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This 2014 excerpt of EUROPP (European Politics and Policy) of the London School of Economics, Apr 24, is by Johannes Wachs.
Hungary faces a greater corruption problem than other states in Central and Eastern Europe, such as the Czech Republic and Slovakia. Corruption is systemic, rather than associated specifically with particular governments or politicians.
EU funds are particularly susceptible to the problem; 33.8 per cent of EU funded projects received only one bid, compared to 29 per cent of those funded with national funds alone. Post-award contract modification was three times more likely when EU funds were involved. Besides the waste and damage corruption brings, the misuse of EU funds exacerbates tensions between Hungary and net-contributor states in the rest of the EU.
EU payments to Hungary in the 2007-2013 budget cycle amounted to a positive balance of 24 billion euros, or above 3 per cent of the country’s GDP every year. Given the anemic growth of the Hungarian economy in the last decade and low levels of investment, these funds are critical to Hungary’s development.
Bribes and similar interactions between lower level bureaucrats and private level individuals are rare. Instead there is an unspoken culture of ‘legal corruption’, a common understanding in the bureaucracy that connected firms should receive preference.
Many contracts are handed out by manipulation of the procurement process, and without competition. For example, an unattractive contract may be modified after a friendly firm secures the deal. Alternatively, limited advertisement or a short submission deadline can exclude firms that are out of the loop.
Groups of business elites connected to different political factions thrive or struggle based on who is in power. Prior to the 2010 Hungarian election, market leaders lost about 25-30 per cent of their market share, and were replaced by a new group of companies that saw a comparable increase in market share following the change of government. A high profile example is the success of Közgép Zrt, a construction company with many personal connections to the government.
Political capture of the bureaucracy because of incumbency is a serious problem in the region. Moreover, the increasing role of the state and domestic actors in the banking and utility sectors also raises the potential for new areas of corruption to emerge.
Ed. Notes: Most people all over the world suffer from the corruption of the well-connected. Only a few societies have managed to curb corruption. How did they do it? However they did it, can corrupt societies copy what worked elsewhere? To learn what works, political reformers might want to study sociology as well.
Personally, I think ordinary people must demand a Citizen’s Dividend just as boldly as insiders demand a huge slice of the action. It’s ironic normal citizens have a harder time demanding this fundamental justice than greedy insiders have demanding more than a fair share. But we can’t leave so much wealth on the table and expect the innately grasping to walk away from it.
We must capture and share society’s surplus so it won’t tempt the unscrupulous. Further, we must demand an end to taxation, replacing them with dues, and thereby elevate people from mere taxpayers — peons — to respected members of society with equal rights. Geonomics is how to do it.
The US Service Women’s Action Network (SWAN) reports that sexual assaults and harassment continue to occur “at alarming rates.” Sexual violence has long-lasting effects, and the many years of Pentagon studies and Congressional hearings have not ended it. There were 5,061 sex assault reports in the 2013 fiscal year.
As stated well by SWAN, sexual assaults in the military reduce the strength of the US armed forces and threaten national security. Defense Secretary Chuck Hagel has vowed to prevent these assaults, but we need more than vows and speeches.
An effective tool in preventing such assaults would be to declare that any assault by a soldier against another soldier is treason. Attacks of any sort against a member of the armed forces aids the enemy by weakening defense against external enemies. The assaults and harassment reduce recruitment and the retention of skilled personnel. It is outrageous that the military that is supposed to protect the country cannot protect its own members.
A declaration that assaults within the military are crimes of treason would make a stark impression. This declaration should be buttressed with posters and repeated in military news media. The troops should be ordered to say out lout in unison, “Assault is Treason!”
The punishment for proven assaults, after a trial, should include public shaming. The best preventative is internal, the feeling that such acts are shameful and odious.
Some generals and Pentagon officials say that actions to reduce and investigate assaults should remain within the military, to avoid breaking up the chains of command. But they have had many years to deal with this. It seems that the civilian practice of hiring attorneys and bringing the matter to court with representatives chosen by the victims provides better assurance of justice. Moreover, the victims should have the common-law right to sue those who assault them for damages. Such lawsuits would be most effective if the victim had the legal ability to sell the tort claim to those who would have a better ability to prosecute the case.
All Americans should support the idea that assaults among the military are treasonous acts. An assault on a fellow soldier is not only an attack against that person, but an attack on the whole military and an attack on the whole nation.
Treason is not to be treated lightly, and neither should sexual attacks in the military.
Charges for renting the land on which wind farms are built is up to 10 times that of coal-fired power stations.
Wind turbine owners pay private land owners between €35,000 and €50,000 ground rent a year per turbine for contracts of between 15 and 20 years. This takes the total ground rent over the full contract to around €1m.
Millions of euros in government subsidies are disappearing into the pockets of land owners, forcing up the price of wind energy.
Currently just 4% of Dutch energy comes from sustainable sources.
The amount of solar power generated in the Netherlands by companies and private households has almost doubled over the past year.
Ed. Notes: Should we even have any economic policy? Politicians don’t know the first thing about economics. They don’t know that subsidies do very little in the way of benefitting the needy new industry (or whatever) and do very much in the way of benefitting whoever owns the land that the needy need. Long ago Winston Churchill pointed this out with his story about the do-gooders of his day who got the tolls for using bridge reduced — which resulted in the rent for apartments going up by the same amount.
Better than letting politicians subsidize anything, even good things like clean energy, is to instead pay everyone a dividend from society’s surplus, which is society’s spending for the land and nature it uses. Better than letting politicians tax anything, even bad things like pollution, is to instead charge everyone a fee or fine or rent for the values they take (doing that is what would redirect our spending for land, etc, into the public treasury).
If government made polluters pay, there’d be no supposed need to let non-polluters take handouts. And economies could operate as efficiently as nature designed them to. And politicians? They’d have to amuse themselves some other way.
This 2014 excerpt of Undernews, Apr 23, is by Sam Smith.
The Walton family owns the majority of Walmart stock and is the richest family in the country. At the same time, taxpayers help pad Walmart — by at least $7.8 billion annually — and the Walton family’s profits.
Walmart employees are so poorly paid, they need food stamps, section 8 housing, and medicaid to make ends meet. Those programs for the poor constitute a subsidy to companies paying poverty wages. Not only does Walmart not need these subsidies, but the company could afford to raise salaries, more than half of whom made less than $25,000 last year.
Walmart is the largest private employer in the United States, with 1.4 million employees. The company, which is number one on the Fortune 500 in 2013 and number two on the Global 500, had $16 billion in profits last year on revenues of $473 billion. The Walton family reaps billions in annual dividends from the company. The six Walton heirs, with a net worth of $148.8 billion, have more wealth than 49 million American families combined.
Ed. Notes: Is the obvious solution — pay employees more — the best or only solution? What about some company stock to employees so they’d get the dividends now going to owners such as the Walton family? And bigger picture, what about geonomics?
What about paying citizens a dividend from our common wealth, from our society’s surplus, which is the value of land and resources? What about de-taxing wages? Once we increase the income to everyone including working people and decrease their costs — such as taxation and inflation — then they’ll be in the position where they’ll have the leverage to negotiate higher, fairer wages without politicians butting in.
Further, what about ending direct subsidies to corporations, such as the road to Walmart HQ paid for with public tax dollars? Then corporations won’t be so filthy rich … and taxists won’t be so envious. Critics point out the end result — an amassed fortune — but turn a blind eye to the ways that the insiders hog the common wealth for themselves.
This 2014 excerpt of The Conversation, Apr 17, is by David Spencer, Professor at University of Leeds, and it also appeared at MacroBusiness.
Why we are still working so hard? The past century saw huge technological advances and yet there hasn’t been a corresponding increase in leisure time: people are working as hard as ever.
The Netherlands shows how shorter work time can be achieved without a reduction in productivity and in living standards. Longer work hours are also associated with poor health and higher mortality rates – we may be risking our lives by working longer.
The case for working less is ultimately about promoting a higher quality of life including a higher quality of work. It is about giving us more time to realise our creative potential in all kinds of activities; it is about achieving a life that uplifts us, rather than leaves us exhausted and frustrated.
The build-up of household debt, especially in the US and the UK, has put added pressure on workers to work longer.
Employers won’t voluntarily reduce work time, and workers remain unable or unwilling to opt for shorter work time themselves. We must gain the collective will to curb the time we spend at work. A four or three day working week is within our grasp.
Ed. Notes: The author thinks a law saying people may not work too much should do the trick. It hasn’t worked yet. What’s really needed is for everybody to get an extra income.
From where would come the money? It could be all the money we spend for the nature we use. Government could use taxes, fees, dues, leases, etc, to redirect our spending for land (in mortgages mostly) and for resources (in leases mostly), collecting it into the public treasury. Then disburse that revenue — several trillion dollars each year in the US — as equal shares to the citizenry.
Receiving their Citizen’s Dividend — about $1k/mnth — people could choose to work less and play more at the same standard of living. They’d not only have more fun but they’d live longer and incidentally shrink the income gap. Greater economic parity would also impart a whole world of benefits.
This 2014 excerpt of The Associated Press, Apr 22, is by Stephen Ohlemacher.
The Internal Revenue Service has paid more than $2.8 million in bonuses to employees with recent disciplinary problems, including $1 million to workers who owed back taxes.
More than 2,800 workers got bonuses despite facing a disciplinary action in the previous year, including 1,150 who owed back taxes.
Other examples of misconduct by workers getting bonuses included misusing government credit cards for travel, drug use, violent threats, and fraudulently claiming unemployment benefits.
The IRS had about 100,000 workers during the period under review. In the 2011 budget year, more than 70,000 IRS workers got cash bonuses totaling $92 million. In the 2012 budget year, nearly 68,000 workers got cash bonuses totaling $86 million.
Tax compliance at the IRS is generally better than at other federal agencies. In 2011, 3.2 percent of federal workers owed back taxes. The delinquency rate for the general public was 8.2 percent.
Ed. Notes: Such irony is delicious! I wonder if corruption could be cut out if the system itself were not corrupt? What if government did not take people’s earnings but instead recovered our common wealth for our common benefit?
I mean, don’t charge people for the wealth they create but for the nature and privileges they take. Don’t levy their wages, their purchases, and their buildings, but charge them for their pollution, their extraction of natural resources, and their occupying locations in settled areas. Then people would pay only for what they take, not what they make.
Further, citizens could be paid a fair share of the raised revenue. In such an equitable system, the model for justice would be clear to all, and the bar would be set so high, it seems it’d be hard for employees to cheat but rather would feel inspired to strive for the highest ideals.
This 2014 excerpt of Business Insider, Apr 21, is by Rob Wile, interviewing Mac Robertson, an independent portfolio manager and macro strategist who critiqued Thomas Piketty’s new book, Capitalism in the 21st Century.
BI: You say Piketty erred in trying to compare nations’ outcomes. What did you mean?
MR: Nation states, as far as macro economics, are really a fiction. The real aggregations are among hegemonic powers which set economic policy for their group or are a constantly morphing alliances of regions that transcend national borders.
And currently there is only one true hegemon which is the USA, but regional hegemons have defining capability if the USA has benign indifference in a certain region. For example Brazil has much clout in South America now. This is always a fact of life now and the usefulness of examining many nations hasn’t really been useful since Metternich.
What this means is there is little relevancy or usefulness in comparing Italy in the 20th century to the USA, for example.
BI: You said you preferred Henry George’s analysis of income distributions. Who was he and what did he say?
MR: Henry George was akin to Keynes and also Locke. The common denominator is one class of folks are “rentiers” who only seek a low risk return on their assets — usually inherited. That income is “rent.” In George’s time that was, for the most part, real rent on land leases.
George proposed that all funding of the public purse would be a tax on rent. Keynes went further and proposed that not only would rentiers be disproportionately taxed, but their ” euthanasia” should be sought. George would propose that inequality between rentiers’ capital accumulation and income of consumers and entrepreneurs is the only inequality to seek reducing or eliminating. Keynes agrees, so do I.
To not differentiate this income type invites disaster. Why would you tax a Bill Gates midstride? It would be very destructive. Yet Bill Gates’ income explains much of the income inequality. But would taxing late-stage Buffett be good? Perhaps. Certainly to tax third-generation rentiers and forcing the money back into the hands of future Bill Gateses, perhaps by funding universal education to promote future Bill Gateses, is good.
This 2014 excerpt of The Law School Tuition Bubble, Apr 21, is by Matt Leichter.
Anthropologist David Graeber is probably best known for writing the 2011 book Debt: The First 5,000 Years. Last summer he penned “On the Phenomenon of Bullshit Jobs,” which posited as a general rule that “the more obviously one’s work benefits other people, the less one is likely to be paid for it.” Jobs like nurses, cooks, and fight-clubbers-who-guard-you-while-you-sleep-so-do-not-fuck-with-us are good, bond traders, not so much. “Bullshit Jobs” was attacked by every neoclassically trained economist for rejecting marginal product theory.
The problem isn’t marginal product theory but what John Bates Clark did to it: tear land out because he was a shill for robber barons who hated Henry George and his land-taxing followers.
Graeber told PBS why he favored giving everyone a basic income instead of government welfare benefits of various types, a proposal favored by a handful of conservatives, most notably Charles Murray. Yet basic income, instead of government services, has a few problems. One, landowners will suck the benefits up, so without taxes on land rents, poverty won’t vanish. Two, paying for a basic income out of the current tax system will distort incentives for higher-income taxpayers. Three, some people need more government services than the basic income check will provide.
Ed. Notes: As more people acknowledge the need for a basic income, hopefully they will consider the soundest way to fund an extra income for everyone. If they win legislation to recover all “rents”, and share that revenue among the citizenry, then the payment won’t be conventional welfare but will be a Citizen’s Dividend, a fair share of our common wealth. Presently society’s surplus goes to just a few on top but it belongs to all of us and should go to all of us.
Ed. Notes: How do corporations get away with it? Because government was not set up to defend your rights to a healthy environment. Government was set up to limit the liability of businessmen when something goes wrong after they tried to make a buck by putting nature, worker, and consumer at risk. Look at the history of politics. The laws that limit liability are centuries older than the laws that “protect” the environment.
How can we get government to befriend citizens instead of lobbyists? One key reform is restrict the power to tax. Don’t let politicians tax anything they want. Limit them to taxing infringements such as pollution. Let them use taxes and fees, etc, to recover common wealth — such as the worth of Earth — and to leave our private wealth alone.
Worried about no longer taxing the rich? Don’t. First, we don’t really accomplish much of that anyway. Second, if we recover our common wealth upstream, then there won’t be any undue fortunes downstream to long to tax.
Once government can’t tax anything, and as long as politicians want to raise revenue, then they’d have to capture the same natural values that are now being captured by the oil companies. Once oil companies are no longer filthy and unduly enormously wealthy, they won’t be able to pay government to do their bidding — and limited liability could be severely curtailed.
Then, when businessmen have their own incomes on the line, they won’t be so cavalier about putting everyone else at risk. Industrial “accidents” would become as rare as a misplayed note at a symphonic concert. Industry should not be sloppy; it could become a thing of beauty — once deprived of free and easy limited liability.
The debates on raising the minimum wage have ignored one important consequence: the effect on land rent. I illustrate the relationship between a raise in wages and land rent with a quantitative model.
Suppose there is a factory that produces dried papayas. The firm pays all workers the market wage of $10 per hour. There are 10 workers, and the “marginal product” of the 10th worker, i.e. the extra output added by that worker, is 10 units. The marginal product of the 11th worker is only 4 units. The 9th worker added 12 units The 8th worker added 14 units. If we add up the value added per hour by each worker, we get 10 + 12 + 14 + 16 + 18 + 20 + 22 + 24 + 26 + 28 = 190 units. The dried papayas sell for $1 each, so the sales per hour equal $190. The total wage per hour is 10 times $10 = $100.
The owners invested the equivalent of $400 per hour in the business, and seek a return of ten percent, or $40 per hour, which they withdraw from revenue. $190 – $100 – $40 leaves a surplus of $50. Where does it go? It is the rent charged by the landlord per hour for the work space.
Now impose a minimum wage which raises the wage rate to $12. The last worker hired produces only $10 worth, so he is fired. That last worker had the same skill as all the others, but one worker has to be fired so that the marginal product of labor is raised to $12. Total wages now equal 9 times $12 = $108. The total value sold is now 180 units, for sales of $180. After subtracting $108 for labor and $50 for rent, there remains $22 for the hourly return on investment, a return of only 5.5 percent.
Now there are four possible alternatives. First, the owners can get a return of 10 percent elsewhere, so they shut down the business. Second, the owners can offer to renegotiate the rent paid to the landlord. Third, the owners can raise the price of the product. Fourth, the owners can reduce their labor costs by substituting more machines, if possible.
If the firm competes in a global market, the third option is not possible; the owners cannot raise the price. So they negotiate with the landowner. If the owners kept their return at $40, the surplus becomes $180 – $108 – $40 = $32. The landlord replies that their assets are less productive, generating sales of $180 rather than $190, so a new firm would have capital goods of 18/19 of $400, for $379. A ten percent return is $38. Therefore the rent surplus is $180 – $108 – $38 = $34. The owners accept this as the new hourly rent. Much of the increase in the hourly wage has been at the expense of less commercial land rent. That is how the firm can stay in business while paying the higher wage.
The total purchasing power is now $108 in wages, $38 in capital yields, and $34 in land rent, for a total of $180. So the income is sufficient to buy back the product.
Now let us go back to the workers. The worker who is fired is now on government welfare, and the nine working at $12 per hour get taxed $1 per hour to generate $9 for food and housing subsidies for the former worker. The housing landlords realize that they can raise the rents by $1 per hour of labor, since the workers could afford to live their prior to the increase in the minimum wage. The higher taxes and rent eat up all the wage increase.
Thus the housing landlords gain $10 per hour of rent paid by the nine workers plus the laid-off former worker. This raises their total rent to $44, offsetting some of the loss of the commercial rent paid by the firm.
If the firms implement option 3 and raise the prices of their products, the workers are now worse off than before, after paying more for goods plus higher taxes and higher rent.
In effect, a minimum wage is a tax on the employers of low-wage workers. It is economic folly to concentrate the minimum-wage tax on employers. If the people wish to raise the lowest wages, a better tool is to widen and raise the earned income tax credit. The reduction of taxes on low-income workers would be paid for by raising taxes on everyone else.
But the best solution of all to the problem of poverty is to do what the American economist Henry George proposed: to abolish all taxes on earned income, and shift to public revenues from land rent. That shift would increase both employment and wages.
When the minimum wage is raised, people only see the superficial appearance of some workers getting a bigger paycheck. What is not so visible is the reduction of land rent in commercial real estate, and the increase in the rent of residential real estate, especially as it occurs over time. The reduction of rent is often relative rather than absolute, as rents rise but not by as much as they would if enterprises were more profitable. And people do not connect the rise in residential rent to the general increase in low-income wages.
The original problem is in not allowing the market to work. Wages are artificially reduced by taxation, while land values are raised by subsidies. If higher minimum wages are mostly at the expense of commercial rent, and end up being eaten by higher residential rent, it is simpler and more effective to directly tap the land rent for public revenue while eliminating taxes on wages.
This 2014 excerpt of Weekly Wastebasket, Apr 18, is by Taxpayers for Common Sense.
The public helps the “cowboy” live high on the hog with sweetheart deals including water, mining, crop insurance, grazing, livestock disaster, and other subsidies from Uncle Sam.
Recently federal Bureau of Land Management (BLM) agents seized Nevada rancher Cliven Bundy’s cattle to settle the more than $1 million in fines he has racked up since 1993. The fines are a result of Bundy grazing his cattle on BLM lands where grazing is prohibited, land for which he didn’t have one of the 18,000 federal permits in the west.
Government data pegs private grazing fees at roughly $18 per Animal Unit Month (AUM represents the amount of forage (e.g. grass) a cow and her calf need for a month) throughout the west over the past two years. In Nevada the average private grazing fee was $15 per AUM. Yet this year the BLM fee is set at $1.35 per AUM.
The fees charged for grazing permits fall far short of the cost taxpayers incur for opening these lands to ranchers, covering a little more than 13 percent of overall program funding in fiscal year 2004.
Certainly there are differences between private land and public land in quality, but there are also a variety of federal programs such as Wildlife Services (killing wolves and other predators) that also benefit ranchers.
If ranchers owned that land, they would have to maintain it and pay taxes on it. Having taxpayers subsidize your grazing fees is a much cheaper way to go.
Federal grazing rules are outdated, too generous, and don’t even come close to covering the costs taxpayers bear in maintaining federal grazing lands.
Ed. Notes: Not just Westerners but many people assume that owning land means keeping its rental value rather than paying its rental value. However, owners do owe. Owners do not create land and they do not create its value. The society they belong to might not create the land, either, but they do create its value. They create the demand for the land which creates its value and price and rent.
People need to evolve to this understanding. Not long ago, people thought that if they had a kid, they owned that kid’s labor. If a daughter, they could sell the kid (charge a dowry). Times have changed about children. Now public awareness must change about land.
Another problem is government spending. It’s not just ranchers who should not get subsidies; it’s anybody. Letting politicians decide who to bestow public money upon is the problem. Much better is to simply, automatically divvy up common wealth among the citizenry equitably.
With people getting this extra income, they would not need much in the way of government programs. They could happily shrink public budgets. With government not needing so much revenue, they could repeal most taxes, especially those that raise costs and restrict output. So people would pay less tax at the same time they’d receive more income.
That should make even cowboys happy, shouldn’t it?
This 2014 excerpt of the New York Times, Apr 18, is of a book review by Howard W. French.
“The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor” is by William Easterly who describes himself as a recovering expert, referring to his career at the World Bank.
“The technocratic approach ignores what this book will establish as the real cause of poverty — the unchecked power of the state against poor people without rights,” he writes. He cites African land grabs.
Easterly’s other major claim is that technocratic advisers attach little importance to the historical background of the countries they work on. He offers the example of the World Bank, in 1949, whipping up a 950-page development plan for Colombia in less than a year, in which recommendations weren’t specific to that country.
He claims paternalism and a belief in the incapacity of others is an unexamined foundation of development ideology.
He touts Adam Smith who understood that not all problems could be solved by the Invisible Hand of the market and describes Hayek as a fierce proponent of individual liberty who favored a minimum income guaranteed by the state and attacked British Conservatives as “paternalistic.”
The greatest benefits to a society come from the spontaneous, uncoordinated actions of mostly small actors whose talents are allowed to flourish, as opposed to top-down initiatives involving the state or outside donors.
This 2014 excerpt of Common Dreams, Apr 16, is by Jon Queally.
The AFL-CIO’s latest ‘Executive Paywatch’ report shows the astronomical disparity between the annual pay of the nation’s top executives —- which continue to rise year after year —- and the stagnant wages that middle class and the working poor continue to suffer.
U.S. CEOs averaged $11.7 million in 2013 while the U.S. worker earned $35,293. That means CEOs were paid 331 times that of the average worker.
In 2013, CEOs made 774 times more than those who work for minimum wage.
While many of these companies argue that they can’t afford to raise wages, in 2013 the S&P 500 companies earned $41,249 in profits per employee.
Workers continue to scrape by in an economy that has left them out of the so-called recovery.
Ed. Notes: While CEO pay is way too high, why don’t critics ask why? Since they don’t ask, they can’t answer. Let me give it a shot. It’s because Big Business gets:
sweetheart deals on contracts,
leeway to violate laws, even fail to pay what they owe (such as royalties) and not get punished,
shift taxes and other costs onto employees and consumers, and they get to
capture what should be our common wealth (the economic worth of government-granted privilege like limited liability and the worth of Earth).
All this tilts the playing field, giving them the competitive edge over both small business and people needing jobs. And, as noted above, companies don’t have to negotiate with employees who’re enjoying material security.
While workers might not receive fair pay, it’s because they receive zero, no, portion of the common wealth. Imagine if everyone got a share of the worth of Earth — sort of like what’s done in Alaska with oil value and in Aspen CO with land value. If you got an extra income without working, for just being a decent member of society with an equal right to Earth, then you’d have a bit of financial cushion which you could use as leverage to negotiate a higher wage.
So the solution to low wages is not to legislate higher wages but to demand a fair share of society’s surplus. Not only would workers benefit, but so would people who’re not working — children, the elderly, the infirm, and the misfits who do not belong in conventional society but in a world that no longer exists or has not yet been born.
If we shared the immense stream of spending for nature — for land, resources, EM spectrum, ecosystem services, etc — automatically, if everyone got a share, even the rich, automatically, then we could shrink government bureaucracy and bureaucratic programs to an absolute bare minimum. When government is not too active, then it does not need so much money; its budget could be shrunk and its taxes along with it. Despite the critics’ demand for higher taxes, lower overall taxes would benefit workers (they’re the ones working from Jan 1 to early May to pay all the taxes levied upon them) more than the rich, as long corporate welfare and the rest of the favors (above) for business are repealed.
So, do be concerned about inequality and unfair pay but do demand a solution that truly works: geonomics.
This 2014 excerpt of Strong Towns, Apr 16, is by Andrew Price.
Relying on sales tax means everything other than retail becomes a burden. Shops generate revenue for the city, while houses, businesses, and factories that do not make any direct sales do not generate any direct tax revenue – yet consume infrastructure and services.
In sales tax based cities, building more retail does not automatically mean more tax revenue. There are only so many toothbrushes, televisions, and cars a person will want to buy in a year. A new store opening up will not always mean we will buy more toothbrushes, televisions, or cars.
If a city invests downtown and that attracts more shoppers downtown, tax revenue won’t necessarily increase as people are not necessarily spending more – they are just spending their money downtown instead of in the suburbs.
Building a new restaurant does not mean I will eat out more, only that I will have more choices of where to eat when I decide to eat out.
There is also the threat of online retail where people can bypass paying sales tax completely. Wealthier residents that travel frequently may do most of their spending out of state, or even in a foreign country. The city has access to none of this.
The largest problem with sales tax based cities is that they have no way of capturing or measuring the performance of their investments. Building a neighborhood park or cleaning up a residential street will not lead to people spending more. We end up with a delusion that cities are like charities – to provide services and infrastructure for the people no matter the cost, because there’s no way to capture or measure it.
In order for a city to make a return on their investments, as well as to judge if an investment was productive, cities need a way to capture the increases in the value of their areas they invest in. Typically, cities capture the value of their communities through property taxes or land value taxes.
This 2014 excerpt of Slashdot, Apr 16, is by Soulskill.
“According to a recent survey of 1,000 U.S.-based software developers, 56 percent expect to become millionaires in their lifetime. 66 percent also said they expect to get raises in the next year, despite the current state of the economy. Note that some of the other findings of the study (scroll to bulleted list) seem overly positive: 84 percent said they believe they are paid what they’re worth, 95 percent report they feel they are ‘one of the most valued employees at their organization,’ and 80 percent said that ‘outsourcing has been a positive factor in the quality of work at their organization.’”
Ed. Notes: If people in IT had to pay full value for the patents and copyrights that the government gives them, could it be such a lucrative field? New fields that are popular with consumers are, naturally, a gold mine. But cheap monopolies exaggerate the value of new programs.
Also, a lot of money and time and talent could be saved if there were some standardization. Another industry that changed everyone’s lives at the time — railroads — eventually standardized the width of train tracks, which really ratcheted up efficiency, so railroads could not profit off mere bottlenecks. Some day certain consensed upon protocols could save everyone big bucks in software, too.
Meanwhile, whenever software developers do strike it rich and buy housing, there they drive up the price of land. That makes housing unaffordable for those who have not struck it rich … at least until society wakes up and recovers and shares the socially-generated value of land.
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.
not exactly Georgism, the Single Tax on land value proposed by Henry George. He did, tho’, inspire most of the real-world implementations of the land tax that some jurisdictions enjoy today, and modern thinkers to craft geonomics. While his name and our remedy both begin with “geo” since both words refer to “Earth”, the two have their differences. (a) George pegs land monopoly as the fundamental flaw while geonomics faults Rent retention. (b) To fix the flaw, George was content to use a tax, while geonomics jettisons them in favor of price-like fees. (c) George focused on the taking while geonomics headlines the sharing. George envisioned an enlightened state judiciously spending the collected Rent while geonomics would turn the lion’s share over to the citizens via a dividend. (d) And George, as was everyone in his era, was pro-growth while geonomics sees economies as alive, growing, maturing, and stabilizing. Despite these differences, George should be recognized as great an economist as Euclid was a geometrician.
a manual. The world did not come without a way for people to prosper, and the planet to heal and stay well; that way is geonomics. Economies are part of the ecosystem. Both generate surpluses and follow self-regulating feedback loops. A cycle like the Law of Supply and Demand is one of the economy’s on/off loops. Our spending for land and resources – things that nobody made and everybody needs – constitutes our society’s surplus. Those profits without production (remember, nobody produced Earth) can become our commonwealth. To share it, we could pay land dues in to the public treasury (wouldn’t oil companies love that?) and get rent dividends back, a la Alaska’s oil dividend. Doing so let’s us axe taxes and jettison subsidies. Taxes and subsidies distort price (the DNA of exchange), violate quid pro quo by benefiting the well-connected more than anyone else, reinforce hierarchy of state over citizen, and are costly to administer (you don’t really need so much bureaucracy, do you?). Conversely, land dues motivate people to not waste sites, resources, and the ecosystem while rent dividends motivate people to not waste themselves. Receiving this income supplement – a Citizens Dividend – people can invest in their favorite technology or outgrow being “economan” and shrink their overbearing workweek in order to enjoy more time with family, friends, community, and nature. Then in all that free time, maybe we could figure out just what we are here for.
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.
about the money we spend on the nature we use. It flows torrentially yet invisibly, often submerged in the price of housing, food, fuel, and everything else. Flowing from the many to the few, natural rent distorts prices and rewards unjust and unsustainable choices. Redirected via dues and dividends to flow from each to all, “rent” payments would level the playing field and empower neighbors to shrink their workweek and expand their horizons. Modeled on nature’s feedback loops, earlier proposals to redirect rent found favor with Paine, Tolstoy, and Einstein. Wherever tried, to the degree tried, redirecting rent worked. One of today’s versions, the green tax shift, spreads out of Europe. Another, the Property Tax Shift, activists can win at the local level, building a world that works right for everyone.
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 heri-tage 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 divi-dend, as Tom Paine suggested, and taxes (except any on natural rents) could be abolished, as Thomas Jeffer-son suggested. Were we sharing Earth by sharing her worth, territorial disputes would be fewer, less intense, and more resolvable.
a discipline that, compared to economics, is as obscure as Warren Buffett’s investment strategy, compared to conventional investment theory, about which Buffett said, “You couldn’t advance in a finance department in this country unless you taught that the world was flat.” (The New York Times, Oct 29). The writer wondered, “But why? If it works, why don’t more investors use it?”
Good question. Geonomics works, too. Every place that has used it has prospered while conserving resources. Yet it remains off the radar of many wanna-be reformers. Gradually, tho’, that’s changing. More are becoming aware of what geonomics studies – all the money we spend on the nature we use. Geonomics (1) as an alternative worldview to the anthropocentric, sees human economies as part of the embracing ecosystem with natural feedback loops seeking balance in both systems. (2) As an alternative to worker vs. investor, it sees our need for sites and resources making those who own land into landlords. (3)As an alternative to economics, it tracks the trillions of “rent” as it drives the “housing” bubble and all other indicators. And (4) as an alternative to left or right, it suggests we not tax ourselves then subsidize our favorites but recover and share society’s surplus, paying in land dues and getting back “rent” dividends, a la Alaska’s oil dividend. Letting rent go to the wrong pockets wreaks havoc, while redirecting it to everyone would solve our economic ills and the ills downstream from them.
People must learn to stop whining so much and feel enough self-esteem to demand a fair share of rent, society’s surplus, the commonwealth.
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.
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.
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.
Happiness is the absence of the striving for happiness.
Parentage is a very important profession, but no test of fitness for it is ever imposed in the interest of the children.
George Bernard Shaw
Commerce with all nations, alliance with none, should be our motto.
The mass of men lead lives of quiet desperation.
Henry David Thoreau
The equal right of all men and women to the use of land is as clear as their equal right to breathe the air. It is a right proclaimed by the fact of their existence. For we cannot suppose that some men and women have a right to be in this world and others do not.
A man must not deny his manifest abilities, for that is to evade his obligations.
Think of all the beauty still left around you and be happy.
Never let your good get in the way of your better.
The real voyage of discovery consists not in seeking new landscapes but in having new eyes.
Courage is saying, “Maybe what I’m doing isn’t working; maybe I should try something else.”