The Geonomist Volume Eleven Issue Four

Geonomics is …
... of interest to Dave Lakhani, President Bold Approach (Mar 8) and Matt Ozga (Jan 29): “I write for the Washington Square News, the student run newspaper out of New York University. Geonomics seems like it has great significance, especially in this area. When was geonomics developed, and by whom?”

About 1982 I began. Two years later, Chilean Dr Manfred Max-Neef offered the term geonomics for Earth-friendly economics. In the mid-80s, a millionaire founded a Geonomics Institute on Middlebury College campus in Vermont re global trade. In the 1990s, CNBC cablecast a show, Geonomics, on world trade as it benefits world traders. My version of geonomics draws heavily from the American Henry George who wrote Progress & Poverty (1879) and won the mayoralty of New York but was denied his victory by Tammany Hall (1886). He in turn got lots from Brits David Ricardo, Adam Smith, and the French physiocrats of the 1700s. My version differs by focusing not on taxation but on the flow of rents for sites, resources, sinks, and government-granted privileges. Forgoing these trillions, we instead tax and subsidize, making waste cheap and sustainability expensive. To quit distorting price, replace taxes with "land dues" and replace subsidies with a Citizens Dividend.

Matt: “This idea of sharing rents sounds, if not explicitly socialist, at least at odds with some capitalist values (only the strong survive & prosper, etc). Is it fair to say that geonomics has some basis in socialist theory?”

A closer descriptor would be Christian. Beyond ethics into praxis, Alaska shares oil rent with residents, and they're more libertarian than socialist. While individuals provide labor and capital, no one provides land while society generates its value. Rent is not private property but public property. Sharing Rent is predistribution, sharing it before an elite or state has a chance to get and misspend it, like a public REIT (Real Estate Investment Trust) paying dividends to its stakeholders – a perfectly capitalist model. What we should leave untaxed are our sales, salaries, and structures, things we do produce.

In Virginia, the number of localities asking the state for permission to tax land and buildings at different rates has doubled. Last year, one city, Fairfax, won the right to split its property tax rate. This year, both the city of Roanoke and Prince William County have sought permission. With near unanimity, the legislature has already passed Roanoke's bill; if the governor signs both enabling bills, the two jurisdictions will be able to un-tax structures while up-taxing sites. A higher rate on locations with none on improvements would discourage speculation and encourage better land use, revitalizing city centers while curbing sprawl. If the home state of Thomas Jefferson, an early advocate of recovering ground rent while un-taxing useful efforts, keeps doubling the number of shifty jurisdictions, they may soon surpass Pennsylvania, the leader with 20 who tax land more than buildings. For nearly a century, the Pennsylvania constitution has allowed localities to shift their property tax without state approval. (Tax Notes via Tax Analysts' Tax Base via Josh Vincent in MTTS, Jan 21)

In Oregon, Rep Jackie Dingfelder (D) introduced a constitutional amendment, HJR 30, to let localities shift the property tax. Co-sponsor and chair of the Finance Committee, Lane Shetterly (R), is choosing a hearing date. Dr. Greg Jacobs of PSU, one of the leaders of the local Sierra Club, offered to ask their Salem lobbyist to seek more co-sponsors. To supply your legislators with more info on tax shifting, introduce us to them.

You gotta laugh with Paul Skeptic (Dec 28): “I just watched the end of Survivor. It was the first time a person ran the show from start to finish. He was a car salesman! I have always said that a successful used car salesman is the best-adapted human today. They don't need any skills or training, no understanding of life or politics, just a feel for how to manipulate people – a flowing understanding of what to say at that moment, w/o the bother of even having to think. A mind that sees words like truth and honesty just the same as quality or speed – all relative to what is best for them. They are not bothered by a conscience, they just live in the moment. Words are no more than tools for them to reach what they want.” So more survivors should run for office, and if our esteemed leaders ever lose, a career in game shows awaits them. As more a mass audience than an interactive society, I suppose we deserve both reality TV and surreal politics. War is serious business. Or maybe it's just business. But it's certainly serious. To lighten your mental load (mainstream media insists you take politicians' guile seriously), check out these jokes about economics and those who profess it. Grab yourself a giggle at http://netec.mcc.ac.uk/JokEc.html.

For the first time, the Scottish Parliament passed a non-government motion without amendment. While most members abstained, those voting January 30 overwhelmingly supported the motion by the Scottish Green Party to assess how land value taxation could contribute to the cultural, economic, environmental and democratic renaissance of Scotland.

Of the presidents elected lately in Taiwan, Mexico, Brazil, and Korea, the latter, Roh Moo-hyun, might actually provide humanity useful leadership. Buoyed by young, progressive, and enthusiastic supporters, on December 19th Roh won by a narrow margin. Then he appointed as head of the Economic Subcommittee of the transition team Professor Lee Joung-woo, editor of Rethinking Henry George a Century Later, a collection of papers contributed by eleven scholars who have held monthly seminars on Land-Value Taxation since 1993. The committee formulated policy and ideology and made specific plans for each ministry to carry out Roh's key pledges. The Korean Henry George Association sent an open letter to Roh recommending Rent recovery as one way to heal the two Koreas signed by more than sixty civic, religious and academic leaders, including Rev. Suh Kyung-suk, the renowned NGO leader who initiated a major civic movement of Korea in 1987. A few major news media favorably reported the letter. After his inauguration, Roh promoted Lee to be one of the three top aides in the Presidential Office. (Yoon-sang Kim, Korean translator of Progress and Poverty, Jan 9)

Studying the wars plaguing less developed nations, the World Bank concluded that the single best predictor of conflict was a nation's dependence on the export of commodities. The richer its natural resources, the worse its division of the Rent, and the more revenue available for battling over this reliable income stream. Au currant now among development specialists is the phrase, the “paradox of plenty”. Over a century ago, Henry George coined “progress and poverty”. Where the land is rich, as in oil-rich Nigeria or coal-rich West Virginia, people are poor; where technology is advanced, as in American cities, people are poor. Since land and tools are two main essentials for producing wealth, “paradox” is an apt term. The response of Tony Blair, George Soros, the World Bank, and Transparency International is to require multinationals to report how much rent they pay Third World governments for oil and minerals, putting pressure on corrupt officials to spend some of the loot on the people. (World Bank Press Review of Dec 16 via Progress Report)

In Kenya outside Nairobi, the capital, where truckers stop to pay a toll, a town, Mlolongo, has sprung up to serve the drivers. Entrepreneurs lease land from the municipality but avoid other taxes. Across the road, little happens as private owners keep their land idle waiting for demand to reach them. In bustling Mlolongo, truckers keep replenishing currency. While residents don't live in opulence, they don't suffer and do earn a living. Few have time to hear the exhortations of politicians, preachers, and NGOs. (Silvano Borruso)

Counting the almighty dollar, about $666 billion is in paper, almost ten times that, $6.3 trillion, is electronic. About one third of the paper notes, which only the US can produce, fills foreign treasuries (Christian Science Monitor, Jan 9). So many Franklins departing the US scene is why the Federal Reserve can issue so much money without causing much inflation at home. Abroad, the portion of global currency reserves in dollars is 68%, up from 51% a decade ago. While the US dollar is at a 16-year trade-weighted high, in 2000 the US share of global exports ($781.1 billon out of a world total of $6.2 trillion) was 12.3%, its share of global imports ($1.257 trillion out of a world total of $6.65 trillion) was 18.9%. The national debt of the US, greater than any other nation's, as of last April was $6.021 trillion against a gross domestic product of $9 trillion. In order to pay back lenders and investors in dollars, smaller economies compete in exports of food and raw materials; in order to be able to buy back their own currency, governments store up dollars. (Henry C K Liu, chairman of the New York-based Liu Investment Group, Asia Times, Jan 6?) Where governments siphon too much revenue into the officials' private accounts, and where banks lend too much for real estate speculation, there inflation soars and currency traders sell. Then wasteful, corrupt governments devalue their currency to cheapen their exports, which also ups the price of imports, squeezing their own people.

America has changed. Soldiers on the streets, long ordinary in the Third World, make the place look besieged. TIPS (Terrorism Information and Prevention System), the scheme asking Americans to report "suspicious activities" on the part of others, recruited over a million wannabe spies. The authoritarian and the easily-led form a standard distribution across all societies, all times, in Germany then, in America now. Thanks to the ACLU, Ashcroft has shelved TIPS. But the Bush Administration won $37 billion for its new cabinet Department of Homeland Security to compete with the FBI, CIA, NSA and the Secret Service. The current military budget, now $396 billion, roughly $5000 for every household in the US, is growing rapidly. Tho' the US has 4% of the world's population, its war budget is more than those of every other country in the world combined. The next largest: Russia $60 billion; China $42 billion; Japan $40.4 billion; United Kingdom $34 billion; Saudi Arabia $27.2. If the US recalled the troops from well over 100 countries around the world where they're antagonizing the natives, we could cut it 75% (if not more). The problem of having a powerful military is similar to that of having a big hammer: pretty soon, everything starts looking like a nail. (a conservative journal, Daily Reckoning, Dec 17)

At least part of nature, most governments regard as a common asset, such as the airwaves. While the US gives away much electromagnetic frequency – in 1996 Congress gave TV station owners spectrum worth $110 billion – it does auction off some of it, but not wisely. In 1996, the Federal Communications Commission accepted an unrealistic winning bid from a small cap company, $4.7 billion from NextWave. Since they could not deliver cell-phone service to 90 markets nationwide, the FCC tried to be both their regulator and lender. Yet NextWave soon filed for bankruptcy. The government re auctioned the license, netting $16 billion. However, earlier the agency had not made timely payment a condition for keeping the license, had lent NextWave credit, and put a lien on the license, all of which treats the license as NextWave property. Sticking to the letter of bankruptcy law, the Supreme Court gave the spectrum back to NextWave, which is now largely a fiction. We the people lose both the $16 billion and the use of the spectrum, which has remained dormant for years. (The Washington Post via Wyn Achenbaum, Feb 07) A coalition of groups including Consumers Union, New America Foundation, the Association of Independent Video and Filmmakers, et al have petitioned the FCC to no longer “sell” spectrum permanently but lease it temporarily.

If you want to graze your cow on somebody else's grass, in the 16 westernmost states you'd pay a private landholder $13.50 per month; you'd pay our public steward, the US Forest Service, 1/10 that, the lowest it's been in over a quarter-century, about as much as a pet owner pays to feed a guinea pig. Paying so little, ranchers take too much and treat what they take poorly. As cows over-graze and cause erosion, the public loses both land and money. So eight environmental groups sued to force the USFS to finally rule on a languishing 1994 proposal to triple grazing fees on 95 million acres of federally owned land. (San Jose Mercury News, Feb 27 via Grist Magazine) Not only do we under-charge some cattle herders, we exempt others. Disney, owner of over 30,000 acres in Central Florida, cuts its property tax bill by grazing temporary cattle on theme park grass. Universal Studios and Sea World cultivate pine trees. Thus hotels and huge tourist attractions each year keep site rents totaling from $.5 to $1.5 million (Orlando Tribune, via Wyn Achenbaum, Feb 5). The very people who owe for exclusive use of prime sites, we exempt.

Farmers in California's Central Valley demanded $400 million from the United States Bureau of Reclamation, which supplies water for irrigating crops. Because the flat land does not drain well, or because farmers use too much water, what's left behind is salt and perhaps the toxic mineral selenium. Landowners were able to hold not themselves but the Bureau liable. So the federal government offered the 100 owners (many of whom are not family farmers but corporations) over $100 million in damages; the Westlands Water District would pay $32 million to buy the 34,000 acres and keep them out of production, the largest buyout of farmland in the bureau's 100-year history. If a federal judge approves the deal, it could be the first step toward retiring as much as 200,000 acres. Yet bureaucrats might raid the environmental budget for the settlement funds. Plus, the price tag is so high because the land is over-valued since the water is nearly free. (The New York Times, Dec 12)

Agri-subsidies in general inflate the value of farmland. The 2002 Farm Bill increases subsidies by $72 billion, up to $190 billion. These payments raise farmland value, making landowners the real benefactors. When selling out (whether to move to another farm or out of farming), they get prices that incorporate the subsidy, leaving the new farmer with none. When leasing (almost half of U.S. farmland is operated by someone other than the owner), they get Rents which incorporate much subsidy even when the law allocates the subsidy to producers. (Ashok Mishra, Economic Research Service, USDA; Ortalo-Magn´e visiting at the University of Wisconsin; and Barry Goodwin, Ohio State, 2002 November) As more people struggle to fix subsidies, more will see how great fortunes come from government, how all subsidies distort price and behavior, and how simply the problem is solved by axing them and paying ourselves instead a Citizens Dividend from recovered Rents.

Do people really respond to taxes and tax breaks? If profit matters, they do. Ever generous Congress grants some extractors of methane from coal beds a tax credit. During the 90s (the life of the break), their extraction went up 26%; 29 companies not qualifying for the credit let output drop 14%. Exempting the lucky ones over the next five years is expected to cost us $3.6 billion. Still not satisfied, Bush and his resource bullies seek to end the stipulation that they not extract in the wilderness during the weeks critical to wildlife's life cycle. Environmentalists note how extraction pollutes streams and threatens nature (Friends of the Earth, Jan 9). The Washington Post notes how Bush has staffed regulatory agencies with ex-extraction lobbyists. The New York Times (Dec 29) notes how ranchers cry their property rights (to pump potable water and to hunt) get violated by fossil fuel extractors allowed on the land. What needs saying loud and clear is that land is our common heritage and her rent is to be shared among us all, not hoarded by a corporate few. Once enough of us understand this moral imperative, implement it, and defend it, then business interests will wander away, seeking profit in more honorable ways of actually producing useful goods and services – the kind of behavior we really should quit taxing.

Having missed the boom of the 90s, Wyoming is missing the bust of 00s. With under a half million people – fewer than any other state – and bountiful fossil fuels for which corporations pay handsomely, the state keeps swelling its permanent fund, a fortuitous arrangement similar to Alaska's. Wyoming collects mounds of resource Rent while not levying any taxes on income, one of three states to leave earnings unscathed. This frustrates conventional economists who urge Wyoming to adopt the broad-based “tax stool” – on sales, buildings, and income – in lieu of the “tax tree” – one trunk drawing from natural rent exclusively. As revenue from taxes on fuels in situ and on building sites keeps rising, the legislature keeps upping spending on schools, prisons, and health care and still enjoys a surplus. (Washington Post, Feb 6 via Wyn Achenbaum) Perhaps the state could accept a bit less Rent and demand that extractors do much less damage to the aquifer and wildlife (see above).

What recession? Some people feel no pain. In California, more buyers paid a million bucks for a home than ever before; 13,828 homes sold for a million dollars or more, up 45.5% from the 9,501 sold in 2001. In Southern California, sales jumped from 4,863 to 7,611, up 56.5%. In the San Francisco Bay Area, sales went from 4,066 to 5,404, up 32.9%. Statewide, there were 1,131 sales in the $2 million range, 324 in the $3 million range, 86 in the $4-$5 million range, and 88 sales for more than $5 million. Million-dollar homes averaged 2,885 square feet with four bedrooms and three bathrooms at $462 per-square-foot, down from $472 a year ago. (DataQuick of MacDonald Dettwiler, Inman News Features, Feb 4, via Wyn Achenbaum) Wyn notes that if building a pricey home cost $200 psf, then half its price tag is for the land; at $100, three quarters of the price is for location.

Away from California and the Northeast, homebuilders set another record. Taking advantage of affordable interior land and the Fed's lower rates (to help business, hurt by falling stocks), builders started over a million new homes in November, the new single-month high, on the way to the biggest year yet. Along the costly coasts, housing starts dropped, lowering the median new-home price from $178,900 to $167,300. (The Oregonian, Dec 28) Sales of existing homes broke the old record of 2001, rising from 5.30 million to 5.56 million in 2002. Their median priced home rose 7.1% to $158,300.

With mortgage rates past 40-year lows of less than 6%, owners the last two years refinanced more than 15 million mortgages worth nearly half of the $2.5 trillion of all mortgage debt outstanding. Borrowing against their homes, whose equity grew by about $500 billion last year, owners took out $90 billion in 2002 and $84 billion in 2001. In 2000, they took out only $20 billion.

This spending spree of equity pumped more that $274 billion into the economy in 2001 and 2002, accounting for 20% of the growth in the US GDP. (New York Times, Feb 2 via Wyn Achenbaum) Yet it came at the cost of much debt. Geonomics could convert that equity into an annuity without any debt. If each month we all paid in land dues and got back rent dividends, then the rent collected and shared, including from high-value downtowns and oil fields, would assure that a vast majority come out ahead, receiving more than they get now from a home-equity loan that they must pay back with interest.

As the stock market shrank by $7 trillion since 2000, many small investors left. To regain their confidence, our late-barking watchdog regulators fined big name Wall Street brokerage houses $1.4 billion for huckstering Enron and pals to the unwary. (How do those fines compare to the commissions they made while egging on the feeding frenzy?) The same day, a French court fined insider George Soros $2.2 million, almost the profit he made, for acting on reliable information fed him by French bankers. (Oregonian, Dec 21, Winter Solstice) To create a paper trail, the SEC now requires stock analysts to certify they're telling the truth. (Oregonian, Feb 7)

Out of stocks, many people now bet on real estate. Over the last five years, buyers bid up housing by 29%. In the '90s, housing prices rose twice as fast as incomes. From 1990 to 2000, the percentage of homeowners who spend 35% of their gross income – or half their take-home pay – on mortgage payments rose from just 6% to over 20%. (The Daily Reckoning, Dec 17, dailyreckoning.com) Poor people, losing half their income to housing/land (even their home sites inflate in value), monthly choose between roof and food. Spending more on things we don't produce – land – means spending less for things we do produce, like food, clothing, and shelter. If people aren't consuming, companies aren't producing. They're not hiring – help-wanted advertisements in newspapers across the country fell to the lowest level in almost 40 years (NY Times, Feb 6) – and they're not leasing space. The vacancy rate nationwide hit 16% in the fourth quarter of 2002. For the year, office lease revenue dropped 7.7% and at the end of 2000 were 19% off their peaks. (Wall Street Journal, Jan 8 via Ed Dodson in the Henry George News) But what goes up … median-priced homes plateaued last June at $164k (USA Today, Dec 16). Foreclosures are up; bankruptcies, too. Give this present land-price peak about three more years of leveling off before tumbling steeply to at least 25%, if not 50%, off current prices. Then ordinary folk will have the purchasing power to restart our stalled economy.

Experts tell us when the real estate bubble bursts, the opposite happens; we'll all writhe in the agonies of recession. Actually, the recession is now. Incomes are down, sales are down, so government revenue is down while demand upon social services is up. To make up the shortfall, some cities raised their property tax rate: all the towns in Montana, Atlanta (GA), and New York by 18.5%, its biggest jump ever. In response, thousands of homeowners asked the National Taxpayers Union how to fight the hikes. (USA Today, Dec 23). The smart way to fight back is to de-tax sales and incomes, letting people produce more, and shift the hike from buildings to land; most residents save while the well-to-do in the west hills and owners of downtown locations (often absentee) would pay more. Owners who'd kept prime sites idle would get busy, easing the artificial shortage of land, bringing down its price and with it the over-spending on land – the root cause of recession.

Greenspan and apologists say we're safe from inflation, tho' at 2.4% last year it will still double prices in just a few decades. Now they want you to fear deflation – things getting cheaper (“The Dark Side of Falling Prices”, The Sunday Oregonian, Jan 26). At the same time, conventional pundits cheer labor getting faster. Productivity jumped 4.7% in 2002, helping make cars, clothes, and computers cheaper than ever. (Oregonian, Feb 7) And while pundits bemoan the fact, we produce all this stuff using under 80% of our industrial capacity, meaning capital's productivity is high, too.

Having labor and capital produce more in less time did not shrink the workweek. Instead, it expanded unemployment; payroll shrinkage hit 20 months, which it hadn't since the mid 1940s (USA Today, Mar 10). Plus, saving on labor meant spending more for land and monopolies like local phone service – things we don't produce. The economics priesthood recited, “high housing values” (read, high land costs) means more wealth, not just bigger numbers on paper (The Oregonian, Mar 5). Yet once rising land costs gobble up higher incomes and the spending that goes with, producers cut back, fire some workers, and people have less wealth.

To benefit from the two trends – cheaper products and more expensive nature – we could collect these rising values via land dues or land-use fees or land-value taxes, then share them via a Citizens Dividend. Enjoying this extra income, recipients could in comfort choose to work less and still afford the falling cost of living.

The World Bank again suggests collecting Rent (4th time by our count) in Generating Public Sector Resources to Finance Sustainable Development: Revenue and Incentive Effects by Stefano Pagiola et al. “The second half of this book focuses on ways to produce new financial flows by capturing a greater share of the rents from natural resources and by instituting green levies.” Technical Paper 538, December 2002.

Philadelphia Chamber of Commerce: “On November 26 the Chamber hosted a press event as City Controller, Jonathan Saidel, unveiled his proposal for tax reform. While the Chamber fully recognizes that there are some areas in this plan that will be controversial, we believe that it is a step in the right direction for the business community: shift real estate taxes so half of revenues come from a Land Tax, reduce resident wage tax to 4.0% by shifting tax to real estate.” Buffalo News op-ed (Nov 4): “We must stop demolishing buildings for parking and adopt a progressive site-value tax that rewards investment and discourages neglect.” By the Millennium Group. The City Comptroller Anthony Nanula nd SUNY-Buf prof Henry Taylor also bring up this reform. (via Incentive Taxation, Dec)

In London, with house prices rising 30% a year (which can't go on much longer), the English Green Party fingered land speculation and called for a land tax (The Guardian, Dec 9, via the Progress Report) The Permaculture Activist (#49, winter) ran a long article on taxing land by Scotland's Shirley-Anne Hardy, who worked with Friends of the Earth – Scotland.

In The New York Times on New Year's Day, Worldwatch's Sandra Postrel defended cutting taxes on income – both stock dividends and worker's wages. Taxing dividends spurs companies to borrow rather than sell stock and spurs investors to trade growth stocks rising in price rather than hang on to steady stocks paying dividends. Taxing wages curbs employment and the employees' purchasing power.

IBM researcher Scott E. Fahlman, who normally works in artificial intelligence, proposes an "interrupt fee" like an ante in a poker game. If a phone call or email turns out to be unnecessary, the recipient could keep the fee; if it's worth his time, he could decline the fee. Friends or participants on a mailing list could be given tokens. A marketer would buy tokens from a third-party clearinghouse. Fees would vary: investor Warren Buffett might set his interrupt fee at a level too high for the vast majority of people to bother him. A reporter who did likewise might find himself isolated from the electronic world. IBM has tossed the idea out onto the Internet and up for grabs. No royalties will be charged. (Ziff Davis Media, Dec 5) A novel example of the fundamental principle: pay for what you take, not what you make.

In TESTAMENT OF HOPE: the Essential Writings of Martin Luther King, Jr., Edited by James Melvin Washington, the chapter, "Where Do We Go From Here?", p 615: "In 1879 Henry George anticipated this state of affairs [need for nontraditional jobs] when he wrote, in PROGRESS AND POVERTY: [quotes George on best work not done for money].” Then p 616: "the guaranteed income must be dynamic; it must automatically increase as the total social income grows." Since society generates the value of sites and resources, made by none of us and needed by all of us, land rent qualifies as social income. As the values of land and raw materials rise, social income would grow, automatically. Since it'd be dynamic, we need not guarantee it. Such a rent share even used to exist. Ancient Athens paid citizens a silver dividend from the Laurion mines. In 490 BC, Athenians voted to spend the proceeds on building up a navy, which defeated the Persian fleet and saved Greece from foreign conquest. (A. Am. Andreades, A History of Greek Public Finance, Harvard, 1933 via Michael Hudson)

The Persistence of the Old Regime by Arno J. Mayer (1981) offers detailed proof. While most people, when you say "rich", picture capitalist or industrialist or corporation, Mayer shows how the landed gentry, owning not just country estates but also the forests and coal fields that became fuel for machines, and owning land in and around growing cities, enjoyed many more and much bigger fortunes than Marx's few bourgeoise. His nouveau riche townies eagerly sought entry into the landed elite thru mutual investments, co-directorships (more figurehead for aristocrats), schooling, and marriage. To govern or influence government, old money and new money collaborated, yet land retained the upper hand and received the lion's share from contracts, tariffs, tax breaks, subsidies, and interest rates. Mayer recounts Lloyd George's battle with the House of Lords over the land tax; vetoing it on the eve of World War I was their last overt political act. William Domhoff, author of Who Owns America Now (which cited the local growth machine, reviewed here years ago), notes in his State Autonomy or Class Dominance? that in the debate to shape unemployment comp, Southern plantation owners went up against the Rockefellers – and won. We'd add that “land” lords are still in charge, if you expand land to include oil, and expand Rent to include about half of mortgage interest.

Is W truly worried about Saddam? His Dad (former CIA director) did not remove the Iraqi dictator (former CIA recruit) when he had the chance. This war, like most wars, is not so much against an opponent materially but against one's own people psychologically, that is, to scare Americans and to keep them paying taxes loyally. Note Bush did increase funds for tax enforcement, already 40% of the IRS' budget, albeit not as much as the IRS had wanted (NY Times, Feb 5)

What to do about Iraq – or India or any nation arming itself with missiles (other than the US, of course) – is to halt the arms trade (the US is the biggest exporter), punish violators, strengthen (and democratize) the UN, and make oil pay its true costs. To do that, add surcharges equal to the cost of the damages from smog. Paying more at the gas pump, people in the First World would drive less and buy more hybrid cars. Paying more for heating oil, Northerners would insulate homes and add solar tubes. Consume less oil, deprive Iraq and Saudi Arabia, which is where the terrorists actually come from, of billions in hard currency. At home, we could collect and share our resource rents thru-out America, not just in Alaska, setting a better example for others, making it harder for ruling Arab elites to hog oil rent, keeping it from ordinary people in the oil-rich parts of the world. While all these actions would have some impact immediately, even during these months Bush Jr has been rattling his saber, had we begun when Bush Sr warred with Iraq, by now the problem would be solved.

Sure, markets by themselves do not dissuade polluters. We have governments to do that (supposedly), to defend all our rights, once society reaches consensus on what our rights are. But citing pollution and other ills as "market failure" is like faulting stomachs for not pumping blood. Let's get it straight. Not pumping blood is heart failure, not stomach failure. Stomach failure is not digesting food. And not defending rights is government failure, not market failure. Once people understand markets, not fear them, then may geonomics become the law of the land. Forget failure and inspire others by showing how markets were designed to work right for everyone, once we axe taxes and subsidies and share society's surplus, the rents for land and resources.

The guy who shot the last passenger pigeon, which just years before had been so numerous to darken the sky, did he know extinction followed his bullet? In Spain, where the Iberian lynx teeters on the abyss, when someone builds one more home, clears one more forest, paves one more highway, wiping out the cat's last bit of refuge, will he understand that it had been 2000 years since the last feral feline was annihilated? The Chinese fisherman, like his father before him and his father before him, cuts off a shark's fin and tosses the body back into the sea to die, thinking what? Is the individual who takes the last one more culpable than the person who took the tenth to the last, or the 100th to the last? If that person knows, perhaps. But is knowing enough? The cause of extinction is not an individual taking the last pigeon; it's too many people taking too many pigeons. That's a society driven not just by greed but also by exacerbated need. When pay is low and a share of Rent nonexistent, people grab for all they can get. When pay is high and Rent received, not only do we feel more secure, and thus generous, but receiving an income from the worth of Earth reminds us of her bounty, and of our debt to her. Let us help each other know our impact on nature, and our right to natural rent.

Some economists note economics is inadequate. One Nobel laureate compared the discipline to astrology. In Why Aren't Economists As Important As Garbagemen? (1991), David Colander of Middlebury College and a member of the Eastern Economic Assoc which has several Nobel laureates as members, cited his colleagues “celestial mechanics of a nonexistent world” (p 153) and hoped, because economics is irrelevant, it did no harm. Robert Heilbroner and William Milberg in their The Crisis of Vision in Modern Economic Thought (Cambridge U Press, 1995) faulted econometrics for 'data mining' and for publishing studies that their peers cannot replicate. Robert A. Gordon, in his presidential address to the American Economic Association, warned economists of placing 'rigor' ahead of 'relevance'. But he went unheeded. Leaving us geonomists lots of clarifying to do. While all I wanted was some smog-free clean air.

Bill Grennon (Nov 4): “Appreciate your succinct posts in Green Tax policy forum. A Libertarian site has challenged me to justify the public's right to site value. Could you give me your quick thoughts?”

JS: Using land deprives others of something everyone needs and nobody made. Since we have a right to life, we have a right to land. So each of us owes all of us Rent.

Bob Stahl, (Apr 18): “Mere parasitic claims to the wealth of land does not create it. Wealth needs to be created by adding value.”

JS: Merely claiming wealth is what the present recipients of Rent do now. And while it does take adding value to create wealth, how much labor is needed depends on the advantages provided by the land. On a good location, one easily creates lots of wealth. Since it's land, not labor, that generates this extra output, to whom does it belong? Owners don't create site value; nature and society do. Libertarians get thrown off by seeing the Rent be routed thru the public treasury. They miss seeing it come back out again as a dividend to residents, since most Georgists stress the taking/taxing, not the sharing/dividend. They're also misled by the word "rent", suggesting land, which is important, but distracting attention away from resources like oil, the EM spectrum, and any monopolies government may grant, such as a utility franchise or patent. All together, we're talking trillions. Share it via dividends and we could shrink the workweek. Now that's true liberty.

Chuck Adams, Director, Alternatives to Growth – Oregon (Oct 15): “How would the property tax shift affect suburban homeowners?”

JS: A study of a Washington, DC, suburb showed over 80% saved. People who'd pay more usually own parking lots or strip malls. The rare poor owner who'd pay more you could defer or buy out. Where the majority does pay more, rebate it as a dividend to residents, assuring the land dues or land tax stays affordable. Joseph Lyles (Oct 3): “As property value climbs, the tax-take climbs; this forces retirees on fixed incomes out of their homes. Alexander Hamilton suggested we create a National Bank to finance one's mortgage and use the interest payments to finance government. Then we could abolish the property tax.” JS: Or, simply replace it with land dues and pay everyone a rent dividend, enabling retirees to stay put.

Jim Mann (who sent in his pithy notes from Henry George's Progress and Poverty, Oct 31): “How do land dues differ from taxes?”

JS: Big difference is, if you don't pay, you don't lose your property or don't go to jail, but you do lose membership benefits, such as voting and a clear title. To evolve from taxes to dues will probably take us 20 years.

To discuss such issues in depth, join the e-lists Land Theory for philosophy and MTTS for strategy.

Heather Remoff (PA anthropologist and author): “Jeff did it. His letter to the editor ran in the Sunday, Dec. 22, 2002 Money and Business section of the NEW YORK TIMES. It's not often we Georgists are able to break into the TIMES. Jeff deserves high praise for this (a little funding wouldn't hurt, either). The last Georgist letter to make it into the TIMES was the Sept. 2, 2002 piece by Hal Horvath suggesting a plan to ensure public ownership of water at its source. It was a great letter. It's worth noting that Horvath was inspired to read George's PROGRESS AND POVERTY after exposure to Jeff's newsletter, THE GEONOMIST.” Australia's David Brooks (Dec 25): “May I have permission to reproduce your letter in the NYT? Many thanks.” Such a nice Christmas present.

At the Basic Income track in the Eastern Economic Association conference in New York Feb 21-23, Brazilian Senator Eduardo Suplicy reported that his Senate became the world's first national legislature to pass a universal income supplement. The bill must pass the House of Deputies then be signed by President Lula. Brazil would begin paying the extra income in 2005 at a small amount, to be increased later. My talk (thanks to the Robert Schalkenbach Fdn) urged converting this social salary into a Citizens Dividend by funding it from recovered Rents for privileges, resources, and sites (www.usbig.net, paper 45). Manhattan, famed for its tiny studios with a wall bed, a TV hanging from the ceiling, and a coffee table the size of a chessboard – 300 square feet going for $1,200 a month (I visited a friend leasing one) – exemplifies not just skyscrapers but also sky-high site values. Academics picked up a couple hundred copies of The Geonomist (reprinted by the Henry George School). Two publishers asked for a book proposal. Organizers invited me to organize a panel on nothing but recovery of Rents for next year's conference in Washington, DC.

At David Korten's talk Feb 7, our lit table unloaded a couple dozen newsletters and signed up another dozen people. I talked to some key people, including Korten and Dr. Russ Beaton of Williamette U., co-organizer of the event and GeoSoc member (dues in arrears).

At the inaugural Urban Ecology and Conservation Symposium (UECS) on January 24 at Portland State University, 200 people got to hear our rap and view our map of Portland, color-coded, showing density at block level (with dark violet for high density and pale for low). Viewers saw land used intensively right besides prime locations left fallow. In Portland, the densest use forms a ring around brown fields, vacant lots, and abandoned warehouses having the same density as our huge urban park. Charging Rent to the lax owners of those largely idle sites (by shifting the property tax from buildings to land) spurs them to attract the development that's now sprawling out. Two dozen took away our newsletter and signed up for further information.

Congressman Earl Blumenauer and Metro President David Bragdon headlined the Regional Livability Summit March 8, hosted by the Coalition for a Livable Future (CLF). GeoSoc members Don McGillivray and Jeff Strang worked the crowd. Jeff's group summary cited land value taxation. The plenary agreed taxes need reforming. As the CLF works on economic policy, both Don and Jeff agree the GeoSoc should join. Strang suggests using another name, one more telling, like “Land Value Tax Advocates”. Do others concur, or nominate other monikers?

Green Budget Germany (Förderverein Ökologische Steuerreform [FÖS] e.V.), the German group of researchers, government officials, and activists which focuses on the environmental tax shift by organizing events, testifying at hearings, and getting into mainstream media, lists yours truly as one of their North American experts.

The Communitarian Economics Newsletter, spurred by Amitai Etzioni and which goes out to more than 2,000 people all over the world, asked a few of us (including David Kusnet, ex-Chief Speechwriter for Bill Clinton), “What is a communitarian concept of economic justice?” In a nutshell, it's when the community shares its resources, the values of sites, resources, sinks, and special permits, and does not tax nor subsidize individual efforts. Achieving such sharing would at long last balance individual liberty with communitarian equality.

The Capital Ownership Group Virtual Library offers our “Share Rent, Share Profit, Shift Consciousness” at http://cog.kent.edu/library.html

The Aussie magazine, PROGRESS, ran our article (Jan-Feb), “Is the Tobin Tax an Exception?” Is it a good tax, unlike most others? Even if it could somehow be collected, wouldn't the levy soon just migrate from currency traders to us travel trash, like the income tax did from the rich rentiers to poor workers? And doesn't it just obscure the corruption causing weak currencies and distract reformers from two fundamental reforms? (1) Draining surplus cash away from speculators by recovering Rents and (2) using not US dollars but a true global currency.

Green Voice, the newspaper of the Pacific Green Party, ran our “Geonomics: Primal green economics” (Winter), thanks to the able editing of Jeff Strang.

People who tested their Geonomic Quotient at Progress.org – Raquibo (Jan 13): “The quiz was fun, educational and simultaneously infuriating and amusing (if that's possible), keep up the good work!” Norene Jenkins (Feb 22): “I thought the quiz was great. I am an activist and I scored 99.”

Ravi Naidoo, UN Economic Commission for Africa (Feb 19): “Jeffery Smith, Michael Binder, and Male Oliveros have taken forward our discussion. A distribution of assets, particularly income-generating/ social protection assets, is crucial to economic growth (as in Taiwan example given), poverty reduction, and coping strategies, and is ignored in neo-classical economics (which focuses on productivity). Our strategies will not be implemented in a power vacuum. Certainly landowners will not easily agree to part with land, if history is any guide.” To break up huge plantations, Namibia tries to collect farm rent, but the white owners resist, since taxes often fail to return as services; plus, land in an agrarian society is a unique security. Yet four times in history, big owners did yield their surplus, bloodlessly. Then, other taxes were low, and the collected Rent was well-spent.

Bill Boyer, OR emeritus Chair of Education, U of Hawaii: “'Rent' is still in-house language. Great cartoons; how do you get them?” Anybody got a better term for Rent? Most of the cartoons come from member Lowell Harriss, emeritus Columbia; a few are original.

Ed Dodson, Director, School of Cooperative Individualism (24 Dec): “My website attracts around 20,000 hits each month. The main pages have a slightly new look. The library continues to expand as fast as I can scan and edit rare essays and papers from many sources. The encyclopedia on political economy is being used regularly; by whom I do not know.” www.cooperativeindividualism.org

Chris Wright, British author, sent us a copy of his futuristic novel, Sod'em at Gomorrah, the tale of a harried ad man who retires to a loving community in the countryside. For a copy, write the author at chriswright@iasco.sagehost.co.uk.

John Watkins, New England simplifier (Feb 2): “Looking at the EEA and USBIG stuff, I'm reminded of how important it is that our work be economically sound. I need some visionary economists (or economically sensitive people) to serve as advisors to Simple Society. Can you recommend some people?” Volunteers?

Mel Forde, Seattle retiree (Dec 17): “Looking at your address, the town of Wellfleet surprised me, being on Cape Cod, quite a distance from Portland OR.” Yes, it's the mailing address of our VP, Gary Flo.

John Morales, Missouri retiree (Jan 27): “Enclosed gift to help your efforts to spread our word far and wide. Keep up the good work but budget some quality time for wife and child.” Excellent advice, thoroughly heeded.

Last quarter, the Robert Schalkenbach Fdn helped us participate in events here in Portland and in New York City. Individuals pitched in mightily, too. For rejoining, thanks to super sustainer Heather Remoff, PhD (PA engaging author and anthropologist), sustainers Everett Gross (NE retiree), John Morales (MO retiree), Gerry Shaw (AB Canada oil man), stalwarts Mel Forde (WA retired accountant), Ernie Kahn (MA T-shirt model), supporters Dr. Bill Boyer (OR emeritus Chair of Education, U of Hawaii), Dr Steve Cord (MD author and lobbyist), Allan Cooley (SoCal accountant), Paul Nesbit Johnson (UT extra supporter), Chuck Metcalf (CA bassist, architect, and monetary reformer), Greg Young (MO graduate), subscribers Kathleen Walsh (OR near neighbor), and Sue & Scott Walton. Anyone else if so moved, please contribute; invest in a better world ASAP.

Organizers of conferences of change-makers have invited me to present geonomics. Funders willing, on May 22-24, Saratoga Springs, NY, the 2nd Biennial Conference of the US Society for Ecological Economics, co-founded by ex-World Banker Herman Daly, will hear my “Property Tax Shift” and “Dividends as Feedback Loops”. Either May 30 - Jun 8, Cuba, Havana, 4th Intrl Convention on Environment and Sustainable Development or June 5-7, Australia, Sydney, 4th Annual Global Conference on Environmental Taxation will hear “Property Tax Shift” and “Tax & Subsidy Favoritism” while Prosper Australia are organizing additional symposia for me. Jun 15-20, Croatia, Dubrovnik, UNESCO Conference on Sustainable Development of Energy, Water and Environment Systems, which also accepted my paper last year, may hear how Rent can fund improvements to infrastructure. July 15-20, annual meeting of the Council of Georgist Organizations meets in Bridgeport, CT with local politicos. For details, call Sue Walton, 888/262-9015.

Sachin (Dec 31): “I am very interested in the tax proposals you and others have laid out in such sites as the Progress Report. What are your thoughts on the viability of such policies in California, with its Prop 13? I am from San Diego, and we could use this plan to stop us from turning into a sprawling mess like LA County (we are getting there pretty fast). This year would be the perfect time, politically, to make it happen.”

A city or county could just shift its property tax from buildings to land and see what the state did about it. Otherwise, the locality might skirt Prop 13 by: (a) using Assessment Districts while exempting everyone from the property tax, (b) suing localities for under-leasing public lands, (c) creating a new legal levy, giving it a name like "tariff" or "land dues", and earmark its raised revenue exclusively for a dividend paid to residents; that might stand up in court, n/or (d) amend the state constitution. Depending on how deeply you'd like to ingrain the reform, we have various constitutional amendments.

Brad VanDyke (Dec 18): “I'm delighted by your articles on 'The Leaking Economic Value of Communities', the seven hidden subsidies, and "'Suburbanomics'. I've been trying to spread the word. I live in rural Utah and am deeply concerned about our future locally as well as globally. I'd like to be a big part of change for the better. On several matters I'd be pleased to receive your input. Plus, as a person interested in philosophy and policy strategy, how do you make money?”

Usually, you don't. The few who do, earn via books, professorships, seats in think tanks – ways that work best for people who don't rock the boat. Others build up a membership organization, find an angel, then win foundation grants. It's a strategy that invites readers to use the coupon below. Send as much as your conscience allows. Happy Equinox. Excellent Earth Day.

THE GEONOMIST

Vol. 11, No. 4 Editor: Jeffery J. Smith

Vol. 11, No. 4
Editor: Jeffery J. Smith