GEONOMIST, #47 — 2005 Summer (Vol. 14, No. 2)
|June 26, 2005||Posted by Jeffery J. Smith under The Geonomist|
Home+site prices bubblicious? Media asks
War & Corruption China smog riots ……. page 3
Erection Indices Ex-Reds tax flatly ….. page 4
MNC tax break Regs after politics …. page 4
Cars ride free Logs ride free ………… page 5
CEO pay way up Rich get way richer page 5
Home starts/sales Condos get top $ …… page 6
Metros zinging Hot states/regions … page 6
Get rent via stock Property tax up ……… page 6
Growing ex-urbs Farms = cash cows .. page 7
Gas truly cheap? Life costs more ……… page 7
FROM OP-ED PAGES
The Economist, Financial Times, Guardian . page 8
FROM THE ARCHIVES
Memoirs of Hadrian ………………………………… page 9
RF Kennedy, Jr’s Crimes Against Nature … page 9
Hudson on pensions Global savings glut? page 10
Fannie/Freddie oops History of Monopoly page 10
Good tax, oxymoron? ……………………………… page 11
Homes+sites on front page
Up to 75,000 of the single-family houses built last year were put up on parcels where a house had been razed (Time, June 13). What’s exploding in value is not the house; the building is older, more worn out. It’s the location, near a sunny coast or a cool city’s downtown.
Some owners borrow against their sites to invest in stocks and bonds. From the Federal Reserve’s most recent data, from 2001 to 2002 (bearish years), the extracted equity used to buy securities was 11%; during 1998 and 1999 (very bullish years), it was only 2%. As a whole, re-financiers may not be the savviest of investors. (San Jose Mercury News, 2004 December 22)
One out of every eight Americans lives in California, where the median price of homes+sites has gone thru the roof. Yet wanna-be buyers bid against each other. In Los Angeles, they ask their real estate agents to write recommendations on their behalf, even attach photos. (CNN/Money, March 10) (Cont’d p 2)
Geonomics is …
a way to connect the dots. Making the cyber rounds is “The Cavernous Divide” by Scott Klinger, from AlterNet (posted March 21): “As the number of billionaires in the world expands, so does the number of those in poverty.” Duh. The yawning income gap is not news. Nearly every issue of our quarterly digest carries a similar quote. Yet the connection was worked out long ago by one of America’s greatest thinkers, Henry George, who labeled his masterpiece, Progress and Poverty. Techno- and socio-advances always enrich few and impoverish many. Yet progress also pushes up location values – the geonomic insight (is Silicon Valley cheaper now or more expensive?). Instead of taxing income, sales, or buildings, society could collect those values of sites, resources, EM spectrum, and ecosystem services via fees and dues, which would lower the income ceiling, and instead of lavishing corporate welfare, pay out the recovered revenue via dividends, which would jack up the income floor. Dots connected.
FROM THIS PEN’S PERCH
Fall on your sword, not!
In Oregon, Senate Revenue held two hearings on SJR 1, Site-Value Taxation (SVT). At the first, seven people, mostly from Portland Metro, testified, all in favor. At the second, an informal roundtable discussion hosted by Sen. Charles Starr (R), Metro Councilman Rex Burkholder, founder of the bicycle activist group, spoke on shifting the property tax from buildings to sites and Kris Nelson of Geonomics, Inc did a Power Point. About 25 people showed up, including a Sierra Clubber, Wes Kempfor, but mainly business types. Most asked about SVT’s fairness. Supposedly, it’s OK to squander perfectly buildable sites, forcing development outward, creating sprawl, and not OK to recover the socially generated value of locations. I noted that places that do tax land, not buildings, are quite successful, like Sydney Australia; proponents are not asking anyone to drink poison or fall on their sword. However, like Lincoln said at the start of the Civil War, “It’s nice to have God on our side but we must have Kentucky.” While it’s nice to have real results on our side, we must have righteousness; voters must understand they are the rightful recipients of land value – a value we all create, of something none of us created.
Randy Tucker, Legislative Affairs Manager, Metro (May 27): “We entered this session looking for a chance to get some attention paid to SVT, not to pass the bill. We are doing what we hoped we’d be able to do. Yes, if the Senate passed the bill it would get more attention, but we’d want to ensure that it didn’t pass the House since it’s not ready for prime time. If it goes to the ballot, we are not prepared to run a ballot measure campaign (Metro can’t do that anyway).”
(Cont’d from p 1)
Home sites on second page
Yale economist Robert J. Shiller came out with Irrational Exuberance in 2000, which called the stock market bubble just before it burst, making the book a best seller. In 2005 he released a new edition, which notes real estate prices are rising much more rapidly than either construction costs or incomes. When this bubble bursts, it might set off a worldwide recession. (NPR Talk of the Nation, April 6)
“After the Housing Boom: What the coming slowdown means for the economy – and you.” This headlined the cover of Business Week (April 11).
The fact that prices are rising faster than rents, when the two usually move more closely in tandem, shows more purchases than usual are for speculation. (USA Today, May 11) In hot markets, speculators buy then resell after owning for less than six months. Such “flipping” in Las Vegas makes up 11.5% of home sales, up from 2.4% five years ago; in Los Angeles, however, flips decreased to 4.1% from 4.3%. For the nation, it’s 3.7%, up from 2.4% five years ago. (USA Today, May 22) The number of real estate investment clubs has grown fourfold since 2002, from 44 to 177. Non-affiliated clubs put the number closer to 500 groups nationwide. In contrast, the number of stock market clubs fell 46% from a 1999 peak of 36,151 to 19,646 at the end of 2004. (USA Today, May 23)
Alan Greenspan, Chairman of the Federal Reserve, denied a housing bubble but admitted to some “froth” (AP, May 21). Atlanta Federal Reserve Bank President Jack Guynn warned that some buyers and builders, especially in Florida, will get burned. The rocketing rise in price is not sustainable and may be topping off. Compared with previous double-digit gains, median new home prices were “only” 3.8% above the gain of 2004’s April. (USA Today, May 25)
Paul Krugman, the New York Times (May 27): “Stephen Roach of Morgan Stanley argues that we have not yet paid the price for our past excesses. America’s housing market, like the stock market at the end of the last decade, is approaching the final, feverish stages of a speculative bubble: 23% of the homes sold last year were bought for investment, not to live in; 31% of new mortgages are interest only. Even Alan Greenspan admits that we have ‘characteristics of bubbles’, but only ‘in certain areas.’ But these aren’t tiny regions; Florida and California are big and wealthy, so that the national housing market as a whole looks pretty bubbly. If the hectic pace of home construction were to cool, and consumers were to stop borrowing against their houses, the economy would slow down sharply. Now the question is what can replace the housing bubble, maybe the biggest bubble in U.S. history’.” (Via Polly Cleveland)
Hoping to leave no “paper profits” on the table, some owners delay sale. It shows we are in the late stages of a housing mania that is reminiscent of the dot-com stock market bubble. (USA Today, May 30) USA Today polled 55 top economists; 3/4 called housing overheated. Goldman Sachs reported to clients that homebuyers appear to be irrationally exuberant.
Beneficiaries – lenders, builders, and realtors – deny any bubble. They point out that the ratio of housing sales price to annual rental value is not as skewed as stock price was to earnings back during the 1990s stock bubble, except San Francisco’s ratio of 35 to one does match Microsoft’s price-earning’s ratio of 2000 (NYTNS, May 29). Yet stocks – where one finds day traders – always fluctuate much more wildly than do house+sites – where speculators need months to flip a property.
A typical existing home+site costs 3.5 times a median family income, compared with a longstanding 2.7 ratio. In hot markets on the coasts, price-to-income ratios are near peak levels of 1981 and 1989 (USA Today, May 11), just before the last tumble in home+site prices.
To afford debt, more people choose loans that are cheaper initially: adjustable-rate mortgages (ARMs) and interest-only mortgages. ARMs account for more than a third of home borrowing; they should have only 20%. Interest-only loans grew from 1.5% in 2001 to 31.1% last year. Once prices peak, then mortgagers won’t be able to resell at a profit or qualify to refinance with a more affordable loan. Borrowers defaulting could cause a recession. (The Oregonian, June 9)
As Baby Boomers near retirement, the affluent ones buy second ones. They consider lending rates low, which briefly rose to 6% for a 30-year fixed mortgage but fell back to 5.75%. For the growing population – young families and immigrants – banks offer interest-only and ARMs. More demand on finite land means in 33 of the nation’s 110 metropolitan areas, median home prices are four times median incomes. One in eight households devote at least half their income to housing costs; one in three devote a third. Yet Harvard U’s Joint Center for Housing Studies predicts sales and price to keep rising over the next 10 years. (The State of the Nation’s Housing: 2005; Washington Post, June 13)
Other economists predict the bubble to burst in 2005 or early 2006. Spending more on home+site means spending less on goods and services, so those providers earn less and spend less. With less business to keep people employed, some borrowers default, forcing more to, and the bubble to burst. When? While Robert Schiller’s first edition was timed perfectly, his second isn’t. If the 18-year land-price wave holds and Bush’s economic advisor Greg Mankiw was right 16 years ago, prices fall in 2007. How low can they go? In Boston, median home prices fell 6% in the early 1990s and 13% in Worcester, Mass. In New Haven, Conn., prices dropped 21% from the late 1980s through the mid-1990s. But the current run-up has been steeper so the collapse should be, too, at least a quarter, perhaps half. How long will prices stay down? In Japan, where sites were so over-blown that if one could afford to buy Japan once they could have bought America four times, the average price of land along major streets in 2003 was 115,000 yen per square meter, down 5% from a year earlier. While the margin of decline narrowed from the previous year’s -6.2%, it was the 12th straight year of depreciation. (Kyodo News in Japan Times, 2004 August 2) Can the media stay tuned for another two years?
War keeps Iraq corrupt
From Pearl Harbor to V-J Day took less time than Bush’s War on Terror, starting from 9/11. All the Arabs involved in 9/11 (no charges have been filed against any administration officials involved) came from Saudi Arabia, where the Bush people have close personal ties; none came from Iraq, which he attacked. Civilian con-tract managers have lost or stolen nearly $100 million from Iraqi oil sales and seizures from the former govern-ment of Saddam Hussein. They were hired to spend it on reconstruction projects in south-central Iraq. Controls were so lax that two agents hired to distribute more than $1.4 million left Iraq before accounting for all of it; the money remains unaccounted for. (USAT, May 4) For its part, Halliburton – which won its contract without competition from other bids, overcharged for meals and gasoline, and whose subsidiary operates illegally in next-door Iran – got a $72 million dollar bonus from the US Army, on top of over $10 billion billing (Oregonian, May 11). Reader John Morales (Apr 4) notes not every US oil company buys from the Mid East. From the Department of Energy, those that do: Shell (the most at 205,742,000 barrels), Chevron/Texa-co, Exxon/Mobil, Marathon/Speedway, and Amoco (the least, 62,231,000 barrels). Companies that do not import from there: Arco, BP/Phillips, Citgo, Conoco, Hess, Sinclair, and Sunoco. Drivers can choose to not buy from companies who buy from Saudis who fund terror.
Pollution spurs Chinese riot
In southeastern China, hundreds of police attacked elderly villagers, mostly women, who were protesting against chemical factories polluting the air, the river, and the farmland. In reprisal, thousands of residents of Huaxi in Zhegian province rioted, overturning police cars and driving away officers. Police barred reporters but local people used phones to get the word out. One reporter who got in was detained and had her notes confiscated. Last year, tens of thousands of rural folk rioted in western China in Sichuan province over environmental issues. The federal government has ignored all petitions to make the factories efficient enough to preclude pollution. (The Oregonian, Apr 14) As China changes from communism to capitalism, it shows neither ideology to be environment-friendly. Capitalism is not a free market; it’s a partnership of the elite and the state taking advantage of the market. Freedom is not license but liberty. One’s liberty depends on another’s responsibility; people must be responsible enough to respect rights for individuals to be free. To be free from pollution, industry must respect the right to live in a healthy environment. Government must defend that right. Then industry won’t cut corners and let its byproducts pollute others, but seek ways to minimize input, thru-put, and useless byproducts, thereby cutting costs and saving money. Doing so would also save the health of residents and of the environment.
Tallest tower, deepest drop
Over the past three years, the Euro has gained 50% against the dollar. The World Bank predicted the dollar to keep declining but not meltdown and the world eco-nomy, from its 2004 peak, to slow down. As the Federal Reserve raises its rates, foreigners buy more U.S. stocks and bonds; how much they bought, minus how much they sold, was up almost 10% in the 12 months ending February, slowing the dollar’s fall. Yet the higher rates create more debt, which is what spooked investors in the first place. The weaker dollar, rising U.S. interest rates, declining stimulus from previous U.S. tax cuts, and higher oil prices, make Americans buy fewer imports, slowing foreign economies. If nations add new tariffs, the downturn could turn into a global recession. The World Bank expects the global economy to pick back up in 2007, a fateful year. (USA Today, Apr 6)
Building skyscrapers take so long to envision, plan, design, find financing, and build, that when the new tallest building in the world is finished, it coincides with the end or nadir of that business cycle; the discoverer named this correlation the Big Erection Indices. The classic example is New York’s Empire State Building opening in the bottom of the Great Depression. Now Dubai is building the latest record-setter – over 20 stories taller than the current tallest in Taipei, 101 stories – and already has its pilings planted in the ground, 160 feet down. Its height will be enough for the structure to sway 10 feet back and forth. They plan to open in 2008 (The Oregonian, March 31) – a year into our recession.
Ex-reds adopt flat tax
After the wall came down, Eastern Europeans had a hard time growing business and getting business to pay taxes. So Russia, Ukraine, Georgia, Romania, Slovakia, the three Baltic countries, and three Yugoslavian nations adopted a flat tax. Pushed in the US by wealthy players like Steve Forbes and the Hoover Institution, the flat tax levies the same tax rate on all incomes from small to big. The rate is low enough and the filing simple enough that most citizens and companies comply with the law, unlike before. While former communist nations turn back to a flat rate, it was Karl Marx and followers who over a century ago won graduated rates in capitalist countries. The flat-taxers set their rates lower than richer, neighboring nations with graduated income tax rates, which attracts business and investors. To compete, Austria lowered its rate from 50% to 34%. Most Western European nations have high rates to fund extensive social services, including foreign aid to Eastern Europe. (Christian Science Monitor, March 8) Worldwide, the rich have deposited $11.5 trillion in the 70 tiny tax-haven nations (Tax Justice Network; it’d be more, counting deposits of rich corporations). Better than taxing the rich to serve the poor is to quit creating the rich – abolish corporate welfare and tax breaks for owners of nature – and quit creating the poor – from recovered rents, pay citizens a dividend. Endowed citizens won’t need costly social services. Use the flat tax to fund cops, courts, and military so that if a nation feels invasive, its citizens will feel the war fever first where it hurts most – right in the pocketbook.
Tax break for multinational
Politicians granted huge corporations doing business overseas a one-year tax holiday rate of 5.25% instead of the usual 35% if they would bring their profits home. Congress explained that by spending the profit in the States, firms would generate jobs here. So far, Sun Microsystems said it may declare $1.1 billion as domestic profit and laid off 3,600 people, 10% of its work force. National Semiconductor said it may repatriate a half billion dollars and cut 550 jobs, 6% of its work force. Colgate-Palmolive may bring home a half billion dollars and promised to eliminate 4,400 jobs, 12% of its work force. The law, which they called the “American Jobs Creation Act”, may return $320 billion to the US, but not generate jobs. (The Wall Street Journal, March 10) If not trying to dodge taxes, firms might make sounder decisions. Instead of trying to tax corporations downstream, do not enrich them upstream with subsidies, loopholes, and free services. Charge them full market value for all the pieces of paper that government gives them that create so much value – charters, waivers, franchises, patents, licenses, leases, and titles – and use that revenue to fund a Citizens Dividend, liberating workers from dependence on jobs.
Smog rules follow politics
In the spring, Bush’s EPA announced its rules for polluters. It set tougher standards for polluters and counties in states that voted for Kerry and lax rules elsewhere, letting some polluters use techniques that pre-date the Clinton era. People breathe the dirtiest air in California, mainly from cars, and in the Northeast, from cars and coal-fired power plants. While reducing smog could raise electric bills by one dollar a month, it would save many times that in lower costs for medical attention and prolong many thousands of lives of newborns, asthmatics, and the elderly. (MSNBC, April 15, tax day) Since some stubborn companies prefer to pollute at a profit rather than profit by efficiently tapping energy, we could lure them to eliminate their waste by no longer taxing or subsidizing them and spur them to find efficient ways by charging them for the costs they impose. Investors would take note and shift their portfolios from polluters to more efficient alternatives – such as solar power and fuel-cell cars – thereby funding the transition.
Cars get Free Ride
General Motors and DaimlerChrysler wrangled $88 million from the US to put a few dozen hydrogen-power vehicles into service by the end of the decade. The grants are part of $1.2 billion that the US will spend on hydrogen fuel-cell research over five years. These are the same carmakers who oppose standards for fuel efficiency and smog emissions. Not getting subsidies are small firms and basement inventors, where most break-thru ideas come from. Another subsidy for cars – the federal highway bill of $295 billion – includes a $37 million road for Wal-Mart. Bush pledged to veto the bill, which the Senate can easily override, having passed it 89 to eleven. Vetoing it makes Bush seem frugal, yet had the vote been close, he might have had to sign it in order to serve his financiers. Given such gifts, gridlock is worse. In 2003, there were 3.7 billion hours of travel delay and 2.3 billion gallons of wasted fuel for a total cost of more than $63 billion. Half of all traffic delays are caused by car crashes. Traffic in some cities actually improved — due to less commerce. (USA Today, May 9) Better than subsidies for anyone would be no taxes on earnings and full charges for polluters, thus guiding investors from dirty, wasteful engines to clean, efficient ones. Over half of city surface is devoted to cars. If they paid their way by paying land dues, they’d claim less land. Owners would infill cities, providing riders for mass transit. That would clear the roads and the skies.
Logs get free roads
For the timber industry, money does grow on trees. To give timber companies access to new sources of timber, the US Forest Service builds roads thru national forests, spending enormous sums for little or no return. In 2004, the Forest Service lost almost $48 million in Alaska’s Tongass Forest alone. In the face of a worldwide timber glut, demand for Alaskan timber has plummeted. Between fiscal years (FY) 1998 and 2004, nearly 50% of the Forest Service’s timber contracts offered went without a single bid. Of those sold, 70% received only one bid. Forest Service estimates of demand range from three to seven times the past three-year average annual logging. In order to meet its inflated estimates, the USFS wastes money and trees. (Update from Taxpayers for Common Sense via the Progress Report)
CEO pay bubbles up, too
For non-supervisory private-sector workers – 80% of the labor force – wages fell a half percent last year after inflation. Add in supervisors and government workers and wages are down 0.9%. Productivity – more output from less labor input – has been growing, as has outsourcing abroad, so demand for American workers is down, while their costs are up, such as employer spending on rising medical costs. (The Oregonian, April 12) At the other end of the pay scale …
After three years of merely modest raises, many chief executives posted their largest windfalls since the 1990s. CEOs of the largest 100 public companies averaged $14 million in 2004, up 25% from 2003. Their compensation includes salary, bonus, incentives, stock awards, stock-option gains, and fresh option grants. Directors granted retention bonuses, supplemental retirement pay, reimbursed income taxes, and permitted personal use of corporate jets. Some of the biggest winners oversee small companies. Forest Laboratories’ Howard Solomon gained $90.5 million from exercising options; Coach’s Lew Frankfort got $84 million and fresh grants worth $130+ million. To rationalize their gifting, boards cited higher corporate earnings and stock prices but when companies under-performed they cited subjectives like leadership. While shareholders vote for directors, management nominates them, many of whom are former CEOs. To curb pay, set stringent perform-ance guidelines, and limit severance packages, share-holders put more than 100 proposals on shareholder ballots this proxy season. Even when such measures pass, boards often ignore them. (USA Today, Mar 31)
Very rich get very richer
The Forbes 400 – the world’s richest people – is still topped by Bill Gates at $46 billion. Warren Buffett is second at $44 billion. For the second straight year, billionaires are richer and more numerous. (Oregonian, Mar 11) Worldwide, 8.3 million people were millionaires in 2004, up from 7.7 million in 2003. Their combined wealth rose 8.2% to $30.8 trillion. About 2.5 million Americans, 1% of the population over age 15, have more than $1 million, not including the value of their primary residence. More than 80% of them believe the next generation will have money problems. Last year, millionaires spread their assets more conservatively. They put 34% in equities, 27% in fixed-income invest-ments, 13% in real estate investments, 14% in miscellaneous like hedge funds, foreign currency, and commodities, and kept 12% in cash deposits. (SF Chronicle, Jun 10) The richest got that way with the help of the law. Government did not charge them full value for their permits: titles to locations, leases for natural resources like oil and iron, licenses to wide swaths of EM spectrum, patents to intellectual turf which prohibit similar discovery by later inventors, etc. Nor did government recover and share society’s surplus, putting workers, especially low-skilled ones, at a disadvantage to employers like Walmart. An upstream solution forgets taxation yet precludes concentration: abolish corporate welfare and recover all rents, paring off excess corporate profit. End limited liability, so firms must pay any costs they impose. And pay a Citizens Dividend, so workers can negotiate a bigger share of the profit pie.
Homes starts & sales up
Following a plunge in March, when new housing starts dropped 17.6%, the steepest drop in more than 14 years, housing starts jumped 11% in April, to 2.038 million new units. While housing starts plunged 17.8% in the Northeast, they rose 6.2% in the Midwest, soared 25% in the South, and edged up 2.5% in the West. The volatility may warn of this cycle ending, or be due to inclement weather, or both. (CNN/Money, May 17) Construction spending hit a record in April, rising 0.5% to a seasonally adjusted annual rate of $1.07 trillion. It was the 15th straight month of record activity. Sales of new homes supposedly rose to a record 1.316 million units in April, 13% above a year ago (the Commerce Dept did revise lower its figures for February and March.) Sales of existing homes supposedly rose 4.5% in April (March figures were revised lower) to a record seasonally adjusted annual rate of 7.18 million. The old record was 7.02 million in 2004 June. Like starts, sales grew in three regions and were flat in the West. The inventory of unsold homes rose 8.1% to 2.48 million, a 4.2-month supply at the April sales’ rate. A six-month supply is deemed a fair balance between buyers and sellers. (CBS Market Watch, May 24)
Condos command top $
In Manhattan, the average condominium price tops $1.2 million. (New York Times, June 1) While New York is out of reach for many, Miami is not. Well-to-do baby boomers from the North nearing retirement and foreigners whose currency has gained vis-à-vis the dollar target South Florida. Despite four major hurricanes that roared across Florida last summer, causing $22 billion in damage and weeks of panic, Miami-area home values increased 20% in 2004, vs. a national gain of about 12%. Almost 70,000 condo units are in the permit pipeline or are newly built and for sale citywide. Last year Las Vegas – perennially among the USA’s hottest housing markets – issued permits for 40,000 units of all types of housing. Miami has so many gaping holes in the ground – where old buildings have been razed and new ones are planned – that downtown looks as if it has been bombed. Up to 70% of recent condo buyers are purchasing for speculation, betting rather than buying. Some builders, developers and lenders might be heading for a crash, as has happened there before. (USA Today, April 20) Indeed, Florida real estate popped back in the 1920s, just before the Big Crash followed by the Great Depression.
Metro housing: hot & not
Of 136 metro areas over the past year (April to March), home prices ranged from a low of $82,400 in the Youngstown-Warren area in Ohio, to more than eight times that in the San Francisco Bay area where the median was $689,200. Anaheim-Santa Ana at $656,900 was second and San Diego at $584,100 was third. Of the 20 cities with the fastest appreciation, 14 were in California, four in Florida and two in Nevada. The three fastest were in Florida: Bradenton jumped 45.6% to $275,100; nearby Sarasota was up 36% to $326,300; on the Atlantic side, the West Palm-Boca Raton area rose 35.9% to $362,800. All but six areas rose. Losers included Waterloo-Cedar Falls Iowa (down 2.6% to $86,500), Syracuse, N.Y. (down 2.6% to $92,600), and Canton, Ohio (down 4.5% to $103,400). Beaumont, Texas held the bottom with a loss of 6.5% to $90,000.
States & regions hot & not
The median price for homes+sites in the first quarter of 2005 rose fastest in Arizona, up 5.2%, and fell 0.4% in North Dakota. Over the 12-month period, it rose fastest in Nevada, up 31.2%. California, Hawaii, Florida, Maryland, and Virginia were hot, too. Prices rose less than 5% in Ohio, Indiana, Michigan, Kansas, Colorado, Oklahoma, Mississippi, and Texas, where prices rose 3.8% in the past year, the slowest. (USAT, Jun 1) Regionally, the West showed the fastest growth at 16.9%. In the Northeast, prices rose 14.0%. The Midwest had increases of 7.8% and the South had a 6.6% price rise. The median house+site price was highest in the West, at $282,900, and lowest in the Midwest at $148,800. (CNN/Money, May 12) Nationally, the median sales price hit $206,000, up 15.1% from 2004 April – the fastest year-over-year price gain in 25 years. Over the past five years, the median price of home+site – $206,000 in April – is up 55%. Along the coasts, it’s steeper, doubling in California and rising about 80% in Nevada and Hawaii. LA is up 135%, Las Vegas, 117%, Miami, 128%; Washington DC, 108%. (Time, Jun 13) Buyers who spent $1 million or more for a single-family home last year hit nearly 51,000 — 65% of them in California — a fivefold increase since 1999 when 10,000 paid $1 million or more. (USAT, Apr 7) Since 1998 (except in 2000), prices have risen at a record-setting pace.
Get rent via banks, builders
To profit from the real estate boom, investors can instead buy related stocks that are surging. With long-term lending rates still low, people still want more mortgages, enriching banks. Holding the stock of lenders, one does well. Shares of real estate investment trusts, which manage apartments, have returned 31% in the past year and 51% during the past three. Shares of one major builder, Toll, are up 131% since the end of 2003, which blows away the 21% rise of the median sales price of existing homes during that period; Toll sells at 11.2 times its expected 2005 earnings, vs. 15.9 for the Standard & Poor’s 500. Makers of building products from lumber to concrete and carpet are booming. Building Materials Holding’s shares have jumped 64% this year. (USA Today, May 26).
Property tax takes more
As high land prices pushed up property assessments, the property tax generated more revenue for states. Tax collections rose to a record $600 billion in the 50 states last year, up 7.2% over 2003, the biggest increase since 2000. The money is rolling in even faster this year as many states report double-digit revenue increases through April. Even with all that money, states still borrowed, tho’ in the first four months of 2005 it was 23% less than a year earlier. While happy to sell out for more later, homeowners are not happy to pay heftier property taxes now. In many states they push for caps on assessments, limits on rates, or no property tax at all. (USA Today, May 26). Which is perfectly opposite the right reform. Rather than exempt only the elderly, exempt everyone from the counterproductive part of the property tax, the part that falls on buildings. That part merely fines people for making improvements. The other half, the part that falls on the location, raise it and keep raising it until all the value of all locations is recovered. Then, rather than let government keep it and politicians and bureaucrats spend it, return it as a dividend to residents. It’d be like what Alaska does with some oil royalty and Aspen Colorado does with some land value, using it to assist residents with home+site costs in that pricey ski resort.
Growing far from centers
It’s harder for firms to attract workers to pricey markets. Experienced workers with seniority rights claim openings in cheaper rural locations. Mass migration from pricey areas to affordable ones is dubbed the “salmon run”. Like the plague in the Middle Ages, real-estate-price inflation is spread by the people who flee it. Flush with cash from selling or borrowing against homes, Californians bid up prices in Oregon ski towns, Arizona golf communities, and Nevada lake resorts. Putting bigger yards at affordable prices above longer commutes, Americans moved to counties on the edge of metropolitan areas. Several of the counties that grew the fastest from 2000 to 2004 are distant suburbs of major cities, from No. 1 Loudoun County in Virginia, 35 miles west of Washington, to No. 6 Henry County, Ga., about 30 miles south of Atlanta. Booming counties are not only in the Sun Belt, where growth has been relent-less for decades, but also in the Snow Belt, including Kendall County, southwest of Chicago; Scott County, south of Minneapolis; and Ohio’s Delaware County, north of Columbus. In California, far more people are leaving coastal counties than are moving in from elsewhere in the country. The drain is happening from San Diego, Orange, and Los Angeles counties in the south to San Francisco and Marin in the north. Births and foreign immigration, however, keep populations in most counties growing. (USAT, Apr 15) To reverse sprawl, make metro land affordable. Remove the cost of land from the cost of housing. With taxes, fees, or dues, recover the value of land; then with dividends, share land value among residents.
Farms just a cash cow
With stocks sluggish and mortgage rates low, more investors buy farmland and reap OK returns, such as 6.5% on a quarter million dollar investment while the land itself appreciated by 8% in one year. Since 1987, by when farms had dropped to 40 cents on the dollar, they’ve gone from $600 per acre to $1,360 per acre in 2004, a 52% increase when adjusted for inflation. Buying low and selling high, investors realize a tidy capital gain. Yet from 1986 to 2004, the S&P 500 returned 12% per year. So farms are not a better buy but a way to diversify when stocks drop. With farms listed for sale on the internet, more investors discover them. Since 1988, investors who live in cities and know little or nothing about farming have owned more than 40% of US farmland. The greatest concentration of absentee owners occurs where the land is most fertile and the harvests richer. They take their advice from big corporations – purveyors of chemicals and buyers of balk harvests – businesses that have so far opposed organic methods of farming. (The Oregonian, Mar 5) To make farmland affordable to farmers, recover site rents all over the region, driving site prices down, and pay citizens in the region a dividend, pushing farmers’ and the average person’s income up.
Gasoline cheaper now?
With inflation factored in, a bottle of Coke, which cost a nickel during World War II, costs roughly the same today. Eggs, milk, and bread now cost less; so do clothes and electronics. But not new cars, new homes, healthcare, and a college education; they cost much more. And oil? It spiked in 1980 April; at $39.50 per barrel then, it’d exceed $90 in today’s dollars. Energy makes up a small percentage of a family’s budget, about 4%, what it was in the early 1980s. Even during the oil embargo of the 1970s, it took a while before consumers began buying smaller, more fuel-efficient cars or moving closer to where they worked. (ChrScMtr, Apr 19) In inflation-adjusted dollars, gasoline prices peaked in 1981 March at more than $3 per gallon. Today’s prices are 30% below that all-time high. Gas prices were 17 cents per gallon in the 1930s, a quarter in the 1950s, and 50 cents in the 1970s. Yet looking at the time it takes to earn the money to buy gas, at today’s average hourly wage of $17.50 it takes seven minutes to buy a gallon of gas for ($2.10), as it did in the 1970s; in the 1980s and the 1950s, it took 10 minutes; in the 1940s, 12 minutes; and in the 1930s, more than 20 minutes. As a percentage of per-capita disposable income, the cost of 1,000 gallons of gas (a year of heavy driving) in 1935 would be 36%; in the ’60s and ’70s, about 12%; today, less than 7%. Since the mid-1980s, gas prices have held steady. (USA Today, May 31)
Costly benefits to living
Due to intense international competition, many companies have had to eat added costs for energy and other goods. Nevertheless, economists still blame energy for inflation, eventho’ the core rate does not count energy nor food nor mortgages. The core rate sped up to 0.4% in March from 0.3% in February, the biggest burst since 2002 August. In 2005 Q1, the core rate rose at an annual rate of 3.3%, the fastest quarterly rise since 2001 Q3. For 2004 core inflation rose “just” 2.2%. (Reuters, April 20) Yet even 2.7% doubles prices in 27 years. “John Williams, head of Shadow Government Statistics, estimates the current real consumer inflation rate is closer to 6%. The free market Agora Research put it at 7%-8%.” (GlobalCirclenet, Mar 21) Meanwhile, average earnings declined 0.3% in March, the same in February, and were down 0.5% from a year earlier. (Reuters, April 20) Again, the cost of living outweighs the benefits of living. To afford inflation, consumers borrow. Their debt at the end of 2004 was $2.1 trillion. That’s up 5% from the year before, up 9% from the year before that, and twice as big as 10 years ago. (USA Today, April 28) Debt inflates the money supply, which inflates prices. Instead of rising, prices should drop to reflect the falling cost of living (in constant dollars). To slow down inflation, the Federal Reserve has raised its basic rate eight times since last June, in quarter percentage point increments, to 3%. When interest payments weigh too much, fewer people borrow, which curbs the money supply, slowing down inflation. A less traumatic way to shrink debt is to cut the cost of what most people borrow for: home+site. Do that by recovering then sharing the value of locations.
FROM THE OP-ED PAGES
UK money, labor, CT daily
Over 12 million people, mostly in Asia, mostly women and girls in the sex trade, are slaves, kept at work by force. Slave owners pocket $13k per general worker and $23k per sex worker. The authors of the UN report said it’s time to reform laws on labor and land that herd people into slavery. (Oregonian, May 12)
The Financial Times (British ed, April 15) by Samuel Brittan: “The taxation of land raises revenue without disincentive. Henry George, a 19th-century American reformer, published a bestseller, Progress and Poverty. The excuse given by officials for taxing work and enterprise but not land values is that it is impossible to separate the cost of pure space. Yet this distinction is made every day by developers. In parts of the world, including Australia, there is some land taxation. ‘Boom Bust’ by Fred Harrison makes a case for the existence of an 18-year business cycle, which he links to speculation in property.” (via Michael Hudson)
The Guardian (April 12): ”The Greens have yet to secure a parliamentary seat at Westminster, but have two elected representatives in the London Assembly, two in the European Parliament, seven in the Scottish parliament, and around 60 councilors. The new Green party manifesto included replacing VAT with eco taxes such as aviation fuel tax and plastic bag tax, replacing business tax rates with a land value tax.”
The Hartford Courant (April 17): “We hope lawmakers get serious this legislative session about giving the state and municipalities effective tools to cope with random development. Permit cities to tax urban land at a higher rate than buildings. This discourages owners from holding vacant parcels and encourages development. The system has produced spectacular results in Harrisburg, Pennsylvania.” (Via Josh Vincent)
David Morris, President, Institute for Self-Reliance (their website): “More than a century ago, Henry George led a powerful movement based on the idea that by taxing the increase in the value of land resulting from public actions, many other taxes could be eliminated. In Hong Kong, its rail transit system receives no subsidy; all costs are paid from land rents derived from the development near stations. Bill Batt [a contributor to my textbook] concluded value capture has merit. If we were to use Oregon’s Measure 37 as the basis for a givings law, then 100% of the increased value of land due to government actions would be taxed.”
The Economist, Earth Day
April 21. “‘The environmental movement’s foun-dational concepts, its method for framing legislative pro-posals, and its very institutions are outmoded.’ Those damning words come not from any industry lobby or right-wing think-tank but from ‘The Death of Environ-mentalism’ [by ex-Sierra Club chief, Adam Werbach]. Yesterday’s failed hopes, today’s heavy costs and tomorrow’s demanding ambitions have been driving public policy quietly towards market-based approaches. If this new green revolution is to succeed, however, three things must happen. The most important is that prices must be set correctly. Then market forces could prove the environment’s best friend. If greens could learn to love them, they could move from the fringes of politics to the middle ground where most voters reside.”
(ClickPress, Apr 15) “In a democracy, the people are supposed to be sovereign. The New Party would put this concept into practice by giving each citizen shares in the nation. A nation, like a business, has assets and liabilities. As assets, it has land, property, gold, foreign currency, and revenue from taxation. As liabilities, it has to pay for roads, infrastructure, education, health, pensions, and bonds. The value of shares will vary with the economy. Shares would heal Great Britain’s two-tier society and give everyone a decent start in life.”
FROM THE ARCHIVES
Memoirs of Hadrian
Historical fiction, yet highly acclaimed by critics, The Memoirs of Hadrian was written in 1951 in French by Marguerite Yourcenar (the first woman elected to the French Academy). P 117, “I have put an end to the scandal of untilled fields neglected by great landowners too little concerned for the public good; any field not cultivated for five year’s time belongs hereafter to the farmer who proposes to put it to use… With this intention I myself took over the direction of the imperial domains; no one has the right to treat the earth so unproductively as the miser does his pot of gold.”
Crimes Against Nature
In this his latest book, 2004, Robert F. Kennedy, Jr (pp 190-197): “You show me a polluter and I’ll show you a subsidy. I’ll show you a fat cat using political clout to escape the discipline of the market and load his production costs onto the backs of the public. Taxpayers give away $65 billion every year in subsidies to big oil, and more than $35 billion a year in subsidies to western welfare cowboys. Those subsidies helped create the billionaires who financed the rightwing revolution on Capitol Hill and put Bush in the White House. While communism is the control of business by government, fascism is the control of government by business. True free-markets, in which businesses pay all the costs of bringing their products to market, is the most efficient and democratic way of distributing the goods of the land – and the surest way to eliminate pollution. Free markets, when allowed to function, value raw materials and encourage producers to eliminate waste by reducing, reusing, and recycling. I don’t think of myself as an environmentalist anymore; I consider myself a free-marketeer. John Winthrop, the Moses of the Puritan migration, said their mission was to build a ‘city on a hill’ – an example to the world of what nations can accomp-lish if we work together in community. Winthrop’s 1630 sermon – arguably the most important speech in Amer-ican history – called for his fellow citizens to steer away from the greed and power politics that had corrupted the old world. Winthrop’s words are often quoted by neoconservatives who invariably omit his warning against the temptation to elevate commercial values lest we ‘disappear into the lure of real estate.’”
The American Revelation
“Author and historian Neil Baldwin’s new book, The American Revelation: Ten Ideals That Shaped Our Country From the Puritans To The Cold War (St. Mart-in’s Press), offers his assessment of the key issues and concepts he feels make America a unique nation. Bald-win argues these are not only key ideals, but also uni-versal ones that are critical to any discussion about national values, irrespective of political viewpoint or personal background. Baldwin begins his book with John Winthrop’s 1630 speech ‘City On A Hill’ that outlined, among other things, what Winthrop considered a religious person’s obligation to society and the proper response from believers who considered the actions of their government immoral or indefensible. Baldwin covers Ralph Waldo Emerson’s ‘Self Reliance’ and Henry George’s ‘Progress and Poverty’, profiling a major philosopher and economist whose concepts proved central to the nation’s emerging ideals. The American Revelation is an incisive look at several key figures, neither omitting their flaws nor overstating their importance. Baldwin’s writing combines autobiographical detail, analysis, and reflection of their importance in the evolution of American values.” (Nashville City Paper, April 28)
America Beyond Capitalism
Subtitled “Reclaiming Our Wealth, Our Liberty, and Our Democracy” by Gar Alperovitz (2005), it catalogs in detail the problems of the country – income gap, time famine, sprawl, sexism, etc – and the response of American communities in dealing with them, which he dubs the Pluralist Commonwealth. Doing more of these cooperative projects, people can change the system. Yet more than list all the progress heartwarming to the left – nonprofits providing services and firms owned by workers and governments – he also moves beyond the left by acknowledging the disappearance of work, the possibility of shrinking the workweek, and the need for an income apart from labor. He still assumes political participation trumps economic justice – that making it possible for people to speak at endless meetings is a blessing – but that’s forgivable, since he also insists upon time off from work. It’s a wealth of information and well written. Gar is also one of five new contributors to my geonomics college textbook to be published by Elgar, Inc. Elgar editor, J.C.J.M. van den Bergh, (May 20): “Your list of style suggestions sounds very good even though ambitious. I must admit that you are a quite original thinker (that’s a compliment). I look very much forward to see your entire manuscript.”
Michael Hudson on savings
Harper’s April cover story on Bush raiding social security to forestall a slump was by Michael, a contributor to our forthcoming textbook. It had hard data. Our private retirement accounts total $10 trillion, with $4.7 trillion of that in stocks. All stocks equal $14.2 trillion (end of 2003, Federal Reserve). Americans have so little savings, spending so much to service debt. It left me curious. How much debt is for sites? How much are sites worth, a source of an extra income for all? By how much does the cost of living fall each year, minimizing the need for savings? Then Radio Canada interviewed Michael. “Compared to US Social Security, private pension plans covering tens of millions of workers are in much worse shape. Companies lobbied hard to avoid putting away the money. Government deregulation allowed companies to cut their pension contributions and inflate their growth estimates. Corporate accountants and executives made the unrealistic assumption that private-sector pension contributions could be invested to make at least 9.5% year after year, decade after decade. Lower deductions allowed companies to report higher earnings and pay out higher dividends to support their stock prices. United Airlines already has defaulted and companies in the steel and auto industries may follow suit. The U.S. government insures corporate pension plans, which have now racked up liabilities of about $450 billion. For Commentary, I’m Michael Hudson in New York. Hudson is an economics consultant who teaches economics at the University of Missouri in Kansas City. (cbc.ca/commentary, June 2)”
Global savings glut?
Former Princeton economist Ben Bernanke notes that global investors don’t have much choice. Taxes and rules are too stiff in Europe, in Latin America the law is lax and corruption rife. The Asian ethic favors saving over spending; governments run deficits to subsidize exports. So Americans find imports cheap, which creates jobs abroad. And foreigners find the American market receptive and US stocks and bonds secure. The French had $3.3 trillion stashed outside France in 2003. Japan invests only a quarter of its savings at home. Most of that outflow lands in America, pumping up stocks and the demand for bonds, lowering their rates. Low interest rates make mortgages attractive, so Americans don’t save but borrow, pumping up real estate, and spend, growing GDP but not employment. Thus Yanks shop lots and save little while foreigners shop little and save lots. (Newsweek, May 2) This offsetting worries people who assume political borders are economic borders. Yet the same surges and flows happen within nations, too. If the economy is to serve the people, the only rational response is to recover that pumped up value of locations and share it among citizens.
Fannie & Freddie fracas
Fannie and Freddie were created by Congress to buy mortgages and repackage them into securities for sale to investors. Spreading around the risk of low-income people defaulting was supposed to make it easier to lend to them. The two federal quasi-insurers also hold loans. In 1990, Fannie and Freddie had a combined portfolio of $132 billion, or 5.6% of the mortgage market. By 2003, they had $1.38 trillion, or 23% of the market. While greater size does generate higher profits, it also creates greater risk of imploding the market. However likely such an event is not known. Freddie Mac misstated earnings by $5 billion, which in 2003 forced out top officials. Last year Fannie Mae was forced to restate earnings back to 2001, which could amount to $11 billion. Signatures in ledgers had been falsified and some mortgages held-for-sale had been recorded as held-for-investment. (USA Today, May 6) To put more people into their own homes, what government could effectively do would be to recover site rents. That’d knock the land component out of the price of homes and spur owners who’re wasting buildable land to get cracking, augmenting the housing supply, which would also cut price. Then if there’s still any sound reason to bundle mortgages, let the market do it, keeping the size of any portfolio within acceptable risk.
Sign of coming crash?
The chief economist for MarketWatch, Dr. Irwin Kellner, is the Weller professor of economics at Hofstra University and chief economist for North Fork Bank. (CBS/MarketWatch, May 10): “If long-term rates don’t rise soon while the Fed keeps boosting short rates, the spread between short and long rates will narrow significantly. By the end of the year the yield curve could well be flat, setting off alarm bells about a possible recession in 2006.” Alan Greenspan, Chairman of the Federal Reserve, while addressing the major global bankers worried over falling long-term rates (CBS/Marketwatch, June 6). This is our third issue in a row where we’ve copied mainstream economists pointing to this signal of looming recession, so you too can watch the coming of the perfect storm. It’s not that high rates for short-term bonds or low rates for long-term bonds cause recessions or even catalyze them. They just reflect the mood of the investor who, when they see the tide going out, way out, need rather strong inducement to keep with the program.
Taxes cost us in many ways
Martin Feldstein, contributor to The Wall Street Journal, Professor of Economics at Harvard University, and President and CEO of the National Bureau of Economic Research, authored “Tax Avoidance and the Deadweight Loss of Income Taxes”, published in Review of Economics and Statistics, 1999 November. He concluded that income taxes have negative consequences. Previous estimates have stated that for every dollar raised in tax revenue, there is an efficiency loss of 2.5%. However, these previous estimates did not consider the effect of tax rates on tax avoidance; that is, engaging in legal non-taxable behavior such as accepting health benefits instead of salary, taking more leisure time, and being less productive. As tax rates rise, tax avoidance becomes more severe. He estimated that the loss in efficiency from current income taxes is more than 30%. If Social Security taxes are included, it’s 50%. Raising the income tax 10% increase, while raising revenue by $21 billion, would reduce efficiency by $44 billion. These conditions are aggravated by the progressive tax structure of the U.S. tax code.
How the rich rule
“That the wealth of the majority of people fits a curve that describes the energies of atoms in a gas (March 12, p 6) is no mystery. The underlying reason for this skew was explained in 1879 by the economist Henry George, who showed it was caused by the conditions of land tenure. One way to understand what is happening is to imagine three people playing a game of Monopoly. When all the properties have been bought, a fourth player joins the game. He will inevitably be subject to unfair terms as, wherever he lands on the board, he has to pay rent to one of the other players. This is an accurate model of a key aspect of real economies. Those who do not own land have no option but to work for wages, which will be driven down to a minimum.” (New Scientist, April 9)
The history of monopoly
What became known as MONOPOLY was originally The Landlord’s Game, a 40-space board game patented in 1904 by Elizabeth J. Magie. A Quaker, she advocated a fair distribution of wealth, following the popular social reformer Henry George. Her game included a starting point, labeled “Mother Earth,” railroads, utilities, and a “Go to Jail” square. Players traveled clockwise along a square path, and real estate was offered for sale or rent. By 1910 the game was being played by members of an experimental community in Arden DE that adopted George’s idea that all men have equal right to land and that it is unfair for some to grow wealthy as land increases in value. In 1924, Elizabeth Magie Phillips (then married) got a second patent for her game. She shifted the goal from bankrupting the opposition to endowing contestants by rescuing ‘poor’ players. In 1929, Ruth Hoskins, also a Quaker, became a teacher at the Friends School in Atlantic City. She tailored the board, using Atlantic City street names, including those on which players in her circle lived. Two Atlantic City players introduced Philadelphia hotelier Charles E. Todd to the game. A clever acquaintance, Charles B. Darrow, obtained the copyright for the Atlantic City-flavored version in 1933. Darrow gave the plain game board the color it has today. In 1934, he pitched Monopoly to Parker Brothers without luck. After he peddled it for a year successfully, Darrow and Parker Brothers reached a deal. Parker Brothers also purchased Magie Phillips’ patent. Since then, MONOPOLY has sold more than 750 million sets in 80 countries and has been produced in 26 languages. (Newark Star-Ledger via Mark Monson)
Good tax, oxymoron?
David W Burdick, Mt Hood CC (March 08): “’Fed’s Chief Gives Consumption Tax Cautious Backing.’ An interesting idea, which has potential to develop sustainable economics. What are your thoughts?”
Editor: A consumption tax is not much help for people who have to spend every penny they get and barely save a thing, if that, so it’s not too fair. As for efficiency, it will raise prices of everything, even green goods and services, unless you exempt them; and if you do that, you raise the cost of bureaucracy. I’d junk it, most other taxes, and transform the tax stool. Instead of taxing sales/consumption/business, charge for extrac-tion/depletion of natural resources. Instead of taxing wages/income, charge for polluting/fouling the environ-ment. And instead of taxing buildings/improvements, charge for exclusive use of locations (land “ownership” used to include “owership”). Thinking taxation lets people ignore those profits without production (“rents”), when we should recover society’s surplus and share it.
Educating elected officials
My fact-filled inquiries elicited interest from major players in Oregon including: Rep. Mark Hass (D), Rep. Kim Thatcher (R), Oregon’s Chief Economist Paul War-ner, Lane County Commissioner and Gubernatorial can-didate Pete Sorenson (D), Portland Development Com-mission Director Don Mazziotti, Oregon League of Con-servation Voters Legislative Affairs Director Jessica Ham-ilton. Prudential Northwest Properties Broker Erik Blender (April 8): “I work with ‘Realtors Building Com-munity’. We support a Real Estate Transfer Fee. I also support Site Value Taxation versus standard property taxation. I would like to attend the Senate Roundtable to lend my support. How can I best contribute?”
In the media
April 25, The Communitarian Network (Amitai Etizoni’s e-newsletter), Feedback to #65 on immigration, printed a dozen responses, including ours. April 29 in Dublin Ireland, Research and Markets announced the addition of Critical Issues in Environmental Taxation: International and Comparative Perspectives (Volume II) to their offering. The announcement lists and the book includes my article, “Public Policy! Front and Center! Can Eco-Taxes Counter Subsidies?” The US Society for Ecological Economics’ Newsletter announced our spring issue and our textbook project. The Georgist Journal, spring, reprinted liberally from the spring Geonomist.
On the podium
March 4-6 in New York city at the annual of the Eastern Economics Association, among 80 others within the track of the Basic Income Guarantee Network (their 4th Congress), moderated once (on monetary reform: new credit as a common asset) and presented twice to fairly well attended workshops (about 20 participants on “A Polynesian Play Ethic Yields a Unique Indicator: Leisure” and on “Aspen’s Housing Assistance: local application of sharing rent”). April 12 at Mt Hood CC, presented “Tools for influencing governance of Ecological and Economic sustainability” with the head of Oregon’s Progress Board, Jeff Tryons. May 24 spoke again at Mt Hood CC, during lunch hour (after dining as a guest). May 26 at Portland’s Village Building Convergence, to which hundreds of idealists flock from all over the country to volunteer to help construct public amenities such as gardens and saunas, a dozen came to my concurrent workshop for an hour and a half. At all, disseminated scores of this newsletter.
Pat Kane, spokesman, author of a book on the Play Ethic (Mar 21): “I’d very much like to know more about your paper presented to this year’s Basic Income conference, ‘A Polynesian Play Ethic Yields a Unique Indicator: Leisure’. I am becoming ever more aware of my insufficient consideration of ecological concerns. Can you send me your paper?” Ed: Sure. Anyone else?
Bill Grennon, New Hampshire activist and husband (March 23): “I spoke to a native woman working in Hawaiian Bank today and told her about your Polynesian Play Ethic vs. the Protestant Work Ethic talk at the BIG. She really liked it! You give me hope and I draw strength from your vision and convictions, Jeff!!!”
Richard Reids, director, Oregon Annexation (Mar 23): “You’ve probably thought about linking Site-Value Taxation with the Citizens Dividend. I believe it would be possible to get some broad based support for the dividend and use the real estate industry’s subsidy as an example of how we’re robbed of our dividend by all the subsidy we provide.”
Ron Amos, Congressional candidate, to the Democratic Freedom Caucus list (May 7): “[Mutual friend] Hanno, thanks for answering. So many individuals ‘own’ their own homes that SVT would be a hard sell, but maybe a way can be discovered to make that re-education take place much faster. I am constantly looking for ways to make change easy; Citizens Dividend would help do that. I think I can make a political case for Citizens Dividend and infrastructure costs coming out of land rent.”
Paul Justus, Arkansas planner busy updating their region’s long range transportation plan (May 21): “As part of our re-framing, have people thought of using the term ‘Natural Rent’ as opposed to ‘Land Rent’? There is something primordial about the sacredness of Land that people think they would be sacrificing by allowing their land rent to be fully taxed. Of course, in reality, Geonomics ensures that one will have access to the land. I believe the Citizen’s Dividend is key to implementing a program of Geonomics.”
Dick Strong, California soil scientist (May 7): “I’ve been carrying your spring Geonomist in my van. I really like the newsletter. I’m on a month long research trip to the Chihuahua Desert in Mexico and New Mexico. I found 24 ejidos – hospitable, civic pride, sense of community. Drought is reducing plant growth. Fields are being abandoned, towns becoming ghost towns. My story is at soilandhealth.org. My immediate problem is my fuel pump quit. I close with a poem.” Ed: Which was quite touching, BTW.
Newcomers, old stayers
The European sponsors of a May conference, including UN Habitat, granted me a subsidy of 200 Euro. The Robert Schalkenbach Foundation made it possible for me to follow up with contacts made at conferences abroad, which is quite time-consuming, and to disseminate newsletters at the annual conference of the Eastern Economics Association, which granted me permission to place a stack on their own info table. Our 2005 spring Geonomist elicited enough renewals and newals from stalwarts Wendell Fitzgerald, Kathy Rentenbach (OR activist), sustainer Heather Remoff (PA anthropologist), Mark Sullivan (NY leader), supporter Dick Strong (CA agronomist), subscribers Mason Gaffney (UC Riverside prof), Jason Murhphy (MO prof), Gib Halverson (WI firefighter), Rich Nymoen (MN leader), Don Levor (NY retiree), and Nadine Stoner (WI leader), and others to cover the costs of copying and postage. Big thanks to all for re/joining, donating, and granting. If you don’t see your name above and know it belongs there, just send a check. We’ll know what to do with it.
WHERE FROM HERE?
June 26 – 29, the Community Development Society holds their 2005 conference at the Radisson Plaza Lord Baltimore Hotel in Maryland. My roundtable is under Policy and Practice. July 20-23, the US Society for Ecological Economics holds its 3rd Biennial Conference in the Tacoma Convention Center in Washington. It has our panel on Rents: Bill Barnes, U of Portland on “Rent Lock-In in the Energy Industry; Michael Mascall, PhD, former chair of the Sierra Club of BC Chapter, on BC Forest Subsidies; myself on “Who Gets Rent Determines How Green Your Economy”; and Karl Seeley, Hartwick College, on “Beggar Thy Neighbor: Doing Well By Doing Bad”. We’ll also engage policymakers in a nuts-n-bolts workshop. June 24-26, Anniversary Gathering of the School of Living (schoolofliving.org). Speakers include Alanna Hartzok, Paul Justus for the Ozark Regional Land Trust, and others on many topics such as Geoism. Register at s-o-l.org/images/GatheringFlyer. doc. This September, The American Monetary Institute is hosting a conference in Chicago (monetary.org). More info, contact Stephen Zarlenga (email@example.com).
What you can do: report
Econ Journal Watch is a scholarly online journal that exposes irrelevant and wrong-minded articles in the academic economics journals. Close associate Fred Foldvary is an associate editor of the journal and has an article on “geo-rent” at: www.econjournalwatch.org/main/ index.php?view_issue=1&categories_id=6. If you read any article in the mainstream economics literature that you find irritatingly bad, feel free to send Fred an article critical of it. They welcome your input.
What else you can do, II
Richard, Green Party, (Apr 11): “I agree with geonomics. How do we get from where we are to where we want to be?”
Editor: Look at other movements that dealt not with a single issue but with shifting the paradigm, such as the environment or gender equality or racial equality. How’d they do it? All had in the beginning a bestseller, like Silent Spring or Female Eunuch or Uncle Tom’s Cabin. The book not only got the word out, it also crystallized a worldview and a simple reform. So: (1) Compose the Message, which highlights the basic problem, like: “Letting a few take what we all make – the value of land – is stressing both nature and society.” (2) Define the Mission, which sums up a solution in a way that resonates with a critical mass and captures society’s momentum, perhaps: “Rather than tax and subsidize, share Earth by sharing her worth.” (3), Recruit Members, more people to refine, articulate, and spread the word. That means in our mass market, (4) Media exposure. Today, that’s not so much a book as it is a computer game, since it’s the young who shift paradigms, not the entrenched (Kuhn says). And (5), raise Money. While every course taught on history leaves it out, nothing happens without money.
What else you can do, III
Kate Thomsen, Portland State grad student: “Your taxing ideas are fantastic. I had not heard about geonomics. I’m curious about your background and how you make a living in a culture that does not exactly reward thinking outside of the standard economic box. I have trouble answering this question myself.”
Wendell Fitzgerald, retiree from California to Oregon (Apr 26): “I will be sending you a donation to be on your regular mailing list.” Editor: It arrived. Thanks.
Anyone else? Where society jumped the track is at rent, its own surplus, overlooking all the money people spend on the nature they use. Win geonomics, so sharing society’s surplus is the norm, thereby making the world work right for everyone. Merry Solstice.
Dear Geonomy Soc. (an educational IRS 501[c]3);
Here’s my tax-deductible yearly donation:
Bottom line: Secure Earnings, Share Earth