We are Hanno Beck, Lindy Davies, Fred Foldvary, Mike O'Mara, Jeff Smith, and assorted volunteers, all dedicated to bringing you the news and views that make a difference in our species struggle to win justice, prosperity, and eco-librium.
Would you grant powerless people any human rights? Some people would not. What would you propose?
This article comes from the Inter Press Service News Agency.
The new year is looking much like the old for certain residents of the “Pays-Bas” shantytown in Niger’s capital, Niamey. Four months after seeing their homes demolished in the name of safety and security, they are still waiting for resettlement at an alternative, developed site promised by authorities.
“I am currently living with a neighbour whose home was spared, by chance” said Binta Tchindo, a divorced mother of five. The lack of privacy is terrible, she told IPS. Still, she does not dare to rebuild her own house, as she fears it will only be destroyed again.
Home to more than 5,000 people, Pays-Bas derives its name from the French “bas-fonds”, a term for a slum, according to resident Alpha Seydou. It is located in the south-east of Niamey, on rugged ground along the road to the airport.
Claiming that the take-off and landing of planes made the position of the informal settlement hazardous, municipal officials decided to clear Pays-Bas by means of an operation that began in September, with military assistance.
“Catastrophes must be prevented. It’s for this reason that the residents of Pays-Bas must leave this dangerous zone that they are living in — illegally,” Soumaïla Yahaya, a municipal official, told IPS.
The operation was later postponed while a new living area was sought for residents, but not before violent confrontations had taken place between the inhabitants and security forces that led to about 20 youths from the area being questioned and jailed. Most are now out on bail.
“If we have settled on this site, from which they now want to chase us away, it’s because we are poor. (But) what I know is that the capital does not only belong to the rich; we also have a right to it,” Seydou told IPS.
It’s an argument that Yahaya dismisses: “We cannot continue to tolerate this anarchy consisting of people coming to set up homes without authorisation in vacant areas belonging to local authorities if we want to make a modern capital of Niamey.”
In an ironic twist, expulsion of shanty dwellers may also reflect how their areas are become more desirable places to live.
“Today, as the area (the settlement of Golf) has become up-market, they want to chase us again, chop down the trees and sell plots to wealthier Nigeriens,” said resident Zoubeirou Adamou.
In addition, informal settlements are accused of being security risks.
“These areas are dens of thieves who disturb the sleep of peaceful communities of the capital. The residents who live there did not ask anyone for authorisation before settling; as a result, they will be cleared off,” says Boubacar Ganda, president of the Council of the Niamey Urban Community (Conseil de la communauté urbaine de Niamey) — a body of elected officials.
But, this allegation is queried by Hamadou Boulama Tcherno who directs the Nigerien Social Forum, which has taken to heart the plight of thousands of people who have lived in the slums of Niamey for decades, and who are now being are cleared off or threatened with eviction — often without the offer of alternative places to settle.
He claims that the large majority of residents in Pays-Bas and certain other shanty towns are people who left their villages because of hunger or poverty, in the hope of finding a better life in Niamey, and that they’re not disturbing anyone.
“If rural areas are losing more and more of their youth to urban centres, it’s simply because of the poverty created by neo-liberal policies, which is today much more evident in rural areas than in town.”
According to a study done in 2005 by the National Institute of Statistics (l’Institut national de la statistique), the incidence of poverty at national level in Niger is 62.1 percent in urban areas, against 65.7 percent in rural areas.
Tcherno believes the solution to these problems is through the construction of social housing that the state could rent out to deprived communities at low cost, a suggestion government does not appear to endorse.
“We are in a free market; it is therefore illusory to believe that the state can meet this request,” retorts an official in the Nigerien Ministry of Town Planning, Habitat and Real Estate Registration, in Niamey. He offered no alternative suggestion, however.
Even for those who are allowed to remain in informal settlements, the future can be bleak. The slums in Niamey are afflicted by a severe shortage of social services, obliging residents to defecate outdoors.
“This situation exposes them to certain illnesses like cholera,” Illiassou Maïna, a doctor based in the capital, told IPS.
Centralized, paternalistic government was a bad Soviet Communist idea, so why does AWOL Bush favor it?
Here are portions of a news article appearing at stateline.org
by Kavan Peterson
A little-noticed change in federal law packs an important change in who is in charge the next time a state is devastated by a disaster such as Hurricane Katrina.
To the dismay of the nations governors, the White House now will be empowered to go over a governors head and call up National Guard troops to aid a state in time of natural disasters or other public emergencies. Up to now, governors were the sole commanders in chief of citizen soldiers in local Guard units during emergencies within the state.
A conflict over who should control Guard units arose in the days after Hurricane Katrina in 2005. President Bush sought to federalize control of Guardsmen in Louisiana in the chaos after the hurricane, but Gov. Kathleen Blanco (D) refused to relinquish command.
Over objections from all 50 governors, Congress in October changed the 200-year-old Insurrection Act to empower the hand of the president in future stateside emergencies. In a letter to Congress, the governors called the change “a dramatic expansion of federal authority during natural disasters that could cause confusion in the command-and-control of the National Guard and interfere with states’ ability to respond to natural disasters within their borders.”
The change adds to tensions between governors and the White House after more than four years of heavy federal deployment of state-based Guard forces to fight in Iraq and Afghanistan. Since the 2001 terrorist attacks, four out of five guardsmen have been sent overseas in the largest deployment of the National Guard since World War II. Shortage of the Guards military equipment — such as helicopters to drop hay to snow-stranded cattle in Colorado — also is a nagging issue as much of units heavy equipment is left overseas and unavailable in case of a natural disaster at home.
A bipartisan majority of both chambers of Congress adopted the change as part of the budget-busting, 439-page, $538 billion 2007 so-called Defense Authorization Bill signed into law last October.
The nation’s governors through the National Governors Association (NGA) successfully lobbied to defeat a broader proposal to give the president power to federalize Guard troops even without invoking the Insurrection Act. But the passage that became law also “disappointed” governors because it expands federal power and could cause confusion between state and federal authorities trying to respond to an emergency situation, said David Quam, an NGA homeland security advisor.
“Governors need to be focused on assisting their citizens during an emergency instead of looking over their shoulders to see if the federal government is going to step in,” Quam said.
Under the U.S. Constitution, each state’s National Guard unit is controlled by the governor in time of peace but can be called up for federal duty by the president. The National Guard employs 444,000 part-time soldiers between its two branches: the Army and Air National Guards.
The Posse Comitatus Act of 1878 forbids U.S. troops from being deployed on American soil for law enforcement. The one exception is provided by the Insurrection Act of 1807, which lets the president use the military only for the purpose of putting down rebellions or enforcing constitutional rights if state authorities fail to do so. Under that law, the president can declare an insurrection and call in the armed forces. The act has been invoked several times in the past 50 years, including in 1957 to desegregate schools and in 1992 during riots in south central Los Angeles after the acquittal of police who were caught on videotape beating Rodney King.
Congress changed the Insurrection Act to list “natural disaster, epidemic, or other serious public health emergency, terrorist attack or incident” as conditions under which the president can deploy U.S. armed forces and federalize state Guard troops if he determines that “authorities of the state or possession are incapable of maintaining public order.”
Mark Smith, spokesperson for the Louisiana Governor’s Office of Homeland Security and Emergency Preparedness, said local and state emergency responders know what their communities need during a crisis better than officials in Washington.
“The president should not be able to step in and take control of the National Guard without a governor’s consent. The Guard belongs to the states, has always belonged to the states and should remain a function of the states,” Smith said.
The arguments being made for or against increasing the U.S. troops in Iraq have left out the essential details of what exactly they are supposed to do, what the new strategy consists of. Strangely, even the U.S. administration has been silent on its new strategy.
The U.S. chiefs have finally stumbled into the right strategy for establishing security in Iraq. The new plan includes creating gated communities in Baghdad. This is how the market has been establishing local security world wide. In South Africa, where violent crime has risen to an extreme height, people with the means to do so have responded by creating walled neighborhoods. There is one entrance, with a guarded gate. Visitors are required to provide identification.
In South African cities, wealthy and middle-class neighborhoods are protected by a high wall, topped with electrified fencing. A second layer of security is provided by the household, with bars on the windows, strong locks on the doors, and alarms connected to private security companies which provide armed response. One cannot obtain insurance unless one has such protective devices.
Governments world-wide have failed to provide what is supposed to be the prime reason for the state, protection from violence. Markets world-wide have responded to the demand for security with gated communities. Conventional economic theory says that security is a public good which markets will underprovide, which makes it necessary for government to provide with taxes. But the reality is the opposite: the prevalence of violent crime is evidence of government failure, while markets can and do fill the gap.
The new strategic plan for Baghdad is for the residents of neighborhoods to work with the Iraqi and U.S. military to create secure gated communities. The first step is to clear the neighborhood of violent rebels and terrorists. The plan can only work if everybody who lives in the neighborhood seeks security and wants to be at peace with their neighbors.
The concept of creating islands of security is nothing new. The U.S. military tried to do this in Vietnam with strategic hamlets, but the plan failed because they were not able to eliminate the Viet Cong members within the villages. If a neighborhood in Baghdad contains militia who seek to kill their neighbors, then this location would not be eligible to become a gated community.
The second step is to secure the perimeter of the neighborhood. At first, the area will require troops to guard the paths into the place. For permanent security, the residents and troops need to build a wall around the community, with one guarded entrance gate. Building a wall would provide a splendid opportunity for employment.
Third, the residents should be armed and trained to become a defensive militia. Every person in the gated community would need to have an identity card. The neighborhood should be small enough so that the people can get to know one another. There has to be continuous surveillance of the streets, which also provides employment. Eventually, the residents would take over their own security. They would have cell phones so that they could call for help if there is an invasion.
Once the neighborhood is secure, schools and businesses would be established in the community. In South Africa, I visited a gated community in which it was previously unsafe for children to be outside, but now, with gated security, children could play without fear. So too in Baghdad, schools should be set up within the community so that children may safely be educated. Grocery stores, restaurants, gasoline stations, and other small businesses would be established to serve the neighborhood so that for daily goods, one would not need to go outside the gate. The U.S. military should also provide a generator for the neighborhood so that it can supply its own electricity, so it can be as self-sufficient as possible.
With a population of six million, even with a troop surge, only parts of Baghdad can become secure with gated communities. So this would be a gradual process, where islands of security are established one by one, starting with those neighborhoods most amenable to the plan. As more neighborhoods become secure, there would be an exponential increase in commerce.
It is widely acknowledged that the solution to the violence in Iraq has to be political as well as military. As I have argued previously, the best political solution is to base political power in villages and city neighborhoods. The gated communities need to have their own empowered local governance. For that, the community needs its own public revenue. The plan proposes an equitable distribution of the oil profits. The money should go directly to the residents. The gated community would then collect ground rent from every plot of land within the neighborhood, just as private gated communities are financed from the assessments on the real estate owned by the members.
Like in South Africa, the residents of gated communities in Baghdad need to have additional security at the household level, each house and place of business having alarms, a secure entrance, and barred windows. Each family would have a telephone and be able to call for help. Each family should also be armed and trained to defend itself. But visitors to the community would be disarmed.
Clearing the neighborhood of terrorists and violent rebels would require cooperation between the U.S. and Iraqi military and governments. This is a weak link in the plan, because if U.S. troops capture a terrorist and the Iraqi government then claims he is not a danger and lets him go, and he then commits violence within the neighborhood, the plan will fail. Unfortunately, some Iraqi officials and officers are allied with violent militia, so the security plan would need to let U.S. forces make the decision on whether to detain or expel suspected violent rebels and terrorists. U.S. forces have to take the lead at first and operate in both Sunni and Shiite neighborhoods, so that both groups feel that this plan is in their interest.
Americans opposed to the increase in troops and who advocate withdrawal from Iraq may not know that the plan is to create secure enclaves in Baghdad. Past failure does not imply future failure if there is a new plan that has worked elsewhere. The public debate on Iraq should now focus on the alternatives of withdrawal versus establishing gated communities. In my judgment, the social and political costs of withdrawal at present could be catastrophic, much greater than the costs of creating gated communities. It seems to me that there is now a sensible plan, finally, that can work if done right, and a chance to salvage the mess created by past incompetence and misjudgment.
Copyright 2007 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Fred Foldvary and The Progress Report.Also see:
Here are portions of a news report released by edie.net Hindu holy men could boycott a ceremony at the pinnacle of their religious calendar because the Ganges, the focus of the festival, is too polluted to bathe in.
The Ardh Kumbh mela is held at the confluence of the sacred Ganges and Yamuna rivers every six years and regularly smashes records as the largest ever gathering of humans.
To put the scale of the event in some context, the largest gathering of Muslim pilgrims at Mecca was in 2005 when an estimated 2.5 million Hajji took part. The last Ardh Kumbh, in 2001, attracted between 70 and 100 million Hindus from all over the world.
The religious significance of the event is profound – Hindus believe that by bathing in the waters of the two rivers, they can wash away sin and escape the endless cycle of death and rebirth, ensuring a place in paradise.
The site is believed to be the location of an ancient battle between gods and demons over an elixir of immortality.
But the spiritual, allegorical purity of the Ganges – considered to be the body of a god on Earth – is undermined by the physical reality. It is one of the most polluted water courses on the planet.
There are myriad reasons for this pollution. There are some 29 cities, over 70 towns and countless villages along the banks, all of which discharge a heady mix of raw and treated sewage, agricultural pollutants and industrial chemicals into the great river.
An estimated 1.3 billion litres of sewage is released into its waters daily, with around 6 million tonnes of chemical fertilisers and 9,000 tonnes of pesticides reaching the river every year.
The religious practice of cremating bodies before scattering the ashes in the holy river has also taken its toll, especially as increasingly scarce wood has become unaffordable for the very poor, meaning half-burned bodies are being dumped in the river.
This year, a gathering of Sadhus – Hindu ascetic holy men – have threatened to boycott the mela, saying the river has become too dirty and the authorities must take tougher action to ensure its cleanliness and purity.
Past studies, including one by international group Greenpeace, have shown the water contains some of the most toxic chemicals known to man.
Although the religious assumption that the purity of the river is divinely protected and germs and pollutants cannot survive its water persists, Hindu priests have tried to fight against this belief and educate the faithful about the problem.
India’s Hindu political parties have refused to take any action against the pollution.
As a stop-gap solution, local authorities have said they will release relatively clean water from reservoirs and canals into the river above the site of the festival in the days running up the mass-bathing, providing a temporary flush.
But in the long term, the problem looks set to get worse as the population of the Ganges basin, already in excess of 350 million people, looks set to triple within a generation.
We present excerpts of a report appearing in the Denver Post (Colorado, U.S.).
by Karen Augé
If there is anything more risky than going to prison, it may be getting out of prison, a new study shows.
In the first two weeks after release, former inmates die at a rate 13 times that of the general population, a University of Colorado researcher has found.
The leading cause of death among former inmates is drug overdose. And the most common deadly drug is cocaine, according to the study by Dr. Ingrid Binswanger, which will appear in this week’s New England Journal of Medicine.
Heart attacks pose the second greatest risk to the newly freed, followed by homicide.
“Clearly there is a period of high vulnerability in the first two weeks after release,” Binswanger said.
The study followed 30,200 inmates released from Washington state prisons for just under two years.
In all, 443 former inmates died over the two years; 38 died within the first two weeks of release.
“The differences are more striking for women than they are for men,” said Binswanger, a public health researcher at CU’s health sciences center. She did the study while on a fellowship in Washington.
The risk of death was 5 1/2 times higher for women released from prison than for other women. Eighty-seven percent of ex-prisoners in the study were men.
The study did not differentiate among crimes committed or the length of time the inmates spent in prison.
Some experts said the results don’t surprise them, because inmates have more physical and mental health problems than other citizens and often get little help making the transition to freedom after a highly structured life.
“I don’t know how anybody makes it,” said Christie Donner of the Colorado Criminal Justice Reform Coalition.
“One day they are in a secure facility where life is completely dictated,” and the next they are on their own, Donner said.
“There is a perception that there is a transition period. But that handoff doesn’t exist,” she said.
In 2005, there were 784,400 people on supervised parole from prison nationwide, according to the Bureau of Justice Statistics.
The bureau estimates that one quarter of all inmates have some kind of mental illness; another 23,046 are HIV positive.
In a 2002 report to Congress, the National Committee on Correctional Health Care estimated that 67,000 inmates are released from the nation’s prisons each year with chronic illnesses such as asthma, diabetes and heart disease – but no medications.
In addition, the report found that only 23 states provide some medications for mentally ill inmates upon release.
In Colorado, departing inmates get a 30-day supply of whatever medication they have been taking in prison, including medication for mental illness, said Alison Morgan, corrections department spokeswoman.
Sick or healthy, Colorado inmates who have not been returned to prison on a parole violation get $100 and a set of clothes when they leave, Morgan said.
The department does not track prisoners after release but is notified when inmates on parole die, she said.
Although widely regarded as the worst president in history, Bush seems to have a large supply of “enablers” in Congress. Why?
by Norman Solomon
President Bush may be a headless horseman. But the biggest problem is what he rode in on.
The Reverend Dr. Martin Luther King Jr. had a good name for it 40 years ago. The madness of militarism.
We can blame Bush all we want — and he does hold the reins right now — but his main enablers these days are the fastidious public servants in Congress. They keep preparing the hay, freshening the water, oiling the saddle, even while criticizing the inappropriately jocular rider. And when the band plays Hail to the Jockey, most of the grown-up stable boys and girls cant help saluting.
The people who actually live in Iraq have their own opinions, of course. UPI reported at the end of December that a new poll, conducted by the Iraq Center for Research and Strategic Studies, found that about 90 percent of Iraqis feel the situation in the country was better before the U.S.-led invasion than it is today. Meanwhile, according to a CNN poll last month, 11 percent of Americans support sending more U.S. troops to Iraq.
Buried in a New York Times news article on January 9 was this statement of fact: By law, Congress can limit the nature of troop deployments, cap the size of military deployments and cut financing for existing or prospective deployments.
Some Democrats in Congress want to hand the president his head and some dont. But, as a practical matter, the distinction is moot. Hes in the thrall of what you might call a repetition compulsion disorder that manifests as digging in his heels.
Obviously the president likes the wind in his ears. And he shows no sign of slowing down. Bush can keep riding the madness of militarism at a gallop unless people on Capitol Hill stop nourishing it with appropriations. And they wont do that unless we find effective ways to insist that they cut off funding for the war.
The key problem right now isnt the headless jockey. Its the stable hands who keep feeding the horse he rode in on.
Norman Solomons book War Made Easy: How Presidents and Pundits Keep Spinning Us to Death is out in paperback. For more information, go to: www.normansolomon.com
Be it resolved that all taxation be done away with, replaced by the market revenues of sites throughout the nation. “Sites” are generally thought to be land-locations, but they can also be air-waves, internet site-names, landing slots at airports, access to over-crowded freeways, etc., etc.
There are three major virtues of using site-revenue fees as a substitute for taxation: simplicity, fairness, and non-distortion of the economy.
SIMPLICITY The simplicity of site-revenue is apparent. There is no need for businesses to hire teams of accountants whose purpose is to legally conceal profits from the tax-man. Site-revenue is determined by the market price for the use of a site for a particular period of time. Market pricing of sites removes a great deal of complexity from taxation, as there is very little need for assessment–which can be arbitrary, corrupt or incompetent. The only exception to this rule is that a lookout must be kept for collusion. So, assessors take on the role of watchdogs, rather than of active economic players.
On the receiving end, there is no need for the govt to hire armies of tax-collectors whose most effective tool is intimidation. The entire IRS would be replaced by the existing pool of county tax assessors, who are already in place across the United States.
FAIRNESS The fairness of site-revenue is also apparent. A country may seem huge, but it has only a finite number of revenue-capable sites. Yet, its armies and legal system must protect the entire landmass/ airwaves, etc. It only seems fair that those who would privately profit from the use of part of that entity should help to support the defense of their property, whether they make profits or losses at the end of the day.
It can be considered a fair cost of doing business in a country, which is directly proportionate to the amount and quality of land which is utilized. Since the utilization of land excludes all other businesses from using that same parcel–which is a hidden cost to competition–it is only fair that a higher amount be paid to the community or govt for the exclusive use of good land.
Further, under the system of site-revenues, there is no longer any fear of failure to pay taxes resulting in criminal penalties. The only crime involved would be the fraud of manipulating the market price of sites.
NON-DISTORTION But the most important aspect of site-revenue collection is its non-distortion. It is the only “neutral tax.” If we tax profits, great teams of accountants are hired to disguise profits and utilize every loophole in the tax code– and the tax code grows beyond the pale of most encyclopedias.
If we tax labor, more and more labor is done “off the books.” If we tax sales, a greater black market for goods is created. If we implement VAT, great hordes of bureaucrats must track every particle of the production process.
Contrast that with the simple, upfront collection of site-revenues. Since the cost of doing business under a system of site-revenue collection is known in advance, there is no need to hire accountants beyond what is needed for balancing the books honestly. Site revenue is a _fixed cost_, which is known even before production and hiring begins. The only distorting feature is that it encourages enterprises to use as little land as is actually needed, and no more.
CONCLUSION So, there are plenty of reasons to recommend site-revenue as the most desirable form of public revenue. But the best of all is the ability to finally stop the damaging and wasteful taxation of capital and labor, which has resulted in untold economic distortions, loss of freedoms and the politics of envy.
A man was walking down a shopping street and came to a store window where there was a big drawing full of lines and squiggles. A sign by the drawing asked, “Can you see the picture?” All the man could see was a chaos of lines going every which way. He stared at it and tried to make out some kind of design, but it was all a jumble. Then he saw that some of the lines formed ears, and whiskers, and a tail. Suddenly he realized that there was a cat in the picture. Once he saw the cat, it was unmistakable. When he looked away and then looked back at the drawing, the cat was quite evident now.
The man then realized that the economy is like the cat. It seems to be a jumble of workers, consumers, enterprises, taxes, regulations, imports and exports, profits and losses – a chaos of all kinds of activities. Here are fine houses and shops full of goods, but yonder is poverty and slums. It doesn’t make any sense unless we understand the basic principles of economics. Once we have this understanding, the economy becomes clear – we see the cat instead of a jumble. We then know the cause of poverty and its remedy. But since most folks don’t see the cat, social policy just treats the symptoms without applying the remedies that would eliminate the problem.
What is this economics cat? It starts with the three factors or resource inputs of production: land, labor, and capital goods. Land includes all natural resources and opportunities. Labor is all human exertion in the production of wealth. Capital goods are tools (such as machines and buildings) used to produce wealth. The owners of land get rent, workers get wages, and the owners of capital goods get a capital return.
Picture an unpopulated island where we’re going to produce one good, corn, and there are ten grades of land. On the best land, we can grow ten bushels of corn per week; the second land grows nine bushels, and so on to the worst land that grows zero bushels. We’ll ignore capital goods at first. The first settlers go the best land. While there is free ten-bushel land, rent is zero, so wages are 10. When the 10-bushel land is all settled, immigrants go to the 9-bushel land.
Wages in the 9-bushel land equal 9 while free land is available. What then are wages in the 10-bushel land? They must also be 9, since labor is mobile. If you offer less, nobody will come, and if you offer a bit more than 9, everybody in the 9-bushel land will want to work for you. Competition among workers makes wages the same all over (we assume all workers are alike). So that extra bushel in the 10-bushel land, after paying 9 for labor, is rent.
That border line where the best free land is being settled is called the “margin of production.” When the margin moves to the 8- bushel land, wages drop to 8. Rent is now 1 on the 9-bushel land and 2 on the 10-bushel land. Do you see what the trend is? As the margin moves to less productive lands, wages are going down and rent is going up. We can also now see that wages are determined at the margin of production. That is the “law of wages.” The wage at the margin sets the wage for all lands. The production in the better lands left after paying wages goes to rent. That is the “law of rent.” If you understand the law of wages and the law of rent, you see the cat! To complete our cat story, suppose folks can get land to rent and sell for higher prices later rather than using it now. This land speculation will hog up lands and make the margin move further out than without speculation, lowering wages and raising rent even more.
Now we have good news and bad news. The good news is that when we put in the capital goods we first left out from the example above, the tools and technology increase the productivity of all the lands. If production doubles, rent doubles, and wages go up. Wages won’t double, because workers have to pay for the tools, but even if wages go up 50 percent, that’s good news, and why industrialized economies have a high standard of living. Also, high skills enable educated workers to have a wage premium above the basic wage level. The bad news is that the technology enables us to extend the margin to less productive land, which lowers wages again. So there is this constant race between technology raising wages and lower margins reducing wages.
It’s bad enough that a low margin sets the wage level at the poverty level, especially in countries with low technology and low skills. Government then taxes away a large chunk of those wages, which hurts those workers with higher wages. The result is a highly unequal distribution of income. Workers have the low wage set at the margin and reduced further by taxes, while the owners of land get all the extra production as rent, but pay less in taxes because of tax breaks to landowners. (Capital-goods returns boil down to wages and rents, because capital goods are ultimately produced using land and labor.)
Behold the cat! The margin at the least productive land sets low wages, and the rest goes to rent, resulting in inequality, with poverty for low-skilled workers. If we see the cat, the remedy is also clear: stop taxing workers, and let everybody share the rent. If we get public revenues from the rent instead of wages, the public benefits equally from the rent, while workers get the full product of their labor. And wages will be higher, too, because by collecting the rent, we eliminate land speculation, moving the margin up to more productive lands, which raises the wage level. The economy grows faster too, since the government no longer punishes enterprise and investment with taxes, so wages go up faster over time. We all become fat cats.
Those who see the cat have a clear picture of how the economy works. They can see why we have social problems, and what the remedy is. Those who don’t see the cat keep trying treat the symptoms with welfare, but they never cure the economic disease. Others see the welfare as not curing anything, and think they can just get rid of the welfare. Only those who see the cat realize that the remedy is a shift of public revenue from labor to land so that we eliminate poverty and thus any need for the welfare state.
Copyright 1997 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieveal system, without giving full credit to Fred Foldvary and The Progress Report.
Standing timber is generally now exempt from property taxes, by law or custom. Land remains on the property tax rolls. This sounds like a Georgist idea; advocate Ellis Williams, a forest economist, has made the point. It is, however, just partial and discriminatory Georgism. Standing timber is exempt, but as soon as it is cut, milled, and hammered into buildings, it goes on the property tax rolls. The bias is apparent between capital in different forms. The kind with higher labor-content – buildings – is taxed higher so the kind with less labor-content – timber – may be exempt.
Timber still yields some revenue when it is cut. The idea has been to substitute a yield tax for the property tax. In practice, though, yield tax rates are much too low to be revenue- neutral. In California, for example, the yield tax rate is 2.9%. 2.9%, levied just once at the end of each sixty years, is obviously less than 1% levied every year, starting from year one. Values are very low in the sapling years, it is true, but well above zero; and, in the last few years before harvest, the stumpage is worth nearly as much as its final harvest value. I have calculated that a yield tax of 25% or so (varying with the tree life and the interest rate) is needed to have a present value equal to that of a 1% property tax. The present system works as though you exempted half the buildings in a city from a tax and raised the rate on the others.
Here is the revenue result in one major California timber County, Mendocino. Its major property value is timber, but the County government and its subdivisions hardly get dried beans from the yield tax on it: $3.9 millions in 1993, compared to $45 millions from all property.
This is not because they are cutting timber slowly; actually, they are depleting the inventory. Neither is it because other values are high. This County has no large cities. Most of its people live outside cities, and its annual timber harvest is twice as high as the sum of all its other “agricultural” gross output (including fishing). The net cash flow from timber harvests is much more than twice as high as the net cash flow from other property, because stumpage value is added mainly by property (land and growing stock), while other farm products like grapes, fruits, and milk are more labor-using.
How about land under the timber? It is separately valued, and kept on the property tax rolls. However, it yields revenue of only $1.2 million: 1/3 of what the yield tax renders.
Why so little? They could raise the valuation of timber land to compensate for exempting the trees. In addition, “timberland” in some areas is sold for vacation homes and resorts. Assessors once began using those sales to justify higher valuations. They also observed smaller timberland owners paying higher unit prices than giant corporate owners, and up- valued parts of the vast spreads accordingly.
Timber owners had other ideas, however. Major owners led by SP (520,000 acres of timber in California) took alarm and went to Sacramento for relief. They got their lands put in a “Timber Preserve Zone” (TPZ) wherein land is assessed only on its putative value for raising timber, regardless of market value, regardless of alternative uses, and regardless of non-timber income from land growing timber. These “compatible” (untaxed) uses include grazing, resorts, vacation homes, campsites, fishing, hunting, watershed protection, tourism, rifle ranges, rights-of-way, mining, log storage, landings, roads, logging camps, etc. There is also hemp for the drug trade: possibly the state’s most valuable crop, but unrecorded.
TPZ is hardly known outside the timber counties, but it covers vastly more acres than the better-known “Williamson Act,” which provides for preferential low assessment of farmland. In Mendocino County, TPZ land of medium grade (“Site III”) is now tax-assessed at $136/acre. This is about 10% of its value for growing timber (disregarding the value of compatible uses), and a lesser fraction of its value for higher-valued “incompatible” uses like retirement homes that require formal “conversion” (obtainable on demand) out of TPZ. This is how they keep the tax payments on TPZ land down to only $1.2 million.
Mendocino County, on the north coast, is redwood country. Redwood’s value on the stump (“stumpage”) this year is 53 per board foot (pbf) when mature. In Shasta County, timber stumpage is worth about half that, 28 pbf, and is heavily logged at that value – Shasta is our biggest producer. Since it is worth logging great volumes of Shasta timber to get 28 pbf, then there is a lot of surplus in Mendocino timber at 53 pbf. This surplus is what makes this land so valuable for timber culture. This surplus, unvexed by taxation, is what makes these lands so attractive to, and the playthings of corporate raiders, merger specialists, speculators, arbitrageurs, lawyers, and junk-bond salesmen living thousands of miles away.
Redwood is a faster-growing species than most western timber (although much slower than Yellow Pine in the southeastern states). An acre of good (Site II) Mendocino land will yield a crop of 40,000 bf after 60 years of growth, worth about $20,000 on the stump at the 1995 price. Discounting that to the present, using a real interest rate of 5%, means dividing it by about 16. Add 10% for the present value of all harvests after 60 years, and you have very roughly $1,400 per acre for the land value based purely on timber culture, considering no other values. Yet, under TPZ its assessed value for taxation is only $156, about 11% of its true value just for timber culture. This low tax valuation is enforced by legislating the assessed values statewide (California Revenue and Tax Code, Section 434.5). The legislated formula mandates that “income-based” assessments be found using past prices, projected in the far future with no adjustments for inflation, but discounted at a high interest rate (i.e., a rate not adjusted for inflation). It is clear for whose benefit this law was framed.
Meantime, urban demand is probing up north into southern Mendocino County from the Bay Area and Sonoma County, its southern neighbor. Mendocino has a long, scenic coastline with premium amenity values. A significant fraction of the TPZ land has a speculative value for resort, retirement and vacation uses, well above its timber value. None of this is reflected in tax assessments: TPZ protects against that, even though owners may convert out of TPZ at will. Land may be classed as TPZ regardless of past, present, or intended use.
The private area of Mendocino County is 1.9 million acres. Half of that is timberland, with 863,000 acres in TPZ. At an extimated $1.36/acre in taxes, this contributes $1.2 million to the County budget. The County gets $45 million from all property, of which the timberland fraction is 2.7%.
Add to that the yield tax of $3.9 million and you have timber and timberland together providing about $5 million of County taxes. However, the County and its subdivisions, especially school districts, get over $100 million in subventions from Sacramento, paid by taxes on income, sales, and businesses. By comparison, the $5 million is a paltry share indeed to raise from the most valuable resource in the County.
Timberland owners around the country have sold this bill of goods to legislators. In many states, less than half the private land is fully taxable, because of such laws. These are not all southern and western states, either, as one might surmise. In NH, for example, only 45% of the private land (and none of the Federal land) is fully taxable. The rest is sheltered by the state’s “Current Use” tax law, their version of our TPZ law.
Champions of these laws argue that land taxes, accumulating with interest over long growth periods, would eat up all the profit from growing timber. Let us see. Taxes of $1.56 per acre per year, accumulating over 60 years at a real interest rate of 5%, come to $552 per acre in constant 1995 dollars. At that time the timber stumpage will be worth about $20,000 in 1995 dollars, or 36 times the accumulated future value of the land taxes. In addition, the timber will have shielded the owners from the eroding effects of inflation, a very real benefit that is assumed away by the “simplifying” technique of using constant dollars and “real” interest rates. On top of that, it is a good bet the real value of timber will have risen after 60 years of population growth.
Thus, land taxes would have to be 36 times what they are now to consume the whole value of timber harvests. The fact is, present taxes are a negligible token. Timberland is effectively sheltered from the full weight (light as it is) of the 1% property tax imposed on ordinary land. It contributes, as we have seen, only about $1.2 million a year to help support public services in Mendocino County.
The acre value of timberland is low compared with downtown values in San Francisco, where one little square foot in the hottest spot may fetch $2,000. That is $87 million per acre! However, there are very few such golden acres, compared to a million acres of timberland in Mendocino County, 35 million acres in California, and 737 million acres in the U.S. That is 32% of the area of the 50 states. (The fraction of public and private land in forests is, by coincidence, the same: 32%).
Owing to the success of timber people in spreading their peculiar gospel, almost all of their land is underassessed. Almost all state yield taxes, imposed in lieu of property taxes on standing timber, are too low to be revenue-neutral. Add to that, Congress since 1943 has made timber a “capital asset” for federal (and therefore state) income tax. Many costs of managing and carrying this capital asset are expensable – certainly interest and property taxes are. The net result is that timberland contributes very little to public revenues at any level.
Residents of timber counties are typically scattered, and poorly organized. Timber companies are huge, rich, few, and tightly organized. In Mendocino County, Georgia Pacific and Louisiana Pacific, absentee owners, together own 500,000 acres – 58% of the County’s timberland – and Georgia-Pacific owns Louisiana-Pacific. Timber firms influence state forestry schools, hiring professors as consultants. They patronize research in forest economics at think tanks like Resources for the Future in Washington, D.C., which has never criticized their tax preferences, but trained its big guns on public agencies: the Forest Service and Bureau of Land Management. “The industry” controls tax laws in 50 states, and sloughs tax burdens onto others. It will continue to do so until voters in the timber counties wake up and organize to control state timber tax laws.
Taxation is the form of socialization used in market economies. Choosing what to tax is choosing what to socialize. Rather than socialize labor or repel capital it is possible to tax land.
Land holds a unique place in the distributional ethic because it is (by definition) of natural origin. Man did not create Earth with its resources but rather fights over it. Land is also (with exceptions) more nearly permanent than man or his works. Thus, rent as private income neither elicits the supply nor preserves it. Its main function is to allocate the fixed supply among uses, but it is arguable that land taxes, when based on land’s capacity-to-serve, are at worst neutral to this function and at best improve on it.
The philosophical rationale for land taxes is strongest under an organic theory of the polity. It is no accident that Henry George (prominent protagonist of land taxes) crystallized his ideas after reading Andrew Bisset’s Strength of Nations on feudal levies. Landholders have a privilege from the State and in return are liable for taxes in perpetuity.
The entire value of land, now and forever, is here regarded as a benefit received from government. This is consistent with A. Marshall’s concept, “the public value of land”, where value is the product of three things: nature; government; and spillover values from development of adjoining and linked lands. All these values being unearned by the individual landholder they are fit to be taxed.
The organic view distinguishes the land from its holder. Land taxes may be paid by income the land earns, not by the holder as a person unless we identify him with the land and regard him as having a prior right to own land free of liabilities to the public from which he holds title. The contractual theory, by contrast, treats government as a kind of business extending services to specific lands whose holders need pay only for recent benefits received, construed narrowly.
The rationale for land taxes presumes a functional attitude toward distribution, regarding property not as an end in itself but a means to get things done. A land tax based on market value, not varying with actual use, is a fixed cost that sharpens marginal incentives. Critics today seldom argue otherwise, but oppose land taxes precisely because they do force landholders to respond to the market, which may have its own faults in a world of “second-best”.
Land taxes are in rem and so disregard the holder’s personal circumstances, a drawback in some opinions. On the other hand landholdings are much more concentrated than the receipt of income or taxable consumption or payrolls, and land taxes are not shifted, making the tax inherently progressive even though but loosely correlated with taxable income. Avoiding land taxes is next to impossible, even though collection enforcement is limited to seizing the land, not the person or any other asset.
The rationale includes a concept of landholder stewardship. A limited number of land titles were issued in order to get land under tenure to assure best use. So far so good, but those not receiving or inheriting land need a counterpoise to assure they receive their share. Land taxes do so in three ways: by supporting government; by pressing landholders to produce goods and services; and pressing them to hire workers to do so. Land taxes act as a kind of social audit and performance standard of stewardship to promote equity towards those excluded.
There is also more equity among landholders, which in turn promotes efficiency. Absent land taxes there is pressure on governments to do as much for A’s land as for B’s. Efficiency however calls for specialization and differentiation, meaning high values for some land and low values for other, with windfalls and wipeouts. Land taxes automatically compensate the losers from the gains of the winners, thus freeing land planners to maximize the joint benefits.
The rationale of equity for the excluded says that lands with open general access like parks and roadways should be exempted in whole or part. But such exemption can lead to overcrowding, to meet which it is clear that some user charges on such land can be construed as special kinds of land taxes. An obvious example is a charge on large trucks in downtown streets. Lacking any such constraint the crowding might in turn lead to indefinite expansion of the exempt land use.
The rationale is only partly consonant with personal ability to pay. Landholding confers potential ability to pay, but that is only realized upon one’s using the land well. And earned cash is not tapped at all. A land tax is a fixed periodic charge. It is based on qualities inherent in the land with few concessions to the landholder’s personal illiquidity, weakness, setbacks or aging. “Use it or sell it” is the message, which many consider too harsh.
What is harsh for the distressed holder, however, is accommodating to frustrated buyers, and it boils down to which group shall be accommodated. Since liquidity is known not to increase in step with total wealth, imposing taxes on landed but illiquid holders has a strong progressive effect. The regular flow of land taxes also accommodates governments, especially small local ones needing steady revenues that are not turned on and off at the convenience of others.
It is not always a question of selling complete units. Land around homes and enterprises is subject to sharply diminishing marginal utility or productivity and a function of land taxes is to constrain horizontal extension of holdings, to the end that the nucleus of each holding may be closer to others to facilitate trade, cooperation, linkages, sharing common costs, and other synergies. The “highest and best use” of land is usually that which most relates to and complements its neighbors and trading partners, who must not be held too far distant.
There is also a diminishing return to time as buildings age, and a function of land taxes, in conjunction with building exemption, is to advance (and/or stop retarding) renewal of sites, neighborhoods, cities, regions and whole economies.
Locke, Quesnay, Adam Smith and others have shown a tendency to shift all taxes to land, whatever the nominal base or event, assuming elastic supplies of labor and capital. This leads some to conclude that all taxes alike just tap land rent. But one cannot tap rent where there is none. Taxes on other bases simply abort the taxed input or activity at the no-rent margins of land use, both extensive and intensive. This excess burden in turn puts an upper limit on the possible tax rate, thus sparing much rent from being taxed at all while destroying other rent completely. The only way to tap much rent is to tax land directly.
Land value and capital are not convertible into one another (excepting exhaustible minerals, not treated here). From this it follows that efficiency does not require equal tax rates on the two, but only uniformity within each class. Uniformity is impossible with capital because of differential concealability. But land is uniformly non-concealable. The case for neutrality of land taxes is stronger under uniformity, but mainly requires that the tax not be a function of use.
A land tax may be based on the current potential rent, or on value. In most countries other than Britain it is the latter. Values are not simply proportional to rents because many land values are elevated above that by expected higher future rents. In such cases taxes rise high relative to cash flow, and at a stiff rate may even be higher. This subjects the holders to a cash drain. The extra tax may be shown, however, in general to tax the unrealized increment, in the manner advocated by Haig-Simons, at the time it accrues. There is some recent falling-away from Haig-Simons, and to one school now this is “double taxation”, an issue currently mooted.
The most controversial question in land taxation is the effect on appreciating land. Most hands agree the land tax advances conversion to the higher use. To Henry George this “sovereign remedy” would correct a market failure and unlock speculative holdings with profoundly beneficial effects. To several modern writers following Richard T. Ely the advance of conversion is unneutral and somewhat wasteful. Speculation is seen as efficiently keeping land from premature commitments. To this writer it seems mathematically obvious that an efficient adaptation to rising future incomes would result in advancing, not retarding conversion. But the issue is now moot.
Land taxation at the local level has a natural cap in local particularism as expressed in “Don’t swamp the lifeboat”. Land taxation by a central national government might go much heavier, and accordingly statesmen like Austen Chamberlain in Britain and James Madison in America have contrived to divert land taxation to local governments. Colin Clark, on the other hand, has published a plan to nationalize land through taxation without depriving the poorer localities. He would rank the local jurisdictions in order of land value per capita, and apply a central government surtax starting from zero but graduated upwards according to this ratio. The scheme basically has central government apply to local ones the same principle of direct land taxation that local governments can apply to individuals, tapping the rich rents without destroying marginal rents. Clark, like George, may have been reading Bisset’s Strength of Nations.
Controlling sprawl and stimulating economic development are two of the most vexing problems perpetually facing planners. The conventional instruments of change, indeed are unreliable, vulnerable to politics and often little more than 1ow impact Rube Goldberg bureaucratic mechanisms. New tools designed to work with economic forces and not against them, tools which can actually make a difference, are demanded. The land tax, an old idea first promulgated by Henry George in 1879, may be such a tool. It’s already in use in Pennsylvania.
The land tax is simply what the name implies — a property tax assessed either on land value alone or at a lower rate on Improvements than on land. It sheds lights on the dark shadow of the property tax, its depressing impact on incentives to improve land, the fact that every such impr6vement is immediately and forevermore penalized with a tax increase. A land tax, however, (urns this disincentive on its head and puts the property owner in the position where (he easiest way to reduce his property taxes is to improve land, thereby spreading tax overhead and generating revenue to pay for it. Only sitting on a property and doing nothing with it is discouraged under a land tax.
The significance of this effect to stimulating economic development in depressed areas, particularly downtowns, should be obvious. What better incentive could be offered to a landowner, developer or investor than to guarantee there will be no tax increase now or in the future as a result of their efforts to upgrade their property? The scaled property tax incentives stale legislatures have typically offered (e.g., 50% abated the first year, 45% the second, etc.) are but faint imitations of the land tax and its value. Moreover, when developers are encouraged to put downtown land to its highest and best use, the thrust of urban sprawl is blunted. Instead, there are compelling reasons to first develop the highest-value land found near population centers.
Henry George’s concept of the land tax, first advanced in his classic text, Progress and Poverty, advocated it as a means of giving labor its due and redistributing wealth through capitalism. He offered, as an analogy, the example of Mohammed Ali who found that imposing a tax on date trees caused Egyptians fellahs to cut down their trees; but a tax of twice the amount imposed on the land produced no such result.” George’s “remedy” to the situation he found in 1879, the side by side existence of enormous wealth and hideous poverty in the midst of the American Industrial Revolution, was a tax that would raise revenue without discouraging production.
While property taxes have certainly caught on since then and his book was quite popular at the time, the concept he envisioned did not take root immediately. It ran counter to the interests of barons who wished to clearly hold land in speculation until governmental investments in infrastructure increased its value, a challenge which still faces land tax adherents. Nonetheless, there are now real-life examples indicating that Henry George was right — the land tax sets the stage for economic development in downtowns and this can discourage sprawl.
Pennsylvania communities have provided the leadership on this issue. The Commonwealth has, since 1913, authorized the use of two-rate property taxation whereby buildings are taxed at lower rates than land for certain classes of municipalities and there are now several legislative proposals to extend this privilege to other communities as well. The evidence from the 15 cities who have applied the concept is quite positive and among them are the Cities of Harrisburg and Pittsburgh. Both have exhibited faster economic growth and stronger downtowns than comparable communities without the two rate tax.
Harrisburg, as an example, adopted a split-rate system in 1975 that taxes buildings at one-third the rate of land and it collects 36% of all city real estate tax dollars from land. According to the Harrisburg Office of Business and Industrial Development, the number of vacant structures, some 4,200 in 1982, has now dropped to less than 500 and over $700 million in new private investment has been attracted. It was, in fact, voted the No.2 “best investment” city in the Eastern U.S. two consecutive years in a national banking institution poll. Crime and fire rates have dropped while businesses, private sector jobs and homes have increased in number after 3 decades of decline. The City’s Mayor, Stephen Reed, writing to an Allentown Home Rule Charter Commission member (that city recently chose a 2-rate tax by referendum), stated “our two-tiered rate policy has specifically encouraged vertical development, meaning high-rise construction as opposed to low-rise or horizontal development that seems to permeate suburban communities and which utilizes much more land than is necessary.”
Pittsburgh has had a two-rate system for decades. The original version taxed improvements at half the rate of land but was totally restructured in 1979-80 to effectively further lower the rate on new buildings. The tax rate on improvements are now less than one-fifth that on land. This has resulted in some 57% of City tax dollars being raised from the land tax. The combined city-school-county tax on buildings is less than half that on land values. The impacts, once again, have been very beneficial. The value of building permits issued annually from 1980 to 1989 was, on average, 70% higher than it was between 1960 and 1979. Meanwhile, the cities of Allentown, Buffalo, Cleveland, Detroit, Rochester and many others were experiencing declines. Pittsburgh’s new construction activity during the 1980-1992 period was actually also equal to 65% of Philadelphia’s, though the latter has four times the population.
These statistics, and many others, can be gleaned from a number of readily available sources and for those who wish to obtain more information or to further examine the underlying philosophies regarding the land tax, the Henry George Foundation of America/Center for the Study of Economics (410-740-1177) is an excellent starting place (http://www.smartnet/~hgeorge). The land tax is finally gaining some momentum after 118 years of consideration.
Why has it taken so long? The vested interests of land speculators are an obvious reason. They ridiculed George’s ideas when he pronounced them and were in a position to control events. This obstacle remains, but the more serious hindrance is lack of knowledge. The conventional property tax is taken as a given and politicians forever seek to “increase the tax base,” ignoring the costly impacts of sprawl and resorting to such unimaginative and devastating alternatives as local sales and wage taxes when they no longer dare to raise rates.
We planners, too, have been ignorant. We preach against sprawl and cite facts to prove residential properties are tax-losers, but our solutions of regulation, special incentives and grant-funded projects seldom work the way we hope and usually have but limited effects. They are typically more complicated than need be and not very cost-effective. Our voices also fail to carry the influence we desire because we’ve sometimes let the profession become associated with anti-growth interests. Worse, we act as if land planning has nothing to do with land economics, as if the former could be imposed upon the latter, when the opposite is more often the case.
If we hope to make a difference, we must become more knowledgeable in land economics and taxation and put that learning to work in helping elected officials devise revenue-raising methods which do not topple that for which we stand. The land tax is such a method and we need to infuse budgeting debates with understanding of its principles and the land use consequences. The groups who have kept alive and promoted the concept are not likely to carry it forward very far because they’ve, too frequently, made It part of fairly radical environmental and labor agendas. Such methods will not serve to mainstream or sell the land tax concept and fail to acknowledge the very practical benefits the tax offers or the fact it frees property owners to make more productive use of their capital as well as labor.
As planners we are in a position to both see and explain those benefits and we must do so. Sprawl is a community disease and our number one enemy. The land tax, by encouraging the ‘development of downtown and higher-valued properties with existing infrastructure first, provides a real antidote to complement our zoning placebos. It also, thereby, serves as a non-regulatory tool to lower the pressure on rural open spaces and agriculture land. Some will fear land taxes could encourage the development of these areas and want to piggyback open space and agriculture preservation programs onto them, but that is easily done and only serves to enhance both efforts.
The land tax should also be advocated by planners as a tool which can be used to effectively stimulate downtown revitalization without the necessity of large public investments. Conventional property tax increases, wage and occupational taxes and special sales taxes all serve to chase business out of the downtown and discourage building improvements but the land tax has no such negative impacts. It is the perfect assist for enterprise zones and Business Industrial Districts, provided they encompass entire jurisdictions and don’t promote intra-community competition.
The land tax, finally, offers a unique opportunity to pull together the often disparate interests of economic development and environmental groups. Glory and opportunity abounds for both in pursuing this remedy. It should be included in land use and economic development elements of Comprehensive Plans and it has much to offer fence-riding politicians as well. They can raise revenue with no negative impacts on development and they get to offer something to both their pro-growth and anti-growth constituencies.
The task facing planners presents challenging new ground. It is an opportunity to lead. Partnerships with research groups are needed to do more land value taxation studies of individual municipalities. The concept cannot be advanced unless citizens and leaders have facts in front of them to know how others have fared and how they will do under land tax and how it might be phased in. Planners must start analyzing land tax options as part of the Comprehensive Planning process and incorporate their research into those efforts. The gains to be had are many and despite all our well-intentioned best efforts at planning, we must admit the rewards of our conventional regulatory and grantsmanship approaches have been limited. It can be a frustrating profession, but the land tax is one tool which holds the promise of making plans into reality and we ought to take a long hard look at it.
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.
an answer for Jonathan of the Green Party (Nov 7): “What does ‘share our surplus’ mean?”
Our surplus is the values that society generates synergistically. It’s the money we spend on the nature we use: on land sites, natural resources, EM spectrum, ecosystem services (assimilating pollutants). It’s also the money we pay to holders of government-granted privileges like corporate charters. We could share it by paying for the nature we use and privileges we hold to the public treasury then getting back a fair share of the recovered revenue. Used to be, owners did owe rent (“own” and “owe” used to be one word). And presently, some lucky residents do get back periodic dividends: Alaska’s oil dividend and Aspen Colorado’s housing assistance. Doing that, instead of subsidizing bads while taxing goods, is the essence of geonomics.
Jonathan: “Is local currency what you mean?”
Editor: It’s not. Community currency is a good reform, but every good reform pushes up site values. That makes land an even more tempting object of speculation. Now, any good will eventually do bad by widening the income gap – until you share land values.
a study of a phenomenon David Ricardo noted going on two centuries ago. When wine grapes rise to $10,000 a ton from the very best land (last year, cabernet sauvignon commanded an average of $4,021 a ton in the Napa Valley), then vineyard prices soar from $18,000 an acre in the 1980′s to $100,000 an acre five years ago and now for a top pedigree up to $300,000 an acre (The New York Times, April 9, via Wyn Achenbaum). Pricey land does not make wine pricey; spendy wine makes land spendy. While vintners make their wine tasty, nature and society in general – not any lone owner – make land desireable. Steve Kerch of CBS’s MarketWatch (April 5) notes that much of what a home sells for on the open market is a reflection of intangible factors such as what school district the house sits in. The price the builder has to pay for the land also tends to be driven by the same intangibles. Because the value of land comes from society, and because one’s use excludes the rest of society, each user owes all others compensation, and is owed compensation by everyone else. Sharing land’s value, instead of taxing one’s efforts, is the policy of geonomics.
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.
an economic policy based on the earth’s natural patterns. Eco-systems self-regulate by using feedback loops to keep balance. Can economies do likewise? Why don’t they now produce efficiently and distribute fairly? The answers lie in the money we spend on the earth we use. To attain people/planet harmony, that financial flow from sites and resources must visit each of us. Our agent, government, must collect this natural rent via fees and disburse the collected revenue via dividends. And, it must forgo taxes on homes and earnings, and quit subsidies of either the needy or the greedy. As our steward, government must also collect Ecology Security Deposits, require Restoration Insurance, and auction off the occasional Emissions Permit. And that’s about it – were nature our model.
a way to connect the dots. Making the cyber rounds is “The Cavernous Divide” by Scott Klinger, from AlterNet (posted March 21): “As the number of billionaires in the world expands, so does the number of those in poverty.” Duh. The yawning income gap is not news. Nearly every issue of our quarterly digest carries a similar quote. Yet the connection was worked out long ago by one of America’s greatest thinkers, Henry George, who labeled his masterpiece, Progress and Poverty. Techno- and socio-advances always enrich few and impoverish many. Yet progress also pushes up location values – the geonomic insight (is Silicon Valley cheaper now or more expensive?). Instead of taxing income, sales, or buildings, society could collect those values of sites, resources, EM spectrum, and ecosystem services via fees and dues, which would lower the income ceiling, and instead of lavishing corporate welfare, pay out the recovered revenue via dividends, which would jack up the income floor. Dots connected.
a way to 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.
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.
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.
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.