GEONOMIST, #24 — 1999 Summer/Fall (Vol. 7, No. 4)
|July 27, 1999||Posted by Jeffery J. Smith under The Geonomist|
Geonomics is …
an economic policy based on the earth’s natural patterns. Eco-systems self-regulate by using feedback loops to keep balance. Can economies do likewise? Why don’t they now produce efficiently and distribute fairly? The answers lie in the money we spend on the earth we use. To attain people/planet harmony, that financial flow from sites and resources must visit each of us. Our agent, government, must collect this natural rent via fees and disburse the collected revenue via dividends. And, it must forgo taxes on homes and earnings, and quit subsidies of either the needy or the greedy. As our steward, government must also collect Ecology Security Deposits, require Restoration Insurance, and auction off the occasional Emissions Permit. And that’s about it – were nature our model.
Africans halt false reform …………………….… page 2
Cow gone, Door closed ……………….……….. page 2
A budget better than Bill’s …………..…………. page 2
Homeless earn $50,000 ……..…..………..…….. page 2
$ for nothn’, patents for free ….…………..….. page 3
Upstream vs. Downstrream ……….………..… page 3
Ah, spring! And the perennial geoist’s fancy turns toward the greens. Actually, Georgists may want to woo environmentalists year round. More than do others, defenders of the earth echo the call to shift taxes off effort, onto one’s exclusive claims upon sites and resources. Minnesota’s Environmental Planning Commission did; see the previous GroundSwell. The April Earth Day issue of the online magazine Eco IQ features an article on sprawl and the Property Tax Shift by this editor (www.ecoiq.com/magazine). The well-attended events that celebrate Earth Day (April 21 usually) offer ideal venues for those who would spare Earth and those who would share her worth to link up. Let’s strategize with others already on the same page. And inform other greens getting up to speed. It’s a match made for all seasons.
Oregonians inch to tax-shift
In Oregon, leaders who work to protect the environment have been cautiously tiptoeing around an aspect of geonomics, the Property Tax Shift (de-tax buildings, re-tax locations). Drawn by the shift’s ability to make sprawling cities compact, the mayor of Portland, Vera Katz, said in an e-mail that she had downloaded from our website (www.progress.org/geonomy) and would meet with us later. The state’s major daily, The Oregonian, applauded the Metro Executive, Mike Burton, who had proposed a reform of the property tax. Tho’ he fell short of citing the shift, his staff is well aware of it, having met with us many times. And Metro Councilor Bill Atherton, who spoke at the 1998 Conference of Georgist Organizations in Portland, communicates with us regularly about his proposed land use fee. It may take time, but stirring the pot should pay off in Oregon.
Mass media, mad messiah? ….….……….…. page 3
FROM OP-ED PAGES
Senate, People Who’re Rome .…………….… page 4
FROM THE ARCHIVES
Pop socialist Galbraith ……………..….……… page 4
Greening the Built Environment ………….… page 4
Q & A, Tobin Taxes Triumph? ………..………. page 4
Property is and isn’t …….…….….….………… page 4
Africans halt false reform
They didn’t take it. The people of Zimbabwe were offered free land but they did not take it. The administration of President Mugabe had proposed in a referendum that his government reverse history: confiscate the large farms of the white minority then parcel out the acres to the black majority. Yet back on February 15, the measure failed, due to the voters’ lack of faith in the current corrupt regime. The black farmworkers still want their own land, but await a more reliable proposal. (NYT Feb 17)
One reform that has never failed to break up large plantations into many family farms is the land tax. Having to pay the tax makes being a middleman landlord not worth the bother. Redistributing land by collecting its rent worked in Denmark in the 1820s, in California in the 1890s, and in Taiwan in the 1950s. Let’s hope Africa and the rest of the developing world go next. An added bonus is owner occupants tend to be better stewards than absentee landlords.
Cow gone, Door closed
Not only do societies fail to collect natural rents from farmers, loggers, miners, homesteaders, and downtown owners, societies also bestow undeserved funds upon owners of land. The classic example is the ag subsidy, but there are many more, such as the below-market insurance for owners who build on flood plains or on steep cliffs. Daring nature to hose them out, these owners inevitably need their fellow taxpayers to bail them out. The eco-system, however, once degraded by draining, filling, or clear-cutting, is never compensated. In the Pacific Northwest, a rainy area prone to floods and mudslides, luxury homes, even whole neighborhoods, are washed away each year. Better late than never, Kelso, Washington, which suffered such a fate this past winter (damaging or destroying 137 homes, consuming tens of millions of US tax dollars), has at last gotten around to exercising its constitutional power to halt logging in the area. The town officials (perhaps wary of expensive liability) deny that the most recent slide was connected to the most recent logging. (The Oregonian, Feb 17)
A budget better than Bill’s
Bill Clinton’s federal budget for fiscal 2001 (released in February) – whether good, bad, or indifferent – is big. Most of the debate focuses on how much to fund each category and how heavily to tax various income groups. A totally different approach is to leave everyone’s income alone yet charge for using sites and resources, then disburse the collected revenue to citizens. Let citizens select service providers (cutting out many middlemen) rather than let politicians fund bureaucrats to pay administrators to hire teachers and doctors. Ending subsidies in general would end subsidies in particular – to factory farmers, clear-cutters, nuclear radiators, and the lot – which would bless the environment enormously.
Is this feasible? If citizens no longer had public schools, social security, medicare, and food stamps, would their citizens’ dividend be big enough to afford private providers? The Urban Land Institute in America’s Real Estate (p 14, 1997) noted over half of corporate profit comes from property. A ballpark figure for annual natural rent of two trillion dollars would pay each adult citizen about $8,000 annually. This is without touching the billions of fat in the budget for the military, foreign aid, and the drug war (the only part of the USG to grow under Clinton). Nor does the current rent total take into account how much wages rise where land is used productively, and how much site values rise (fattening the citdiv) when and where taxes on work, enterprise, savings, and homes are eliminated. Nor does the $8k CD reflect how much the costs of schooling and health care will fall once licensing is opened up and the playing field is leveled.
Some future president may be more like a present CEO and merely predict the expected worth of the nation and the share to each citizen. Receiving a share of Earth’s worth ought to reinforce our link to the Mother.
Homeless earn $50,000
Rising land values now only benefit those intending to sell pricey land. To benefit all members of society, rising land values must be shared fairly. Until that happy day, people earning as much as $50,000 per year must sleep in their cars if they happen to be working in Silicon Valley where the median price for a home is $410,000 (NYT Feb 20). While extreme, California is not unique.
Even where the property tax is carved into the constitution, localities might still collect and disburse local ground rent. To collect it, a determined city or county could fashion some sort of land use fee or increase and make annual the deed fee. Then to disburse the collected revenue, the local government could pay out a Housing Voucher good for paying rent, mortgage, or taxes.
Not only would sharing site rent make local housing affordable but collecting it would make cities compact. To pay the land dues, owners would quit speculating and start constructing, turning parking lots and abandoned warehouses into useful buildings. Government, too, dependent solely upon site value, would quit procrastinating and unload its inventory of surplus urban sites and make narrow its streets, putting more land on the tax rolls. Since the city center enjoys the most demand and can command the highest prices, those owners and city authorities would out compete owners of outlying locations, filling in downtown. Besides sparing suburban land, in-fill also creates more riders for mass transit, another plus for the environment. Thus sharing site rent is a win/win for both home-hunters and nature lovers. (See “Profit Shapes Urban Space” in www.EcoIQ.com/magazine April.)
$ for nothn’, patents for free
The US Patent Office surprised tech-watchers by granting amazon.com exclusive rights to the computer program that lets web business sites affiliate. Since the software is already in use, observers had thought it was in the public domain and not patentable. Profiting by outperforming the competition is one thing, but gaining by excluding competitors is something else. Some clerk in the USPO thought otherwise. (Oregonian, Feb 26)
Even if this particular patent is too broad (as a future challenge is likely to show), it does point up an overlooked fact – the basis for enormous modern fortunes (such as Bill Gates’) is the virtually free patent. Worth hundreds of billions of dollars in some cases, patents are granted by the federal government for little more than a filing fee. Not much business savvy shown there. Imagine GM selling all its cars, Cadillacs included, for the price of its cheapest Geo. What’s now ludicrous could become lucrative. All government need do is gear its prices for patents, corporate charters, monopoly licenses, utility franchises, and most fundamentally land titles, to however much the market will bear. Then divvy up the revenue with the shareholders, we the citizens.
Upstream vs. Downsteam
Valuable patents, lucrative resource leases, profitable franchises, highly remunerative corporate charters – all these precious pieces of paper are given away by our agent, the federal government, for as close to free as possible. Later, downstream, government dons a different hat and tries to tax the income generated by the state-granted privileges. Outraged, the right argues that income taxes are too high; the left counters that corporate taxes are too low. In shadowy deals, US businesses save billions by partnering with tax-exempt foreign firms who rebate the funds in non-taxable ways (NYT Feb 20). Yet the whole issue can be made moot. Government could forgo the income tax and instead charge full market value each year for the titles it grants. Not only is collecting the revenue upstream much more efficient, it also reinforces the view that the values generated by society at large, and the values attached to nature in particular, by rights belong to us all.
Mass media, Mad messiah?
Whose side are these guys on? The media routinely hail a rise in unemployment as good news and a rise in wages as bad news. They rationalize this bias on the theory that more costly workers cause inflation. (AP, Mar 4) Never do they give space to the view that more costly capital (borrowed funds) causes inflation, despite data from Wall Street author George Brockway in The End of Economic Man showing that inflation follows the Fed raising the lending rate (as it’s starting to again). Reporters tell us that the one resource, oil, causes inflation but ignore the possibility that land in general does, too. Nor do the mass media give equal time to the view that no factor causes inflation, only issuing too much unsecured currency causes inflation.
Yet thank goodness for psychological dissonance. The human mind cannot stand being contradicted by reality forever. Lately, a few brave souls, while not being so bold as to postulate what may be right, have begun to ask if the Fed’s policy is wrong. Rather than give the economy a rest (as if poverty were already cured), raising the lending rate may send the economy to its sick bed. (NYTNS Feb 27)
It’s odd that in a self-proclaimed market economy, the lending rate is set not by competition but by fiat based upon the imperfect worldview of one man. The chairman of the Federal Reserve continues an authoritarian lineage dating back millennia. Our earliest laws decreed by kings and potentates dealt with debt.
Ever since ancient Mesopotamia, debt has been secured mostly by land. Hence as debt swells, land holding concentrates, shifting titles from debtor to creditor. Even those “owners” able to hang on to their title may pay as much mortgage and for as many years as tenants pay rent. Plus, wherever land has been held by few and denied to many, its ecological health has suffered.
FROM THE OP-ED PAGES
Senate, People Who’re Rome
“What peasant, however hard-working, can compete with latifundia the size of small countries and worked by thousands of slaves?”
“The soldier settlements might last for Pompey’s lifetime,” Father said. “That’s long enough for his purposes.”
“How very true,” I said.
“And what would you do?” he asked, his face getting red. “How would you change things?”
“Break up the latifundia for a start,” I said. “Forbid the importation of new slaves and the selling of Italians into slavery. Tax those plantations until the owners have to sell off land.”
“Tax Roman citizens?” Father bellowed. “You’re mad!”
SPQR III: The Sacrilege, John Maddox Roberts, ’92.
FROM THE ARCHIVES
Pop socialist Galbraith
John Kenneth Galbraith, Harvard prof and author of bestsellers on economics, had kind things to say about taxes for polluters and depleters, about a variant of the citizens’ dividend, and unkind things to say about neo-classical economics. In Economics and the Public Purse (1973) on page 26: “It will be guessed that the neoclassical system is not a description of reality. (Yet; p 27) the link between doctrine and reality cannot be stretched too far.” On page 251 (emphasized): “Thus we come to the last and most urgent in this series of reforms. That is the provision of a guaranteed or alternative income as a matter of right to those who cannot find employment.”
Greening the Built Envirmt.
Brit profs Maf Smith, John Whitelegg, & Nick Williams (1998, Earthscan) offer a smorgasbord of ways to (re)build buildings so that they tax the environment less. With the encouraging tales of appropriate technology come some startling statistics about the consumption of land and resources by cars and trucks, by houses and malls. Being an up-to-date compendium of efficient techniques from the POV of the conscientious builder is the book’s strength. It trips up when it trots out the same old shibboleths about markets. Leaving to materialists the market, society’s most powerful engine of change, may be the biggest mistake progressive make. Why not make green the market, too? It’s humanity’s version of nature’s watering hole and just as organic.
Q & A: Tobin taxes triumph?
Allen Butcher of TOES: The Tobin Tax would levy currency trades to rein in market volume and volatility, restore national sovereignty over monetary policy, and raise substantial revenue for environmental and human needs. Is this tax consistent with geonomic analysis?
Geonomics steers toward a world sans taxes; they’re more cause than cure of poverty and eco-ploitation. Taxes need coercion; longing to control others bugs them. Instead, let’s ask how one amasses a fortune and challenge Tobin’s assumptions: Keep borders, a source of great pain? Nations had total sovereignty over currency? Kings were often in debt to bankers. People are better off under states than under corporations? Why be under at all? We could cooperate. Does a big payoff justify doing what one can get away with? Let’s rein out volume and volatility. Capital (like labor; down with visas!) should be free to seek the highest return. Where that is, everyone would want to know, had we the funds to spare. A citizens’ dividend gives us the funds to spare.
Property is and isn’t
Life would be simpler if environmentalists did not have to take on the property issue. But greens cannot avoid it. Already the property rightists oppose regulating risky land use. The lines are drawn. Defenders of the earth may as well raise the stakes. Let winning the battle for zoning, for parks, for endangered species, et al be a victory, too, for sharing Earth’s worth. As long as rent is privatized, land is commoditized. As soon as a critical mass understands that the money spent on sites and resources is the rightful income of all, others won’t be so eager to exploit. To reach a common accord with all sides, ecologists must acknowledge that the values produced by labor and capital are private property and not fair objects of taxation. It’s not only good politics, it’d also cut costs, letting economies get more from less, the principle of sustainability.