The Geonomist Volume Twelve Issue Four

Geonomics is …
... 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, including 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.

Becoming the first president of any nation to do so, Lula of Brazil signed into law an income floor (Jan 8). In 2005, government will consolidate existing federal support programs into one payment to those most in need and later expand payments to all citizens. The Senate and the Chamber of Deputies passed the bill introduced by Sen. Eduardo Suplicy who has fought for a basic income in the Brazilian Congress for the last 15 years. While leaving many details to be worked out later, the bill does target some land rents among other funding sources. In Spain, the winners of the regional election in Catalonia back in November were leftists and greens. Some MPs who form the new government are members of the Red Renta Basica (basic income network). Back in 2002, a pair of elected officials presented a bill for implementing Basic Income. Now, in the new government's program is Point 5.5: "Redefine the Minimum Insertion Income [the existing means-tested welfare] so that it becomes a citizen's Basic Income, studying different proposals for its gradual implementation." (USBIG Newsletter Vol. 5, No. 25, Jan-Feb) May they study society's surplus, the "rents" we pay for the nature we use.

To build up under-used sites, attract more investment, hire more workers, cut the cost of housing, and contract sprawl, the Maryland General Assembly considers a shift of the property tax from buildings to locations. HB1168 would eliminate the half of the State property tax based on the value of the buildings and retain the half based on the value of the land, thereby lowering the tax burden for a majority of property owners. The Land Value and Incentive Taxation Act would also empower county and Baltimore City officials to likewise shift their local property tax from buildings to locations. The MD House Ways and Means Committee hears HB1168 in Annapolis as we go to press. (via Josh Vincent) If a jurisdiction were to quit taxing buildings and business and start collecting ground rents, it could pay residents a dividend from surplus revenue. Putting more cash into the pockets of lower-income residents, while also generating more job opportunity in construction and related trades, would mean fewer people in need of state services, letting government cut spending without hurting the unfortunate. It's worked wherever tried.

We've borrowed California's weather in Oregon; already it's clear and warm. Time to dig, or vacate for fun, unwired, while nature still endures. More than just send me news clippings, wouldn't you want to compile this whole thing? Win us a grant? Join the board? Struggle? I'll just help. A chick pecking out of an eggshell has a straightforward task. Most make it into the world. Our task – to remake the world – is tough, and tricky. Gandhi's claim that everybody has part of the truth made me wonder. Some see favors for the rich. Another found affordable land enabling Golden Eras. But what could our opponents possibly have to say that's true? Don't go there if you want to keep your friends and your current worldview. Or, accept some market logic and turn against taxes. What's there for us instead? Bounty. Enroll and listen to students, older students whom you can't flunk out, so to figure out how to package this shifty medicine. We'll win our world together

Are parking lots warming more than just summer soles and rubber tires but the entire rotund world? Surface temperatures have risen about 1 degree F. in the past century, with faster warming in the past two decades; the 20th century's 10 warmest years all occurred in the last 15 years of the century. Some climatologists figure it's not just the CO2 that cars and other engines spew into the air; it's also our altering the land that's impacting the climate. (The Christian Science Monitor, Feb 5) And the heat is not just from gas but also from soot, microscopic on snow. It warms snow faster, keeps more heat on earth, and melts snow sooner, raising sea levels earlier. (Atlanta Journal-Constitution, Dec 23) Soot we can cut by making diesel engines burn cleaner. And parking lots disappear under new buildings and urban gardens when government charges owners the annual rental value of land; then owners find more remunerative uses for their lots. In the countryside, owners there too, once having to pay land dues, use land more efficiently, which includes not using some land at all. Reverting back to hedges as windbreaks adds greenery and cuts dust.

While legislating an income floor, Brazil still struggles over land reform, high and misplaced taxes, bureaucratic corruption, high and misplaced subsidies, inflation, even slavery. On the ranch of Senator Joao Ribeiro of the right-wing PFL party, Labor Ministry officials discovered 32 enslaved workers; two weeks earlier, four official investigators were shot dead near the national capital. There are some 25,000 slaves in Brazil, mostly in isolated parts of the countryside where powerful landowners hold sway. Brazilians found holding workers in slave-like conditions currently face a fine of 314 reais ($108) per worker and are cut off from state loans. (Reuters, Feb 12) Bill Moyers reports that some human rights activists are suing Unocal for using slaves to build a petro pipeline in Burma (Jan 9). Venezuela, impoverished by oil, is considering legalizing the theft of food when motivated by hunger (Reuters, Jan 15 via Ken Ford) To further the understanding that people are equal, let's agree that land, oil, and resources were created for us all to shave via regular rent dividends.

In Peru, to persuade farmers to quit growing coca the US went so far as to offer them valid titles to their land (ChScM, Dec 26). In neighboring Columbia, many farmers already hold titles. There the government, funded by the US, sprays coca fields hard, arrested a top left-wing rebel commander, and negotiates demobiliza-tion of the 15,000-member paramilitary force. So to launder piles of drug money, drug traffickers and right-wing army commanders gobble up fertile land; bullies swagger onto farms and at gun point offer the owner a deal he cannot refuse. For decades, scores of wealthy families owned large tracts but produced nothing, hold-ing it until its price gets high; of Colombia's arable area, only about 20% is used for agriculture. Hoarding terri-tory lies at the root of Colombia's 40-year conflict, which has displaced two million of country's 40 million people into shanty towns. (Letter from the Americas, Jan 21) Almost two hundred years ago in Argentina, the new republic's first president tried to tax fields, which would break up huge holdings into family-sized farms. More recently, Columbia taxed nearby sites to fund highway construction. There are Latin precedents to follow.

Since 1991 in South Africa, landless black robbers have killed 1,500 white farmers; 50,000 of the latter own 90% of the commercial farmland. The government tried to buy out some whites and transfer title to blacks, but without tools and loans, black farms failed. The government can no longer afford the buy-outs, spending instead on soccer stadiums. (New York Times, Jan 6) What's worked before (Denmark, California, Australia, New Zealand, Taiwan) is to tax land; then owners of more than they're using sell off their excess to their former tenants; on family size plots, the new owners feed their families, ending hunger. After a while, they gain the expertise and backing to farm commercially.

Typical of the country's biggest landowners, the Duke of Westminster, Britain's richest man from inheriting downtown London, receives from taxpayers via Europe's farm subsidy regime a daily handout that equals eight times the minimum wage. These subsidies reward big-scale farming that harms the environment, yielding mountains of food to be dumped in the developing world, pushing down prices and destroying local farmers' livelihoods. (The Guardian, Jan 22) The European Union has begun its version of reform: pay owners not by how much they produce but by how many acres they own (Guardian, Feb 13, via Ken Ford)

Instead of in-the-box reform, consider transforma-tion: abolish all subsidies in favor of a equitable Citizens Dividend on par to everyone. From whence would come the funds? From rent, from the money we spend on the nature we use. In London, celebrities and global businessmen queue up to buy a lease for a spot to park their car at almost $200,000. (Daily Mail, Feb 24)

Aussies buy American

Investors in Australia, a country with a population slightly larger than that of New York State, acquired $2.4 billion worth of real estate in the US last year, more than foreign investors from any country but Germany. The Australian investment, while amounting to only a fraction of the $114 billion worth of American real estate that changed hands last year, represented a threefold increase from 2002 and was substantially larger than the direct investment from all other countries combined if Germany and the Middle Eastern countries are excluded. The Dutch and British, who once led the roster of inves-tors, continue to buy America, but they invest in REIT's or commercial-mortgage-backed securities rather than individual properties or portfolios. The Australians, in joint ventures with American companies, have been in-vesting in shopping centers anchored by supermarkets or drugstores and in industrial buildings. In the last pro-perty cycle, Japanese investors took over trophy assets like Rockefeller Center in Manhattan and the Pebble Beach Golf Course in California; in 1996 they gave up control of the office complex, then bankrupt, and sold the golf course in 1999. (New York Times, Jan 28)

A worried International Monetary Fund asked Bush and Congress to cut the federal deficit, claiming it could trigger global recession. The White House expects the budget deficit to expand to a record $475 billion in fiscal 2004, nearly 5% of GDP. The IMF thinks it could balloon to $550bn, over 5% of GDP. (Dow Jones Newswires, Jan 8) Either amount exceeds the 3% that eurozone countries have agreed to aim for – but miss. France, Germany, and Italy violate the 3% limit. Considering federal debt, the US's for the first time surpassed $7 trillion – about 62% of GDP. In fiscal year 2003, Congress spent over $300 billion on paying interest on the debt – about $2,000 per taxpayer per year, without even reducing the debt. (ombwatch, Feb 23) But it could be worse. Japan's federal debt equals 140% of GDP.

American household debt grew from 105% of disposable income at the end of 2002 to a record high of 111% in 2003; while housing value grew 5%, mortgage debt grew 13%. At the nation's third largest loan originater, adjustable-rate mortgages climbed 11% to 55% of their loans. When interest rates rise, homebuyers will have lesss to spend on others' output, much of which comes from China, another huge debtor.

Chinese banks can't deny a loan to a business owned by the People's Army, no matter how bad its finances. To keep their economy growing, in the first half of 2003 banks doubled total loans outstanding. That increased bad loans which at China's four major banks averaged 40% to 50% of all loans. Soon the banks will issue credit cards, increasing consumer defaults. If the bank(s) sink, that would hobble the Asian economies.

With both Asians and Americans spending less, to whom will foreign investors, who own $1.5 trillion of the US debt, turn? (moneycentral, Jim Jubak's Journal, Jan 30) America's deficit spending – public and private – keeps inflating prices. Some cheer that consumer prices rose 1.9% in 2003, but that figure leaves out mortgages and income taxes (their core rate also deletes food and fuels), and it will still double prices in a few decades (The Oregonian, Jan 16). And it's still inflation, not a lessening in the cost of living. As technology advances, we should be able to spend less money each year, not more. Instead, our bankers and rulers de-value the dollar. That makes imports more costly, which impedes foreign producers.

Nowhere are politicians likely to cut wasteful porkbarrel spending; one typical example: the US Forest Service already lost more than $34.8 million on the Tongass timber program in 2002, yet in 2003, late on the eve of Christmas Eve, Bush exempted Tongass from the federal rule limiting subsidies to private loggers for building roads in national forests (Progress Report). Rather than axe the pork, in order to sell even more bonds politicians will offer buyers higher interest. That'd let lenders raise their rates, too; higher borrowing costs would curb global investment and output, again slowing the global economy.

To raise revenue and spare the environment while not dampening production, the IMF urged Congress to start taxing energy consumption. For the long run, the US Government's financial house seems "perilous"; to pay Social Security and Medicare benefits over the next 75 years, it faces a $47 trillion shortfall. To close that gap, the Fund recommended "an immediate and permanent" tax increase of 60% or a cut in Social Security and Medicare of 50%. Overlooked was the strategy of borrow less, waste less, and recover more of society's surplus to share among us all.

The Chinese announced they have developed computer hardware that, by them owning the intellectual property, will lower the price of chips to $20-35 and of desktops to $200-$250. Running on Linux, which is completely free of charge, would keep the price low. Otherwise, the cost of manufacturing a computer consists of 5% material, 3% processing, 12% sales management, and 70% fees for authorization of production. Only 10% is left as profit. If the Chinese-owned standards are adopted, the 70% intellectual property fee will be saved. (People's Daily Online, Feb 12 via Michael Hudson) Bill Gates would be bummed, but he'd also be bummed if the US were to charge him not just a filing fee but the full annual rental value for his exclusive patents and copyrights. Those revenues, once recovered, would enable government to cut taxes on income earned by out performing competitors in a free and fair market.

In Northern California, a logging company sold some forest to a county, but the land was worse off than the corporation had claimed during negotiations. So the county prosecutor sued the loggers, who're head-quartered in Texas where one can cash in on government contacts and natural resources without much restraint. The corporadores then launched a drive to recall Paul Gallegos, spending a quarter of a million dollars to replace the public attorney with a yes-man. Voters drew up along familiar battle lines: hippie vs. logger, extractor vs. conserver, old family vs. newcomer. (San Francisco Chronicle, Feb 28) Gallegos' plight mirrors that of Greenpeace. Off the Miami shore back in 2002 April, green sailors peacefully boarded a boat loaded with illegal timber. Instead of charging the timber trafficers, the government took Greenpeace to court. Prosecutors want to prohibit Greenpeace from doing civil disobedience in Bushlandia. All these parties, green or grey, fail to grasp that the value of resources in their natural state belongs to us all.

In the United States, the top producer of lumber and plywood is Oregon. In Oregon, the top producer is Lane County. If Lane County were a state, it would be the 11th largest lumber producer and the fifth largest plywood producer in the US. Lane's capitol is in Eugene, home of the state University. Its thousands of idealistic students are no match for long-time owners of forests. By donating to candidates, timber families get their servants elected. Just behind logging is real estate, which owns block after block of downtown Eugene, and into which the timber fortunes diversified over the years. Back in 1986, citizen activists passed a measure declaring Eugene a nuclear free zone; words on paper. The big donors get governments to add roads and other public works to support their developments and get tax breaks for new firms to fill the new buildings. Five of the top 20 donors, all of whom profess "free market" ide-ology, have multi-million-dollar deals with government; politicians hold the bidding period open for donors and write job specifications to fit only certain companies. Further enriched, the forest lords fund record-breaking campaigns. (Register-Guard, Dec 21).

All that money they spend is rent, a flow invisible to progressive urbanites, yet rent is public property, something we should share. It's the return to performing labor or providing capital that is private property, something we should not tax.

Below the ground is a lake worth more than $180 million. The California Department of Water Resources began the project to store water in wet years to extract in dry years. The state investment totaled $74 million. After a series of closed meetings between water bureaucrats and large water contractors, one of the latter, Paramount, ended up controlling over half the water bank. Along with them, scores of other small farm operators, as well as residents in nearby Bakersfield, also draw water from the bank. Paramount has grown to become the largest grower and seller of almonds and pistachios in the world and the largest citrus grower and packer in the US. The company's owner is now worth $740 million and is poised to profit more from selling water to urban developers. Repeating the transformation of Newhall and Tejon ranches, Big Ag is becoming Big Sprawl through water trading. (Los Angeles Times, Dec 19 via Wyn Achenbaum) History is the oft-repeated tale of enclosing the commons, of private individuals taking over public assets. The "end of history" was not the fall of communism; such offenses will end when sharing Earth's worth begins.

The average household spends most of its money on housing and transportation. Shelter claimed 1/3 of household spending in 2001, twice the amount spent in 1972; getting about carved out 1/5 of the average budget, more than food and clothing combined. Households spent the most on housing, 36%-38%, along the coast – Los Angeles, San Diego, San Francisco, Atlanta, Washington, New York, Miami, Boston – and in Chicago and Denver. They spent the least, 29%-32%, in St Louis, Pittsburgh, Minneapolis/St. Paul, Kansas City, Cincinnati, Houston, Dallas, Tampa, Anchorage, and Honolulu, perhaps due to some native islanders qualifying for free land. Households spent the most on cars and trucks, 19%-25%, in Tampa, Phoenix, Dallas, San Diego, Cleveland, Houston, Seattle, Pittsburgh, Cincinnati, and St. Louis, and the least on wheels, 17% or less, in New York, Boston, Washington, San Francisco, Philadelphia, Baltimore, Milwaukee, Portland, Honolulu, and Atlanta which like most of the others has light-rail. In cities New York and Washington, residents pay more to be in close then save on cars; in Texas they choose motorized suburban living. (Urban Land Inst, Sept 8)

For the first time in over four decades, banks lowered their rates nationwide to 4.92% back in June; for 2003, rates averaged 5.44%. Choosing smaller monthly payments for an inflated home over larger monthly paments for a less inflated home, more people took the plunge, which pushed up house prices. Million dollar homes rose to one out of every 72 white homeowners (one in 762 minority owners); the median single-family home frose from $148,000 in 2001 to $170,000 last year. (Wall Street Journal, Feb 19) Now the typical consumer in Miami can afford only 83% of the city's median house price; in LA 68%, San Diego 65%, and San Francisco 63%. As fewer people can afford to buy, prices should again stagnate or fall. (Wall Street Journal, Jan 27)

New buyers gave mortgage bankers a bit of business – but already owners gave them even more; of the record $3.4 trillion in total loans, $2.3 trillion was refinancings. Homeowners went into debt to spend "their home equity" (actually, community land value). Their spending kept the US recession brief, except for those who could only watch the jobloss recovery. (Los Angeles Times, Jan 25)

In most of the country, house prices tend to rise gradually, in line with personal income. Well, not everyone's personal income. For most people, wages are flat or falling. It's only the upper echelon for whom income grows. Their moving into better situated homes hauls up prices of homes below them, too. In New York, California, and Hawaii – places short on land – prices ride a roller coaster. The booms lure speculating homebuyers, but houses in hot markets may not return a fatter profit; over the last two decades, prices more than tripled in Los Angeles but in Milwaukee, too. (Wall Street Journal, Jan 27)

To draw more mortagors into this pyramid game, Bush put in his 2005 budget zero-down loans for government to guarantee to first-time buyers (Los Angeles Times, Jan 25)

In Memphis, apartment managers walk the dogs of residents who are on vacation, pick up and drop off dry cleaning, offer free fax and Internet service, and set out newspapers and coffee each morning. In Atlanta's suburbs, people who move into one garden-style apartment building receive $500 gift certificates to Best Buy, the electronics chain. In Cleveland, Denver, and other cities, landlords give new tenants one, two, or even three months free, worth $1,000 or more. While rents continued to rise in big cities on the coasts, such as New York and LA, they are falling in more than 80% of metropolitan areas across the country. A typical 800-square-foot one-bedroom apartment in LA costs the same as a 1,800-sq-ft two-bedroom in Charlotte, NC. Between late 2001 and last summer, the average rent fell 4.8% across the country. Low interest rates and easier credit for low-income people persuaded many families to quit renting apartments and start buying their first homes. At the same time, developers put up thousands of new rental buildings. By the end of 2003, the apartment vacancy rate had risen from 6.3% in 2002 to 6.9% – a 15-year high.

Despite the declines in rent, the prices of apartment buildings have actually increased in the last few years, as many investors turned to real estate from stocks. Martin Fridson in his Very Good Year (1996) noted that the one thing every year of maximal total return on stock had in common, besides coming off a low year, was abundant easy money (p 224). Conversely, tighter money trims returns. Over the next couple years as bankers raise their rates, stocks will drop; as they raise the mortgage rates, people who might have bought houses will keep renting instead. (New York Times, Nov 25) In recent years in many parts of the country, as people who barely qualified under the less stringent credit requirements lost their jobs, foreclosures on homes swelled. (CNN/Money, Feb 5) As more unemployed lose their homes, they'll move back to apartments, too. Then rents will bounce back up as house prices finally fall.

The commercial vacancy rate rose from 16% in 2002 to end the year at 17.1% – the highest in a decade. The industrial vacancy rate rose from 11.2% to 11.8% – the highest since REIS began collecting data in 1980. (REIS in Merrill Lynch in Deflation Watch) How long can indebted building owners endure these vacancies? Already, US-based corporations defaulted on over $105 billion last year. Yet none were commercial property firms despite the dearth of tenants. Locally, Atlanta has 19.8% vacant, in Dallas it's 25%, and Denver and Silicon Valley see entire sections vacant. To survive, many developers went public and used investor capital to pay down debt, leaving them not at the mercy of banks. (Wall St Jrnl, Jan 23) But it's a gambit you can use only once per cycle.

Are American workers more productive than ever? Maybe not. Government figures count hours worked in the office, not on laptops in planes, at home on weekends. For working couples with kids, their combined workweek rose from 81 hours in 1977 to 91 hours in 2002. Each year, workers return to their bosses unused vacation days worth $21 billion. On behalf of employees forced to clock over-overtime, the Labor Department in 2003 collected $212 million in back wages, a 21% increase over 2002, which had set the previous record high. All that's in America. In Europe, people's time-off equates to them quitting work for the rest of the year on October 24th. In Sweden, women get a maternity leave of 96 weeks. (USA Today, Dec 17) Yet even over there, people need more liberation from useless labor. Winning it is something that cannot be mandated politically but needs to be built in organically; that is, in lieu of taxing workers and investors and subsidizing wasters, we need to recover the surplus in society and share it with all. Thus endowed, we all can choose to work as much – or as little – as we like.

Sick people in 2002 again spent more on medical care than ever before, up 9.3%, equalling 15% of the GDP – about 50% more than a European nation spends – or $5,440 per American. For all that money, are we that much healthier, or had we been that much sicker? What's up with these costs? On the demand side, stress is the big killer, wrecking the immune system, and we're overworked, divorced, abandoning community in search of a better job, and worried about downsizing. And Baby-Boomers have yet to age enough to demand more from the system. On the supply side, there's little or no competition between doctors, hospitals, insurers, drug companies, all their lawyers, and pill-cum-scalpel vs. holistic healing. And as automation and globalization have lost jobs in producing goods, make-work jobs have sprung up in providing services, such as shuffling papers in hospitals and the offices of insurers. (The Oregonian, Jan 9) Want America to get well cheaply? Legalize competition on the supply side, and institutionalize material security on the demand side by axing taxes, recovering rents, and paying citizens a dividend from the revenue surplus. Watch how we to turn to play and heal.

Mikhail Gorbachev (Ekho Moskvy Radio, Mar 1): “natural rent must be a part of public revenue – what they don't earn but rather what they simply receive from the nation, from nature.” The first and only President of the Soviet Union echoed the demand of presidential candidate Sergei Glaziev, student of geonomist and member of the Russian Academy of Science, Dmitri Lvov. Their party, Rodina, came from nowhere to win 10% of the last election, with the help of the Kremlin. But Glaziev did too well, spurring speculation that he could succeed Putin in 2008 (Christian Science Monitor, Jan 29). To curb his popularity, the Kremlin now locks him out of lecture halls where his campaign rallies had been scheduled (Moscow Times, Mar 1).

The Atlantic Monthly (Jan/Feb) ran an article by Maya MacGuineas which saved the best for last: “we need to find some other sources of revenue. One possibility is to levy taxes on pollution and the use of nonrenewable resources—a perfect example of taxing what you don't want in order to avoid taxing the activities you want to encourage. Another possibility is spectrum user fees. Rights to the public airwaves, which are valued at hundreds of billions of dollars, are practically given away. We should charge annual fees for the right to use and profit from publicly owned airwaves.”

The CEO Council for Growth, a group of more than 40 CEOs of major firms in the Philadelphia area, in a letter to Mayor John Street (Jan 16): "We believe that these initiatives – including phase in land-value taxation, reducing taxes for most residents while removing a key impediment to economic development – combined with the anticipated wage tax relief which will be facilitated by the passage of gaming legislation in Harrisburg, will truly make a positive difference."

Financial Times columnist Martin Wolf (Feb 19): "It is moral because owners, as owners (rather than managers or developers), contribute nothing to land's value. It is efficient, because taxing land distorts nobody's choices. On the contrary, a tax on site values encourages owners to use what they own more efficiently. Always desirable, a land value tax is now an idea whose time has come."

Estates Gazette ran John Plender (Feb 28): "the interim report on housing supply by Kate Barker of the Bank of England's monetary policy committee specifically discusses the potential for a national tax on land values. The case is not difficult to make. A land value tax incorporates an incentive to develop and a penalty for not putting land to its best use. When house prices and land values are rising, the tax would act as a dampener on the boom."

Hartford Courant (Dec 7): "The [property tax] differential discourages speculation and encourages property owners to build or to restore existing structures. The results in Harrisburg have been astonishing. Since 1982, about $3.5 billion has been invested in residential and commercial projects; the number of taxable businesses has tripled to nearly 6,000. This year alone, the city has issued building permits for more than $300 million worth of construction, a record. Harrisburg's example ought to inspire Connecticut lawmakers to permit cities in this state to experiment with different tax rates for buildings and the land on which they stand."

Heartland Institute in their Budget and Tax News (December) ran "Philadelphia Weighs Property Tax Reform" by Chuck Metalitz which plugs the shift.

Lincoln Institute in their Landlines ran an article by Richard W. England of the University of New Hampshire (January): "A way to promote compact metropolitan development would be to permit a city to lower the tax rate on buildings and maintain municipal services by raising the tax rate on land. In the Granite State, a pure land value tax yielding an equal amount of state tax revenue would boost gross state product, employment, and residential construction. The boost would be long lasting, not transitory. This stimulus to urban economic activity would help restrain the migration of households and businesses to surrounding rural areas and thereby protect undeveloped lands on the metropolitan fringe."

John H. Beck, Professor of Economics, Gonzaga University (Free State Project): "A tax on the value of land creates the least distortion of market incentives. Furthermore, the benefits of local government services will be reflected in the value of land within the locality. Therefore, it may be deemed fair that landowners pay taxes to finance these services in proportion to the value of the benefits they receive."

Capitalism Nature Socialism, Vol 12, Issue 1, (2001) ran "Green Dreams: The Land of Henry George" by Paul Buhle which recounted his life and times thru a sympathetic leftist lens (via Aussie Anne O'Rourke).

Lord Berkeley: "land values around Jubilee Line stations have increased by £313 billion; the enhancement of property value could be used to at least part-fund, if not wholly fund, Crossrail? Is it not right that the property industry should contribute something to the common good created by such new lines?"

Baroness Scott of Needham Market: "many transport infrastructure projects do not go ahead, because there is not enough finance publicly available? By using the increases in land values that accrue after a project has been built, transport improvements for the public would be gained at no cost to the taxpayer, and would provide an opportunity for wealth creation on the part of the current landowners."

Lord Greaves: "the Government ought, as a matter of urgency, to be revisiting the introduction of land value taxation? It is almost 100 years since your Lordships' House had a huge battle over this, and with terrible consequences. [Their grandfathers derailed it.] Perhaps I would look forward to such battles again. Is it not the case that land value taxation would be a much better and fairer way of financing local government than the council tax and it would also, in many ways, allow a reduction in other taxes, such as income tax?"

USA Today (Jan 8, six weeks before Greenspan critiqued Fannie Mae and Freddie Mac): "Neither pays state or local taxes and each has a $2.25 billion line of credit from Uncle Same. The belief that the government will rush to their aid if they get in trouble lets them borrow at interest rates nearly half a percentage point lower than other big borrowers can. Together they carry debts totaling $1.5 trillion and have guaranteed another $2 trillion in loans. They reduced the average mortgage for homebuyers by less than a tenth of a percentage point, typically just $87 a year. The two firms had combined profits of $11.8 billion in 2003 and paid their exectives and shareholders handsomely." They also lie in their annual reports. Better to just make homes affordable and wages heftier. Do that by axing taxes and sharing rents.

USA Today on Congress' $318 billion for highways (Feb 18): "Any benefits worth passing now should be worth financing now, too, instead of imposing on future generations to foot the costs. Promising new roads without providing a responsible plan to pay for them takes motorists – and taxpayers – for a ride."

Five Nobel Laureates for Peace sent a letter to the president of the World Bank, asking him to quit lending to extractors of oil and gas and to raise the green bar for projects that do win loans. (Environment News Service via OneWorld via the Progress Report)

More than 100 economists from across the country sent a letter to President Bush and the governors of eleven western states, telling them that protecting the environment would raise incomes. The list includes two Nobel laureates: Kenneth Arrow of Stanford University and Robert Solow of Massachusetts Institute of Technology, who also signed the letter to Gorbachev urging him to recover ground rents. With no hint of irony, they said a healthy a quality of life attracts productive families, firms, and investments, and that urban sprawl and growth are harming nature. At least they did recommend eliminating subsidies for over-extraction. (Dec 09, econw.com/pdf/120303letter.pdf)

The New York Times (Dec 26): "despite low commodity prices and an ongoing exodus from rural America, subsidies inflate the price of land by 25%, making it harder for younger farmers to buy land. Roughly half of the nation's agricultural land is rented out; subsidies benefit landlords rather than the actual farmers. Owners don't deserve $20 billion in subsidies."

The Christian Science Monitor (Feb 12) ran an op-ed by William Krist, senior policy scholar at the Woodrow Wilson International Center: "US Trade Representative Robert Zoellick proposed that the developed countries eliminate export subsidies and open their markets. Without these subsidies, the world price for many agricultural products would be significantly higher, and the small family farmers in Africa would earn substantially more for their labors. Keeping out low-priced cotton imports hurts the hard-pressed American textile industry, and US sugar tariffs hurt domestic producers of soft drinks and processed foods. The billions spent on agricultural subsidies could be used to strengthen social security, fund Iraqi reconstruction, or reduce taxes for the average American."

The Washington Council on International Trade, a group of Seattle business and community leaders presided over by Bill Center (New York Times, Feb 21): Job losses are less catastrophic where national health and pension programs protect workers while they search for new jobs. "We don't have the social safety net we need to soften economic dislocation engendered by trade and changes in technology." The cushion comes built in from a Citizens Dividend, which rises with land value, which rises as trade expands.

The Chronicle of Higher Education (Jan 16) ran "Lending a Lasting Hand" by David Glenn, an in-depth feature article that made a case of an extra income for everyone apart from their labor.

Simple Solutions Editor and recruit John Watkins (Feb 18): "the fair way is to charge each person an appropriate fee for their use of the commons. After the collection costs have been paid, the next question is how to provide the owners with the benefit of the remainder; I favor the citizen's dividend. For its other services, government should collect user fees; government will be more accountable, and probably more frugal."

In Britain in 1649, the Diggers' leader Gerard Winstanley wrote: "Buying and selling of land was brought in by War, and does establish murder and theft. The Earth was made to be a common Livelihood to all." (Australia's Progress, 2003 Sept/Oct)

Subtitled Price Revolutions and the Rhythm of History (1996). Brandeis prof David Hackett Fischer recounted four major price swings over the last eight hundred years, varying in length from just under 90 years to just over 180 years. His historical data showed that when population grew, economies could not keep pace. The growing demand coupled with lagging supply built pressure under prices. Kings responded by debasing currency, minting more money, and borrowing from merchant bankers, letting prices fluctuate wildly but ever upward. The prices that rose the most were the items of less flexible supply, mainly land. During the phase of price equilibrium when wages matched rents and the cost of living, civilizations produced their best art and science and faced life with optimism. Later in the cycle, societies were wracked by disease, revolution, repression, and war; crime and bastardy, indicating social breakdown, were near perfect statistical shadows of the inflation rate. Every cycle, the most powerful citizens of the most powerful nation squandered their fellow citizens' credit and lost their country its lead.

After every huge tax break, people snap up a book on tax injustice by a Pulitzer-prize-winning reporter for a big back East paper. The most recent, Perfectly Legal by David Cay Johnston, was even reviewed by Business Week (Jan 19). If you enjoy being staggered by how grossly unfairly the elite and their politician handmaidens treat everyone else, read it. Or consider the bigger picture. Of course taxes are unfair and always have been, favoring those more intimately connected to the state. Yet taxes are unfair inherently; among other faults, there's no way to perfectly match up tax paid with subsidy received. But there's nothing so wrong with taxes that a little abolition wouldn't cure. So, once taxes get abolished, how would we tax the rich? We wouldn't. Instead, we wouldn't create the massive, undue fortunes in the first place. We'd quit subsidizing the elite and we'd recover all the rents for land, resources, and privileges, leaving no public wealth leftover to accumulate into private fortunes. Then our Pulitzer winners would need to find other muck to rake.

Sen. Ted Stevens, an Alaska Republican, had struggled financially. Then in 1997, he got serious about making money. Stevens helped save a $450 million military housing contract for an Anchorage businessman who made Stevens a partner in deals that turned the senator's $50,000 stake into at least $750,000 in six years. This and other investments with businessmen who received government contracts or other benefits with his help soon made him a multi-millionaire. Sen. Harry Reid (D-Nev.) has pushed through federal land trades and other provisions benefiting Nevada interests that employ his sons and son-in-law. Sens. John B. Breaux (D-La.), Trent Lott (R-Miss.), and Orrin G. Hatch (R-Utah) did favors for companies and groups that paid their sons as lobbyists and consultants. How much the politicians get, while indicating corruption, pales beside how much the businesses get. And while using the state to enrich the elite is treated as news (The Los Angeles Times, Jan), it's old history, as old as taxes and subsidies. See Wealth and Democracy by Republican Kevin Phillips for the details on the origins of massive American fortunes.

A Review Essay by Barbara Fried of Stanford Law School. She says that the publication in 2000 of Peter Vallentyne and Hillel Steiner's collection of essays marks the emergence over the past two decades of a theory of distributive justice that joins the premises of the libertarian right to the political agenda of the egalitarian left. Its proponents favor a strong right of self-ownership, which they have taken to imply (contra the left) that individuals have a right to the differential value of their talents [presumably to utilize untaxed]. Yet they hold that individuals have no right to a disproportionate share of the external resources of the world – a view (borrowing further from the right) that they find in Locke's proviso that each may appropriate only so much of the world's resources as leaves others with "enough, and as good" a share. This marries self-ownership of one's talents to a rule for egalitarian sharing of the external resources necessary to exploit them. (Public Law Working Paper No. 63, Philosophy and Public Affairs, Vol. 32, No. 1, Winter 2004, Princeton University Press) And it may lead theorists to some day share rents in lieu of taxation.

German Jews in Berlin. Black farmers in Africa. An Indian tribe in Pennsylvania. They want either their ancestor's land restored to them, or be compensated the land's current capitalized value. While their ancestors were cruelly and unjustly deprived of their land, how much do the descendants of those land-grabbers owe? If the take-over had been moral or permitted under eminent domain in the constitution, how much would society owe? On the other hand, how much do landowners owe society? If residents were required to pay society rent, would descendants of victims still want the land restored to them? Some day, society must collect rents, rather than let landowners keep them. That day, some landowners will lose, despite no longer having to pay taxes on their buildings, businesses, and income, while also receiving a share of recovered rents. Those few losers should not alone bear the cost of transition to a just system of public revenue; their neighbors should compensate them. How much? Perhaps a few years of the rent for their site. And perhaps this formula could be used to settle the claims of descendants of those unduly deprived of land long ago.

The Protestant work ethic is the most outdated, ruthless, plutocratical, hierarchical, deceitful, tyrannical soul-thieving hoax ever shoved down the throat in all the continuous psychosis of human history. Perhaps I should get off the fence here: I don't like a social order that forces labor in an age of abounding surplus. Even I initially wrote "the joy of my work," but hey: that work got its value and energy from play! Its keel is natural (structural) ecstasy, related to the earth. To play is to be alive in the mythical. Relegating a calling to evenings (tired) and weekends (trying to catch up) doesn't cut it. The Utopian implications of the moon landing were eclipsed by the Giant Denial called the "political-corporate nexus," "post-Cold War hyper-Capitalism," "top-down globalization". The knot at the end of the rope of that denial is death sports and their ultimate: war. Those values preach and create scarcity – even starvation – out of the tremendous wealth now up and running. The job system of wealth distribution assumes those ridiculous values. We, myself and many others, question the assumptions. (theworldowesyoualiving.org)

Rep. Pat Farr, Assistant Majority Leader (Jan 30): "How do Measures 5 and 47/50 impact your proposal?"

JS: Those constitutional limits on the property tax need to be replaced with a rent dividend for residents.

Rep. Betsy Close (Feb 4): "Without knowing a lot about it, I can see the wisdom in taxing land, not buildings. However, to tax land at 6 times the rate of buildings as Harrisburg has done raises concerns. I can see empty buildings sitting all over just to avoid taxes. 'Penalizing speculators' may also involve grandma and grandpa's land they are saving for retirement."

JS: People used to own slaves for retirement. Rather than let people keep what's not theirs, there's a better way to help the elderly: as already done, defer any land tax or land dues until the title changes hands. Also, as Tom Paine suggested, rebate a healthy portion of the recovered ground rents as a dividend.

Alanna Hartzok, ex-PA candidate for Congress (Jan 5): "Rebating a dividend is not the only solution to taxing poor people out of their homes. A homeowners exemption of at least a portion of land value might be."

JS: Yet the money lost thru loopholes exceeds the amount collected by the tax. So, unless you get more exempted than you pay in tax, you're paying for somebody else's exemption. They're way too political to pull off fairly. Plus, it's charity for the disadvantaged, which is a whole different psychology than getting a share because rent is ours, all of it is all of ours. Feel the difference? Rather uplifting, eh?

Doug Everingham, Aussie Green (Jan 29): "I agree with the rent sharing principle. But I think most huge incomes are from big companies, where investors or private administrators reap benefits from efforts and skills of many under their commercial control."

JS: It sure looks that way. Yet most outrageous fortunes are not made in the market but in the legislature where the well-connected garner military-corporate welfare. And magnates get more income from land than they do from labor or capital. Half of corporate profit comes from real estate. Most of the richest families got that way from oil. Let's first get back the commonwealth, what's ours to start with, then see what if any massive unfair fortunes remain.

Paul Gagnon, Virginia libertarian, co-founder of the Thomas Paine Network (Oct 18): "I think geonomics (replacing taxes with full value fees for government permits, from land titles to corporate charters) would be the ideal way to go. Does anyone know how much money would be generated by such a system?"

JS: Yeah, but they ain't telling. Ballpark puts it in the mid low trillions, like four annually in the US. In 2001, our GDP was a bit over $10 trillion. Finance, Insurance, & Real Estate (FIRE) claimed over $4 trillion, over 40%. Extraction (everything from farming to mining) accounted for only a half trillion dollars. Now shift from outgo to income: Employment Compensation (to many people) was nearly $5.9 trillion; Property Type Income (to few people) was $3.5 trillion. Property Income for FIRE was $1.3 trillion, six times what it was for extraction at only $0.2 (bea.gov/bea/regional/gsp/). Outside of wages for real work, these trillions are diversions from rent. Charging land dues at full market value would not only recover rent but also lower land price and thus the fees that FIRE can now charge, thereby re-routing these funds into the public treasury.

Bryan Bissell, researcher of religious texts (Feb 4): "I keep hearing that land rent was used in some indigenous cultures. I read your quotes from Confucius and a lot on the theory of land rent or the single tax. Can you direct me to information on the ancient economic practices of the Great Way that Confucius talks about, especially in reference to the land and natural resources? And how the idea of sharing natural resources can be applied these days."

JS: Indigenous cultures that mainly gathered and hunted had rules for sharing the food. Those that farmed held land in common and parceled it out fairly. Applying this pre-historic perspective and ancient value today is logistically easy – recover and share rents a la Alaska's oil dividend – yet politically and psychologically difficult. I cc other geoists who know more than I.

While it's hard to holler for attention amid much noise, such as the Fox story parroting the Heritage Foundation study that showed people can't be so poor since they own so much, even an occasional old rural home, we do keep flitting across their pages. Orion, a successful glossy nature magazine, ran my letter on expanding trusts to the whole earth with all earthlings as beneficiaries. Savannah Georgia's main weekly, Connect (Dec 31) published my lengthy letter which included some research into vacant lots and abandoned buildings (7,000!) gleaned from the local city government.

Thanks to the efforts of member Jeff Strang, the Pacific Green Party decided (Dec 14), to refer my tax proposal to the Green Party US as a potential amendment to their platform. At Portland Community College, eight people signed up for “The Next Economy” (I got paid to teach geonomics!). Steve Zarlenga's talk in a Portland library drew 20 new faces, four of whom bought Steve's massive tome, the highest percentage of buyers at any stop on his western tour.

The Eastern Economic Assoc Annual Meeting in DC included a track which constitutes the conference of the US Basic Income Group. Keynoters were Jay Ham-mond, ex-governor of Alaska, father of the Alaska Permanent Fund, and Senator Eduardo Suplicy of Brazil. Our panel, "Can Rent fund BI?" with Ed Clarke, Alanna Hartzok, and Nic Tideman, drew fewer than last year; many explained they already agreed with our rent policy. In Saratoga, NY, the 14th North American Confer-ence on Environment and Community drew hundreds; about 25 came to my talk, mostly academics. In Georgia, spoke briefly at a statewide meeting in Macon where about 75 met to organize the grassroots events parallel to 2004 G8. Some remembered me from the 80's, my days of Green Party activism. The other talk in Savannah before a couple dozens included a reporter, a professor at the Savannah College of Art and Design, and a police lieutenant representative of the city force. Spoke at length with both the incoming Mayor Otis Johnson and the outgoing one Floyd Adams. Hundreds took newsletters and squabbled over the last remaining few. Some signed up to be members.

The Urban Land Institute reprints our “Financing Transit Systems Through Value Capture: an Annotated Bibliography” by yours truly with Thomas A. Gihring. The JLE Literature Review (2003 July) drew from and cited same. Critical Issues in Environmental Taxation II chose to publish my “Public Policy Front and Centre! Can Eco-taxes Counter Subsidies?”. Greg Mankiw, Chair of Bush's Council of Economic Advisors and sometimes a busy guy, sent me a nice e-mail and a hard copy of an article of his I'd cited and mildly critiqued.

Joel Hirschhorn, author of Sprawl Kills, the book, website, and newsletter who's often quoted in news stories (Dec 29): “Do you have any details on opposition to land tax by developers, land speculators or home builders? After re-reading materials by you and others, I have expanded my support for the tax in my book.”

Dr. Ralph Anspach, inventor of Antimonopoly (Jan 28): “Most home owners have mortgages but still think of themselves as owning the property rather than the bank owning it. It's a matter of perception and this perception hurts the ability of Georgists getting out their very important message. I experienced this reaction by students when we discussed the implications of Ricardo's theory.”

Lowell Harris, emeritus Columbia (Jan 30): “Sorry I got out of the loop. It will not happen again. Your 'Tax Shift' page very good.” Many thanks for all.

Ronald Rosenberger (holidays): “I look forward to every issue of The Geonomist. I've recently been appointed to the County Labor Council here in Pittsburgh giving me the opportunity to spread the national economic ideas of the Geonomy Society.” Way to go!

Gerry Shaw, retired from Alberta oil (Jan 4): “I continue to enjoy your very newsy quarterly. I do find it necessary to give your crisp, witty style careful attention to appreciate your often subtle but always insightful gems. I like your frequent urging that society 'recover' rent. May we all choose our words more empathicly.”

Todd Boyle of Seattle (Feb 8): “Thanks Jeff, for a great read! I celebrate your insight into things, excellent! And willingness to keep on puttin out good writing. I still have miles to go before I finish... just wanted to thank you.”

Jim Mann, retired editor (Feb 23): “I agree with Jeff that we need to consider the worth of things contributed by society as distinct from the worth contributed by the individual. If the land becomes more valuable because of society, then the user must allow society to require compensation for that value; if the value comes from the individual's ideas and work, then forcing him to pay for it is theft. That, I think, is why Jeff advocates rent on land, not on the buildings on it.”

John Morales, retired administrator: “The Board of Directors of the Panama Canal Authority has ordered the Primate Refuge and Sanctuary of Panama to evict monkeys, some of whom are endangered species, that PRSP had introduced on some uninhabited small islands which resulted from the flooding of Gatun Lake of the Panama Canal. Hundreds of students from the whole world have studied primate behavior in the PRSP. You can visit PRSP at www.PrimatesofPanama.org and question this eviction at info@pancanal.com. Thanks for your concern.”

The Local Government Commission with the Urban Land Institute and other heavies (New Partners for Smart Growth) granted me a scholarship (for a second time) to their conference of 1000 held in Portland and space on two information tables. The Robert Schalkenbach Fdn supported our travels back East and local outreach. And our winter issue swayed many newals and renewals: double stalwart John A. Morales (retired Missourian); stalwarts Everett Gross (retired Nebraskan), Lowell Harris (emeritus Columbia), Franklin Hayashida (Hawaii labor leader), Gaye and Gerry Shaw (retired from Alberta oil), Greg Young (Missouri care-giver); sustainers Richard Biddle (Philadelphia teacher), Walter Horn (Boston), Marion Sapiro (LA Basin); supporters Pat Aller (New Yorker), Bob and Susie Fetter (Virginia), Jason Murphy (a philosophy professor in St Louis), Ronald Rosenberger (Pittsburgh); and subscribers Victor Mereski (retired vet in Savannah), Rich Nymoen (Twin City advocate), and Vern Saunders (upstate New York). Thanks to all for re/joining, donating, and granting. If you don't see your name on this list and know it belongs there, just send a check. We'll know what to do with it.

In March, the 3rd Annual International Conference on An Inter-faith Perspective on Globalisation (Dubai, United Arab Emirates). In April, Earth Day at Woman Tree in Portland on Tuesday the 20th. In May the global geoist conference in Spain (Madrid). In June, funders willing: The Other Economic Summit with the G8 in Georgia (Savannah), Take Back Your Time Day in Chicago, and the Green Party National Convention in Milwaukee which will consider replacing their current tax plank with a geonomic one.

John Morales, stalwart extraordinaire and General Semanticist, funded the translation into Spanish by German Lema of Columbia (“Locombia”) of our prize-winning essay, “Bootstrap Development”. It, our “Famous Thinkers on Owning Earth”, our “Where Tax Reform Has Worked”, and “Mexicali, Model for the World” will be available at this year's conference in Madrid in May of the international geoist movement. Know any Spanish readers? Ask us for copies.

Mimic Victor Mereski, retired vet in Savannah (Feb 27): “Hi Jeff, I think with all your traveling, and important discussions, you have forgotten to put me on your subscribers list. I gave you a check.” Checks I try not to forget. If anyone feels forgotten, please, remind me – just send another check. Make spring bloom!

THE GEONOMIST

Vol. 12, No. 4
Editor: Jeffery J. Smith

THE GEONOMIST

Vol. 12, No. 4 Editor: Jeffery J. Smith

Vol. 12, No. 4
Editor: Jeffery J. Smith