The Geonomist Volume Thirteen Issue One

Geonomics is …
... a POV that Spain's president might try. A few blocks from my room in Madrid at a book fair to promote literacy, Sr Zapatero, while giving autographs and high fives to kids, said books are very expensive and he'd see about getting the value added tax on them cut down to zero. (El Pais, June 4; see, politicians can grasp geo-logic.) But why do we raise the cost of any useful product? Why not tax useless products? Even more basic: is being better than a costly tax good enough? Our favorite replacement for any tax is no tax: instead, run government like a business and charge full market value for the permits it issues, such as everything from corporate charters to emission allowances to resource leases. These pieces of paper are immensely valuable, yet now our steward, the state, gives them away for nearly free, absolutely free in some cases. Government is sitting on its own assets and needs merely to cash in by doing what any rational entity in the economy does – negotiate the best deal. Then with this profit, rather than fund more waste, pay the stakeholders, we citizenry, a dividend. Thereby geonomics gets rid of two huge problems. It replaces taxes with full-value fees and replaces subsidies for special interests with a Citizens Dividend for people in general. Neither left nor right, this reform is what both nature lovers and liberty lovers need to promote, right now.

To replace the Tories' council tax (a property tax paid to localities), the Scottish Green Party introduced to the Scottish Parliament a levy based on land values, not on building values. Owners of prime locations would pay more than those owning marginal sites. As levied owners develop their land, they renew cities. By adding to the housing supply, owners cool down housing prices, helping first-time buyers. The few poor pensioners and those on low incomes who hold pricey parcels in or near downtown (it happens) could defer payment until their property is sold or developed. Green finance spokesman Mark Ballard said Labor and Liberal Democrat MSPs know they have a problem defending the current council tax yet want to keep a property tax that benefits the economy and society; just such a tax is the one on land, not buildings. Support from both those parties would give this tax shift a majority in the Scotch Parliament over Tory opposition. (BBC News, March 12, via Ben Spies) Later, the Green's bid to recover site rents, which society generates, in lieu of taxing built values, which individuals generate, ran afoul a legislative technicality. But their bill did spur the British Government to announce a review of the idea (p 6). If only the brave hearted Greens could be king for a day, life would be so much simpler.

Informative e-mail is way too much of a good thing. So you quit some lists, even ones that send intriguing stories your way. And wonder if you'll be out of the loop, have too little to fill a quarterly. No way. Not a problem. Instead, more pruning is in order. No way to process still so much info then scurry about to spread the word and recruit other proselytizers. And still have a life. With our kids, our friends. Summer, outdoors. Swimming, camping, or at least hiking. Those are rights. They belong in the Constitution. Right beside the 4th of July. And the sincerity of campaign promises. Whoa, pardner. But politics is not entirely useless. We need the political process to win economic justice. Once we axe taxes and subsidies and share society's surplus, we can transform ourselves; bid adieu to econo-man and welcome homo-luso, people ready to play, to put work in its proper place, to do what we were put here for, or find out what that activity is. Make it your summer project.

This African nation's present administrators decided to quit letting taxpayers deduct their land tax payments from their income tax liability. As long as they could deduct the rent payments, it was just the same as not paying them in the first place. As soon as the government starts collecting more rent for land, that will drive down the price of land. Hence Government expects it can afford to buy more farmland for resettlement of landless farmers. The resettlement beneficiaries who will pay rent to the state for using the land will not pay the land tax. Making discrimination legal, the law prescribes that Namibian citizens be charged a rate of 0.75% of assessed value while foreign and absentee landlords will be subjected to a rate of 1.75% of the value of each hectare of undeveloped land. Farm owners contemplating non-compliance of this law face a fine of N$20,000 or a five-year jail term. (The Namibian, May 24) Perhaps the lower rate for citizens is a sort of dividend for them.

Spending billions of euros, dollars, and yen, Europe, the US, and Japan subsidize their agri-businesses who, thus armed, distort the world price and undercut growers in poor countries. Growers in the First World can easily sell in the Third, but growers in the Third World can not easily sell in the First. In nations where a majority work the land, deflated commodity prices make development impossible. So last year Brazil complained to the World Trade Organization. On April 26 the WTO ruled that (duh) subsidies do indeed distort world trade. Expect more poor nations to follow suit and file against more rich nations' subsidies. (Progress Report) As subsidies are abolished, consumers in developed countries would spend more on sugar and cotton jeans but as taxpayers they would spend less on agri-subsidies and, politicians willing, less on foreign aid and weaponry for tin-horn dictators. A little savings, a little trade among buddies, and the world could become a more comfortable place. And don't cry for subsidies, governments are not omniscient enough to subsidize smartly. Japan's profligate public spending has not been able to re-ignite growth. Germany's billions in subsidies to the formerly communist Eastern half have done some good in one state, Saxony, but have failed everywhere else (Christian Sci Mntr, May 3). And which comes first: economy or people? Better than aiming for growth is aiming for security and simply paying everyone a dividend from recovered rents, letting citizens spend and invest as they see fit.

Around the world, ministers in nations with proportional representation find it necessary to ally with elected Greens. In order to fund welfare for an aging population, Swedish Social Democratic Prime Minister Goeran Persson recruited Greens to help raise taxes on income and wealth, already the highest in the world. The founder of Ikea furniture, Swede Ingvar Kamprad, has left the country. The government exempted the owner of Hennes & Mauritz fashion retail from the tax on top end assets so he would stay put. Swedes keep 500 billion kroner in offshore accounts. (Financial Times, Apr 14) Instead of just raise taxes, perhaps the PM will hear the Greens and shift taxes (they hosted a conference on the topic over a decade ago where I presented geonomics). Sweden already has taxes on land, resources, and some pollutants, albeit at paltry rates. By raising the rates of those taxes and the fees for government granted privileges like charters for corporations and banks, Sweden could drop the rates of those heavy taxes making Swedes expatriates.

The Premier (like an American governor) of the Australian state, New South Wales (surrounding Sydney), Bob Carr, wanted to tax land less. He got tough with the Greens, who often have enough MPs to derail legislation. Greens liked Carr's bill to abolish the current tax on real estate title transfers, but only for first-time homebuyers, not for sellers of investment properties. Greens also didn't want to lower the land tax rate from 1.7% to 1.4%. Carr argued it is unconstitutional to tax one group of buyers but not another (from here, he has a case). Carr hailed his cut as a help for young families, who are as blissfully ignorant of the laws of economics as everyone else. Ending the tax on transfers will just raise the price of the title and end up saving homebuyers nothing. Greens also want to exempt from the land tax not just owners living on a pension but also anyone earning less than average weekly earnings. Just as it's unfair to single out one class for a tax, so is it unfair to single out one group for a tax break. Better both for equity and efficiency is to recover all rents and pay all voters a dividend. The poor, owning low value land if any, typically come out way ahead. Altho' Greens were involved in the debate, enough Labor reps backed Carr, so his bill passed. (Sydney Morning Herald, May 12)

Taiwan's fine cuts plastic

After years of dispute among environmentalists, government officials, and industry, Taiwan at last drastically reduced plastic waste, more than most “green” nations of the North. Government set large fines against businesses that gave away plastic bags, utensils, and Styrofoam and plastic food containers for free. New plastic bags cost one New Taiwan dollar (3 cents) apiece. Shoppers leave the supermarket with goods packed in cardboard boxes and in their own used plastic or cloth bags. Since 2003 January, waste from shopping bags has dropped 65%. Plastic tableware has nearly disappeared from the island, with usage dropping 90%. Overall, Taiwan has reduced its solid-waste output by roughly 25%. Yet success may be short-lived. While the plastics industry has reported some economic losses, their export of plastic goods has taken up the slack. Nevertheless, in May the Legislative Yuan approved a proposal to drastically reduce the fines from the original range of $1,800 to $9,000 to between $35 and $180 per offense. (Christian Science Monitor, June 15) But at least we have seen again that prices matter and that correcting prices does correct behavior.

Industrialists predicted that European Union vehicle emission rules introduced since 1993 would boost new car prices by up to 20%. In practice, prices fell by 7% in real terms. Industry's environmental expenditure as a percentage of gross value-added is in Japan 0.1% and in both the EU and US 0.4%. These expenses are too small to make manufacturers less competitive. What does influence business to relocate in developing countries with lower air quality standards are labor costs and access to market. While air pollution controls are stricter – and more strictly enforced – in the EU than in the non-OECD, a trading partner such as China does have a substantial body of legislation, in some cases comparable with OECD countries, and the pressure to improve air quality grows. Air pollution standards in the EU and major trading partners the USA and Japan are broadly similar, despite detailed differences. European legislation tends towards "command and control" regulation more than America's, but in both regions there is a trend towards greater use of incentives. Methods like auctions tend to have lower costs to industry. The EU laws affecting industrial emissions are not yet fully implemented. Opponents still predict compliance to cost more than it actually does. (Environment Daily 04/05/04 environmentdaily.com/web/foes.htm, via Green Budget Germany)

In Japan, land prices fell again for the 13th year in a row, 5.7%. Lots beneath shops and offices fell 7.4% in 2003 from last year; they're now 83% off their peak value in 1991. (Wall Street Journal, Mar 23). Yet land was so expensive in 1991, and still is in parts of Tokyo, that its price might still have to fall further before people can afford it and get back into building homes and setting up shop. Japan is still five years away from the average length of the land price cycle – 18 years. The Financial Times (Apr 14) notes for land prices to bubble up, first bankers must lend enough to create the surplus credit for speculators. Still shy from losing so much when the last bubble burst, Nipponese banks lent less for the 73rd consecutive month. Yet that's during the downslide; during the upswing, bankers' memories shorten and their professional caution goes out the window.

Down the coast in Hong Kong, more people are taking on mortgages, up 10% from last year, so land prices may rebound from the 1998 Asian Flu; from 1997 to 2003, prices dropped 50%. During those six years, bankers' margin – the difference between the interest they pay depositors and what they charge borrowers – shrunk 20%, from 2.5% to 2.0%. But don't cry for bankers. By raising their fees for insurance and for managing other people's money (OPM, pronounced “opium”), Hong Kong's fifth biggest bank upped profits by over 50%. (Financial Times, Mar 23)

Despite the leader of the Greater Philadelphia Association of Realtors, Diane Lucidi, urging all her members to turn out in support of the controllers's tax reform, mayor John Street, a former housing advocate turned conventional contribution taker, vetoed the bill. It had included a cut in the wage tax and a shift of the property tax from buildings to land.

Altho' over 1500 Marylanders, including the City of Baltimore, wrote to Legislators in support of HB1168, Maryland's Property Tax Shift Bill, and experts met with every member of the House Ways and Means Committee, which even gave the bill a hearing (unlike most bills), it didn't make it out of committee. It was not voted down, but just didn't get a vote. Maryland's General Assembly is only 90 days long. This year there was a stalemate over slot machines and the budget that didn't get resolved until the last day of the session. Because time ran out, a very long list of bills never got votes. The bill's sponsor, Del. Michael Gordon (Dem. from Rockville in Montgomery County), said it takes three years to get any good bill passed. Legislators have committed to re-introducing the reform next year. To see how much a Marylander would pay after shifting the property tax off buildings, onto land, visit marylandlandtax.org. (John David Kromkowski, point man and ghost author of HB1168).

Governments do some times take land from citizens not to provide the public with something for everyone, like a freeway supposedly (but for drivers only), but to favor a lucky business with more room to operate. When what's at stake is land (not something as vital but less tangible like the Bill of Rights), the press casts this occasional abuse of the state's power of eminent domain as victim David vs. oppressive Goliath (USA Today, Apr 2). That makes the land ethic ever more repugnant to most landowners. Then the ballooning in land costs – they say “housing prices” but the structures are getting older, more worn out; it's location inflating – carries up with it the property tax bill homeowners receive. Aggravated by the possibility of losing their home to the state – however remote – worried voters put measures on the ballot in Maine and Washington to slash property taxes; governors of New Jersey, Pennsylvania, and Texas seek new taxes in place of the property tax (USA Today, Apr 12). Ironically, states like Alabama which already has a low property tax rate and a high sales tax are poorer than states like New Hampshire which has no other tax but the one on property, which is half beneficial – the part on locations – and have deleterious – the part on buildings. To deal with people's emotional attachment to homeland and antipathy to taxes, offer them a dividend from recovered ground rents, which for most people would equal or be more than the land dues they pay in.

It's not just the State of Alaska who pays a dividend (from oil); one locatlity, the city of Aspen Colorado, pays a benefit, too. Rich skiers have bid up the price of housing in Colorado resorts into a Rocky Mountain high. In Aspen, Vail, and environs, normal people can not afford to live where they work – not even doctors. So Aspen helps them (Geonomist, '99 Spring). Now those earning up to $150,000 per year and with a quarter million in the bank still qualify as in need of housing assistance. The public monies come in a small way from a tiny tax on retail sails but mainly from a tax on capitalized rent, from a 1.5% tax on the price of property when it sells. This is a tax on land value – something the seller does not produce – rather than on built value – something the seller does clearly produce. Where the price of land is high it's due to location (the three most important factors in real estate), not improvements, which even when new immediately begin depreciating (just like a new car). Aspen's law exempts from the tax the first hundred thousand dollars of the sales price, in most cases more than enough to cover the cost of construction for a condo, the most popular form of housing. (Cindy Christensen, Operations Manager, Housing Office) The program benefits a few thousand people, half the workforce; city legislation aims to aid 60%. The recovery of rent for housing has drawn so much attention that the city was forced to publish a redbook it periodically updates to answer the many questions (Maureen Dobson, maureend@ci.aspen.co. us, Mar 18). Despite, or because of, its success, the state legislature voted to outlaw the real estate title transfer tax for any other local government in Colorado. (Larry Thoreson, 970/920-5029, Apr 16)

After selling metro land, real estate investors buy farmland to avoid taxes on their capital gains; US law exempts profits from real estate when re-invested in real estate. The investors' ready cash and abundant demand push up the price of farmland near Mid American cities. Farmers who'd been hoping to purchase an adjacent field just can't compete. Many sell out and retire or move farther from urban centers. Not only do the new absentee owners bid up the price, having no personal ties like the old owners they also raise the rents. (Knight Ridder/Miami Trib, Mar 7)

State laws that cut the tax on farmland, supposedly to keep owners farming, backfire, too (2003, Spring). The lower carrying cost even entices speculators to buy out farmers sooner rather than later. Buyers nail up a sign reading, “Soon To Be the Home Of''. In some counties, there are only 250 farmers, yet over 2,000 farmland owners get the lower rate. In Alabama where 8.9 million acres are farmland, 17.5 million acres get the farmland tax break. All speculators need do is host a cow or harvest a corn. While enjoying the break, they get all their ducks in a row: plans, permits, loans. Even after building begins, some loopholes let builders keep the lower rate. Such developers pay property taxes from half to 400 times less – like $500 instead of $125,000. In Florida, SeaWorld, owned by Anheuser-Busch, saves more than $866,000 each year; Disney gets land worth $194 million knocked down to $12.3 million. Localities either do without needed revenue and cut services or raise taxes on smaller landowners and residents. Each year, farm acreage as big as Delaware gets covered with concrete, asphalt, and suburban lawns. (Atlanta Journal-Constitution, April 3)

Want to save farmland? Then make cities more compact. To infill cities, collect site values; that spurs owners of wasted lots to get busy. Spend the site rent recovered from around transit stops on a rapid system, squeezing out cars and traffic. And while recovering ground rents, be sure to abolish taxes on buildings and anything else useful that takes effort to make.

The US has designated 1200 toxic waste Superfund sites across the country. In 1995, Congress let the polluter-pays fees expire; now the trust fund is nearly bankrupt. In 1996, taxpayers paid 18% of program costs; now to get abandoned sites cleaned up, they will have to pay almost all costs. Under former Presidents Reagan, George H.W. Bush, and Clinton, the government made polluters pay. This Bush cut funding for the Superfund program by 25% between 2001-2004 compared with 1992-2000. In the last three years, site cleanups slowed down nearly 50%. In the middle and late 1990s, the EPA cleaned up 87 Superfund toxic waste sites per year; last year only 40. For fiscal year 2003, the EPA Inspector General reported a funding shortfall of $175 million. March 11, the Senate refused to reinstate Superfund's polluter-pays fees, thus extending a $4 million per day tax holiday for polluters. Around the country toxic waste sites languish in communities. (US Public Interest Research Group via Progress Report)

Bush's brother's state also fails to protect public health. When Florida's Department of Environmental Protection (DEP) ever takes action against corporate violators of pollution laws, the accused negotiate their way out of paying fines. They agree to upgrade their plant, which improves their bottom line and often is tax-deductible, allowing corporations to minimize net costs or even come out ahead. Even against repeat violators with long records of multiple pollution offenses, DEP does not pursue criminal charges. Only individuals or mom-and-pop businesses are ordered to pay civil fines. In some settlements, DEP gives the corporate polluters a new permit that lets the accused pollute even more than before. Failure to collect fines deprives the state Ecosystem Management and Restoration Trust Fund, established to finance pollution prevention and cleanup. So Floridians must use their tax dollars to clean up after corporate polluters (PEER, Public Employees for Environmental Responsibility via Progress Report)

Over the last 12 months, productivity – no longer output per labor input but profit per employee – increased 5.5%, the biggest gain in 31 years. The last two years – 4.4% in 2003 and 5% in 2002 – were the best back-to-back years in 54 years. The last three years for America's biggest 100 companies constitute a wave of increase in efficiency not seen since just after World War II. (USA Today, June 14). While some of the advances come from computerization and globalization, these figures miss the work performed out of the office on cell phones in cars and on laptops in airports. To those worried about out-sourcing jobs to India or losing jobs to machines, the silver lining is job loss proves a shorter workweek is possible. And there is a way to share productivity gains. All advances in technology and economy sooner or later show up as up-ticks in land costs; witness Silicon Valley. Where society recovers these ground rents, it can eliminate taxes and pay citizens a dividend. Getting that extra income apart from our labor or capital (from nature, our common heritage), people can freely choose to work less. Instead of we serve the economy, this unseen but ever-felt deity would serve us.

Financial Review (Mar 15): “In Australia land tax raises about $2 billion a year for the states, or a bit under 5% of the revenue raised by all state and local taxes. Its wider use is advocated by serious economists. The Productivity Commission's report urges state governments to consider using a comprehensive land tax to replace state stamp duties. The potential role of land tax in improving the efficiency and equity of the taxation system is greater than that. As the British are beginning to realize, a comprehensive land tax could discourage property price bubbles. And it could do it more efficiently than restrictions on the negative gearing of residential property investment. A more comprehensive tax, which included owner-occupied land, could be a powerful deterrent to over-investment in real estate. It would also reduce the volatility of the residential property market. As a rough substitute for the taxation of capital gains, land tax has a particularly interesting feature. The tax base cannot easily go away. Land tax generally is based on the value of unimproved land, which, in turn, is a function of supply and demand and infrastructure spending by state and local government. Nothing the individual owners do affects the unimproved value of their land.”

ABC Online Stateline NSW, “Land Tax For All”, broadcast March 26): “Reporter Quentin Dempster: 'In its recent discussion draft on home affordability in Australia, the Productivity Commission pushed the idea of a much wider land tax base. Stamp duties should be replaced as a matter of priority with more efficient forms of tax, one of which could be a comprehensive land tax. Sydney University's Professor of Economics and Business, Frank Stilwell [who hosted my talk last year], supports the Singer/Spitzer and Productivity Commission advocacy for an all-in land tax regime.' Respondent Dr Stilwell: 'Well, at the moment, we've got a very unfair situation, whereby landowners are capturing an enormous proportion of social wealth. Over the last 10 years in NSW, about $360 billion of wealth has been captured by landowners. Now, that's a product of community improvement and should be returned, at least in part, to the community. At the moment, the Government's only getting about 12% of that, so most of the extra wealth is being captured by the landowners and there's a strong case, I think, for extending land tax so that part of that can be recaptured, reduce the current stamp duties, other taxes, provide revenues for improved social services, public housing and the like.'” abc.net.au/stateline/nsw/content/2003/s1075710.htm

Morning Herald, Sydney's main daily (April 21): “the Australian tax system has been screaming at taxpayers to gear up to earn increased capital gains rather than to work harder to earn increased wages or salaries. This tax-driven diversion of money and effort away from work, away from small businesses, away from productive investments, is without recent precedent. It has helped push property prices into uncharted territory and may have brought on our last two interest rate increases. Cutting the tax on land will spur more speculation in land and will take away resources from the knowledge economy and put them into the least productive, least honorable aspects of Australian economic activity.”

In his budget speech, Gordon Brown, Chancellor of the Exchequer, announced that the UK Treasury is to look at taxing land values. He encouraged all parties to study the recommendations of The Barker Review of Housing Supply, commissioned by the Treasury. The Review highlights the benefits of capturing the windfall gains created by rising land values. Brown's budget comes only a few days after Scottish Green Party finance spokesperson Mark Ballard MSP launched his bill in the Scottish parliament to base property taxation on land values. (via The Henry George Foundation, Mar 17)

China Daily, May 21: In China's 35 main cities, real estate prices rose 7.7% - in just the first quarter of this year. “Constantly rising property prices are the very lure for more capital swamping into the sector. Those who have access to land are mostly enterprises connected with the government. Thus, the land market becomes monopolized, under the collective control of some big names. The 'Wenzhou property-buying gangs', groups of wealthy investors from Wenzhou, a city in East China's Zhejiang Province, purchase newly-built properties in many cities ranging from Shanghai, Hangzhou near Wenzhou to Chengdu and Chongqing in the inland region and sell them at higher prices to turn a quick profit. In a short time prices double. High property price is an obstacle to further development of local economy. The government should enhance its supervision with market-orientated means, like taxation, rather than simply adopting administrative means.”

Habitat Debate, by the UN, 2003 Dec, p 4: “Land taxation can be the key source of income for cities, and for slum upgrading.” P 10: “Increases in land values measure the enhanced productivity of neighborhoods. If that value was recycled back into the community to pay for the services, a financially self-sufficient, sustainable cycle of virtuous growth would be embedded.”

Yevgeniy Primakov, former Russian Prime Minister now President of the Chamber of Trade and Industry (Izvestiya, April 24): “When I was leader of the government, we introduced for the first time export duty. We need first and foremost to tackle the super-profits in the raw-material monopolies. The finance minister cited the figure of $2 billion that they want to confiscate from the super-profits of the oil companies. This amount could be increased threefold to $6 billion. Look, very many major oil executives have in several years earned billions. The British press, for example, said that Roman Abramovich is the richest man in Great Britain (he has $13.5 billion at his personal disposal). How can the governor of Chukotka be the richest man in Great Britain? You are either governor of Chukotka or a citizen of Great Britain.” (Via Michael Hudson)

Greg Easterbrook, author, most recently, of The Progress Paradox (NYT, May 25): “Ideally, proceeds from a revenue-neutral gasoline tax could be used to reduce income taxes and payroll taxes of the poor and lower middle class. N. Gregory Mankiw, now chairman of Bush's Council of Economic Advisers, in 1999 proposed that the federal gasoline tax be increased by 50 cents per gallon, with income taxes reduced an equivalent amount. ” (Via Heather Remoff)

Since a gas tax is a user-fee for driving on public roads, exhausting pollutants out the tailpipe, sure, tax gas. Yet upstream, an oil tax is a fee for diminishing the world's supply, fouling everything oil touches. While the US can not easily tax Muslim oil fields (outside Iraq, anyway), the US could get rent for oil fields in the US, which supply half of the oil we burn. And tax imported oil? Oil importers would just pass it on, plus some for their trouble. So tax obscene profits? Try to define obscene. And again they could raise prices. So break up oil companies into competing refineries? Sure, try this. Besides taxing oil and gas more, have the US subsidize them less. And lose limited liability. Then at last, clean alternative fuels, engines, and transport systems could compete. Also, if not the federal government, then local ones could de-tax buildings and recover rent for metro sites. Owners who now devote so much surface area to cars – streets, parking, gas stations, dealers, impound lots, junk yards, offices of insurance, traffic cops, trauma units – would pay more and think twice. Many would convert their land to other uses, providing more riders for bikes and buses. That's how we get over our addiction to cars and oil and restore our planet to a state of health.

Wall Street Journal (June 4): “Sitting on the sun-drenched porch eating olives and sipping the local white, as my daughter takes her afternoon nap, I think there are perhaps worst (sic) things in life than too much vacation. Maybe I won't have to work that hard at adjusting.” – Matthew Kaminski, Paris bureau editorial page writer. Ironically, the same day The Financial Times claimed Europeans want to work more but tough union rules keep youth out of the workforce and high income tax rates keep people from working overtime. While both scenarios hold for some people, the authors could have correlated housing costs with leisure loss. People in Europe can afford to work less because housing costs less and medical is already covered. To meet these costs and more, Americans must work more.

Christine Boutin, French deputy in the Assemblee Nationale and chair of the Forum des Republicains Sociaux (part of Jacques Chirac's right-of-centre presidential majority), in 2003 authored a report advocating a universal basic income in France of Euro 300.

The Free Liberal Magazine for libertarian readers ran a two-page spread, “Economic Security For All: the Basic Income Guarantee” by Steve Shafarman supplemented by an editorial cartoon on overwork.

“Imagine if in order to depend still less upon our bodies, and to work less, we were to invent machines to replace our work, and tried to reduce the quantity of our needs to the minimum! We would fortify ourselves and our children, so that they should not fear hunger and cold, and should not continually tremble for their health. All of us together would devote this leisure to science and the arts, as a community would search for truth and the meaning of life, and the truth would very soon be discovered, mankind would be delivered from this perpetual, agonizing, oppressive fear of death, and even from death itself. We are higher beings, and if we actually realized the full power of human genius, and lived only for higher purposes, ultimately we should become like gods.” (Anton Chekhov, “The House with the Mansard, Part III,” 1896)

From The Land System of the United States (1968) by Marion Clawson, Director of federal Bureau of Land Management, 1948-53, p 123: “A remedy might be in modifying the real-estate tax, either lowering it generally, or making it a flat rate on the land only irrespective of how it is built up (the line advocated by Henry George and his followers), or, less radically, by placing a lower tax rate on improvements; thus making it less forbidding to keep up income property or to build new structures to a high standard of comfort and aesthetics. A system of this kind is at work in cities in Pennsylvania and is credited with part of the success in recent urban-renewal programs (notably downtown Pittsburgh).”

The fellow who is now the Chief Economist of the World Bank, Raghuram Rajan, supported a property tax over conventional income taxes in his very readable book, Saving Capitalism from the Capitalists (2004). But the example he gave is a tax on land! His reasoning is different from the geoist one; it goes like this: There are two possible uses for a land. X, the non-owner, wants to use it for growing a crop that would yield him 10,000$. Y, the present owner of the piece of land, wants to leave a part of it fallow, and therefore get a smaller crop yielding 3000$ only. In Rajan's contention, owner Y is leaving it fallow because he derives a certain “psychic” income from it (perhaps the thrill of anticipating a higher future return upon selling it). This income is greater to Y than 7000$ is to X and therefore suitor X can't overbid owner Y in a free market. Presently, the conventional tax regime does not tax this psychic income of Y but if X were the owner it would tax his entire 10k$. This differential in tax liability favors speculation instead of production. A tax on the land will yield more production because it will be inevitably earmarked to the 10k$ that can be derived from this land. (Prakash Chandrashekar, Apr 30)

By Georges Anderla, Anthony Dunning, and Simon Forge (1997) on p 74: “Since the early 1970s, the UK's predictions of future growth have been wrong in any given year by a factor or more than a third. The Bank of England's own model has performed just as badly. So have the highly elaborate ones created in a number of universities and research centers in Europe, the USA, and Japan.” On p 149 they cite Solon then again on p 166: “in Athens, Solon (639-559 BC) was the first Greek statesman as a giver of laws and a reformer. Elected 'archon', or chief magistrate, in 594 BC, then noblemen were all-powerful and the peasants were losing their lands and even their personal freedom because the newly rich capitalists had accumulated mortgages on practically all small farms in Attica. Solon annulled all mortgages and debts and limited the amount of land anyone might add to his holdings and outlawed contracts in which a person might pledge his liberty. Subsequently, Athens rose to power and fame.” On p 152: “in 1966 Singapore enacted laws to end speculation in property and land by foreigners, deliberately to halt the inflationary spiral seen in the UK, Japan, and the USA following property price inflation.” On p 127, “The solutions (to unemployment) suggested seem fairly limited: either welfare becomes a safety-net for the poor or there is an across-the-board citizen's income, tax free. The latter is interesting, but since taxes have to increase exponentially to pay for more people, more benefits have to come from less employment…” Which is no problem when taxes, fees, or dues fall not on labor or capital but on land and privilege, whose values rise not just from speculation but also from automation and the rest of social progress.

Transport Economics in Developing Countries by A. P. Prest (1969, Praeger) on p 132 noted that since 1928, Uruguay's Permanent Fund for Development and Farm-to-Market Roads levied a tax on gasoline, on tires, and on land value based on the parcel's distance to the new road. This land tax yielded only a third of the revenue raised by the fund. The tax rate on assessed value was quite low – always under 1%. Owners who had a parcel near two new roads complained about inaccurate assessment and double taxation. So the method fell from use. Transportation and World Development by Wilfred Owen (1987) stated that development is impossible where cars rule; more road capacity merely means more traffic. While roads are necessary, they're needed by non-motorized transport, too, and must be passable in hard rains and all weather. Besides roads, government must invest in other infrastructure, too: water, sewer, electricity, and bigger and better schools. On p 62-63, he noted the polity can integrate land use by levying taxes on land value, motivating owners to quit procrastinating and start building. Resource poor countries can take heart; tourism is now bigger than oil. The stakes – peace and plenty – are high for everyone.

Throughout Joan Didion's book The Point of California, we see how property ownership is the one speculative market that never dies. Real estate is not simply an engine of the state's economy and a purveyor of the dream itself but also the means by which that dream is destroyed. Didion traces how the accumulation of hundreds of thousands, and sometimes millions, of acres in the hands of a few families like the Irvines and the Hollisters later allowed developers to buy those vast tracts for massive residential developments. The higher the density of the proposed development, the higher the sale price. The early Californians were motivated by the same speculative fever, self-delusion, and willingness to sell to the highest bidder as the latecomers. Land, nature, and homes are intensely emotional and, some would say, sacred possessions. And all good real estate agents exploit these emotions and romantic images to market their wares. (Carol Lloyd, SF Gate, March 2)

The most common neighborhood pests in the area used to be prostitutes loitering broken sidewalks by decrepit motels. As TriMet installed wider sidewalks for the new light rail line, real estate speculators have replaced the prostitutes. Real estate agents see the rail line as a no-brainer selling point for houses in the corridor. Homebuyers see a chance to buy into a neighborhood transformation with the potential for further appreciation. Transit agency officials tout rising home values as a benefit of light rail. (“The light-rail connection”, Dylan Rivera, The Oregonian, April 29) Becoming well off from real estate is something we shouldn't do individually but together via paying in land dues and getting back rent dividends.

In the Arab world, about half the people work (sic) in the public sector and about 15% can't find work at all (The Gulf Today, Mar 31) despite the Mideast having the second fastest growing economy last year at 5.9% (Northeast Asia was first) due to fat oil prices. Even with all that oil royalty, most oil-rich nations are in debt; in 1999, Saudi Arabia's was 120% of GDP. Warned off by politics, bureaucracy, and corruption, in 2003 global investors ventured forth only $9.3 billion, less than in Africa. Over the past 30 years, the region's share of world trade has fallen 75% while its population has doubled; half of them are under 21 and youth unemployment is 30%. (The Observer, Apr 11) The United Arab Emirates population is about 90% immigrant from other Muslim countries farther east. Might a healthy Mideast economy help make regional peace possible?

This war between Muslims and America, could geonomics help resolve it? On the American side, shifting taxes off efforts, onto the values of Earth and privilege, while moving subsidies from corporate welfare to “promote the general welfare” (to quote the US Constitution), that'd raise the price and lower the profits of burning oil. Going on the wagon would de-throne both the Bushies and the Saudis. Sharing all the rents for all nature and government-granted privileges would keep them out of the hands of those few now getting them, toppling the rest of the elite and their concentration of wealth and power, especially in the media. Instead of the glorification of a millionaire footballer turned mercenary who loses his life to “friendly fire” in Afghanistan, we Yanks might then become as reflective as Europeans. We could quit arming both Arab dictators and Israel and bring in the UN. On the Muslim side, the recovery of all rents, especially rents for surface land, would break up huge land holdings, putting farms into the hands of real farmers, the first step in development. Since Muslim nations already recover much oil rent, the challenge is to persuade those governments to spend it in ways other than just enrich the rulers. The surest and most efficient way is to pay a rent dividend, as Kuwait once did, and as the US administrator of Iraq proposes for Iraq. To model such good behavior, we could extend the Alaska oil dividend to all of America, from all natural resources. Recall the photos of Iraqi (all males and not old); almost all are dressed as American youth. So let's share Earth's worth; the power of a good example is waiting to be tapped.

John Watkins, Editor (March 31): “A Citizen's Dividend (CD) will reduce (not eliminate) the necessity to work and it will free people from the restrictions on personal development that result from inadequate resources and inadequate time. A CD will also reduce or eliminate the need for unemployment compensation programs; there would still be a baseline income even when you're unwillingly unemployed. In fact, baseline income eliminates the need for many existing social service programs and the taxes needed to support them. A CD can solve the social security problem because it will be a lifelong income, not dependent on other people's taxes. It will also end the need for social security taxes, leading either to lower prices, higher net wages, or a combination of the two. Because some people will choose to work less, there will be an increase in the relative number of jobs available to those who want to work more. Part of the job shortage is caused by the increase in productivity. It makes business more competitive and can lead to lower prices and a reduction in the cost of living. But that's meaningless to the average person if they don't have the resources to take advantage of those lower prices. The CD will partially offset that. Is it is fair not to more widely share the benefits of increased productivity? We need to reduce or eliminate barriers and make it easier to obtain startup resources; a CD would help with the financing. If all individuals and all businesses paid user fees for all the governmental services they receive, tax management costs would disappear from prices and we'd all be better off. One good source of information is progress.org/geonomy.”

Oregon Planner Mitch Rohse's e-mail, “Market Myths and the case for land use planning”, was right on. Especially the bit about "externalities" (for the deeper story on the loss of ancient environmental rights, see Morton Horwitz's The Transformation of American Law or The Geonomist 2000 Winter). Yet the problem lies not with markets; it's: too few of us distinguish between license and liberty. Free markets (which we've never had) in the sense of license are bad, in the sense of liberty are good (since one's liberty depends upon another's responsibility). Markets work as well as they do today because we enjoy a wide consensus on private property. To make markets work better, we must broaden that consensus to include public property. That is, the value of stuff you create – homes, firms, incomes – is yours; the value of stuff nature and society create – land, resources, and government-granted privilege – is ours. Gifford Pinchot (and a 100 others at our website) said pretty much the same. The key for planners is that the recovery of ground rents, in lieu of taxes on efforts, puts owners, developers, and planners all pulling on the same end of the rope. The libertarian academics running USC's Planning and Markets ran my “Market Planning” on this win/win strategy. If we want markets to work even better yet, we must broaden the consensus beyond "what's mine, what's yours, what's ours" to include environmental rights – pay for the values you take, not for the values you make. Strategy wise, I'd just forget about faulting markets – since they do do undeniable good – and focus on broadening consensus on rights. People need to feel worthy of a healthy planet and of a monetary share of the socially generated values of land and resources.

John David Kromkowski, Maryland attorney: “Your assertion that 'it's worked where tried' seems to imply that governmental collection of ground rent to pay citizens dividends has been tried. To my knowledge, it hasn't been implemented anywhere. What has been tried and has worked is a 'split rate' property tax which raises more revenue from land value than from buildings, capital, and/or labor.”

Editor: What's also in use, on the collection side, is not a split rate but a pure land tax in Sydney Australia and in the past in Johannesburg South Africa and New Zealand and Denmark; on the disbursement side are quasi dividends for housing in Aspen, real dividends from ground rent in England's Garden City, Letchworth, and the Alaska dividend from oil royalty, a kind of ground rent.

Communitarian Economics, an e-newsletter run by Amitai Etizoni, ran my answer as the final word on outsourcing in particular and on global trade in general (Mar 16): “Allow trade within nations and between nations and the more the merrier. Commerce pumps up land values. Recover these ground rents and pay citizens a dividend, as Alaska does with oil royalties.” Sierra (March) ran my letter suggesting that rather than attack small parties like the Greens, run candidates who'll stand up for issues that get people out to vote. Greens Victoria News ran my “Geonomics: Green Economics” (Summer, p 13). Gloria Ohland, Reconnecting America, interviewed me for an article and invited me to her panel in Rail-volution in San Diego in September. Portland's Street Roots ran “State should factor land-based taxation in tax reorganization” by member Don MacGillivray (April 1). The US BIG Newsletter (May/June) cited my talk on Mideast peace thru rent-shares (below). The Catholic Social Academy of Austria published my “Steuern, steuern” (“Taxes, taxes”) in their popular magazine, Österreichs (Austria; June).

In March just after psychotics blew up a train in a beautiful Madrid station and Israel killed a Hamas leader and while nearby the Palestinians celebrated Land Day, I arrived in Dubai, United Arab Emirates, where customs literature reminds travelers that smuggling carries the death penalty, and which, BTW, has the lowest crime rate in the world (altho' some crimes go unreported, as everywhere). In Dubai, a huge new city only 20 years old, everyone spoke English. When asked where I was from, without hesitation I thought, Canada's close, and Oregon they probably haven't heard of, but answered America. Most smiled, I guess because Americans mean money. After I spoke at Globalisation for the Common Good, a Dubai professor reached out to all the city departments that might have anything to do with taxes in a nation without any to set up a presentation for me. A Muslim woman leader who also coincidentally works at the Oregon

Institute of Technology, Rahima Jensen, proposed a joint video on how geonomics engenders peace which we have begun composing. April 13th, Paul Metz arranged for me to speak in Utrecht in the huge Rabobank building, the third largest bank in Holland. About fifty came, and at least half came a half hour early. The presentation lasted two hours, then the bank wheeled in snacks and drinks and at least half stayed an extra two hours. Staying to the end were the Senior Daviseur of Rabobank Internation, Jaap J. van Weezendonk, and a local conservative candidate, Ambassador Age A.H. van der Werf.

May was the global geoist conference in Spain (Madrid), ably organized and orchestrated by attorney Fernando Scornik Gerstein and attended by activists from all over the world, including my contact, local professor and official Susana Bokobo. After I skimmed over my paper of two dozen pages on the history of speculation and corruption in Anglo-America, much appreciated by those used to hearing corruption coupled to America Latina, several requested hard copies. A computer professional, Thomas Bach of Denmark, gave me pointers for designing my game to teach geonomics. Before and after the cordial conference, my cohort Pedro Herrera Molina, a professor and official, set up a couple of meetings for a few of us in the Spanish Ministry of Finance on tax shifting; a few days later the Metro government of Madrid announed that its new antifraud team would begin investigating tax evasion (El Mundo, June 4). Illness (too much fine food, drink, deserts, and clouds of secondhand smoke) kept me from the second meeting, so I set up another with our cohorts' boss, Isabel Espejo Poyato. Our next step is to compose a proposal for funds to research the feasibility of Spain shifting its taxes rentward. Last I met with an architect.

While I felt safe in Dubai, I did not in Georgia. In June at The Other Economic Summit during the G8 near Savannah, people in uniform outnumbered visitors five to one. It was like a reenactment of D Day. Almost every time you came outside you heard sirens or helicopters overhead. Cops, military, secret service set up roadblocks, visited private homes, "inter-viewing" poor blacks. The government declared martial law so you could be put away for the duration and have no recourse upon release after wasting all your time and money on going there. They withheld permits for a venue until days before the conference, pro-hibited fishing so no boat could get close to the island hosting the G8, closed the schools to protect kids from visitors exercising their democratic rights, and rented every motel room so people trying to advance alternatives would have nowhere to stay; we ended up in run-down places that normally rented by the hour. Only about 200 braved the heavily armed roadblocks. The huge waste – millions of tax dollars – dismayed many local business people. Later that week in Chica-go was Take Back Your Time Day. On the strategy of revenue reform, I found myself in sync with organizer John deGraf, a professional lobbyist Brian Dederoski, and the Sierra Club of Los Angeles. Here in Portland, my Earth Day gig at WomanTree gallery and resource center drew no one. Yet as Aspen shows, the “share-rent” solution to outrageous housing costs, even to lost leisure, is possible. So, how to market it? Let us messengers enjoy life more than do those with blinders on. That will shift their prevailing paradigm.

Portland Commissioner Randy Leonard, Republican, replied, intrigued with tapping rents to meet the city budget. Portland City Commissioner and front-running mayoral candidate Jim Francesconi at least paid us lip service (2 May): “I appreciate the detailed information you provided on the work in Pennsylvania related to shifting property taxes. I will be working extensively in the Legislature in support of a stable source of funding for our schools. We cannot continue to be the only county in the state with a local income tax. And I believe the Legislature must look at all the options available so the tax burden on our citizens will be fair and equitable. I look forward to examining in more detail the ideas you have advanced.” Post-election, we'll see.

Rich Nymoen (rich.nymoen@ci.stpaul.mn.us, Mar 9): “Minnesota efforts underway to tax land zoned commercial/industrial. What was before just an effort of ISAIAH's Metro Equity Committee now has the support of the entire organization. Last month, we had a training for our congregation members on how to do legislative visits on this issue. Now we have about 20 people fanning out at the legislature. We're also continuing our efforts to recruit allies and are close to securing letters of support from Association of General Contractors and St. Paul Port Authority. Last week, we met with Chair of the Metropolitan Council who was very receptive. He pledged to take part in some roundtables we're planning over the summer and to hold a seminar on it for the other Met Council members. So things seem to be picking up steam, with a reasonable chance of passage in '05. Our sister Gamaliel organization in Hartford, CT (ICEJ) is making even more impressive progress there, with the help of Josh Vincent.” You guys are doing great.

Gary Flo, our VP (May 4): “I am trying to till the soil a little for you in Burlington. I did the presentation to four members of the Burlington City Govt. in March. This week I sent copies to Mayor Peter Clavelle, the head of CEDO (Community & Economic Development) Michael Monte, and to a city council member (also an economist at UVM) named Jane Knodell. I also gave them copies of Harrisburg report and Smart Growth article on split rate. Used a lot of your quotes in my PPT. The one from Andrew Carnegie is especially good. So maybe this summer they will know what you are talking about.”

Comrade and Australian Green leader Anne O'Rourke (Mar 18): “All of a sudden mainstream economists have picked up the tax on land values. The Labor party attached it to their platform and it looks like they will be the government after the next election. I have a friend who advises the shadow leader – likely to be the next Prime Minister – and got in touch with them to say, hey wait a minute, you guys first put it up in the Whitlam reports 30 years ago; they have digged out the reports, and I have sent them Terry Dwyer's report on the amount of available land rent plus the favorable Financial Review article. Not promising anything, but it is on the agenda.”

Comrade and Taiwanese Green leader, Linda Gail Arrigo, Post-Doc, Sociology, Academia Sinica (the major institute of Taiwan, 4 May): “Jeff, Green Party Taiwan has been dormant for a while, but it seems to have gotten a new lease on life, with a new basement office and a young former Green coming back from long service in the KMT city government; he has a lot of information about city environmental issues. At Sunday's meeting I mentioned Geonomics as a possible direction for social justice appeals for our party; he knows about it and is interested. I will be promoting it more in the future. Now the KMT is certainly going down the drain, we will be a party for social justice as a loyal opposition to the Chen gov't liberal Taiwan nationalism.”

Jeff Strang, Green Party candidate for the Oregon Senate, Dist. 22 (June 6): “I'll of course be working the shift in property taxes off structures and onto land into my campaign.” Finally! A candidate who makes sense! In America, yet!

Our cohort Brad Van Dyke, who represents Rural Utahns For Local Solutions in many public venues, proposes “the geonomic or Georgist site value fee or tax and the dividend somewhat, too.” (May 9): “I saw your constitutional amendment with the Simple Society people. Very concise and to the point.” Brad continues to issue press releases that explain how federal subsidies for 200 planned areas designated for preserving heritage and regaling tourists (often two conflicting aims) inflate rural land prices and skew the rural economy toward dependency, converting to low paying jobs while replacing old worker-owners with richer retirees and second home owners.

Benjamin Howells, ex city councilman of Allentown who led the effort to shift the property tax there (Mar 6): “Of interest here is a point you were making in where you recommended a citizen dividend, which seems to be at odds with my promotion; it's OK ONLY if the dividend is distributed to the greatest body of owners.”

Prakash Chandrashekar (May 4): “I work as a consultant in Infosys, India's most famous corporation. I had an interest in issues of economics, liberty, etc. from my time in college and have been a regular reader of libertarian and geoist sites since. I stumbled onto www.progress.org around two years ago and from there to your magazine. Keep up the good work!”

Nathan Weaver, junior at Miami University in Oxford OH, majoring in economics and finance: “I have become very interested in environmental economics over the last few months. I would love to help you out over the summer; is there anything I can do for you? I'm a great student with a passion for both economics and the environment, which I believed to be at odds until I learned about environmental economics. Is there anything I can do to help out?”

Greg Young, Missouri caregiver, sent highlighted excerpts from Paradigms by Joel Barker: “I'll see it when I believe it.” “Hardening of the categories grows when one is successful and in power.” “To have no ability to explore alternatives is dangerous when a major, rapid change occurs.” From Banishing Bureaucracy: “Guidelines for Leading Paradigm Shifts: 1. Introduce anomalies and help people perceive them.” “Paint a clear picture of the new culture for all to see.” “To build people's faith, you must first earn their trust. Prove to them that others who have made the leap before them have flourished.”

The Robert Schalkenbach Fdn supported our trips to Arabia and Europe. Our spring issue swayed many newals and renewals: double stalwart John A. Morales (retired Missourian: “Wish it could be more!”); stalwarts Michael A. Neil (SoCal health practitioner); sustainers Hanno Beck (Baltimore computer consultant), Harold T. Kyriazi (Pittsburgh medical researcher: “Keep up the good work, guy!”), Heather Remoff (Pennsylvania anthropologist); supporters Jack Bailey (Oregon Common Cause officer), Stephen Bezruchka (Seattle doctor), Mario Cordero (DC area salesman: “Thanks for the great job you are doing; keep me on your list!”), Paul Gagnon (Virginia Libertarian), Mary Rawson (retired Vancouver transportation planner); and subscribers Brian Beinlich (Oregon computer businessman), Willis Frambach (LA area anthologist), Jim Mann (New England retired publisher). 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 June the Green Party National Convention in Milwaukee will consider replacing their current tax plank with a geonomic one. In July in Montreal is the International Society for Ecological Economics, in Burlington Vermont is Sustainable Communities, in Boston is the Social Forum just before the Democratic Party Convention, and in New Mexico Albuquerque we US Georgists. In August in of all places Portland OR is the Environmental Science Conference who debated admitting a presentation of geonomics but finally relented. In September in San Diego is Rail-volution, in Italy Environmental Taxation, and in Spain Basic Income. In June and September are my courses on geonomics via Portland Community College. My project with Elgar Inc, a college textbook on geonomics of 20 chapters, now has a dozen enthusiastic contributors and some non-authoring volunteers.

Pass on newsletters and articles; John Morales, retired Panama Canal administrator: “Thanks much for the detailed, interesting report on Dubai and Netherlands. I forwarded it to various prospects.”

Join others in your area; Philip McCormack, Vancouver doctor: “My property tax breaks down as: Land, $250,000; House, $54,000; Total, $304,000. Now I am paying $2,400 p.a. or $200 a month. After reading Geonomics and of the all-round benefits to my local community, I am willing to pay more. However, at the Federal level I am being skinned alive with Income Taxes and Goods and Sales Tax. I would appreciate an introduction to anyone in the Vancouver BC area who is interested in Geonomics.” Will call.

Massage the message; Stephen Bezruchka, Seattle doctor: “I'll call and we can discuss how I can frame this for my students.” Let's do lunch!

Mimic Michael Neil (Apr 21): “Thanks for the update. Your check is in the mail.” You've heard that before, right? But this reader meant what he said, big time. Since summer means fun, lets have some and enjoy geonomizing together. Merry Solstice.

THE GEONOMIST

Vol. 13, No. 1
Editor: Jeffery J. Smith

THE GEONOMIST

Vol. 13, No. 1 Editor: Jeffery J. Smith

Vol. 13, No. 1
Editor: Jeffery J. Smith