"You know unemployment has gotten bad when the 1% starts laying off Congressmen."
Our seeking to know the amount of Earth’s worth in America is an economic quest but it unavoidably runs up against political hurdles. However much the value of land and resources turns out to be, it’ll be a lot. The people now banking the payments we make for the nature we use likely intend to keep on doing so.
They may worry that if public awareness of rents were to increase, then the private concentration of rents might decrease. Upon learning of the immensity of “rent”, some people would reflect upon the facts that nobody made Earth and everybody needs land. Further, it’s society as a whole who make locations valuable; “rent” is a free lunch for somebody.
People could consider what to do with all that social surplus; the electorate might choose a more equitable arrangement. That is a concern of some.
“A 1% increase in housing costs increases income inequality by 0.125%, spending inequality by 0.248%. Income inequality is among the top challenges for policy makers globally. In a recent survey of 1,767 leaders from academia, business, government and non-profits, The World Economic Forum’s Global Agenda Council found increasing income inequality to be top global concern in 2015.” — “Higher property prices linked to income inequality” in The Conversation, 2016 November 21
If you’re accustomed to receiving “rent”, what are you going to do? Forgo it? Or spend some of it to keep on getting most of it? As a who-done-it, the obfuscation of “rent” is an open-and-shut case. The motive is the possibility of losing “rent”; the means is “rent” itself.
That the rich and powerful distort knowledge is par for the course. Suppressing research, monopolizing and massaging knowledge, it’s what elites do. Centuries ago in the field of astronomy, if you measured planetary orbits exactly, the ruling elite burned you at the stake. While the auto da fe is not currently a threat, the Goliath veteran distorters of truth still keep a lid on the David wannabe discovers of truth.
While the gentry usually enjoy smooth sailing, occasionally they encounter stormy waters. A century and half ago, the biggest fortunes were amassed by those able to win ownership of railroads—which actually raked in more money from the land they were given by Congress than from the freight and passengers they carried. Congress, in exchange for stock and seats on boards of directors, also granted near monopolistic ownership of timber for track ties.
The people did fight back with muckrakers and unions. Also, millions from all walks of life, inspired by Henry George during the final quarter of the 1800s, promoted a Single Tax on locations. In response, John D Rockefeller gave $1,000 to Republican candidate Teddy Roosevelt to defeat Henry George, and the powers-that-be robbed George of his victory in the mayoral race of New York. The third most popular American after Mark Twain and Tom Edison, George was in demand as a speaker all over the world. While on tour in the UK, he had to flee for his life from thugs sent to kill him. What ended his life prematurely was his arduous travel itinerary and too many cigars, but his followers kept battling.
When the popular movement to publicly recover socially-generated rents was a force to be reckoned with, the rentiers did reckon with it. They quashed the movement at every turn. Since power corrupts, the gentry corrupted not just politics but also economics. Of all the social studies, none is as relevant to the most powerful elements in society as is economics.
Dr. Mason Gaffney, UC-Riverside, tells us in The Corruption of Economicsthat those corporations—AKA the “Robber Barons”—funded the universities that then were creating the nation’s first departments of economics.
- Rockefeller oil money at Chicago;
- Timber oil money at Cornell;
- Railroad money—Union Pacific is still the biggest landowner in California—at Johns Hopkins;
And so forth.
“Pay the piper and call the tune.” During the formative stages of the discipline, the newly degreed economists focused overwhelmingly on labor and capital, reinforcing the boss-versus-worker paradigm. They did so despite land being one of the three original factors of production in classical economics, and still is in real-world economies. They ignored the role of rent and submerged nature’s land into humanity’s capital. With land out of the picture, rent got the boot next. There was no reason to count that which no longer counted. As land disappeared into capital, rent disappeared into the ether.
Since then, the number of real estate schools and departments has proliferated at dozens of universities, all funded by the industry. Rentiers control rewards, both monetary and prestigious.
"… 26% of funds donated to universities in 2014 went to endowments with restrictions (meaning income from these endowment gifts is designated by donors to a particular purpose), while 1.6% went to endowments without restrictions on the use of income. Fifty percent of gifts went to restricted current operations, and 7% were completely unrestricted; 13.5% of donations came in the form of or were for the purchase of property, buildings and equipment …"
Via their construction campaigns, universities are part of the local growth machine. The are often some of the biggest landlords in some of the poorest neighborhoods. One egregious example is Yale acting as a slumlord in New Haven Connecticut.
Donors fund the research that agrees with them and ignore the topics that ruffle their feathers. "Wealthy donors have strong feelings about how nonprofits should utilize their contributions." Thereby they marginalize study of society’s spending for land and resources and determine what’s considered legitimate topics of research.
The discipline has not been self-correcting. It’s the nature of domesticated animals, such as civilized humans, to obey, even lionize, those higher up in the hierarchy—donors outrank economists by a long shot. Then beyond that instinct, economists are subjected to another—self-preservation. That gives academics and bureaucrats a more pressing reason to not rock the boat.
“The fraction of time I go ahead and do what he asks isn’t as high as you think.” — U of Michigan President Mark Schlissel said of billionaire real estate developer Stephen M. Ross, who has pledged $328 million to the university.
The lack of scientific rigor in economics is not just sloppy or accidental; it’s intentional. In service of the elite for over a century, economists have made a conscious effort to discredit land.
Not many if any in the field object to the loss of land as a factor. Once a worldview gets institutionalized, it gets awfully hard to change. Normalcy bias sees to that. Outside a rare course-correction, more interference from above is not much needed. They don’t have to be heavy-handed. They can be quite discrete. They don’t censor. They don’t have to. Thus the rich stymie efforts to delve into issues related to our natural heritage.
By making it difficult for economists to take in the entire panorama of economies in action, the elite have made it difficult for anyone to poke their nose into society’s spending for the nature it uses. Lost to sight were not only the sources of great fortunes but also—to society’s detriment—the driver behind the business cycle. By handicapping economists, rendering them unable to forecast booms and busts, rentiers deprived society of what could have been a useful science. That’s not just selfish. It’s classically sociopathic.
It seems a patina of science was called for. If you’re not a science but want to look like one, what are you going to do? You could pirate a prestigious prize.
In the perilous 1960s (perilous to the gentry), central banks (owned by rich old families) lobbied the Nobel committee to give a prize to economists that the bankers offered to fund. Alfred himself left no money for economics, a field held in such low esteem back then by real scientists. Nobel also snubbed mathematics, some say because a woman he was enamored with was wooed away by a mathematician. Rather than lobby the Nobel committee after Alfred’s death to be laureated, the mathematicians created their own prize, the Field Medallion. Yet few have heard of the Field Medal while the whole world knows about Nobel laurels.
Bankers wanted that name’s prestige for their pet field and, notes The New Yorker’s economics reporter, John Cassidy, ponied up the prize money. The Nobel committee caved, mostly. Rather than bestow the faux prize in the annual awards ceremony in Nobel’s native Sweden, economists must do so in nearby Oslo. There, too, do-gooders for peace give out their prize using the family name, beginning well after Alfred died. Alfred’s descendants have asked the bankers funding the false prize to quit using their family name, notes Hazel Henderson. So far, the bankers and committee have turned a deaf ear.
Note the double standard. When Levi’s complains about a fly-by-night clothier in, say, Vietnam, slapping the Levi’s label on subpar jeans, everyone agrees those jeans are counterfeit. But when central bankers slap the Nobel family name on their favorite economist du jour, nobody in the mainstream media utters a peep.
According to Avner Offer and Gabriel Söderberg, authors of The Nobel Factor: The Prize in Economics, Social Democracy, and the Market Turn, the award serves elite interests. Global bankers have given their prize to an academic focused on society only once, to the Swede Gunnar Myrdal in 1974 (who, ironically, later turned against socialism). Every other year it went to economists more friendly to business interests.
Many people assume that what the prize covers is science and what it leaves out is not—a huge bias in favor of the status quo and against geonomics. Yet neither faction of economists—neither those who are pro business nor those who are pro society—is very scientific, since neither distinguishes between spending that rewards lobbying for privilege and spending that rewards producing real goods and services. The award has continually reinforced the primacy of the present biased market in which the winning of rent is no different from the producing of useful goods and services.
This article is Part 12 of a series highlighting the forthcoming book, “Bounty Hunter: a gadfly’s quest to know the worth of Earth,” by Jeffery J. Smith. To date, the experts have not risen to meet the challenge. Indeed, some have even stood in the way. Yet the payoff for knowing this datum is huge.
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