This article is part of a series by Jeffery J. Smith on the surplus—also known as “economic rent”—that exists in the economy. Currently, this surplus is hoarded; yet once shared, this surplus could generate undreamed of possibilities for the entire human population. To see the entire series, visit Progress.org/Counting-Surplus

What Stymies Investigators?

What is it that makes counting the worth of Earth so difficult? Sure, the actual counting is a good-size chunk of work, requiring the unbundling of the values of land and things built on the locations, but it’s doable with sufficient perseverance; some have even done it, after a fashion. So what’s the real problem?

One factor is the public is largely indifferent to knowing the size of this spending stream, indifferent toward most economic statistics in general, indeed indifferent to mathematics in general. So if it takes a groundswell to tabulate the exchange value of land and resources, someone must light a fire under the public’s posterior and spark some widespread curiosity.

Another factor, far more lively, is politics—the subtle suppression by those powerful recipients of rents who’d rather not endure any curiosity nor any flak for capturing so, so much of society’s surplus, of the money society spends for the nature it uses.

Stopped By the Top

People get very, very rich being on the receiving end of society’s spending for land (in mortgages in “FIRE”), for oil, and now for the airwaves (telecommunications). Further, society grants a few members patents and copyrights that create monopolies and billionaires. Those government-granted privileges—which took nobody’s labor or capital to create—act just like earlier privileges, the land titles—which also took no labor or capital to create. Income derived without having to apply labor or capital (perversely called “capital gains”)—other than to lobby and make campaign contributions—as a rule, tends to dwarf most incomes, such as wages and other true earnings.

A century ago and more, 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—and ownership of resources—think timber, coal, and steel. Dr. Mason Gaffney, UC-Riverside, tells us in The Corruption of Economics that those corporations, the “Robber Barons”, funded the universities that then were creating the nation’s first departments of economics. The newly degreed economists focused overwhelmingly on labor and capital, reinforcing the boss-versus-worker paradigm, and roundly ignored the role of land, despite land being one of the three original factors of production in classical economics, and still is in real-world economies.

With land out of the picture, rent got the boot next. Obviously, there was no reason to count that which no longer counted. Lost to sight were not only the sources of great fortunes but also the driver behind the business cycle and the discipline’s ability to anticipate booms and busts. So it goes.

Was there a conspiracy? Is this a theory? No, it’s not a theory. Gaffney did a great job of documentation. But was there a conspiracy? When delivering the fat check—or more likely, at some fancy dinner party ahead of time—did a hired rep of the old families tell the university deans what to do? It could have gone down like that.

Secret cabals of the super rich do meet at hideouts like the Bohemian Grove. The Rockefellers' Trilateral Commission seems to have decided the world’s fate. And the global banks—banks make most of their money off mortgages—funded their phony so-called “Nobel” prize. So maybe the super rich do conspire.

Stopped by Conformity

But once they set the agenda, more conspiring is not really needed. Once a worldview gets institutionalized, it gets awfully hard to change, like QWERTY on the keyboard. Without being told, economists know what’s considered legitimate areas of research and what’s not, as do their students. Then comes the preponderance of courses and seminars and papers on everything but land. Few personality types can buck the trend.

It’s the nature of domesticated animals, such as civilized humans, to admire, lionize, and never criticize one’s betters, who are the rich and powerful. People’s perception of land is so weak and their faith in mainstream economics so strong that the geonomists who could and did predict the recent recession (Harrison in the UK, Anderson in Australia, and Foldvary in the US) could not get a hearing. Meanwhile, conventional guys who could not forecast a low tide were winning famous, faux prizes.

Let that sink in. This is information that would have saved millions of people billions of dollars but it got less attention than the engineer who warned everyone that the O-ring would fail, killing the astronauts on the Challenger. Conformity can be deadly.

Lucky Gentry

Additionally, the rentiers caught a demographic break—land disappeared on its own. In the Industrial Era, the population moved from the country to the city. Most people are not landlords or absentee owners of farmland. Most people are familiar with paying rent and mortgages but not with receiving rent or mortgage interest payments. And it’s not residential mortgages but downtown mortgages that are gargantuan and well outside most everyone’s ken. So land disappeared. Metro land became housing while the rest of land became environment. And with land gone, rent—the single biggest stream in the economy—became invisible, too. A blindspot that bedevils society.

That blindspot led to another happy result for the gentry. Their critics see only labor and capital, left and right, poor and rich. Land barely impinges on their consciousness, if at all. They completely whiff at the dichotomy of our spending for things our neighbors produce and for things that nobody created. It’s a crippling blindspot. The proposals of wannabe reformers are anything but structural and transformative. They leave the cause of yawning inequality—captured rents—totally out of the discussion.

Hence debt grows—mortgages, car loans, student loans, credit card debt, etc—and the middle class shrinks. So when a geonomist does shout out that “the emperor wears no clothes”, there is no audience to hear the shocking discovery that rents are huge and unaccounted for. It’s a global boat the rent retainers don’t want rocked.

Rentiers Don’t Fool Around

The gentry have had their way forever, with few bumps in the road, such as the popularity of Henry George during the final quarter of the 1800s. Robbing the leader of the movement to levy a Single Tax on locations of his victory in the mayoral race of New York derailed his career. Then an exhaustive speaking itinerary and too many cigars finished him off a decade later. The rentiers have probably breathed easy ever since. Mostly.

They do remain vigilant to any potential threats. When the Soviet Union collapsed, their cutting-edge economists invited some name American economists to come over and tell them all about non-left, non-right, third-way economics, centered on a proper social role for the flow of rents. The US State Department invited each professor to stay home instead; all of them acquiesced.

Imagine if Russia did not dissolve into cutthroat capitalism but adopted geonomics and showed the world how to thrive. I know, it looked scary to the 1%, too. So they dodged a bullet. But it shows that one must consider that rent recipients would go to any length.

Goliath Still Crushing David, But Still …

What might eventually spell disaster for rent retainers is simple innate human curiosity. People are aware of recessions, sensitive to losing their jobs, and a bit grouchy after being foreclosed from their homes. A few are starting to put two and two together.

When Piketty’s book Capital In the 21st Century became a big hit, at least one conventional economist pointed out that it was not capital capturing all the surplus that functional economies naturally exude, it was land, mislabeled “housing”. Could Matthew Rognlie’s paper be a fissure in the institutional facade of economia? If that tiny crack is to widen, it’ll take a lot more curiosity and clarity on the part of a lot more people.

If anyone’s worried about their world being turned upside down, they’re not showing it. There is no ridicule of Matt Rognlie. Instead, all there is is an authoritative silence. For now, keeping aloof serves them well.

But a lot is at stake, their response could change. The needed statistics could get mixed into broader, less distinct categories. Or, as in Australia, the relevant data could go from being free from the government to costing hundreds of dollars.

What could counter such tactics? The public going from being part of the problem to becoming part of the solution—awakened and demanding. What could awaken the public? A meme going viral. A meme that conveys the social nature of the stupendous surplus now sending the elite into orbit away from everyone else. Anyone know of such a great visual?

This article is part of a series by Jeffery J. Smith on the surplus—also known as “economic rent”—that exists in the economy. Currently, this surplus is hoarded; yet once shared, this surplus could generate undreamed of possibilities for the entire human population. To see the entire series, visit Progress.org/Counting-Surplus

© Text Copyright Jeffery J. Smith rights reserved.
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