Geonomist, #30 — 2001 Spring (Vol. 9, No. 4)
|March 21, 2001||Posted by Jeffery J. Smith under The Geonomist|
FROM BOARD ROOM TO THE BARRICADES
Geonomics is …
about the money we spend on the nature we use. It flows torrentially yet invisibly, often submerged in the price of housing, food, fuel, and everything else. Flowing from the many to the few, natural rent distorts prices and rewards unjust and unsustainable choices. Redirected via dues and dividends to flow from each to all, “rent” payments would level the playing field and empower neighbors to shrink their workweek and expand their horizons. Modeled on nature’s feedback loops, earlier proposals to redirect rent fond favor with Paine, Tolstoy, and Einstein. Wherever tried, to the degree tried, redirecting rent worked. One of today’s versions, the green tax shift, spreads out of Europe. Another, the Property Tax Shift, activists can win at the local level, building a world that works right for everyone.
Latin lament universal ……………………………… page 2
You with us or against us? ……………..……… page 2
Decline and fall of the Northwest …….……… page 2
Poor Microsoft? …………..……………………………. page 2
When the cat is away ……………………..…..…. page 2
FROM OP-ED PAGES
Sci-fi, greens, & the left ………….………….….. page 3
World Bank land reformer
Ex-chief economist for the World Bank and shy geo-nomist, Joseph Stiglitz, was in Washington for the big confab of the World Bank and International Monetary Fund – outside the police cordons. The World Bank fired Stiglitz two years ago for questioning bank policy. “Free trade” by the rules of the World Trade Organisation, Stiglitz likened to the Opium Wars. As in the 19th century, today the North is banishing barriers to sales in the South while barricading Northern markets against Third World agriculture. Stiglitz proposes reducing the 50% crop rents charged by the propertied oligarchies worldwide. That would de-power the elites. (The Observer UK Apr 29, by Gregory Palast, who broke the story of how Jeb Bush purged the rolls of many voters who were not ex-felons; thanks, Polly Cleveland)
Elected reps in two states, Tony Coughlan in Virginia and Jefferson Davis in Connecticut, introduced bills to let locals shift the property tax off buildings, onto locations. In Virginia, the governor killed it (thanks, Josh Vincent). In Connecticut, it was the committee chair, despite Rep. Mary Mushinsky saying the shift “saves local economies and the remaining land.” (thanks, Al Hartheimer) In Washington, DC, a bill to fund a Metro station from the rise in the value of surrounding land should fare better. (thanks, Ed Clarke) In Oregon, where prices doubled in the 90s, pols debate taxing sales of real estate in order to fund affordable housing. Even at under 1%, the proposed levy drew a heavy bombardment from the speculator lobby. In Maryland, the governor will sign into law some income tax credits for those who put up “green buildings”. Even for a good cause, more loopholes mean higher tax rates on something else. Environmental backers admit that the highest cost in construction is not efficiency devices but land, a cost that land dues would lower.
FROM THE ARCHIVES
Latins got rent for roads …..……………………… page 3
Crony capitalism retards ………….……………… page 3
Fund transit bibliography ……………………….. page 4
Tuning to technophiles …….………..……………. page 4
Beyond taxation ………………………………………. page 4
Push over-development? …………………………. page 4
Budget on the Ballot ………..………………………. page 4
Better than Gross anything ………..…..……..… page 4
Latin lament universal
In Mexico, the Zapatour (the peaceful bus caravan of indigenous decentralists) stopped at most major cities during February. In Puebla, EZLN Comandante Tacho said, “This is our time, brothers and sisters of civil society. It is not fair to be poor in a country so rich in natural resources. Let it be clear to those who call themselves governments: they will no longer be able to forget about us.” (Mexico Solidarity Network, 2/28; thanks Alanna Hartzok) To correct long-standing errors, tax reform at the local level can mean a 700% increase in the assessed value of commercial property (Noroeste, Mazatlan, Mar 21; here in Oregon owners dispute a proposed tax less than 1%). While the new, high assessment may be more accurate, it is even less likely to be paid. Some towns boast of having half their residents pay their property tax instead of the usual 60% ignoring the levy; in some towns, 90% evade paying (Noroeste, Mazatlan, Mar 18; tax delinquents in Oregon are under 0.1%). In Colombia, taxes, inflation, and corruption have driven 400,000 into a formal barter network that uses its own currency and that the government does not harass but encourages. Echoing the Zapatistas, who echoed the Appalachian saying, “why is the land so rich and we’re so poor?”, one Argentine was quoted, “This country has so many riches, but look how many people are hungry.” (ChScMn, Apr 4) That remark is heard around the world.
You with us or against us?
Americans are ready for what geonomics delivers. According to a survey by the Smart Growth Association, most respondents want open space and think traffic has gotten worse in the past three years: 76% think more should be done to manage and plan for new growth; 77% favor using tax dollars to buy land for more parks and open space; 83% favor establishing zones for green space and making agriculture off-limits to developers. Also, most want government to encourage affordable housing, mass transit, and the revitalization of urban centers and inner-ring suburbs. (Saint Paul Pioneer Press, 2000 Oct 17, www.pioneerplanet.com) In other words, the market for selling geonomic revenue reform is almost everyone within even sniffing distance of the mainstream.
Decline and fall of the NW
The #1 city in America, said Money Magazine last December, was Portland (OR). This city of roses dropped to 189 in the Lady’s Home Journal’s list of America’s 200 most livable cities. What matters to ladies that’s doesn’t to money lovers? Two main concerns. Women (single moms?) care about housing costs – here they’re sky high and getting higher – and schools. Portland public schools have low test scores (Portland Tribune, Apr 13). Good schools, after proximity to downtown, are the second most powerful factor in determining site value.
If Microsoft had paid wages and taxes the way other corporations do, in 1999 it would have been $10 billion in the red, says Bill Parish, a Portland accountant. Instead, Bill Gates is the planet’s richest human because Microsoft had til recently the highest valued stock. Gate’s company netted more than other giants by paying workers not cash but stock options. Stock options cost the company nothing, nor does the company have to pay taxes on them. For these savings and others (no medical), computer firms also contract for help rather than hire workers. Such huge savings was one reason why hi-tech dotcoms were so remunerative. Techies spending their riches was what made land values so steep in the Northwest’s Silicon Forest, California’s Silicon Valley, and around other computer-oriented college campuses, forcing out those with shallow pockets. (Portland Tribune, Apr 13)
When the cat is away
Is the IRS trying to tempt you? Just like last year (see The Geonomist, 2000 Spring), the IRS complains it lacks the funds for auditing any more than a smidgen of tax returns. In 1989, the odds of someone earning over $100,000 per year getting audited was 1 in 9; now it’s 1 in 204. IRS suits against taxpayers dropped from 2,519 in 1992 to 641 in 1999. Part of their problem is the IRS can not easily deal with a tax code made ever more Byzantine by every Congressional tax reform. (Christian Science, Apr 13) Yet who is the tax cheater? Those trying to keep what they earn? Or those levying taxes on earned income? A fairer arrangement leaves privately generated values in private pockets and runs publicly generated values (the values which attach to land) thru the public treasury, then back out to everyone equally.
FROM THE OP-ED PAGES
Sci-fi, greens, & the left
From the sci-fi hit, The Sky Road (1999), by Scotsman Ken Macleod (p 241): ‘Greens don’t have taxes… (just) a couple simple economic principles. One is that we don’t have rent, but land ain’t free – God ain’t making any more of it, but we keep right on making more people. So we apply the equivalent of rent to community purposes, like defence. The other is that any individual, or any group, can issue their own currency, backed up at their own risk. No landlords, no usurers, and no officials.’ Myra: ‘A peasant’s idea of utopia. Single tax and funny money!’
The National Wildlife Fed. promotes the broad tax shift (last issue). Their coordinator for their Smart Growth & Wildlife Campaign, Caron Whitaker, added: “I’d advocate for a split taxation system (Georgist taxation) whereby the land (not buildings) is taxed in cities and urban areas, where growth is desired, and buildings (not land) are taxed and/or conservation tax incentives are implemented in rural and outlying areas where development is not desired.” Seems sensible, but not taxing rural land still allows speculation out there, and making growth pay its way in the country can be better handled by impact fees, bonds, and restoration insurance. No sense penalizing people for improving buildings just because the buildings aren’t sitting in a city.
New Colonist News keeps on its site the article, “Affordable Housing and the Land Value Tax Perspective” by Al Hartheimer. Lots of persuasive numbers in there. http://www.newcolonist.com
New America Foundation (found at Hanno Beck’s progress.org) has joined a growing list of green groups promoting some version of a rent dividend, a la Alaska’s oil dividend. Now it’s 20 groups that push sharing (see our “Greens on George: 120 Notable Environmentalists on Taxing Only Land” at progress.org/Geonomy). At this rate, it won’t be the reds but the greens who finally deliver to society an extra income apart from one’s labor or capital – that is, a share of the trillions we spend on the nature we use.
Gar Alperovitz in “On Liberty”: “(Ironically, redistributionists) highlight the Alaska Permanent Fund, which in 1999 allocated almost $1,800 per year to each state resident (roughly $7,000 to a family of four). Yet Alaska Fund income does not depend upon taxation but upon directly capturing returns from the public ownership of capital.” Amusing how urban moderns, blind to the real world at their feet, must call oil “capital”. And public ownership is irrelevant. Whether the site or resource is owned by the public and leased, or owned by a private party and taxed (or “feed” or “dued”), either way rent could be collected and shared. (Thanks, Caspar Davis.)
Ted Halstead, founder of Redefining Progress, in “A Politics for Generation X”: “America could raise trillions of dollars by charging fair market value for the use of common assets – the oil and coal in the ground, the trees in our national forests, the airwaves and the electromagnetic spectrum – and the rights to pollute our air. Charge fair market value for the use of common assets and return the proceeds directly to each American citizen.” (Thanks, Caspar Davis.)
FROM THE ARCHIVES
Latins got rent for roads
South America enjoys a physiocratic tradition. In the 1840s, Argentina had a president who tried to capture ground rent for social betterment – until the army put an end to his flirtation with justice. In the 1920s, both Colombia and Uruguay built new roads using funds collected from roadside landowners. After a few decades of success, this mechanism declined. Confusion arose when one property was near more than one road. And as the roads pushed up land values, land assessments lagged behind. With corruption and inflation, poor people could not afford to pay even the assessments lagging behind. Still, as late as the 90s, Bogota used resultant rent to pay for 80% of a new road. For the general fund, Columbia has a city land tax at 1% and a national one at 2%, and a land gains tax up to 50%, yet land is registered at 20% of its value. (Ortiz, Alexandra. Economic analysis of a land value capture system used to finance road infrastructure: the case of Bogota, Colombia; 1996, and Prest, A. P. Transport Economics in Developing Countries; Praeger, 1969)
Crony Capitalism retards
Here’s another researcher telling how injustice prevents development. At Brookings, the director of the project on Corruption and Poor Public Governance, Shang-Jin Wei, correlates bribery and nepotism with capital flight and dependence on international loans, two basic factors for inflation and repeated currency crises. At the Brookings website, see the stark statistics in his “Domestic and International Fickle Capital: Is There a Connection?”
Fund transit bibliography
The State of Oregon recently rejected the City of Bend’s transportation plan since it lacked specifics on how to fund it. One way is to let transit fund itself. If popular enough, a transit system raises land value around its stops high enough that, were it collected, it could pay for constructing the system. Portland (OR) funded some downtown transit improvements by charging the costs to the owners, and with their assent, who fronted the line. For more, see our bibliography of academic articles and our own article to be presented in Vietnam this fall on “value capture”.
Simple Society President John Watkins (Mar): “If rent is the only source of revenue for the citizen’s dividend, what does this do to the public’s willingness to create open space such as public parks in the middle of valuable land?” Increase it. Where there’s border-to-border building, fewer people want to live. Land values are lower, rent is less, and the CD smaller. Conversely, where land use is optimal (a mix of intense use and nonuse), land value is maximal. So rent is higher and the CD fatter. Want a fatter CD? Use land intelligently.
Alanna Hartzog (below, Mar): “Since Tobin’s Currency Transaction Tax has become so popular, our tax shift could soon become popular, too.” Don’t hold your breath. The Tobin Tax targets the rich; the George Tax takes aim at the land. Whose sympathies lie with that? I say forget taxing altogether and turn to sharing. For us to catch up to the overnight popularity among “progressives” for the Tobin tax, we must forget taxes and focus on the worth of Mother Earth. Get that flow of revenue recognized by people, then talk about sharing it, then, and only then, talk about collecting it.
Tuning in to technophiles
What do you say to Bucky Fuller or anyone who believes new techno hardware without new social software is the answer? wonders Alanna Hartzog (below, Mar).
Two things: One, technology always advances yet by itself never cures poverty or spares nature. Henry George noted this over a century ago in Progress and Poverty. If Amory Lovins persuades people to adopt every last one of his gizmos, that’ll improve the environment, which will raise land values, which will widen the gap between owners and others, giving more people bigger problems than worrying about nature. Two, if taxes are taken off home improvements and off industrial investments, new tools and techniques will spread faster. Meanwhile, if rent is collected, that’ll guide investors out of speculating in land and resources, leaving investors nowhere to turn but to real physical progress.
Budget on the Ballot
Who decides how to split public revenue between services and dividends? Reformers, lobbyists, or legislators – or none of the above? Charles Michael suggests letting the people decide. “Distribute all public revenue to all citizens except however much the citizens themselves authorize government to spend. Now the US federal government raises about $2 trillion per year. For all 285 million citizens, that’s about a $7000 Citizens Dividend (CD). In a referendum, ask voters to write in the percent of the $7000 to leave for government spending. Then average the write-ins to arrive at how much government gets to keep for funding its services.”
That’s a simpler version, and perhaps better, of putting the budget on the ballot – list a few main categories plus the CD. With either version, voters are likely to leave little to government. If legislators waste, why give them more? If they save, why give them more? Given a stake (the CD), voters should vote for representatives who spend wisely, who fund only services that benefit everyone, such as defense (not offense).
And rather than pay everybody, perhaps pay only voters. Excluding children makes the CD bigger. Including children would motivate some to have more kids for no other reason.
Better than Gross anything
Still feel unworthy of an extra income and the leisure it’d bring? Don’t. It’s not redistribution of others’ earnings but predistribution of nature’s worth, shared among us all before an elite or state have a chance to misspend it. And what’s the point of life? Work? Or work, work, work? Leisure gives you the chance to make your life worthwhile in other richly rewarding ways. In economics, leisure could replace the GNP or GDP or even growth as the indicator of well-being. It’s already included by cutting-edge economists in their alternative measures of society’s health. Check out GPI Atlantic’s website, www.gpiatlantic.org. They’re so tuned in, they even use land value as a measure of farmland health.
The main daily of Mazatlan, Mexico, El Noroeste, printed our “Mexicali, model for Mexico and the world” which in Spanish told of the success of Mexicali with replacing the property tax with a pure land-value tax (Mar 13). One reader replied: “I read with interest your article. I suggested to Dr Beraud that it would be almost impossible to introduce such a reform here in Mazatlan, as historically the city council is controlled by a very small group of landowners. Whose basic MO is speculation. I will check out your web page, but wondered if there is available a case history / study of the Mexicali changeover to the geonomic system? All the best.” – Lawrence Pelling (Apr 8). Lincoln Institute’s website has the study.
Rhizome, newsletter of the Environmental Studies Association of Canada, ran in their winter issue our “Public policy! Front and center!” To grow the economy, governments left, right, or undecided hustle to stimulate development. Going beyond the call of duty, the state favors growth over health. On this tilted playing field, one with the lumps of subsidies and the tilts of taxes, technologies lean and clean have a hard time competing. Twenty major favors are presented in a matrix.
Via word of pen
Readers of our report on our talk at the World Social Forum in Brazil (eventho’ mishaps tripped me up several times), had this to say: “Your report on Brazil is excellent.” – Cliff Cobb, interim director of the Robert Schalkenbach Foundation. “Great report Jeff! You have a terrific way with words. (Does social salary mean citizens dividend?) You are certainly observant and have a clear eye at the social scenes around you. Very interesting contradictions.” – Alanna Hartzok, Green candidate (below). “Thanks, Jeff! What a fabulous description of your trip. I loved reading of your adventures! If your book contains this level of wit and wisdom, it’s sure to be a bestseller.” – Heather Remoff, researcher/writer. Interested in the Brazil report? See our site or contact us.
Our essay on trade drew these responses: “May I send your piece out? It is positively magnificent. One thing, please stop saying things better than I can. It destroys my self-esteem.” – Harry Pollard. “You wrote a bunch of really good stuff. Part of your book or something? Let’s turn it into a position paper. Thomas Paine, Henry George, Dorothy Day, and Saul Alinsky are stars of the left, but they all rejected socialism and esteemed the grass roots. Would you consider it risky to have the byline on an article that was non-socialist left? Anyway, let’s get your trade ideas, in one shape or another, onto the WWW.” – Hanno Beck.
Our Spanish essay deriving geonomics – share Rent, don’t tax earnings – from libertarian tenets spurred this: “Your are truly amazing. God Bless you. Your spanish is very good. I am going to pass this on to some friends.” Wendy Rockwell, Costa Rican bookstore owner.
Via word of mouth
In Vancouver, Canada, the main daily, The Sun, ran an article on the 2nd Annual Global Conference on Environmental Taxation (Mar 31; thanks to Mary Rawson). Sponsored by Cleveland State U, BC Institute of Technology, Government of British Columbia, Pembina Institute for Appropriate Development, and Simon Fraser U, this editor told how the Property Tax Shift is the hardest working of all the green tax shifts. Afterwards, received: “Thanks, you read my mind. I did want to get your paper and I will read it with interest. I would also like to keep in touch and will let you how our municipal work on tax shifting and land value taxation evolves.” – Zane Parker, Project Director, NEW BC
For Earth Day in Hood River City (OR) (what a fun event that was!), gave a talk in their downtown theatre on geonomics, about the flow of the money we spend on the nature we use. Now a few get it, via taxes and subsidies, for wasting the planet. Via dues and dividends, we could all get a share of this rent, then spare the planet.
The Progress Report hired us to cover this year’s annual conference of Georgists to be held in Pittsburgh on Labor Day weekend. The gathering of faithful followers may help show the city fathers the error of their ways, at least of those who voted to end the Steel City’s decades-long run of success with the Property Tax Shift (the rate was six times higher on land). For more on this September confab, call organizer Sue Walton at 888-262-9015.
Notes < donors & others
Jolie Bozian, Portland letter-carrier (Mar): “I have enjoyed reading your newsletter. Thank you for sending things to me.”
Joe Huston, Portland carer (Mar): “I just looked at your latest issue of The Geonomist! You are doing good work. The planet thanks you.”
Charles Komanoff, New York energy consultant and ex-Cornell prof who years ago noted each full-size nuclear power plant costs taxpayers one million dollars each day, holidays included (Mar): “I’ve read and enjoyed the two most recent Geonomists. Good stuff, nice range, well edited, upbeat flavor, dear to my heart. I’ll try to subscribe $ soon.” Cohort car-combater, he sent along his articles from The Washington Post on gas-hogs, from New York’s Daily News on bike safety, and his booklet, Drowning in Noise, which quietly adds up how much all that racket driving me batty costs us all. Call for a copy: 212/260-5237.
John Morales, ex-Panama Canal administrator, sent along Working Assets’ request to donors to nominate one’s favorite group for funding (Apr): “Do we try again?” We do if others are willing to make the same nomination.
Richard Strong, California agronomist (Mar): “Relate geonomics to the WTO regulations. For teach-ins at Seattle, Prague, the Hague, Porto Alegre, Quebec, we could really use a simple booklet of background.” How about a paragraph? Common knowledge among development economists is that governments, by not collecting rent, let elites speculate in land. That wastes both land and investment funds. Tho’ few are bold enough to go public (see what happened to Stiglitz), most admit in veiled ways that poor nations need to get the rent, and rich ones need to quit closing their markets to poor producers with subsidies that let producers in the developed world undercut everyone else. Do these two things and the supposed needs for a World Bank or WTO evaporate.
Iowa’s Bob Willis would quit taxing buildings and sales and instead collect rent for society. “Fear of adverse effect of higher taxes on farmland is misplaced. Now property tax breaks and farm subsidies let sellers raise their price. High land prices let landowners borrow more and buy more land. They, and 120,737 landlords, control over 72% of Iowa farmland. To collect subsidies, they over-produce crops, harming the land and driving down harvest prices, harming all farmers and local communities. Shifting taxes off improvements (homes, barns, fences, etc) to land lowers land price, making it harder to borrow for costly chemicals and equipment, encouraging absentee investor/owners to sell off to farm operators who’d return to diversified sustainable farming.”
Ed Dodson uploaded to his website, the School of Cooperative Individualism, a growing selection of Henry George’s writings, as well as essays written about George and his writings on political economy. Click on geocities.com/ejdodson/codingsystem14.html. If you know of other writings by or about George that should be added and links provided, let him know.
After her race for Congress as a Green from Pennsylvania, Alanna Hartzok, organizer of the Advisors on Land Tax Policy (to which this editor belongs), will be one of three speakers in the Schumacher Lecture Series, along with efficiency futurist Amory Lovins, who at last supports the green tax shift in general, thanks to Paul Hawken. Go if you’ll be in New England. Or invite Alanna to wherever you are.
Sean Healy of Ireland’s CORI Justice Commission (Apr 29): “Many thanks for your email. I was glad to receive it. It supplies a lot of ideas on how a basic income might be funded, in part or in full. We have been looking at some of these in Ireland. The Irish Government has announced that it will publish its promised Green Paper on Basic Income this autumn. There will be some government advisers trying to ensure that it will be as negative as possible. However, we will deal with whatever emerges. The suggestions contained in your email are very useful in this context as well. With renewed thanks and best wishes in all your work.” Thanks. ‘Twas our pleasure. Where all can rent be found? Besides surface land, such as downtown commercial sites, there are buried resources, communication licenses, patents, utility monopolies, emission permits, corporate charters that limit liability, plus the power to lend new currency into circulation by the central bank. There’s almost more rent than one can imagine – unless you’re rich and already getting it.
The Society of Ecological Economists of the US and of Canada have both put us on the agenda for their summer conferences, the former in July in Duluth and the latter in Montreal in August. In Pittsburgh in September, we’ll cover the annual Georgist conference and go over opportunities in Latin America. In Vietnam in October, the East Asian Society for Transportation Studies, headquartered in Japan, gathers to hear, among other strategies, our geonomic technique of funding mass transit from the resultant rise in land value around transit stops.
Orders & Re-Newals
For ordering literature, thanks to Glenn Harrington, articulate editor and proud new father (Mar 9): “Please send me The Geonomist back issues with a bill for at least US $150.” That’s what I call a generous request. Note the more recent back issues are at our site. “As always, the Geonomist is chock full of interesting stuff. Congratulations!” – Hanno Beck. “The on-line version of The Geonomist es magnifico. Can you add a few pictures and cartoons, if not streaming video quite yet? We’ll try to send along a little “barmitzvah gelt” to recognize your transition to Superman in this movement. The book is good, presently. With editing and a bit of rewrite here and there, it will also be magnifico. Do you have a good agent? It should yield some decent royalties.” – Marion Sapiro.
For joining and rejoining, thanks again to stalwarts Clay Berling, California soccer promoter, Michael Cykana, Texas researcher who prefers this newsletter in PDF, and Michael Neil, California healer (“please keep all the stuff; just send The Geonomist; thanks”), and to supporters Jack Bailey, Oregon Common Cause President, and Mario Cordero, Costa Rican émigré (“keep up with your good work”). You all make doing so possible. And another huge thanks to the wise ones at the Schalkenbach Fdn for packing me off to major conferences.
What you can do
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bottom line: Secure Earnings, Share Earth