by Jeffery Smith, Portland, OR
Introduction
Since forever, humans have claimed and
counter-claimed every square inch of this planet.
Occasionally, these disputes have ended peacefully. What
has worked in other times and places might work again in
the Mideast. Delivering a double dividend, what settled
land disputes also developed moribund economies and revived
developed ones. Among others, New York, now aiming to
rebuild, has used this policy before. Because it's growing
popular among environmentalists, greens could lead the US
to geonomics.
Bloodless Resolutions
On a distant ridge at dawn, a Palestinian might
gaze across the desert at the hills where his fathers
before him had grazed sheep, where now sprout Israeli
settlements. Many American suburbanites, too, cannot go
home anymore, to childhood’s field or woods or marsh, now
filled or clear-cut or leveled and covered by monotonous
boxy structures. An Australian aborigine knows a similar
scene of displacement and an effective means of redress.
At a British Parliament hearing, an elder
testified, "our land claim doesn't take one piece of land
from anybody." What they want instead is a share of land's
rent. Redirecting rent, the money we spend on the nature
we use enables society to curb taxes on useful effort.
Minimizing taxes on things we create individually while
collecting rent from things created to benefit us all
equally is geonomics. Wherever tried, to the degree tried,
geonomics has worked.
Three times in history, territorial antagonists
yielded peacefully to geonomics. In Denmark, the crown
prince was so eager to try physiocracy (the au currant
version of geonomics), that he deposed his uncle, the
king. In California, runaway land concentration (one
rancher had over a million acres) provoked a schoolteacher
to run for office just to legislate a tax on land values,
not buildings. And in Taiwan, a retreating general was so
desperate that he implemented on the island what he had
merely promised on the mainland. Thus, during the 1840s in
Denmark, the 1890s in California, and the 1940s in Taiwan,
large landowners found it too expensive to hoard land, so
they sold off their excess at prices the peasants could
afford and the tedious struggle between landlord and tenant
ended without bloodshed.
Mideast implementation
These cases involved different classes, not
different cultures. Yet with a new twist the rent rebate
that worked within society may work between societies. The
Koran urges landlords to not gouge tenants but to consider
land a trust. In Israel, admonished to not own land
forever, since the land is Mine (Leviticus), the National
Trust leases all the land to the occupants. These
strictures could lead to geonomics.
Israel and Palestine would establish a steward to
collect land dues and disburse rent dividends a la Alaska's
oil dividend. Since land is more valuable in Israel than
in Palestine, Jews would pay in more than Arabs, yet
everyone would get back the same. And since Israelis
prosper, they drive up land values; having Jews as
co-owners developing land, raising its value, fattening
everyone's Citizens Dividend Arabs might accept
that. Profit does make for strange bedfellows. Two
archrivals, China and Taiwan, recently agreed to explore
for oil together.
Mideast Development
While sharing rent may soothe hurt feelings,
collecting it stimulates development. As a World Bank
report acknowledged, all the Asian Tigers first had land
reform before becoming Tigers. Land taxes impel owners to
put their land to its best use, which requires employment
and construction. As workers exchange wages for goods,
they generate more output for everyone.
Using geonomics, people have turned some of the
poorest lands into the richest economies. Hong Kong is a
barren rock owned by the public. The city collects enough
site-rent to keep taxes on effort way down. Thus prices
are low and investment and income high, moving FORTUNE
magazine to name Hong Kong the world's best city for
business. In a different culture, Mexicali (Mexico)
replaced the property tax with a land tax and bettered
itself.
If Palestine does forgo taxes, it'd become a tax
haven, attracting money from wealthier neighbors without
incurring debt. As Palestine sustains development, it
could sell bonds at a lower rate. When Palestinian bonds
are selling on Wall Street, overlapping self-interest will
wither the appeal of terrorist rhetoric.
New York, Old Story
New Yorkers benefited before from geonomics. After
World War I, the city lacked housing. Borrowing a page
from former mayoral candidate Henry George, the council
exempted new buildings but not underlying sites from
taxation for the next ten years. During the first half of
the Roaring 20s, new construction more than tripled while
in other big cities it barely doubled. Economic good times
came to an end when owners in 1928 began to anticipate the
expiration of the exemption. Stalled housing starts helped
trigger the Great Depression.
More recently, Mayor Rudy Giuliani used to welcome
the school year by suspending for a week the tax on shoes and clothes. Shoppers saved,
stores profited, and the city took in more revenue. If the
city zeroed out taxes on all sales and wages, customers and
workers would flock to the Big Apple, pumping up site
values even higher, providing a fat fund for fixing up
infrastructure. That'd help owners redevelop both lower
Manhattan and the blocks of vacant lots and abandoned
buildings in the Bronx and Bedford-Stuyvesant.
Reject recession
To invigorate our traumatized economy, politicians
push tax buttons and pull subsidy levers. Sometimes they
get it right. In the 1970s around the city of Melbourne
(Australia), some towns lost businesses while others gained
new firms even as the economy was shrinking. The towns
losing companies had the conventional property tax, which
falls mainly on buildings, not on land speculation. The
towns gaining enterprise had a site-value tax that prodded
owners to keep their land at its best use which meant
having tenants who hired people and sold goods. Denmark in
the 1950s raised its rate on land, quickening employment
while slowing inflation. Then in the 60s,the nation
reduced its income tax burden for one year, both investment
and output soared.
Important endorsers
When Johannesburg (SA) taxed land three times
greater than buildings, it recycled sites faster than any
other city in the world. Using urban land efficiently over
and over absorbs development that would otherwise sprawl
onto rural land. Since taxing site-values, not
improvements, in-fills cities, Seattle's Northwest
Environment Watch, a spin-off of WorldWatch (which also
endorses geonomic policy), dubbed the property tax shift
"the sprawl tax". The Sierra Club, Friends of the Earth,
and most major groups endorse shifting the property tax
from buildings to locations.
Some influential constituencies have supported
geonomics. In the 80s, thanks to taxing land six times
higher than buildings, Pittsburgh kept neighborhoods
stable, housing affordable, and crime low. Rand-McNally
named the Steel City "America's Most Livable City" twice.
And the Commission on Affordable Housing set up by the
first President Bush endorsed this property tax shift.
Pro-business supporters include Milton Friedman, Jack Kemp,
and the Philadelphia Association of Realtors.
America's role
As the Chinese character notes, crisis is half
opportunity. To counter global recession and resolve the
Mideast stalemate, Western governments would: (1) eliminate
tariffs on imports from Palestine and elsewhere; (2)
eliminate subsides to domestic producers, so they must
compete with imports; and (3) set a good example; shift
from subsidies to a Citizens Dividend and from taxes to
resource dues. All of us would save boatloads of money
from no taxes on imports, sales, salaries, and homes. Our
governments would stuff their treasuries with the rent from
sites, resources, and sinks (environment as dump site).
Besides rent from land titles, resource leases,
broadcast licenses, and standards waivers, revenue could be
raised, too, from monopoly patents, utility franchises, and
corporate charters. Charging full market value for these
pieces of papers, we'd rake in trillions each year from the
privileged elite. We'd still be the envy of the world but
no longer the master of the world. The terrorist crisis
would make America better; it'd get us to do what we should
have been doing all along.
Beyond borders
After terrorists toppled New York's twin trade
towers, young males in the dusty streets of Palestine
danced in celebration. They wore blue jeans, t-shirts, and
Nike shoes. Our influence extends everywhere; we have no
choice but to lead. The US should put these geonomic
reforms on the table and not budge until a Mideast economic
partnership treaty gets signed. We'd make all future aid
contingent upon reaching an accord.
Where to draw a line in the sand becomes a lot less
contentious when land and oil are no longer spoils of war
and when neighbors do not endure drastically different
standards of living. Growing up, we learn to not fight
over toys but to take turns. Societies need to learn this,
too.
Early last century, Gifford Pinchot, first head of
the US Forest Service, said: "The earth belongs of right to
all its people and not to a minority, insignificant in
numbers but tremendous in wealth and power. The people
shall get their fair share of the benefit which comes from
the development of the country which belongs to us all with
equal opportunity for all and special privileges for none."
A man in a Republican administration could say that then.
We need to hear it again now.