic or aspect of citizenship being excluded, voting, is citizens under that age.
“Exceptionalism” is the idea that a group of people, such as the citizens of a particular country, have unique cultural characteristics not found in any other group of people. Every country is different from the others, hence exceptional in some ways. The United States of America is exceptional in having been founded on an ideology of liberty, democracy, and federalism.
The justification for the American revolution was laid out in the Declaration of Independence. The document declared that all persons are created equal, and that they have “unalienable Rights.” These are moral or human rights inherent in human nature and its natural moral law. The Declaration says that the proper justification of government is “to secure these rights.” Another aspect of the American creed is that it is a union of “Free and Independent States,” the states having parallel sovereignty with the federal government.
The U.S. Constitution reflects this exceptional creed, as a sovereign union of sovereign states, with equality implicit in the original Constitution and explicit in the 14th Amendment, and with natural rights recognized in the Bill of Rights, especially in the Ninth Amendment. But in practice, the exceptional American creed has been implemented with major exceptions.
Slavery was inconsistent with the creed of liberty and equality, and so the country was on a collision course with that contradiction, which became resolved after the Civil War. The theft of land and the killing and moving of the Native American Indians was also a contradiction, which began to be resolved with the recognition of American citizenship, some compensations, and a partial recognition of the sovereignty of the Indian nations. The unequal status of women was yet another contradiction that became recognized and to a great extent resolved in law.
What is good about American exceptionalism is that it is to a great degree still honored in law and practice, and it has had some good influence throughout the world. But what is dangerous about American exceptionalism is that having the doctrine makes the government chiefs think that because America is good, American leaders can do no wrong.
The war of 1898 between the U.S. and Spain was an imperialist war of conquest that brought Puerto Rico, Cuba, and the Philippines under American control. There was no moral justification for not letting these territories become independent, but the American chiefs may well have thought the conquest was justified because the U.S. would instill its exceptional values and governance to the benefit of the conquered people, even while suppressing rebellions.
There was no defense justification for the American entry into World War I, but president Wilson as a believer in exceptionalism thought he would benefit the Europeans by applying the American values of democracy and self-determination, such as by splitting up the Austrian empire into national states. The result was that Nazi Germany was able to conquer diminished Austria and the newly created Czechoslovakia, before attacking the resurrected state of Poland.
American exceptionalism thus induces political and military arrogance. In feeling superior, the American chiefs think they are justified in meddling with foreign governments. In the 1950s, the U.S. government overthrew elected the leaders of Iran and Guatemala, in contradiction to the American creed of democracy. The thought that they were defending freedom and democracy against Communist tyranny then provided the rationale for the American war in Vietnam.
The French writer Alexis de Tocqueville coined the term in his book Democracy in America, where he wrote, “The position of the Americans is therefore quite exceptional.” Other countries have been founded upon an idea also, but not on liberty, equality, and federalism. The USSR was founded on the idea of state socialism. The creation of some states such as Pakistan was based on religion. Many states have implemented degrees of democracy and liberty, but their founding was either a result of nationality or from arbitrary boundaries set by conquerors.
After the its revolution, the French republic was founded on liberty, fraternity, and equality, but France as a country existed prior to that, and the revolutionary creed became corrupted into the terror and empire that followed.
So America really is exceptional in its founding, and also, since World War II, in its economic and military power, and also in its global cultural influence. But the heart of American power has been its market economy, and that economy has become stagnant. The tentacles of regulations, taxes, and growing welfare aid are choking entrepreneurship and employment. Workers have become a liability to firms, as the firms face the costs of litigation and medical mandates, even while the governmental school systems fail to provide the skills needed.
Massive monetary and spending stimuli, along with a temporary oil and gas bonanza, will keep America’s economy afloat until the Great Crash of 2026, when the historic 18-year real estate cycle creates the next crisis, 18 years after 2008, that will bring to an end the subsidy bubble. What comes after that is perhaps the most important question that the U.S. is avoiding. It is becoming clear that American exceptionalism is becoming a thing of the past, which is tragic, because the ideas were indeed exceptional.
When the USA adopted the 16th Amendment to the Constitution a century ago, did the people understand that this would deprive Americans world-wide of foreign banking services? Americans thought that the income tax would just grab the money from the rich, but they did not understand that the income tax would tax everybody else more. All that is needed to equalize wealth without damage to the economy is to stop government subsidies, but this requires an economic sophistication that so far has eluded most people.
Inherently, an income tax yields an incentive to cheat, as the government depends on reporting. So the Internal Revenue Service has to monitor financial accounts to prevent tax evasion. Gradually, the IRS has extended its reach into accounts, first within the USA, and now into the foreign accounts held by American citizens.
No other country has imposed such costs and mandates on foreign accounts as the USA. So ironically the “land of the free” has the least economic freedom for its citizens abroad. The Foreign Account Tax Compliance Act (FATCA), enacted in 2010 requires foreign financial institutions to make reports on American accounts. Foreign financial institutions with American customers are required obtain a Global Intermediary Identification Number. FATCA requires foreign financial firms to identify their U.S. account holders, to disclose the account holders’ names, social security or other tax IDs, addresses, and the accounts’ balances, receipts, and withdrawals. For some accounts, the foreign bank is required to withhold some of the interest paid to the account, and send it straight to the IRS. This US law overrides the privacy laws of the foreign countries.
US law is thus legislating not only within US territory but throughout the whole world. If a financial firm does not comply, the IRS will tax 30 percent of its US-sourced income. The IRS is also busy laying out the legal infrastructure for enforcing this law with agreements with foreign governments for data sharing. Governments world-wide are signing on, because they too face the problem of tax evasion when they tax income that can hide.
FATCA does not just affect fat cats. Many foreign banks are now refusing to provide Americans with bank accounts and are closing the accounts of Americans, who are now also unable to obtain mortgages and insurance abroad. Americans are increasingly giving up their US citizenship in order to be able to work or retire abroad.
The US economy depends on international trade and global finance, with many Americans working abroad for US and foreign firms. Six million Americans live outside the territory of the USA. If Americans can no longer have foreign bank accounts, because the costs to the banks are too high, they will be so hampered that fewer Americans will be willing to live abroad, and this will hurt American enterprise.
Since the US government cannot directly impose laws on foreign lands, many foreign firms will sell their US affiliates and stop holding assets within the USA, thus putting themselves beyond the control of the US government. The overall cost to the US economy of FATCA may be much greater than the increase in tax revenue from reduced tax evasion. Also, those who seek to evade income taxes will find other ways. High taxes induce tax evasion, and enforcement drives evasion into other channels. How successful are US drug laws in stopping the smuggling in of drugs, and how successful have US immigration restrictions been at preventing illegal immigration?
Another consequence of greater reporting of American accounts is the increased risk of identity theft and theft of money from accounts. The greater the reporting, the greater the revelation of data that can be stolen.
It is no use seeking to repeal FATCA. The regulation of accounts, no matter how costly, follows from the income tax being, as Henry George put it, a tax on honesty. The taxation of wealth that can hide and flee requires strict and costly reporting and enforcement. The only effective remedy is to tax something that will not flee, hide, or shrink when taxed. A tax on land value cannot be evaded, and if that were the only tax, there would be no need to impose costs on finances.
Say hello to the new look of this news website. Thanks to the yeoman labor of volunteers such as Daniel Syddall, we’ve given this site a complete facelift, in keeping with modern times. One major change is the Discussion Forum. Go take a look and have your say — tell it from the comment tops! If you’re familiar with the old site, let us know if this makeover looks, feels, and responds better than ever. And if you have any ideas for improving our presentation of the news on progress toward economic justice, then bubble forth. As always, we’re open to the participation of all well-meaning people. And with that, welcome to our transformed site. We’ve loaded our smorgasbord with all the stories fit to startle and inspire.
What Fine? Why JPMorgan Is Laughing All the Way to the Bank
TruthDig, Oct 21, 2013
By Robert Scheer
JPMorgan Chase, the biggest U.S. financial institution by assets, accepted a $13 billion fine on civil charges, a record-breaking civil settlement.
The $13 billion fine represents about half of the profit JPMorgan garnered last year. The company’s stock price, which has increased by 23 percent since January despite a barrage of crises and fines, has not been damaged by the latest settlement.
The criminal case against JPMorgan arose from an FBI-obtained email from a JPMorgan employee in Sacramento, Calif., who warned higher-ups at the bank that they were grossly exaggerating the value of the mortgage backed securities being marketed. That employee is now cooperating with the government and a trial on the matter will go to the origins of the economic crisis in which JPMorgan played a leading role.
JPMorgan wrongdoing include: the Libor scandal and the derivative scams of the “London Whale”; bribing Chinese officials; failing to report what it knew about the Bernard Madoff Ponzi scheme; alleged energy price rigging; and the bank’s acceptance of fines on its credit operations.
CEO Jamie Dimon will survive quite nicely, secure in his roughly $20 million pay and backed by a handpicked board of directors focused on the bank’s still buoyant stock price.
In the past two months, home sales reached a level not seen since before the financial crisis in 2008, and the price of new homes reached their highest level in 20 years.
The value of the U.S. housing market has climbed back to $16 trillion, exactly where it was before the economic crisis. Home prices and permits for new construction are up by double digits nationwide.
These new gains might be an economic mirage. The reality of the current real estate renaissance is that the rich and those on Wall Street are raking in the cash while large segments of the population remain stuck in a downward, alternate housing reality.
Jobs are in short supply, wages are at historic lows, and credit for middle and working class Americans is tight. With their economic ladder into homeownership taken away, many Americans can no longer participate in the housing market.
In their absence, financial firms and rich global jetsetters are snapping up hundreds of millions of dollars of property each week.
Paying above market price and with cash, these firms are setting the pace for the housing market and crowding out non-wealthy Americans who would normally buy. As the Washington Post reports, seven out of 10 home sales in states like Florida are made by these institutional investors. In down-and-out markets like Atlanta, four out of 10 home purchases are made by investors.
Some apartments in New York’s still-under-construction 432 Park Ave.—which is set to the be the Western Hemisphere’s tallest residential building—sell for almost $100 million. The CEO of one of the city’s largest real estate firms told The New York Times that “there is not enough supply” of $50 million apartments. In some of the most expensive buildings, 351-square-foot studios go for $1.6 million.
But first time homeownership in the U.S. has fallen by 25 percent.
The irony of this foreclosure crisis is that it created the massive supply in homes that those very same financial institutions are now profiting from at a record pace. Having profited first from millions of risky mortgages and eventually taken away the homes that underwrote them, institutional investors are now purchasing those same foreclosed houses at rock bottom prices.
Bridges Programming, hosted by Susan Caumont and Jeff Beller, interviewed Martin Adams, author of Sharing the Earth. It’s at Going Beyond Radio, http://goingbeyondradio.com/?powerpress_pinw=4508-podcast
an answer to a rarely asked question. If price is a reward for production, why do we pay for land, never produced by any of us? What is land price a reward for? Good behavior? How much money do we spend on the nature we use? Who gets it? What do they do with it? (If you answer all these correctly, you’re not a genius but a geoist.) The worth of Earth is enough that were we to collect and share it, we could abolish taxes on the goods we do produce. For example, San Francisco’s Redefining Progress has calculated that Cali-fornia could abolish all state and local taxes were it to collect the values of resources and of using na-ture as a dump. By exorcising the profit motive from depletion and pollution, rent collection could replace bossy regulation. Economies could self-regulate, as the rest of the eco-system does. See how big problems yield to big answers when we ask the right questions?
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.
a new field of study offered in place of economics, as astronomy replaced astrology and chemistry replaced alchemy. Conventional economics, in which GNP can do well while people suffer, is a bit too superstitious for my renaissance upbringing. If I’m to propitiate unseen forces, it won’t be inflation or “the market”; let it be theEgyptian cat goddess. At least then we’d have fewer rats. Meanwhile, believing in reason leads to a new policy, also christened geonomics. That’s the proposal to share (a kind of management, the “nomics” part) the worth of Mother Earth (the “geo” part). If our economies are to work right, people need to see prices that tell the truth. Now taxes and subsidies distort prices, tricking people into squandering the planet. Using land dues and rent dividends instead lets prices be precise, guiding people to get more from less and thereby shrink their workweek. More free time ought to make us happy enough to evolve beyond economics, except when nostalgic for superstition.
the study of the money we spend on the nature we use. When we pay that money to private owners, we reward both speculation and over-extraction. Robert Kiyosaki’s bestseller, Rich Dad’s Prophecy, says, “One of the reasons McDonald’s is such a rich company is not because it sells a lot of burgers but because it owns the land at some of the best intersections in the world. The main reason Kim and I invest in such properties is to own the land at the corner of the intersection. (p 200) My real estate advisor states that the rich either made their money in real estate or hold their money in real estate.” (p 141, via Greg Young) When government recovers the rents for natural advantages for everyone, it can save citizens millions. Ben Sevack, Montreal steel manufacturer, tells us (August 12) that Alberta, by leasing oil & gas fields, recovers enough revenue to be the only province in Canada to get by without a sales tax and to levy a flat provincial income tax. While running for re-election, provincial Premier Ralph Klein proposes to abolish their income tax and promises to eliminate medical insurance premiums and use resource revenue to pay for all medical expense for seniors. After all this planned tax-cutting and greater expense, they still expect a large budget surplus. Even places without oil and gas have high site values in their downtowns, and high values in their utility franchises. Recover the values of locations and privileges, displace the harmful taxes on sales, salaries, and structures, then use the revenue to fund basic government and pay residents a dividend, and you have geonomics in action.
a 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 loggers 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.
in part the Great Green Tax Shift maxed out. Economically, taxing pollution and depletion does reduce pollutants and extracts – and thus the tax base; plus such taxes are regressive, requiring a safety net. On the other hand, collecting site rent is progressive and generates a revenue surplus payable as a dividend to residents, which can serve as the safety net. Environmentally, taxes on waste and extraction do not drive efficient use of land, as does getting site rent.
more transformation than reform; it’s a step ahead. Harvard economics students this year did petition to change the curriculum, in the wake of the English who caught the dissension from across The Channel. French reformers, who fault conventional economics for conjuring mathematical models of little empirical relevance and being closed to critical and reflective thought, reject this “autism” – or detachment from reality – and dub their offering “post-autistic economics”. Not a bad name, but again, academics define themselves by what they’re not, not by what they are, unlike geonomists. We track rent – the money we spend on the nature we use – and watch it pull all the other economic indicators in its wake. We see economies as part and parcel of the ecosystem, similarly following natural patterns and able to self-regulate more so than allowed, once we quit distorting prices. To align people and planet, we’d replace taxes and subsidies with recovering and sharing rents.
close to the policy of the Garden Cities in England. Founded by Ebenezer Howard over a century ago, residents own the land in common and run the town as a business. Letchworth, the oldest of the model towns, serves residents grandly from bucketfuls of collected land rent (as does the Canadian Province of Alberta from oil royalty). A geonomic town would pay the rent to residents, letting them freely choose personalized services, and also ax taxes. Both geonomics and Howard were inspired by American proto-geonomist Henry George. The movement launched by Howard today in the UK advances the shift of taxes from buildings to locations. A recent report from the Town and Country Planning Association proposes this Property Tax Shift and their journal published research in the potential of land value taxation by Tony Vickers (Vol. 69, Part 5, 2000). (Thanks to James Robertson)
a POV that Spain’s president might try. A few blocks from my room in Madrid at a book fair to promote literacy, Sr Zapatero, while giving autographs and high fives to kids, said books are very expensive and he’d see about getting the value added tax on them cut down to zero. (El Pais, June 4; see, politicians can grasp geo-logic.) But why do we raise the cost of any useful product? Why not tax useless products? Even more basic: is being better than a costly tax good enough? Our favorite replacement for any tax is no tax: instead, run government like a business and charge full market value for the permits it issues, such as everything from corporate charters to emission allowances to resource leases. These pieces of paper are immensely valuable, yet now our steward, the state, gives them away for nearly free, absolutely free in some cases. Government is sitting on its own assets and needs merely to cash in by doing what any rational entity in the economy does – negotiate the best deal. Then with this profit, rather than fund more waste, pay the stakeholders, we citizenry, a dividend. Thereby geonomics gets rid of two huge problems. It replaces taxes with full-value fees and replaces subsidies for special interests with a Citizens Dividend for people in general. Neither left nor right, this reform is what both nature lovers and liberty lovers need to promote, right now.
a 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.