By THE ASSOCIATED PRESS AUG. 20, 2014
By THE ASSOCIATED PRESS AUG. 20, 2014
Posted on August 23, 2014 at 02:27 PM in common good, commons, cui bono?, Earth for All, economic rent, financing services, government's role, land includes, land monopoly capitalism, Natural Public Revenue, natural resource revenues, natural resources, privatization, windfalls | Permalink | Comments (0)
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I was listening to Bob Edwards interview Ralph Nader, on the occasion of the latter's publication of a new book, and Nader was talking about things the left and the right might be able to agree on. I was in traffic, and only half listening, but when Nader spoke of corporate subsidies, it hit me that one of the biggest corporate subsidies, and one which the average person isn't at all conscious of, is the unearned increment, the possession of unearned wealth.
It isn't that some individuals don't get to collect some, too -- particularly those who own land (with or without a building on it) in or near the major coastal cities, but the lion's share goes to corporations, and their shareholders, who tend to be the 1%.
For more about the unearned increment, start here.
"Our plan involves the imposition of no new tax, since we already tax land values in taxing real estate. To carry it out we have only to abolish all taxes save the tax on real estate, and abolish all of that which now falls on buildings or improvements, leaving only that part of it which now falls on the value of the bare land, increasing that so as to take as nearly as may be the whole of economic rent, or what is sometimes styled the "unearned increment of land values."
Can we get the leaders of the left and right to look at this, or are they owned by the corporations?
By Charles Kanjama firstname.lastname@example.org
Sometime in the 19th Century, somewhere in Europe, a busy town was separated from a poorer residential quarter by a river crossed by a footbridge built by the town authorities. Any person crossing the footbridge had to pay some money, say ten shillings, to cross one way or the other. Then a benevolent town council decided to ease the situation of the poor labourers by abolishing the bridge levy.
After several months, it was noticed that the rents in the poorer quarter had generally increased by about five hundred shillings, thus absorbing the labourers’ monthly savings gained from the abolition of the bridge levy. In 1879, American writer Henry George wrote his groundbreaking work, “Progress and Poverty” to explain this phenomenon. His main economic idea was that growing population as well as infrastructure investment raises the value of adjacent land regardless of the economic activity carried out on the land itself. Henry George was a brilliant writer and an incisive thinker, and he inspired fervent disciples, though mainstream economics treated him largely with contempt. He was derisively called ‘a single-taxer’ due to his proposal to abolish all forms of taxation save for land value taxation.
What George really supported was an intelligent approach to capturing the resulting value from public investments for the whole society. For example, in the European town above, the footbridge had been a form of economic value creation. Once the levy was abolished, the value was captured, not by the labourers as planned, but by their thriving landlords. This was a perverse form of value capture. A century later, the impressive economist and Nobel Prize laureate Joseph Stiglitz supported George’s insight, now called the Henry George Theorem. Stiglitz demonstrated that spending by government on infrastructure often increases aggregate land values by a proportionate amount. So for example, land values along Thika Road increased substantially due to the construction of the modern super-highway. These increases in value were captured mainly by the adjacent land owners and by transporters.
Likewise, a substantial injection of value from the Mombasa-Nairobi-Malaba standard gauge railway project, as well as from the proposed Lamu-Garissa-Isiolo-Moyale/Lodwar LAPSSET Corridor Project, will be captured by landowners within a certain radius of the service points or railway stations to be established along the line. Of course, the improved efficiency in transportation will create value in other areas, including job creation, and relative reduction in the cost of both industrial and consumer goods.
If government was clever, it would include a value-capture approach in project financing. The economic speculation in the land adjacent to the proposed Lamu port, to the planned Isiolo Resort city and to the Mlolongo railway exchange is a pointer of the anticipated value creation from these public investments. Value capture uses multiple approaches to allow government to recoup a portion, say half, of the returns from its investments.
One acceptable approach is land value taxation, or alternatively government land-purchase-and-resale schemes. The former is more legally apt, but under Kenya’s Constitution can only be levied by county government (art.209(2,3)). Another acceptable approach, which is now overdue considering the state of our economic development, is the reintroduction of capital gains tax. This tax was suspended in 1985, the idea at the time being that Kenyans should be encouraged to save and invest, including in the securities market.
However, from the perspective of tax equity today, it is scandalous that capital gains tax, which mainly affects the wealthy, still remains suspended. Of course Kenya must avoid going down the path of European socialist nations like France, which has recently introduced a top-bracket 75 percent income tax for the ultra wealthy. We cannot afford ‘to sock the rich’, as it will discourage investment and trigger capital flight, as well as entrench greater tax evasion. This does not mean that a well-designed capital gains tax cannot work for both property and equity investments.
Still, there is a need to avoid an obsession with traditional but costly approaches for funding Kenya’s mega infrastructure projects. Importantly, the electromagnetic spectrum that is now the focus of government-media disputes over digital migration is a potentially large source of public funds. Also the issuance of oil and other mineral exploration and extraction licences, which should be backed by a credible mining royalties and taxation regime that allows government to recover a substantial portion of mineral value. My New Year wish is that both national and county governments can progress useful infrastructure projects through creative financing that does not unduly stretch our debt leverage ratio but which directly contributes to our economic and social welfare.
I AM writing these pages on the shore of Long
Island, where the Bay of New York contracts to what is
called the Narrows, nearly opposite the point where our
legalized robbers, the Custom-House officers, board incoming
steamers to ask strangers to take their first American
swear, and where, if false oaths really colored the
atmosphere the air would be bluer than is the sky on this
gracious day. I turn from my writing-machine to the window,
and drink in, with a pleasure that never seems to pall, the
"What do you see?" If in ordinary talk I were asked this, I should of course say, "I see land and water and sky, ships and houses, and light clouds, and the sun drawing to its setting over the low green hills of Staten Island and illuminating all."
But if the question refer to the terms of political economy, I should say, "I see land and wealth." Land, which is the natural factor of production; and wealth, which is the natural factor so changed by the exertion of the human factor, labor, as to fit it for the satisfaction of human desires. For water and clouds, sky and sun, and the stars that will appear when the sun is sunk, are, in the terminology of political economy, as much land as is the dry surface of the earth to which we narrow the meaning of the word in ordinary talk. And the window through which I look; the flowers in the garden; the planted trees of the orchard; the cow that is browsing beneath them; the Shore Road under the window; the vessels that lie at anchor near the bank, and the little pier that juts out from it; the trans-Atlantic liner steaming through the channel; the crowded pleasure-steamers passing by; the puffing tug with its line of mud-scows; the fort and dwellings on the opposite side of the Narrows; the lighthouse that will soon begin to cast its far-gleaming eye from Sandy Hook; the big wooden elephant of Coney Island; and the graceful sweep of the Brooklyn Bridge, that may be discovered from a little higher up; all alike fall into the economic term wealth — land modified by labor so as to afford satisfaction to human desires. All in this panorama that was before man came here, and would remain were he to go, belongs to the economic category land; while all that has been produced by labor belongs to the economic category wealth, so long as it retains its quality of ministering to human desire.
But on the hither shore, in view from the window, is a little rectangular piece of dry surface, evidently reclaimed from the line of water by filling in with rocks and earth. What is that? In ordinary speech it is land, as distinguished from water, and I should intelligibly indicate its origin by speaking of it as "made land." But in the categories of political economy there is no place for such a term as "made land." For the term land refers only and exclusively to productive powers derived wholly from nature and not at all from industry, and whatever is, and in so far as it is, derived from land by the exertion of labor, is wealth. This bit of dry surface raised above the level of the water by filling in stones and soil, is, in the economic category, not land but wealth. It has land below it and around it, and the material of which it is composed has been drawn from land; but in itself it is, in the proper speech of political economy, wealth; just as truly as the ships I behold are not land but wealth, though they too have land below them and around them and are composed of material drawn from land.
— The Science of Political Economy
THE term Land in political economy means the natural or passive element in production, and includes the whole external world accessible to man, with all its powers, qualities, and products, except perhaps those portions of it which are for the time included in man's body or in his products, and which therefore temporarily belong to the categories, man and wealth, passing again in their reabsorption by nature into the category, land.
— The Science
of Political Economy — unabridged: Book III,
Chapter 14: The Production of Wealth, Order of the Three
Factors of Production •
abridged: Part III, Chapter 10: Order of the Three Factors of Production
"The Lord's Prayer says, Give us this day our daily bread. Our daily bread comes from the land. No man made the land. It is God's gift to mankind. It belongs to all men. Therefore individual ownership of land is wrong. Individual control of the fruits of the land is wrong."
— Hall Caine, "David Rossi," in "The Eternal City."
The monopoly of the natural resources, principal among which is land, causing rent, and the monopoly of exchange, causing interest, are at the bottom of all the misery and wretchedness of humanity.
The only point where I do not find myself in complete accord (and that is perhaps more due to your comparative silence than anything else) is that I attach relatively more importance to the initial injustice done by the permitted monopoly of raw material in a few hands. It seems to me that individualism, in order to be just, must strive hard for an equalisation of original conditions by the removal of all artificial advantages. The great reservoir of natural wealth that we sum up as land (including mines, etc.) ought, it seems to me, to be nationalised before we can say that the individual is allowed fair play. While he is thwarted in obtaining his fair share of the raw material, he is being put at a disadvantage by artificial laws.
—Grant Allen, Letter to Herbert Spencer, 1886, in "Grant Allen, A Memoir," by Edward Clodd.
Posted on January 08, 2013 at 12:06 AM in as much and as good, charity and justice, commons, Earth for All, economic justice, equal freedom, equal opportunity, equality, inherited wealth, land includes, land monopoly capitalism, landlordism, make land common property, monopoly -- not the game, natural resource revenues, natural resources, pay for what you take, private property in land, privatization, privilege, property rights | Permalink | Comments (0)
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We worked through spring and winter, through summer and through fall.
But the mortgage worked the hardest
and steadiest of them all;
It worked on nights and Sundays, it worked each holiday;
It settled down among us and it never went away.
Whatever we kept from it seemed almost as bad as theft;
It watched us every minute and it ruled us right and left.
The rust and blight were with us sometimes, and sometimes not;
The dark-browed, scowling mortgage was forever on the spot.
The weevil and the cutworm they went as well as came;
The mortgage stayed forever, eating heartily all the same.
It nailed up every window, stood guard at every door,
And happiness and sunshine, made their home with us no more;
Till with falling crops and sickness we got stalled upon the grade.
And there came a dark day on us when the interest wasn't paid.
And there came a sharp foreclosure, and I kind o' lost my hold.
And grew weary and discouraged and the farm was cheaply sold.
The children left and scattered, when they hardly yet were grown;
My wife she pined and perished, and I found myself alone.
What she died of was a mystery, and the doctors never knew;
But I knew she died of mortgage — Just as well as I wanted to.
If to trace a hidden sorrow were within the doctors art.
They'd ha' found a mortgage lying on that woman's broken heart.
Worm or beetle, drought or tempest, on a farmer's land may fall.
But for a first-class ruination, trust a mortgage 'gainst them all.
How much of a farmer's mortgage is for the value of the land itself, and how much for the present value of the improvements which previous owners have made, such as clearing, draining, fencing, irrigating, building structures, plus, perhaps, equipment purchased with the land and buildings?
For that matter, how much of a homeowner's mortgage is for the value of the land itself --including its access to community-provided services such as city water and sewer, fire hydrants, and the like -- and how much for the purchase price of the landscaping and structures on the property, built by any of the previous owners?
To what degree is the modern buyer including in his formal calculations or his underlying assumptions the notion that the land will increase in value during his tenure? (See Case & Schiller, 2003.)
Posted on December 30, 2012 at 09:42 PM in buildings depreciate, capital gains are land gains, cost of living, economic rent, ecosystem services, ending poverty, facilitating commerce, financing education, financing infrastructure, financing services, FIRE sector, fixing the economy, free land, free trade, income concentration, infrastructure, land appreciates buildings depreciate, land includes, land rent, land value created by community, location, location, location, make land common property, Monopoly and The Landlord's Game, Monopoly and The Landlord's Game , natural resource revenues, Occupy Wall Street's values, one solution for many problems, urban land value, wealth distribution or concentration | Permalink | Comments (0)
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Taxing Unoccupied and Unimproved Lands
St. Paul Pioneer Press
reprinted in The American Cooperator, circa 1904
The recent migration of thousands of American farmers to the cold and comparatively uninviting regions of western Canada has not been thru any lack of opportunity, in the more attractive regions of Minnesota and neighboring states, created by natural causes. Whatever lack of opportunity or ''room" exists, anywhere south of the boundary line, is the result of conditions wholly artificial in their origin. Chief among these is the tying up of large bodies of the best lands in the hands of speculators who are holding them for a rise. Take a trip on almost any railroad leading out of St. Paul and all along its line it will be found that the unimproved land exceeds in acreage the amount reduced to cultivation. In great numbers of instances there has been no thought of improving it by its present owners. They have bought it on speculation, and when they sell, it is an even chance that the transfer will be to some other speculator. Drive the speculator out of the field and the vacant stretches between villages will soon be occupied by farms. At present, even in the wonderfully fertile and productive region of the Red River of the North, a vast acreage is unoccupied — held on speculation.
If the Western farmers and legislators had formed a truer appreciation of the fundamental teachings of Henry George in that remarkable book, "Progress and Poverty," they would long ago have found a remedy for conditions which prevent the settlement of lands in their own neighborhoods, condemn the larger part of the fertile area in hundreds of counties to unproductive idleness, curtail the revenues of the stale, and double the burdens of the farmers who are really building up the country. That remedy is the taxation of unproductive at the same rate as productive land; the release from taxation of the farmer's house and barn and crops and cattle, and the laying of the entire tax on the land — including in the term "land" all franchises and monopolistic uses of natural opportunities, like water power, etc. If the land speculator had to pay the same tax, on every uncultivated acre, that the farmer pays on the cultivated — the amount being increased by the abolition of the personal property tax — he would soon be compelled to "sell out " at such figures as would remove all temptation for the homeseeker to travel to Canada or elsewhere in search of cheap land. That the clear, shining virtue of Mr George's proposition should have been obscured by its forced and unnecessary connection with the questions of individual land owning and "free trade" is one of the misfortunes of the century. Divested of this connection, it affords the most direct and equitable solution yet suggested for the multiform problems involved in the right adjustment of taxation.
Equity, therefore, does not permit property in land. For if one portion of the earth's surface may justly become the possession of an individual and may be held by him for his sole use and benefit as a thing to which he has an exclusive right, then other portions of the earth's surface may be so held; and eventually the whole of the earth's surface may be so held; and our planet may thus lapse into private hands.
— HERBERT SPENCER, in 1850, Social Statics, Chap. IX.
Posted on October 05, 2012 at 12:23 AM in a wedge driven through society, all benefits go to landholder , as much and as good, commons, commonwealth, corruption of economics, cui bono?, Earth for All, economic rent, enclosure, equal freedom, equality, FIRE sector, government's role, income concentration, land different from capital, land includes, land monopoly capitalism, landed gentry, landlordism, make land common property, money in elections, monopoly -- not the game, natural resources, no victims, poverty machine, poverty's cause, private property in land, privatization, privilege, rent-seeking, socializing risk and privatizing profit, special interests, the disenchanted, the right to life, time making wrongs into rights, toll-takers, wealth distribution or concentration | Permalink | Comments (0)
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That any human being should dare to apply to another the epithet "pauper" is, to me, the greatest, the vilest, the most unpardonable crime that could be committed. Each human being by mere birth has a birthright in this earth and all its productions; and if they do not receive it, then it is they who are injured, and it is not the "pauper," oh, inexpressibly wicked word! — it is the well-to-do who are the criminal classes.
— RICHARD JEFFERIES, The Story of My Heart, Chap. X., p. 122.
Posted on October 02, 2012 at 12:56 AM in charity and justice, commons, commonwealth, corruption of economics, Earth for All, economic justice, economic rent, ecosystem services, enclosure, equality, is this socialism?, land appreciates buildings depreciate, land different from capital, land includes, landlordism, make land common property, Natural Public Revenue, natural resource revenues, natural resources, no victims, pay for what you take, poverty machine, poverty's cause, private property in land, privatization, privilege, rich people's useful idiots, socialize, socializing risk and privatizing profit, the right to life, usufruct | Permalink | Comments (0)
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The post below this one, "Mitt Romney's 'Fair Share' " refers to his fair share of the costs of providing public goods.
But perhaps an equally important question is the nature of one's fair share of the output of our economy and the output of the earth. Some of the former output is the result of individual efforts, and one ought to be able to keep that portion. But at the same time we must recognize how much comes from the division of labor, from drawing down on the non-infinite supply of non-renewable natural resources on which all of us today must depend and on which future generations of human beings must rely. Those who draw down more than their legitimate share owe something to the rest of the community. Our wealthiest tend, we suspect, to use many, many times their legitimate share, and the median American likely draws far more than their share, when one considers the planet as a whole.
Perhaps "legitimate" is not the right word here. It refers to what is permissible under current law. (The word gets misused a lot -- see the discussion on "legitimate rape," which seemed to be about the circumstances under which a woman has a right to make a specific very personal, decision, and when it is considered by some to not be left to her and is the province of government, legislators or others.)
What is one's "fair share" of natural resources? America is using a hugely disproportionate share of the world's resources. Are we entitled to it because we're somehow "exceptional"? Because "our" God is somehow better than other nation's Gods? Or do we genuinely believe that all people are created equal, and intend to live our lives accordingly?
Our output of greenhouse gases exceeds our share of the world's population. This is not without consequences for the world, and for peace on earth.
We ought to be re-examining our incentives so that they move us in the direction we ought to be going, which is, to my mind, using less. We can build transportation infrastructure which will permit many more of us to move around with less impact on the environment. We can fund that through collecting the increases in land value that infrastructure creates. We can correct the incentives which cause us to use today's inferior technologies to extract natural resources from the earth in ways which damage the environment, as if ours was the final generation, or the only one worth serious consideration.
Better incentives could reduce, eliminate, even reverse urban sprawl. I refer specifically to land value taxation as a replacement for the existing property tax, particularly in places where assessments are for one reason or another not consistent with current property values -- e.g., California and Florida, parts of Delaware and Pennsylvania which currently use assessments from the 1970s, and many other places where assessments are simply out of whack with current reality!) We should be replacing sales taxes, wage taxes, building taxes with taxes on land value and on natural resources. Most of that value is flowing generously into private or corporate pockets, to our detriment. It concentrates wealth, income, and, of course, political power.
Collecting the rent, instead of leaving the lion's share of it to be pocketed by the rent-seekers, would go a long way to making our society and our economy healthier. Eliminating the privilege of privatizing that which in a wisely designed society would be our common treasure would make our society a better place in which to live, a place in which all could thrive and prosper without victimizing their fellow human beings.
Posted on September 04, 2012 at 11:30 AM in all benefits go to landholder , America in the world, as much and as good, common good, commons, commonwealth, corporations, cui bono?, Earth for All, economic justice, economic rent, ecosystem services, environment, equal freedom, equal opportunity, equality, fruits of one's labors, greenhouse gases, incentive taxation, incentives, income concentration, infrastructure, inter-generational equity, land includes, land rent, land value created by community, land value taxation, Natural Public Revenue, natural resource revenues, natural resources, oil, pay for what you take, payroll tax, popular ignorance of land economics, privatization, privilege, property tax, property tax reform, Proposition 13, prosperity, special interests, sprawl, tax reform, toll-takers, unburdening the economy, unearned income, untaxing buildings, untaxing production, user fees, wealth distribution or concentration | Permalink | Comments (0)
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A major theme of the underlying political debate in the United States is the role of the state and the need for collective action. The private sector, while central in a modern economy, cannot ensure its success alone. For example, the financial crisis that began in 2008 demonstrated the need for adequate regulation.
Moreover, beyond effective regulation (including ensuring a level playing field for competition), modern economies are founded on technological innovation, which in turn presupposes basic research funded by government. This is an example of a public good – things from which we all benefit, but that would be undersupplied (or not supplied at all) were we to rely on the private sector.
Conservative politicians in the US underestimate the importance of publicly provided education, technology, and infrastructure. Economies in which government provides these public goods perform far better than those in which it does not.
But public goods must be paid for, and it is imperative that everyone pays their fair share. While there may be disagreement about what that entails, those at the top of the income distribution who pay 15% of their reported income (money accruing in tax shelters in the Cayman Islands and other tax havens may not be reported to US authorities) clearly are not paying their fair share. ...
I have to disagree with the second sentence of this next paragraph. And I think Stiglitz knows better, if he stops to think about it:
Democracies rely on a spirit of trust and cooperation in paying taxes. If every individual devoted as much energy and resources as the rich do to avoiding their fair share of taxes, the tax system either would collapse, or would have to be replaced by a far more intrusive and coercive scheme. Both alternatives are unacceptable.
The billionaire investor Warren Buffett argues that he should pay only the taxes that he must, but that there is something fundamentally wrong with a system that taxes his income at a lower rate than his secretary is required to pay. He is right. Romney might be forgiven were he to take a similar position. Indeed, it might be a Nixon-in-China moment: a wealthy politician at the pinnacle of power advocating higher taxes for the rich could change the course of history.
But Romney has not chosen to do so. He evidently does not recognize that a system that taxes speculation at a lower rate than hard work distorts the economy. Indeed, much of the money that accrues to those at the top is what economists call rents, which arise not from increasing the size of the economic pie, but from grabbing a larger slice of the existing pie.
Those at the top include a disproportionate number of monopolists who increase their income by restricting production and engaging in anti-competitive practices; CEOs who exploit deficiencies in corporate-governance laws to grab a larger share of corporate revenues for themselves (leaving less for workers); and bankers who have engaged in predatory lending and abusive credit-card practices (often targeting poor and middle-class households). It is perhaps no accident that rent-seeking and inequality have increased as top tax rates have fallen, regulations have been eviscerated, and enforcement of existing rules has been weakened: the opportunity and returns from rent-seeking have increased.
Today, a deficiency of aggregate demand afflicts almost all advanced countries, leading to high unemployment, lower wages, greater inequality, and – coming full, vicious circle – constrained consumption. There is now a growing recognition of the link between inequality and economic instability and weakness.
There is another vicious circle: Economic inequality translates into political inequality, which in turn reinforces the former, including through a tax system that allows people like Romney – who insists that he has been subject to an income-tax rate of “at least 13%” for the last ten years – not to pay their fair share. The resulting economic inequality – a result of politics as much as market forces – contributes to today’s overall economic weakness.
Posted on September 04, 2012 at 09:58 AM in common good, commons, cui bono?, economic rent, ecosystem services, financing education, financing health care, financing infrastructure, financing services, financing Social Security, FIRE sector, fixing the economy, government's role, highest salaries, income concentration, infrastructure, land includes, land rent, land value created by community, money in elections, Natural Public Revenue, natural resource revenues, natural resources, political economy, popular ignorance of land economics, privatization, privilege, public spending, reaping what others sow, rent, defined, rent-seeking, socializing risk and privatizing profit, special interests, Stiglitz, tax reform, time making wrongs into rights, toll-takers, unearned income, urban land value, wealth distribution or concentration | Permalink | Comments (0)
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What climbing Scot could tamely see
Upon a mountainous border,
"This hill path shall alone be free
To sporting lords. By order" —
As well lay tolls upon men's eyes,
Arrest the clouds' swift motion,
Trap the free air, divide the skies,
And parcel out the ocean.
— ROBERT BIRD, The Freedom of the Hills, Songs of Freedom, p. 295.
In principle I do not see why the sea should be dispensed from serving our need and comfort, any more than the land. However . . . men were left free to make private property of the sea as well as of the land, or to leave it in its primitive state, common to all, so that it should not belong to one more than to another.
— PUFENDORF, Law of Nature and Nations (1672), Book IV., Chap. 5, Sec. 5.
Randall Stephenson's "Spectrum and the Wireless Revolution" (op-ed, June 11) discusses making more spectrum available and notes the problem of speculators holding spectrum and doing little or nothing with it.
Since the airwaves are a public resource and no one created any part of the electromagnetic spectrum by the sweat of his brow, an obvious solution is to charge rent for spectrum. Mere speculation will become very unprofitable, and people putting their spectrum to low-priority uses will have an incentive to put it to more highly valued uses or sell it to people who will.
We can use the revenue to cut taxes on production or to slow our slide into bankruptcy.
Nicholas D. Rosen
It is well known that these materials and agencies, as fast as they become available, are in the main appropriated by individuals, through the agency or consent of the government, and are then held as private property. Such is the case with the soil and the minerals beneath it. The owners of this property charge as much for the use of it as if it were their own creation, and not that of nature.
— PROF. SIMON NEWCOMB, The Labor Question, North American Review, July, 1870, p. 151.
a link and a longer except follow ...
Posted on April 23, 2012 at 12:23 AM in all benefits go to landholder , capital gains are land gains, commons, commonwealth, corruption in government, cui bono?, Earth for All, ecosystem services, environment, government's role, income concentration, is this socialism?, land different from capital, land includes, land speculation, landed gentry, landlordism, leased land, location, location, location, make land common property, monopoly -- not the game, natural resource revenues, natural resources, oil, popular ignorance of land economics, poverty's cause, private property in land, privatization, privilege, property rights, rent, defined, socializing risk and privatizing profit, special interests, time making wrongs into rights, toll-takers, unearned income, wealth distribution or concentration | Permalink | Comments (0)
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38. Mining companies which mine on public lands pay far less to the Federal government than they pay on privately held lands.
A. That's fair, because the private landholders are better negotiators
B. That's fair, because the 1872 Mining Act set the price, and it wouldn't be fair to change the business environment after setting the rules.
C. That's fair. Corporations need subsidies to create jobs.
D. That's unfair, and the federal government should be getting just as much from the miners as the private landholders are getting
E. That's unfair, and not only should the federal government be getting more from the mining companies, but the federal government should be collecting a significant portion of the royalties now privatized by private and corporate landholders, since we're all equally entitled to nature's bounty. This would permit us to reduce other taxes on wages and production, and perhaps lead to a citizen's dividend, similar to the Alaska Permanent Fund
F. That's unfair, because the 1872 Mining Act was based on old prices and old mining technology.
G. Your reactions?
Posted on March 08, 2012 at 02:15 AM in all benefits go to landholder , as much and as good, common good, commons, commonwealth, conservatism, corporations, corruption in government, cui bono?, Earth for All, economic rent, enclosure, financing education, financing health care, financing infrastructure, financing services, financing Social Security, financing war, government's role, justice of the single tax, land includes, land rent, make land common property, Natural Public Revenue, natural resource revenues, natural resources, oil, pay for what you take, privatization, privilege, special interests, subsidies, the land questions, wealth distribution or concentration | Permalink | Comments (1)
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29. The states need money. Should they sell their toll roads to private companies?
A. Sure! That would provide a nice pot of money that would help with this year's budget and next year's, and after that, we can leave the problem to a future group of legislators and a new governor!
B. Sure! The private sector will take better care of them and turn a profit to boot!
C. No. The taxpayers paid for those roads to be built, and have a right to more control over them than would exist after privatization.
D. No. The taxpayers own that land, a unique right of way, and selling it off forever is irresponsible and wrong!
E. No. Our society -- any society -- is highly dependent on our infrastructure, and control over it must remain in the public sector.
F. No. Those highways are built on land that was bought or taken from individual property owners for the public good. To turn them over to the private sector, for profit, would be wrong.
G. No. Those highways will increase in value over the coming decades and centuries, and should not become anyone's private property, at any price. Both their economic value and the control over them belongs in the common sector.
H. No. Even if it looks as if it might make sense for our generation, what of future generations? Should we permit the privatization of a common asset they will likely be dependent on?
I. No. Future taxpayers will build more highways intersecting with these current tollroads, and increase their value; were these to be privatized, it would be the private corporation who would reap the benefit of that future public investment.
J. Your suggestions?
Posted on February 29, 2012 at 09:26 AM in absentee ownership, common good, commons, cui bono?, facilitating commerce, financing infrastructure, FIRE sector, franchises, government's role, infrastructure, inter-generational equity, land includes, land speculation, location, location, location, municipal ownership of utilities, Natural Public Revenue, pork spending, privatization, privilege, public ownership of utilities, public spending, reaping what others sow, socializing risk and privatizing profit, special interests, stock ownership, the land questions, toll-takers, transportation, wealth distribution or concentration | Permalink | Comments (0)
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15. We were at war in Iraq. What was the real issue?
A. Oil revenues: who gets them?
B. A stable supply of oil -- don't worry about who gets the revenues
C. Providing water systems, electricity, schools for the people of Iraq
D. Providing a safe period in which they can replicate 250 years of American experience and develop government structure to provide security, infrastructure, etc.
E. your suggestions?
15a. We're in Afghanistan. Is it about that country's natural resources?
13. Electric utilities have long been regarded as "widows' and orphans'" stocks. Safe, if not high income. A few years ago, they were deregulated. A recent study has shown that retail electricity prices have increased faster in states that adopted competitive pricing than in those where rates continue to be set by government agencies. We all need reliable electricity. Should we permit the licenses to generate and distribute electricity to be an opportunity to make a windfall profit? (Or should we encourage municipal ownership of vital utilities?)
D. No. Electricity is vital to the economy, and we ought to do what we can to keep it affordable to ordinary people, and not a source of corporate windfalls.
E. No. Natural monopolies ought to be publicly owned, the prices kept low, and any excess revenue accrue to the public treasury, not to the benefit of private investors.
F. your suggestions?
Posted on February 13, 2012 at 10:49 AM in absentee ownership, common good, corporations, cost of living, cui bono?, democracy, facilitating commerce, franchises, government's role, immigration, infrastructure, land includes, location, location, location, monopoly -- not the game, municipal ownership of utilities, natural monopolies, privatization, privilege, public ownership of utilities, special interests, stock ownership, the land questions, time making wrongs into rights, unburdening the economy, windfalls | Permalink | Comments (0)
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12. Foreign corporations own the water utilities in parts of New England. Often these companies came with significant acreage on picturesque reservoirs, some within easy commuting distance of New York City. Water is a vital resource, and the infrastructure which supplies it and cleans it is vital to everyone. In other places, including NYC, municipal utilities supply the water. Is private ownership of the water supply acceptable?
A. Sure! Why not?
B. As long as it is regulated by stong public utility commissions
C. No, this should be a public function.
D. Private ownership is fine, as long as it is American corporations. They'll take care of us, and not overcharge us.
E. This is a natural monopoly situation, and rightly should be owned by the local, county or state government, or some local public entity. Clean water is too important to leave to the private sector, even where the supply is abundant.
F. Your suggestions?
10. The advent of digital TV freed up many broadcast frequencies. What should we do with them?
A. Give them to the media companies, in proportion to their current share of market. Let them decide what to do with them; after all, they are the experts.
B. Give them to the media companies, in proportion to their current share of market. Let them decide what to do with them; after all, they created them!
C. Auction off the frequencies to the highest bidders, forever, with no further strings attached; they can hold onto them without using them if they choose, for as long as they like, or simply put a test pattern on the air, or whatever they prefer. When demand rises and they believe they can make a high enough profit, they are welcome to sell them to the highest bidder, forever, and use the profits to enrich their deserving and smart shareholders.
D. Auction off to the highest bidder the licenses, for five year terms, with the auction to be repeated every five years, or the price to be set as a function of the size, wealth, income of the available audience. Use the revenue to reduce taxes on productive activity.
E. Auction off to the highest bidder the licenses, for five year terms, with the auction to be repeated every five years, or the price to be set as a function of the size, wealth, income of the available audience. Use the revenue to provide a dividend to every American, something like the Alaska Permanent Fund.
F. Your suggestions?
7. The corporations which pollute the world's air through emissions from their US-based factories and refineries and electricity-generating plants will be asked to pay for carbon credits to offset the pollution they create. Where should the revenue go?
A. Back to the corporations and their shareholders
B. To the American people as a Citizen's Dividend (similar to the Alaska Permanent Fund)
C. To American workers and retirees in the form of revenue to support Social Security
D. To the American people as a reduction in federal income taxes, starting with the highest income people who pay the highest income taxes
E. Same, starting with the lowest-income workers who have the least left from their wages
F. To corporate shareholders in the form of a reduction on their dividend taxes
G. your suggestions?
6. We say that the airwaves [over the US, that is] belong to the American people. Who should get the economic rent on their value?
A. The American people, in the form of a Citizen's Dividend (similar to the Alaska Permanent Fund)
B. The American people, in the form of a reduction in payroll withholding for Social Security
C. Those who pay federal income taxes (about 75% of us pay more in withholding for social insurance than we do in federal income taxes) in the form of a reduction of federal income tax rates -- starting from the bottom? starting from the top?
D. The corporations which pay corporate income taxes, in the form of a reduction on corporate income taxes
E. The shareholders of the media companies, small, medium and large: let them keep that rent, or just tax it as we do now, as a corporate income tax, and then light taxes on dividends and capital gains
F. The management of the various media companies, to the extent that they can negotiate good contracts for themselves.
G. The lobbyists for the media companies, to the extent that they are successful in preserving the privileges we currently grant the media companies, their management and shareholders
H. Your suggestion?
5. Water is running short in some parts of the US. How should we effectively share the water?
A. Let those who own it now continue to treat it as their private treasure. After all, they've planned on it, and we can't interfere with their plans, can we?
B. Recognize that every one of us needs water, and charge everyone for the water they use, based on the local supply and demand situation. Where water is scarce, all will pay high prices for the water they use; where the supply is generous, the price will be lower.
C. Treat water as our common treasure. Charge for it. Let the revenues flow into public coffers, not private or corporate pockets.
D. Your suggestions?
Posted on February 05, 2012 at 09:19 AM in all benefits go to landholder , capital gains are land gains, commons, ecosystem services, incentive taxation, incentives, land includes, Natural Public Revenue, natural resource revenues, pay for what you take, the land questions | Permalink | Comments (0)
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4. Oil and natural gas are pumped from the Gulf of Mexico and along our ocean coasts by corporations large and small. (Mason Gaffney points out that Harry Truman increased the size of the US by more than any other president by expanding the coastal zone, but that we collect little revenue from the natural resources drawn therefrom.) How much should the oil companies pay the federal government?
B. Just the amount negotiated in 1996. We can't change the rules just because the price of these commodities has risen rapidly.
C. A fixed and trivial percentage of the value of the oil.
D. A rising percentage of the value of the oil and gas, related to the retail prices of the products.
E. An amount that is based both on a percentage of the value of the oil and gas and on the amount of carbon produced by burning the finished product.
F. Your suggestions?
3. Oil and natural gas are pumped from federal lands by corporations large and small. How much should the oil companies pay the federal government?
B. Just the amount negotiated in 1996. We can't change the rules just because the price of these commodities has risen rapidly.
C. A fixed and trivial percentage of the value of the oil.
D. A rising percentage of the value of the oil and gas, related to the retail prices of the products.
E. An amount that is based both on a percentage of the value of the oil and gas and on the amount of carbon produced by burning the finished product.
F. An amount that relates to the medium- to long-term scarcity of these natural resources, so that we have incentives to leave more for future generations, who may develop technologies to use them more efficiently or extract them with less harm to the environment.
G. Your suggestions?
2. Some of our busiest airports do not have sufficient runways, landing slots at preferred times, gates, tarmac, etc., to meet demand. Flights end up circling and arriving late, producing cascading delays for passengers across the country. Many airports are constrained by surrounding communities not to expand their acreage. It takes time to build a new airport further from the city, and is expensive to add the transportation infrastructure to serve it. How should scarce resources at existing busy airports be allocated?
a. The airlines who currently own a gate ought to be able to sell it off to the highest bidder, or rent it for whatever they can charge their competitor.
b. Landing rights ought to be sold once and for all to the highest bidder. When they no longer want them, or can no longer use them profitably, those rights should be theirs to auction off at whatever price they can get, even if it is double or triple -- or more -- what they initially paid.
c. Leases for landing rights at peak hours should be auctioned off, with a term of a few years, and the revenue should first support airport costs and air-traffic control expenses. Should there be an excess, it should not be returned to the leaseholders: it belongs to the community at large and should go into general revenue.
d. Your suggestion?
see a related post, below.
Today I'm starting a new series of posts entitled "The Land Questions." Eventually I'll accumulate them onto a website of their own, but before I do that, I think they could be improved. There's a tag at left if you'd like to look at just these posts.
I welcome your suggestions, rephrasings, additions, edits, etc, via the "comments" opportunity.
1. The skies are getting crowded with flights. Small planes and commercial jetliners take up large amounts of sky, and require equal attention from air traffic controllers. How should we allocate scarce airspace, particularly at peak travel hours?
Delays are a fact of life at New York’s three main airports.
Each day, thousands of passengers are stuck on planes at the airports — Kennedy, La Guardia and Newark Liberty International — sitting in line behind a dozen other planes waiting to take off or circling overhead until they get clearance to land.
And the delays persist, despite changes in procedures and schedules by the airlines, airports and Federal Aviation Administration over the years. (In the latest move, the F.A.A. last fall created new flight paths out of Kennedy to speed up departures.) Even a significant drop in the number of flights since the economy slowed has not helped much. Flight delays last year in New York were as bad as they were five years ago.
In the first half of 2011, the region’s airspace — defined as the big three airports, plus Teterboro Airport in New Jersey, which caters to corporate jets, and Philadelphia International Airport — handled 12 percent of all domestic flights but accounted for nearly half of all delays in the nation. In the same period in 2005, they represented just a third of all delays, according to a report by the Government Accountability Office.
These delays ripple across the country. A third of all delays around the nation each year are caused, in some way, by the New York airports, according to the F.A.A. Or, as Paul McGraw, an operations expert with Airlines for America, the industry trade group, put it, “When New York sneezes, the rest of the national airspace catches a cold.”
This sermon identifies a/the source of something I posted a few days ago. It also fits in well with the "Earth for All" Calendar.
Man and Mother Earth
Albert H. Jenkins
[A sermon delivered at the Davies Memorial Unitarian Church, Washington, D.C., 7 October, 1962. Published by the Robert Schalkenbach Foundation]
When Khrushchev was here several years ago, he repeatedly said that in the United States "capitalism has replaced feudalism." Our newspapers and most of us accepted that statement as a self-evident fact, but I believe Khrushchev was mistaken.
I believe feudalism persists here in the midst of capitalism, and from this, I believe there flows a moral and economic wrong so enormous and fundamental that it is poisoning our human relations and destroying our civilization as it has destroyed other great civilizations in the past.
Of course, we do not have the outward and visible signs of ancient feudalism -- publicly recognized categories of kings, nobles and serfs. But though feudalism was a social system, it was basically an economic system also. It was the power of some men to command the labor of others through the ownership of land -- the Mother Earth of us all.
Does that power still exist today, right here in our own country as well as in others? If so, to what extent and with what results? Before we attempt to answer these questions, let us be good scientists and get our definitions straight. Let us get our mental feet on the ground and start from there.
For that purpose, we have the simple visual aids you see before you. The first is a global map of the earth. It represents what the economists call LAND.
That term includes not only the earth's surface, which is what most people think of as land, but also all of Mother Earth's other natural resources -- oil, natural gas, ores and minerals, water, and even the air we breathe. Everything on which and from which man lives and without which he cannot live, is LAND.
You will recognize the second visual aid as Rodin's "Thinker." However, I had our cartoonist put a suit of blue overalls on him. That is because he represents man as a worker of hand or of brain, or both. In short, he is what economists call LABOR.
LABOR, working on land - the surface of the earth and its natural resources - produces what is called CAPITAL. This term is represented by the railroad locomotive in the third visual aid.
CAPITAL, in the economic and real sense, is not money, nor stocks, nor bonds. It is factories, machines, railroads, trucks, ships -- anything which, after it has been produced from land, is used for further production, transportation or distribution of either capital goods or consumer goods.
Of this economic triumvirate -- land, labor and capital -- the most fundamental is LAND, because it is the source of everything else. Yet, nowadays, the land factor is almost forgotten in our economic controversies. That is understandable for several reasons.
First, in our complicated civilization, most of us are out of touch with land. It is buried under buildings and pavements in our cities. And everything we buy from outside our cities comes to us so many steps removed from the land that we seldom think of the source -- our Mother Earth.
Second, the most continuous and conspicuous economic controversies today are between labor and what labor thinks of as "capital" --the owners and managers of industry and business. Workers are in direct contact with employers in their daily lives, and winning wage raises and fringe benefits is the "bread and butter" of labor leaders.
Likewise, employers are constantly pressed by "labor problems," which concern them obviously and directly.
So it is natural that workers and employers seldom stop to think that the economic share they are quarreling about is what is left after landowners and land speculators have taken their portion, which comes first because they control the source of all things, and labor and capital can produce only by buying their permission to use the land.
That brings us to our fourth and last visual aid, this sketch. The water pouring into the bucket represents the hard-earned fruits of labor and capital working together in all stages of production. The water going out through the hole in the side of the bucket represents the unearned tribute taken by the modern feudal landlords. They get their share first. What is left in the bottom of the bucket is what labor and capital must divide between them. They quarrel over it, not realizing that both are being robbed by a third party who contributes nothing to production. Obviously, when someone gets something for nothing, someone else gets nothing for something.
Now, as our next step toward answering the question whether feudalism persists in the midst of capitalism, note this well, for it is the first of two key points:
As more people are born in or move into a community, the price of the land in and around that community goes up because more people need it to live on, to buy for houses, factories, shops and other purposes. The community itself must establish streets, schools, parks, etc.
Federal and local tax money spent to put up a school, a post office, a government defense plant, or to establish or maintain a police or fire department, boosts the value of all nearby land. The man who spends his money to build a house raises the price of the vacant lot next to it. Landowners and speculators reap an unearned and increasing harvest from these activities.
In effect, they command the labor of other men through their ownership of land, and that is the essence of economic feudalism. The same is true of men who charge other men ever-increasing prices for using the oil, gas, minerals and other natural resources which, by moral and economic right, over and above the cost of extraction, should be the free gifts of Mother Earth.
Now let us bring this down to your own experience. Many of you own a house. You remember its price. Suppose it was $15,000. Little more than a decade ago, in 1950, the price of the lot averaged about 10% of the total cost of the new home. Now the lot cost has doubled to 20%, and is still rising.
At the 20% figure, the buyer of a $15,000 house pays $3,000 for the bare land on which it was built. How long does it take you to earn $3,000, or to save it out of your earnings? For that length of time, if you were that home buyer, you were the feudal serf of the man who sold you the land on which your house was built. In return for your $3,000, he gave you nothing but his permission to use land which he did not create, and the money value of which he did not create. He commanded, and if you have not yet paid off the mortgage, is still commanding, your labor for the time it takes your hard-earned savings to add up to $3,000.
And that's not all. That $3,000 was added to your mortgage. If it's a long-term mortgage, the interest you will have to pay will about double the final land cost to you. Therefore, as a result of the persistence of economic feudalism in this country, the former landowner and the mortgage moneylender are commanding your labor for as many months as it takes you to earn and save $6,000, If you live in a house as a renter, you pay the land cost, too.
Here's another example, from my own experience. In 1926 the railroad labor newspaper I work for bought a piece of land on Capitol Hill, right across Independence Avenue from the House end of the Congress building. That was an absolutely unique location having many advantages, but this land cost us only $24,000.
About 30 years later, Congress ousted us in order to put up the third House Office Building. We looked around for a site for our new building, and were offered a piece of land below Capita! Hill, across from the Capitol Plaza, and comparatively distant from the center of things and from the Senate and House office buildings.
That location is not unique in the way that our original one was and is far inferior in all respects. But the price asked was $1.5 million. That was too much for us, but later this same land was bought by the Carpenters' Union and we may suppose that they paid at least what was asked of us.
That huge sum will come out of the dues paid by the union's members. Land costs always come out of someone.
For our new building we finally bought a plot at the corner of First and D Streets, Northwest, still more distant from Congress and still more inferior to our original land, and very little larger. Yet the price was nearly $400,000.
The difference between that price and the $24,000 we paid 30 years before has to be made up by raising the price of our paper to its subscribers.
Now let us look at an example which concerns everyone of us in this room this morning. You know how hard we are trying to pay off the mortgage on the site we are buying for our church. A few years ago we would have faced no such obstacle because the price of suitable land would have been only a few hundred dollars. Ye we had to pay $16,000 for it and were lucky to get it at that.
Why? Because the owners and speculators in land for mile around Washington are holding it for unearned profits and in that way are creating an artificial scarcity of available land. They know that the population of this area is growing and that the need for land for useful purpose is increasing. So, the longer they hold out, the higher will be the prices and profits they hope to get.
What can, and what should be done to end this deadly hang-over of economic feudalism? Most liberals and labor spokesmen, unfortunately, offer no real remedy, only temporary palliatives which make the patient worse in the long run.
What they propose, and often get, are public subsidies and government guarantees to give the economic system a "shot in the arm" when it is being slowed down by rising land costs. Such artificial stimulation boosts land prices still higher, requires ever-increasing doses, and merely postpones the day of reckoning.
The government housing programs, particularly those for slum clearance and urban redevelopment, are good examples of how land profiteers are subsidized with public money supplied by the taxpayers who will take the losses if land speculators and mortgage-moneylenders run wild and cause a crash.
As a matter of fact, more and more urban redevelopment projects are being promoted by smart real estate operators. A public body buys the land at a high price, pays the heavy expense of clearing off the old buildings, then sells the land to a private developer at a fraction of the price the public body paid for it.
There just isn't enough public money to go very far in that kind of program, and slums are spreading faster than they are being cleared. Such a system has not worked and will not work.
Right here in Washington, the Washington Post recently reported that "Nathan Bernstein and his wife became the first individuals to get a piece of the vast southwest redevelopment project." They bought about three-fifths of an acre for $139,000. That's at the rate of more than $230,000 an acre, or $5 a square foot. And, since the report describes Bernstein as a small businessman, it seems obvious he got some of the least costly land in competition with wealthy real estate corporations.
Such huge land costs have two results, among others.
Something different -- a real, fundamental remedy -- is needed. What can it be? Let us approach an answer in this way:
Slum property yields its owners profits of between 20 and 25% -- far more than any other kind of stable investment. That is largely because the more the buildings deteriorate, the lower their value is assessed, and the lower the taxes will be. Thus, the owner is rewarded for being a "slumlord" more ruthless than ancient feudal landlords.
But suppose this slumowner spends some of his money to convert his wretched old buildings into decent dwellings, or tears them down and puts up new ones? Either way he has not only increased the supply of good housing but he has also provided employment for workers in the building trades and in industries which fabricate and transport materials for construction. He has benefited manufacturers, merchants, architects, engineers and other professional men, as well as the economy in general.
Instead of being rewarded, however, this owner who redeveloped his slum property is penalized. The assessor comes around and boosts his valuation and from then on he must pay an annual fine in the form of increased taxes. In effect, he is treated as though he had committed a crime.
This tax system is upside down, according to a school of economic and moral thought fostered by the teachings of Henry George, an American, who long ago wrote a book entitled Progress and Poverty. It aroused controversy in its time, but has produced practical results in some parts of the world, and its teachings are now having a revival in our own country.
Those who agree with Henry George maintain that the man who should be encouraged and rewarded is not the one who lets his slum property run down, but the one who does a favor for everyone by improving his old buildings or tearing them down and putting up better ones.
How would this be done? By taxing the land under the buildings at its true economic value, which is usually much higher than the assessed value, and taking taxes entirely off the buildings or other improvements.
At first that may seem to be a startling thought, perhaps even an unjust one. But remember this, there is a fundamental difference morally and economically between land and buildings. No owner created his land, and its money value was created by the whole community. Is it unjust then for the creators of that value -- the people of the community -- to get the annual return on it in the form of taxes?
In contrast, buildings and all other improvements are man-made. They would not exist unless individuals had invested money and labor in them. When the community taxes them, it is taking something the community did not create.
The purpose of the tax system which Henry George advocated goes far beyond clearing slums by reversing the impact of local and state taxes. Its purpose is no less than to end persistent economic feudalism and its attendant evils. It proposes to do that by making it unprofitable to hold land out of use, or to use it inadequately while waiting for increasing population and public need to boost its selling price.
If landowners and speculators had to pay more taxes on their land, they would sell much more cheaply to people who need land for use. Thus taxes on land values tend to reduce land prices and the cost of living. In that respect, land values are unique. All other kinds of taxes in whole or in part operate to raise prices and living costs.
There is an old and true saying that "the power to tax is the power to destroy." Every dollar of tax destroys something for better or for worse. The question is what do you want to destroy -- the productive activities of labor and capital, or the feudalistic obstruction of men who command the labor of others through landownership and speculative profits?
Federal taxes as well as local taxes are full of favors for landowners and land speculators. Here is just one example:
Earned income pays federal tax rates ranging from 20 to 91%. Unearned profits from land pay only the capital gains tax, which ranges up to 25% at the most. What is more, Uncle Sam gives back to the landowner much of the local real estate taxes he has paid, because such taxes are deductible from taxable income. Thus a wealthy land speculator in the 50% tax bracket, in effect, deducts half his real estate tax from his federal income tax.
More and more people are awakening to the problem of economic feudalism and are seeking its remedy. I only wish I could say that the liberals and the laborites of our country were leading the search.
House & Home, a monthly magazine covering all phases of the home-building industry, is a Luce publication, and as such would generally be considered conservative. But on the land and tax question, House & Home is "radical" in the old American sense of that word, meaning that it goes to the root of things, seeks out and tries to remedy causes.
Through its intimate and practical knowledge of the home-building industry, House & Home became convinced that this industry is being strangled by high and rising land prices, and that the only cure is to tax land values more and houses less. It printed a whole special edition on that subject in August, 1960 and called the land speculator "Public Enemy No. 1."
The Reader's Digest, scarcely a liberal magazine, recently published an excellent boil-down of the House & Home material under the title "Land Speculation and How to Stop It."
Feudal lords, big and little, are exacting more and more billions of tribute from the rest of the people. This will get worse as the population explosion puts heavier and heavier pressure on the land and other natural resources.
Warnings of this came long ago from the classical economists. One of them, David Ricardo, put it this way:
Advancing wealth and productivity bring more people, but they do not bring more land. As a result, those who own the land can command an ever greater return for an increasingly scarce resource. Meanwhile, capital and labor conflict with each other for the rest of the product, and get smaller and smaller shares while the landowners get more and more.
Therefore, Ricardo said, "the natural price of labor is that price which is necessary to enable the laborers … to subsist and perpetuate their race." This came to be known as his "iron law of wages."
Ricardo and other classical economists correctly foresaw that in times and places of rapid economic growth and relative scarcity of workers, wages could rise temporarily. But now the population explosion is on full blast and the industrial revolution, instead of creating more jobs, as it formerly did. is resulting in millions of workers who cannot find jobs even at Ricardo's "subsistence wage."
This economic insecurity will continue and grow worse until the land and tax question is answered, and answered right, for it is the inevitable result of the economic feudalism which has cursed mankind throughout the ages and lingers on in our own country.
Things move fast nowadays, and the time is growing short. Dare we delay too long in solving the biggest and most fundamental of our economic and moral problems -- the problem of Man and his Mother Earth?
Posted on January 09, 2012 at 12:15 PM in cost of living, cui bono?, Earth for All, Henry George, incentive taxation, incentives, land includes, land speculation, land value created by community, land value taxation, land, labor and capital, population, population growth, private property in land, Progress and Poverty, the land question, wages, wages driven down | Permalink | Comments (0)
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Paul Krugman's column in the NYT Sunday was entitled "Things to Tax," and I thought it was a bit broad-brush.
"Let me suggest two areas in which it would make a lot of sense to raise taxes in earnest, not just return them to pre-Bush levels: taxes on very high incomes and taxes on financial transactions."
I don't disagree with either of those as a starting point, but neither goes to the root of the problem, which I believe to be the sorts of privileges we have given out, or somebody's ancestors put in place and we've not even thought about questioning. They are so familiar to us that we don't question them any more than we think about breathing. So (switching metaphors) we find ourselves barking loudly up the wrong tree -- while the critters in the other trees are smiling broadly!
The best answers I know to which tree we ought to be barking up come from the writings of Henry George. Several speeches were what I was first inspired by:
Whether or not your own orientation is theological, I think you might appreciate these.
We ought not to be taxing indiscriminately. What we tax matters greatly. Some provide Natural Public Revenue -- and we ought to socialize that revenue -- and other possible objects of taxation ought not to be taxed at all -- privatize them!
Which rich should we tax?
- Should we tax the ones who have bought or inherited or otherwise acquired our very choicest land -- that in our biggest cities, well-served by taxpayer-provided infrastructure and services?
- Should we tax the ones who, in effect, own our most valuable natural resources, or have access to resources we send our military to protect on our behalf?
- Should we tax those who benefit from monopolies of various kinds, such as owning our water companies, our electric utilities, our cable-tv companies, or monopolies of their own creation?
- Should we tax those who benefit from privileges of various kinds, such as the possession of our airwaves, landing/takeoff rights at busy constrained airports (think LGA at rush hour)?
- Should we tax those who benefit by taking some fraction of every financial transaction, even if that transaction doesn't create additional value for the economy as a whole?
- Should we tax those who benefit from the activity or inactivity of the FIRE sector, which Joe Stigitz says is creaming 40% of the profits made by the productive sectors of the economy?
- Or should we just tax all the high-income people, without going to the root of the privileges which produce undeserved wealth for some at the expense of the rest of us.
The answers to these questions matter.
Go to the root. Understand what is privilege, and what is an actual contribution to the economy. Understand what is someone's free lunch, paid for by the labor of others. Understand who reaps what they haven't sown. Correct these things.
An old idea. Look up Henry George's writings from the late 19th century, which kicked off the Progressive movement and still inspire many of us.
Short term, maybe, changing the income tax brackets is appropriate. But it doesn't get at the root of the problem.
Be radical. Go to the root.
For more information, see http://lvtfan.typepad.com/ or http://www.wealthandwant.com/, or look up Henry George's ideas.
As an afterthought, I'll add that you might want to check out Mason Gaffney's website, at http://www.masongaffney.org/; Fred Foldvary's writings, including "The Ultimate Tax Reform," and Walt Rybeck's book, "Re-Solving the Economic Puzzle."
Posted on November 28, 2011 at 02:17 PM in cui bono?, FIRE sector, free lunch, Henry George, incentive taxation, income concentration, land includes, land speculation, monopoly -- not the game, municipal ownership of utilities, natural monopolies, Natural Public Revenue, natural resource revenues, natural resources, Occupy Wall Street's values, political economy, privatization, privilege, public ownership of utilities, reaping what others sow, socializing risk and privatizing profit, special interests, Stiglitz, tax reform, taxation, teach your children well, unburdening the economy, wealth distribution or concentration | Permalink | Comments (0)
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Bryan Kavanagh, in Australia, writes,
The rioting in England is indefensible, but how to understand it?
I’ve mentioned several times throughout these blogs that the rent of land represents community. However, although land and natural resource rent is community-generated, less and less of it has been captured back for public revenue over the last forty years. Thereby, a sense of a community has been lost.
That’s because it has become fashionable to privatise the rent of land and natural resources in the misbegotten belief that ‘user pays’ and increased taxation is preferable to the public capture of publicly created resource rents. It is largely privatisers of our natural resource rents who’ve been able to put about this self-serving idea successfully. And they’ve sold it well to governments.
The cumulative effect of the process over forty years has been to widen the gap between rich and poor. This now vast divide is well documented, but the role of rent has been kept invisible.
Right wing shock jocks consider the private leeching of natural resource rents by private interests is respectable employment and, unable to think through the natural consequences, they’re flabbergasted by London’s street riots.
The rising of the hun in the city is obviously a function of poverty and dispossession. Feeling disenfranchised and disconnected, these predominantly lower class youth exhibit their hate for a system that keeps them down and often unemployed whilst bank CEOs receive their multi-millions. Unlike many of us, the rioters see the game is rigged and their frustration has spilled over into aggression and excess.
Posted on August 09, 2011 at 10:15 PM in all benefits go to landholder , connect the dots, economic rent, fixing the economy, government's role, land includes, land value created by community, make land common property, natural resource revenues, one solution for many problems, popular ignorance of land economics, poverty machine, privatization, privilege, socializing risk and privatizing profit, terrorism, the disenchanted, unemployment and underemployment, wages driven down | Permalink | Comments (0)
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Who benefits? Smartphone Users??? Hah!
Spectrum auctions are a win-win-win? Only if you omit future generations -- even our own future selves, if we expect to be alive in, say, 15 years -- from the calculation.
"Congressional budget officials estimate those auctions would raise a total of $24.5 billion over 10 years. Reid's plan envisions $13.1 billion going to the Treasury Department to help narrow the federal deficit. The remainder would largely go to compensate television broadcasters that give up airwaves, cover the expenses of broadcasters and government agencies that move to different parts of the spectrum and fund the construction of the public safety wireless network."
Compensate television broadcasters for giving up their privilege of owning a portion of OUR airwaves? Should we have compensated Captain Kidd when piracy was stopped?
I don't know whether Chicago has yet figured out that selling its parking meters wasn't a particulary smart thing to do. But we need to study this, and recognize that we ought not to be selling off our public assets. LEASE THEM, and REPEAT in a decade or two. NATURAL PUBLIC REVENUE, not just once, but forever!
By JOELLE TESSLER 07/28/11 06:01 PM ET
WASHINGTON -- The debt ceiling battle could produce an unlikely winner: smartphone users.
Senate Majority Leader Harry Reid's current plan would direct the Federal Communications Commission to auction off highly valuable radio spectrum to wireless carriers desperate for more airwaves. Companies such as AT&T and T-Mobile USA say they need more capacity to keep up as their customers increasingly use iPhones, tablets and other portable devices to handle mobile applications, online video and other bandwidth-hungry services.
The plan could generate critical revenue for a government spending beyond its means. Congressional budget officials estimate the auctions would raise $13.1 billion for deficit reduction.
Reid's proposal would also deliver a big victory to public safety officials: It would set aside airwaves and money for the construction of a nationwide wireless broadband network that would let police officers, firefighters and emergency medical workers communicate with each other across agencies and jurisdictions.
"Spectrum auctions are a win-win-win," said Tim Doyle, a spokesman for the Consumers Electronics Association.
But the proposal still faces significant hurdles. For one thing, a competing debt ceiling plan from House Speaker John Boehner, which will be voted on Thursday, contains nothing on wireless spectrum auctions. Boehner's focus is on spending cuts, not finding new sources of revenue. What's more, Reid's proposal has run into major opposition from television broadcasters, which are under pressure to give up spectrum that would be sold to wireless carriers.
The haggling over wireless spectrum auctions comes as Congress rushes to try to agree on a plan to stave off an unprecedented U.S. default on its debt, which could have catastrophic consequences for the global economy. The Treasury Department has warned that the government will run out of money to pay its bills after Aug. 2 if Congress does not raise the debt ceiling. Reid and Boehner are pushing competing proposals to lift the debt limit and slash spending.
No matter how the current fight plays out, many in Washington see spectrum auctions as an attractive way to chip away at the federal deficit.
Stifel Nicolaus analyst David Kaut, for one, says spectrum auction legislation has a good shot of passage in Congress – whether it is part of the current debt ceiling package, a deficit reduction measure down the road or even a stand-alone bill.
"You have wireless pressures, budget pressures and public safety pressures," Kaut said. "The forces are aligned."
Reid's proposal would give the FCC authority to auction off airwaves voluntarily relinquished by government agencies such as the Pentagon and television broadcasters with extra spectrum. It would allow broadcasters to share in the auction proceeds.
Congressional budget officials estimate those auctions would raise a total of $24.5 billion over 10 years. Reid's plan envisions $13.1 billion going to the Treasury Department to help narrow the federal deficit. The remainder would largely go to compensate television broadcasters that give up airwaves, cover the expenses of broadcasters and government agencies that move to different parts of the spectrum and fund the construction of the public safety wireless network.
Reid's plan, based largely on a Senate Commerce Committee bill, would also dedicate a highly contested piece of airwaves to that network. Such an "interoperable" network was a key recommendation of the 9/11 Commission, and is becoming an urgent priority for lawmakers as the 10-year anniversary of the 2001 terrorist attacks approaches. The shortcomings of existing networks became apparent after the 9/11 attacks and Hurricane Katrina, when emergency workers could not talk to one another because they were using incompatible – and sometimes antiquated – systems.
At this point, perhaps the biggest hurdle facing any spectrum auction proposal is opposition from television broadcasters reluctant to give up their existing airwaves. Dennis Wharton, an official with the National Association of Broadcasters, noted that many broadcasters fear being moved to different channels that would reach fewer viewers.
He added that many broadcasters want to use their existing airwaves to deliver television signals to mobile devices and to "multicast" more than one television signal at a time. Broadcasters worry that they could be moved to a part of the electromagnetic spectrum that is less conducive to such broadcasts.
Wharton said that while the proposals in Congress are intended to be voluntary for broadcasters, those that want to hang onto their airwaves are concerned that they could face user fees and other government sanctions intended to force them to give up their spectrum anyway.
Ultimately, Wharton said, it will be viewers who suffer in the face of "incredibly shrinking free and local television."
Posted on August 02, 2011 at 04:57 PM in commons, cui bono?, economic rent, government's role, land includes, land rent, land value created by community, make land common property, Natural Public Revenue, natural resource revenues, parking, popular ignorance of land economics, private property in land, privatization, rich people's useful idiots, socializing risk and privatizing profit, user fees, wealth distribution or concentration | Permalink | Comments (0)
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Housing Choice - Help Today’s Owners or Future Buyers - NYTimes.com.
Here are the opening paragraphs:
The unexpectedly deep plunge in home sales this summer is likely to force the Obama administration to choose between future homeowners and current ones, a predicament officials had been eager to avoid.
Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market, using tax credits, mortgage modification programs, low interest rates, government-backed loans and other assistance intended to keep values up and delinquent borrowers out of foreclosure. The goal was to stabilize the market until a resurgent economy created new households that demanded places to live.
As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.
It seems as if the suggestion is that we ought to let the housing market crash, and then hope that we will pick up again where we left off, and experience this boom-bust cycle again.
There doesn't seem to be much discussion of the factors that produce the boom-bust cycle, or of the notion that we can actually prevent the next boom-bust cycle through wise policy.
What policy? A tax shift. Shift taxes off wages (starting at the bottom); off sales (starting with essential items); off buildings of all kinds and equipment. What's left to tax?
That which we should have been taxing all along: the value of land. Henry George (b. Philadelphia, 1839; died NYC, 1897) introduced the idea in his 1879 book, Progress and Poverty, which remains 130 years later the best selling book ever on political economy. It sold over 6 million copies by 1900, and George, Thomas Edison and Mark Twain were perhaps the three best-known public figures of their day. George's "remedy" came to be known as the "Single Tax." It was a recipe for small government -- right-sized government, funded by the only legitimate revenue source: value created by nature and by the community. Land, to the classical economists -- Adam Smith, David Ricardo, John Stuart Mill, Henry George, etc. -- was distinctly different from capital. (The neoclassical economists -- and those who only know their sort of economics -- can't seem to see the difference, and conflate them, leading to all sorts of stupid -- and unnecessary -- messes!) Land includes not just the value of locations (on earth, in water, in space) but also electromagnetic spectrum, water rights, non-renewable natural resource values, pollution "rights," and lots of other like things. (Mason Gaffney provides some excellent lists.) Those locations include urban land, land made valuable by favorable climate, water supply, access to ports, to transportation systems, to desirable views, to vibrant cities with jobs, cultural amenities, educational opportunities; geosynchronous orbits; congestion charges; parking privileges, etc. Those of us who claim title to a piece of land ought to be required to compensate the community in proportion to the value of that land, for the right to exclude others from it. That compensation should be paid month in and month out, to the community.
Our current system is perverse. We must purchase the rights to the land from the previous holder at whatever price the market will bear, or what the seller's circumstances require him to accept. Rich landholders can hold out for higher asking prices; poorer ones may be forced to accept lower prices. Few of us enter the market with more than a few percent of the asking price in hand; we mortgage our future earnings in order to pay the seller's asking price.
In most coastal cities, that price is predominately for the location, not for the building itself. A May, 2006, Federal Reserve Board study found that land represented, on average, 51% of the value of single family housing in the top 46 metro markets in 2004; in the San Francisco metro, land represented 88.5% of the value, and in no metro in California did it represent less than 62%. Boston metro was around 75%, NYC metro was about 70% (I'm doing this from memory), Oklahoma City about 20%; Buffalo about 28%. Extrapolating from some of their tables, I found that the average value of a single-family structure across the 46 metros was about $112,000, with a range from perhaps $88,000 in the lowest metro to a high of perhaps $130,000 in the highest. The range of average land values across the 46 metros, though, was much wider, from perhaps $25,000 to $750,000!
Suppose we did let the housing market crash, and then shifted over to George's proposal, collecting our tax revenue first from land rent, and only after we'd collected the lion's share of the land rent, tapping other less desirable revenue sources such as wages, sales and buildings. What would happen?
Back to the title of the article: "Grim Housing Choice: Help Today's Owners or Future Buyers?" Maybe economics doesn't HAVE to be the dismal science. Maybe our choices are not so grim after all. Maybe we can put ourselves on a firmer footing, without the boom-bust cycles we've been experiencing so regularly. (See Mason Gaffney's recent book, After the Crash: Designing a Depression-free Economy. And while you're on that site, you might read "The Great Crash of 2008" and "How to Thaw Credit Now and Forever.") Maybe we can leave our children a society in which all can prosper.
Not too much to ask for, is it?
Or shall we leave them a society in which 10% of us are receiving 48% of the income, and 10% of us possessing 71.5% of the net worth.
Which side are YOU on?
Posted on September 05, 2010 at 10:52 PM in a wedge driven through society, boom-bust cycles, broadcast spectrum, bubble, buildings depreciate, capital gains are land gains, classical economists, cost of living, economic justice, economic rent, financing education, financing infrastructure, financing services, FIRE sector, fixing the economy, Henry George, housing affordability, income concentration, infrastructure, land appreciates buildings depreciate, land includes, land share of real estate value, land speculation, land value taxation, land, labor and capital, location, location, location, Natural Public Revenue, neoclassical economists, one solution for many problems, parking, paying twice, popular ignorance of land economics, privatization, property tax, public spending, real estate bubble, reaping what others sow, sprawl, tax reform, transportation, unburdening the economy, unemployment and underemployment, urban land value, wages, wealth distribution or concentration | Permalink | Comments (0)
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Where have all the economic gains gone? Mostly to the top. The economists Emmanuel Saez and Thomas Piketty examined tax returns from 1913 to 2008. They discovered an interesting pattern. In the late 1970s, the richest 1 percent of American families took in about 9 percent of the nation’s total income; by 2007, the top 1 percent took in 23.5 percent of total income.
It’s no coincidence that the last time income was this concentrated was in 1928. I do not mean to suggest that such astonishing consolidations of income at the top directly cause sharp economic declines. The connection is more subtle.
The rich spend a much smaller proportion of their incomes than the rest of us. So when they get a disproportionate share of total income, the economy is robbed of the demand it needs to keep growing and creating jobs.
What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they send them anywhere around the globe where they’ll summon the highest returns — sometimes that’s here, but often it’s the Cayman Islands, China or elsewhere. The rich also put their money into assets most likely to attract other big investors (commodities, stocks, dot-coms or real estate), which can become wildly inflated as a result.
Meanwhile, as the economy grows, the vast majority in the middle naturally want to live better. Their consequent spending fuels continued growth and creates enough jobs for almost everyone, at least for a time. But because this situation can’t be sustained, at some point — 1929 and 2008 offer ready examples — the bill comes due.
This time around, policymakers had knowledge their counterparts didn’t have in 1929; they knew they could avoid immediate financial calamity by flooding the economy with money. But, paradoxically, averting another Great Depression-like calamity removed political pressure for more fundamental reform. We’re left instead with a long and seemingly endless Great Jobs Recession.
THE Great Depression and its aftermath demonstrate that there is only one way back to full recovery: through more widely shared prosperity.
I think Robert Reich sees part of the problem, but he doesn't see the solution. How do we achieve more widely shared prosperity? By a variation on Alaska's theme. In Alaska, a significant share of the value of the state's natural resources is used to fund state government, and another significant share is placed each year into the Alaska Permanent Fund, which is invested in a broadly diversified portfolio and pays an annual dividend of $1000 to $2000 to every permanent resident of Alaska, of all ages. [See http://www.nytimes.com/2010/09/04/us/politics/04alaska.html for an article mentioning this, and the Alaska Permanent Fund link, at the left of this page.] Alaska has it half right: they collect a decent share of the value of the natural resources, but they don't tax their land value much.
How do we share the prosperity beyond the top 10%? By shifting our incentives so that those who currently grow wealthy in their sleep by collecting economic rent find themselves sharing that rent with the rest of us. Untax wages, starting with incomes under the median. Untax sales. Untax buildings. Tax land value. Tax the value of those things which the classical economists would have recognized as land -- water rights, "rights" to pollute, airport landing rights at congested airports, geosynchronous orbits (which prevent satellites from bumping into each other), electromagnetic spectrum (those airwaves which most people would say "belong to the American people" but which we have permitted corporations -- public and private -- to privatize), natural resources such as oil, natural gas, copper, coal, lithium, etc.. All these things are going into corporate portfolios (here and abroad -- and some of those corporations are families in power, despite attempts at nation-building), week in and week out, and their value accrues to the shareholders of the corporations. Stock ownership is quite concentrated, and these benefits flow into the pockets of a relative few, who, as Reich rightly points out, may or may not spend or invest in America's products. When they do invest, they often acquire our best land and resources, buying thereby the labor of thousands of Americans. When an acre in Manhattan can be worth $400 million, the seller of that land didn't make it valuable. WE did! So why should an individual, or a corporation, or a trust, or a university, or a pension fund -- or any private entity -- get to pocket that value as if they did? (The kindest thing I can say is that we have a bad habit! Something like chattel slavery -- and look at how long it took us to end that.)
Pocketing that value has two sorts of effects: when they sell, they pocket that so-called "capital" gain. It isn't capital! It is land value! Capital depreciates; what rises in value is land, and it rises for reasons which have nothing at all to do with the "fellow" who owns it.
But even when they buy and hold, there are important effects of permitting that privatization. The rich don't need to put the land to its highest and best use, because they can get by with something less while they wait for the community to cause it to grow. (See The Taxpayer at 72nd and Madison. Notice all the surface parking lots in Manhattan, Philadelphia, Hartford and many other cities. See the 4.3 acre "hole in the ground" in Stamford, CT, right near the city's 100% location, vacant since the early 1980s.) They're patient! They can afford to be. The top 10% of us hold 71.5% of the chips, according to the 2007 Survey of Consumer Finances.) Not using the land well reduces the supply of housing close to the center of things (adding to sprawl) and/or of jobs (which we say we want) and contributes to a wide range of our most serious social, economic, environmental and justice problems.
If we collected more of the annual rental value of our urban land, the holders of that land would turn into active users or sell it to someone who would put it to good use. Good use creates jobs, and homes and other things that the market wants. But when the market can't afford them, it does without. People are priced out of housing in the places they'd prefer to live. They lack jobs or are underemployed, and the rich keep getting richer.
Reich advocates extending the EITC, exempting the first $20,000 of wages from payroll taxes, improving and extending early childhood education, making public universities free in return for 10% of the first 10 years of full-time earnings, creating "earnings insurance." He concludes,
Policies that generate more widely shared prosperity lead to stronger and more sustainable economic growth — and that’s good for everyone. The rich are better off with a smaller percentage of a fast-growing economy than a larger share of an economy that’s barely moving. That’s the Labor Day lesson we learned decades ago; until we remember it again, we’ll be stuck in the Great Recession.
Well, 130 years ago, Henry George spoke to some of the kinds of measures that have been proposed over the years for reducing poverty and promoting widely shared prosperity. See "Part VI -- The Remedy" and particularly "Ineffective Remedies" and "The True Remedy"
"Ineffective Remedies" begins,
OUR CONCLUSIONS point to a solution. It is so radical that it will not be considered if we believe less drastic measures might work. Yet it is so simple that its effectiveness will be discounted until more elaborate measures are evaluated. Let us review current proposals to relieve social distress. For convenience, we may group them into six categories:
1. More efficient government
2. Better education and work habits
3. Unions or associations
5. Government regulation
6. Redistribution of land
That 10% of us who hold 71.5% of the net worth also received 41.3% of the current income. [Note that these percentages are understated, since the SCF purposely omits the Fortune 400 families. They hold about 1% of the nation's net worth.]
Picketty & Saez provide annual updates on income concentration. For 2008, they report that the top 10% of us (sorted by income, not net worth) received 45.60% of the income when capital gains are excluded and 48.23% of income including capital gains. (For 1988, the corresponding figures are 38.63% and 40.63%; in 1958, 32.11% and 33.56%. Do we notice a trend here? Do we like it or think it a healthy trend?)
We have permitted and supported a structure which funnels wealth and income into relatively few pockets. We have to reform this structure, and we have to recognize that the current beneficiaries are not likely to be keen on reform -- conservatives have a lot to conserve for themselves -- and those who are dependent for their salaries on being popular with those beneficiaries are not likely to be particularly interested in looking at the underpinnings of the structure with an eye to removing some of the ladders (escalators!!) or gentling the chutes.
Those who get to privatize the value of what ought to be common assets grow wealthy in their sleep. Until enough of us understand the mechanism to constitute a majority, we aren't likely to correct it.
It is a bit disheartening to think how many well-regarded economists live in California, the land of Proposition 13, and haven't lifted a finger or opened their mouths to suggest that it is not in the best interests of California's people. Milton Friedman acknowledged many times that the tax on land values was the "least bad" tax -- and didn't have anything to say about Proposition 13, which was the antithesis of what a wise person or society would do with that information. So I guess I shouldn't be surprised that today's California economists, with very few exceptions, aren't all that concerned with the economic wellbeing of ordinary people any more than economists elsewhere are. Or maybe, as my late mother would have expressed it, their educations have simply been neglected. (At which point she would proceed to fill in my newly-identified knowledge gap.) Economists can start with the links in this post, and then explore from there.
Posted on September 05, 2010 at 12:19 PM in a Manhattan acre, a wedge driven through society, absentee ownership, Alaska Permanent Fund, broadcast spectrum, capital gains are land gains, classical economists, common good, commons, cui bono?, economic rent, ending poverty, fixing the economy, government's role, income concentration, land appreciates buildings depreciate, land includes, land speculation, landed gentry, location, location, location, natural resource revenues, natural resources, oil, one solution for many problems, popular ignorance of land economics, poverty machine, privatization, reaping what others sow, socialize, unburdening the economy, unemployment and underemployment, wealth distribution or concentration, windfalls | Permalink | Comments (0)
Tags: Depression, Recession, Robert Reich
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Following on from reports today (Friday) that a ‘major’ discovery of oil in the North Sea, Aberdeen North MSP Brian Adam has renewed Prof. Josef Stiglitz call for an Oil Fund. The Nobel Prize winner and former Chief Economist of the World Bank, said on BBC Scotland’s Newsnight programme on Tuesday (24th August) that the UK had “squandered" it's oil wealth and that it is now "imperative" an oil fund is established to secure the wealth that remains under the North Sea for future generations.
The discovery, made by German firm Wintershall yesterday, of up to 100 million barrels of oil would equate to, at today’s oil prize, to over $7billion. This comes just a few short months since the last major discovery in Scottish waters in June, when up to 300 million barrels were discovered by EnCore Oil.
Commenting, SNP Brian Adam said: “The oil industry has contributed a great deal to Scotland, especially in Aberdeen, and it’s showing no sign of drying up despite the pessimistic view taken by the London Parties in the 70’s, which still continues today.
“Over the course of the summer we have seen two major discoveries in North Sea, plus the GERS report which showed that with independence Scotland would see a budget surplus of over £1 Billion, whilst the UK struggles with a mammoth £50 Billion deficit. Even the most hardened unionist cannot deny that the financial case for independence couldn’t be any stronger.
“On Tuesday, Professor Stiglitz said that the SNP was “absolutely right” on the need for an Oil Fund, the UK Government has ‘squandered’ Scotland’s oil, that current situation is unsustainable and that an Oil Fund was now “imperative”.
“The unionist parties must put aside their petty party politics and start putting the interest of Scotland, and it’s people, first before it’s too late.”
To return to the excerpt from Huxley's "This I Believe" essay -- "To devise a perfect social order is probably beyond our powers, but I believe that it is perfectly possible for us to reduce the number of dangerous temptations to a level far below that which is tolerated at the present time" -- This brings to mind something that has run through my head from time to time, that there is huge individual temptation to support -- actively or passively -- the maintenance of an inequitable system, even one by which one is currently victimized, if one thinks one might be able to join the portion of society which benefits from that structure. "I might win the lottery; therefore I should support measures that preserve the privileges of those with huge wealth!" -- or so the thought pattern goes -- and goodness knows the wealthy like that thought pattern just fine! Particularly those whose fortunes have been made based on privileges like the ownership of land well-served by taxpayer-provided infrastructure, or scarce natural resources, or anything the classical economists would recognize as "land."
Henry George starts with the premise that "man seeks to satisfy his desires with the least effort" and it flows from this that there is certainly a tendency to exploit one's fellow human beings if structures permit one to, even if one doesn't understand the mechanism of that exploitation.
From there, my musing takes me to the thought that in that same prayer, perhaps the one most used by Christians of any prayer, we ask forgiveness for our trespasses and agree to forgive those who trespass against us. I wonder how that phrase must have seemed to people enslaved in the American south (or north).
And then my musing leads me into one of my favorites of Henry George's speeches, "Thy Kingdom Come." A lift:
“Our Father!” “Our Father!” Whose? Not my Father — that is not the prayer. “Our Father” — not the father of any sect, or any class, but the Father of all humanity. The All-Father, the equal Father, the loving Father. He it is we ask to bring the kingdom. Aye, we ask it with our lips! We call Him “Our Father,” the All, the Universal Father, when we kneel down to pray to Him.
But that He is the All-Father — that He is all people’s Father — we deny by our institutions. The All-Father who made the world, the All-Father who created us in His image, and put us upon the earth to draw subsistence from its bosom; to find in the earth all the materials that satisfy our wants, waiting only to be worked up by our labor! If He is the All-Father, then are not all human beings, all children of the Creator, equally entitled to the use of His bounty? And, yet, our laws say that this God’s earth is not here for the use of all His children, but only for the use of a privileged few!
There's that word again: privilege.
Back to George:
Why, consider: “Give us this day our daily bread.” I stopped in a hotel last week — a hydropathic establishment. A hundred or more guests sat down to table together. Before they ate anything, a man stood up, and, thanking God, asked Him to make us all grateful for His bounty. And it is so at every mealtime — such an acknowledgement is made over well-filled boards. What do we mean by it?
If Adam, when he got out of Eden, had sat down and commenced to pray, he might have prayed till this time without getting anything to eat unless he went to work for it. Yet food is God’s bounty. He does not bring meat and vegetables all prepared. What He gives are the opportunities of producing these things — of bringing them forth by labor. His mandate is — it is written in the Holy Word, it is graven on every fact in nature — that by labor we shall bring forth these things. Nature gives to labor and to nothing else.
What God gives are the natural elements that are indispensable to labor. He gives them, not to one, not to some, not to one generation, but to all. They are His gifts, His bounty to the whole human race. And yet in all our civilised countries what do we see? That a few people have appropriated these bounties, claiming them as theirs alone, while the great majority have no legal right to apply their labor to the reservoirs of Nature and draw from the Creator’s bounty.
Thus it happens that all over the civilized world that class that is called peculiarly ‘the laboring class’ is the poor class, and that people who do no labor, who pride themselves on never having done honest labor, and on being descended from fathers and grandfathers who never did a stroke of honest labor in their lives, revel in a superabundance of the things that labor brings forth.
and, skipping ahead,
Nothing is clearer than that if we are all children of the universal Father, we are all entitled to the use of His bounty. No one dare deny that proposition. But the people who set their faces against its carrying out say, virtually: “Oh, yes! that is true; but it is impracticable to carry it into effect!” Just think of what this means. This is God’s world, and yet such people say that it is a world in which God’s justice, God’s will, cannot be carried into effect. What a monstrous absurdity, what a monstrous blasphemy!
If the loving God does reign, if His laws are the laws not merely of the physical, but of the moral universe, there must be a way of carrying His will into effect, there must be a way of doing equal justice to all of His creatures.
There is. The people who deny that there is any practical way of carrying into effect the perception that all human beings are equally children of the Creator shut their eyes to the plain and obvious way. It is, of course, impossible in a civilization like this of ours to divide land up into equal pieces. Such a system might have done in a primitive state of society. We have progressed in civilization beyond such rude devices, but we have not, nor can we, progress beyond God’s providence.
There is a way of securing the equal rights of all, not by dividing land up into equal pieces, but by taking for the use of all that value which attaches to land, not as the result of individual labor upon it, but as the result of the increase in population, and the improvement of society. In that way everyone would be equally interested in the land of one’s native country. Here is the simple way. It is a way that impresses the person who really sees its beauty with a more vivid idea of the beneficence of the providence of the All-Father than, it seems to me, does anything else.
I've wandered a bit, but perhaps in a sense come full circle, back to Huxley's "This I Believe."
Posted on August 15, 2010 at 06:40 PM in a wedge driven through society, better cities, civilization, cui bono?, equality, government's role, Henry George, infrastructure, land includes, natural resource revenues, natural resources, one solution for many problems, poverty machine, poverty's cause, privatization, privilege, slavery, urban land value | Permalink | Comments (0)
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I looked online, and found a copy of the article in PDF format here, which permits me to throw away my hardcopy.
Posted on August 09, 2010 at 12:22 PM in a wedge driven through society, absentee ownership, boom-bust cycles, bubble, buildings depreciate, capital gains are land gains, connect the dots, cost of living, cui bono?, debt, economic rent, FIRE sector, fixing the economy, free lunch, government's role, home equity, housing affordability, income concentration, land appreciates buildings depreciate, land includes, land share of real estate value, land speculation, landed gentry, Landlord's Prayer, landlordism, little people pay taxes, middle class, paycheck to paycheck, popular ignorance of land economics, poverty's cause, privatization, privilege, reaping what others sow, slavery, Stiglitz, tax reform, unburdening the economy, wealth distribution or concentration, windfalls | Permalink | Comments (0)
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This struck me as a short and clear delineation between what is rightly our common treasure and what is rightly the private property of individuals and corporations.
It seems clear what we ought to be taxing -- collecting -- to fund education, to fund infrastructure, to fund all the services which are best funded by all of us. Tax public wealth to the extent that policies give individuals and corporations title to it. Stop taxing private wealth, until we have collected all the public wealth sitting in private pockets. End that free lunch, that windfall.
Posted on August 06, 2010 at 03:28 PM in a wedge driven through society, civilization, commons, cui bono?, economic justice, equality, financing education, financing infrastructure, financing services, fixing the economy, free lunch, government's role, income concentration, land appreciates buildings depreciate, land includes, land speculation, land value taxation, land, labor and capital, landed gentry, natural resource revenues, oil, one solution for many problems, public spending, reaping what others sow, socialize, tax reform, teach your children well, unburdening the economy, wages, wealth distribution or concentration, wealthandwant, windfalls | Permalink | Comments (0)
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Joe Stiglitz made some important observations in a talk on July 26 at the University of Queensland. Here are the first few paragraphs from an article on the University's website:
Inadequate taxes on mining means the people of Australia are being cheated and the economy is getting poorer, a Nobel Prize-winning economist told a crowd of 1400 people at The University of Queensland last night.
Professor Joseph Stiglitz shared his thoughts on the proposed mining tax in response to a question from an audience member during the seventh UQ Centenary oration.
“Natural resources lead to an appreciation of the currency and that leads to an imbalanced economy because it's hard for any other sector to do well, competing with imports or exporting,” Professor Stiglitz said.
“You're selling off your assets and in many cases you're selling them off at a very low price.
“If you are taking resources out of the country and you are not reinvesting those resources in one way or another – a stablisation fund, human capital, infrastructure – then your economy is getting poorer, not richer, and a good accounting framework can show that,” he says.
“When you're taking out natural resources from an economy you ought to have a subtraction from GDP - a firm that held a resource and was selling it off would take off depreciation and that would show up in its books as depreciation.”
A bit of searching returned another account of that same evening:
Professor Stiglitz told a packed UQ Centre that Australia's economic stimulus package was the best designed in the world.
AND he said natural resources - coal, iron ore - should be properly valued at market just like the electromagnetic spectrum.
The government auctions the spectrum to the highest bidders who want to operate mobile phone networks, cable companies, television and radio stations.
Basically, a country - like Australia - will end up poor if doesn't get the best price for its assets - and natural assets are not renewable, once they are gone they are gone. If the proceeds from the sale of these assets are not invested in infrastructure to support and grow other sectors the economy (manufacturing and value-adding, goods creation) then a country and it's people will not prosper - HELLO! HELLO! Drowning not waving.
"It should be subtracted from Gross Domestic Product (GDP)," he said. "You are selling off assets at a very low price if you don't have adequate taxes on mining - you are being cheated," he said to audience applause.
He thinks resources should be auctioned off to the highest bidder - the free market at work. Of course, the mining industry will make all kinds of threats.
To everyone's amusement he joked about how mining companies bamboozled, threatened and bribed governments of developing, fragile nations.
"I assume that's not the case in Australia," he mused.
To prosper, a country needs to set up a stabilization fund (from a mining tax, if not a resources auction) for nation building.
This is what he calls an investment fund for building infrastructure and to grow value-adding industries, maintain education, job creation.
Not only that but the sell-off of natural resources should appear on a country's accounts as a kind of depreciation of assets - otherwise the accounts are not accurate. ...
He made these comments at the end of the oration after he explained the difference between the financial sector and the economy - the economy is not the financial sector.
The financial sector (the banks and regulators) are the culprits behind the global financial crisis which has crippled the global economy. Apparently, moneylenders have been skimming 40 percent of the profits from companies that actually make and produce things. His big point was that this is not really the role of the financial sector. The financial sector's job is to support economic growth, not cripple it.
"Finance is a means to an end," he said. "The lack of balance between the financial sector and the economic sector was actually the real problem in this economic crisis (NOT the real estate bubble)."
The second account concludes with:
And as for Climate Change and the price of carbon and waiting for the rest of the world before we do anything?
Economies are not restructuring because there is no carbon price. The western world worries about the growing and changing consumption patterns of China and India.
Professor Stiglitz doesn't believe the West should begrudge them at all.
It's not consumption that's evil - it's profligacy. WASTE! Now, I wonder who wastes more the West or countries raising people out of poverty?
India and China will follow the wasteful ways of the West if the world fails to set a carbon price and force everyone to consume less to save the planet - the planet will force us to change in the end (*he says).
"If we had agreed to have a price on carbon at Copenhagen that would have been the answer," he said. "It would have provided an increase in global aggregate demand (global economic spending) as firms all over the world needed to retrofit (their business to meet pollution standards)."
So why is the US not hearing this advice? There is a lot here that speaks to issues which Americans would be wise to attend to. Alaska pays for a large portion of its costs by taxing its natural resources, and also provides an annual income to every permanent resident, of any age, from the proceeds of investing oil revenue into a broadly diversified portfolio, through the Alaska Permanent Fund. We have sacrificed many American lives in Iraq, but not produced a situation in which Iraq's oil revenue gets used either to finance infrastructure and government-provided services OR to provide an income to every citizen.
Re-read these excerpts with Iraq in mind, and then thinking of Afghanistan, and then of America.
Postscript: see also Karl Fitzgerald's account of Stiglitz's 7/30 talk.
Posted on July 29, 2010 at 12:25 PM in a wedge driven through society, absentee ownership, Alaska Permanent Fund, broadcast spectrum, commons, connect the dots, cui bono?, economic justice, economic rent, ending poverty, equality, financing education, financing infrastructure, financing services, FIRE sector, free lunch, greenhouse gases, incentives, income concentration, land includes, land value taxation, natural resource revenues, natural resources, pollution, poverty's cause, privilege, Stiglitz, The End of Poverty?, unburdening the economy, wealth distribution or concentration, wealthandwant | Permalink | Comments (0)
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One of my standing Google Alerts brought me to someone's blog post about income concentration in the US, which took me back to my spreadsheets on the subject. My spreadsheets start with Piketty & Saez's annual spreadsheet, and then add in some calculations. Many people who report on their data seem to me to miss the most important columns. What many people report is this breakout:
The data is powerful. Looking at income including capital gains and fractiles defined using that income definition (their Table A3), we find the following income shares for 2007:
But where it gets interesting is to break out the fractiles individually, and then to look at trends. Here are a few selected years from the P&S tables, which start in 1913:
|Income Concentration, selected years 1913-2007
|Source: Piketty and Saez 2007 spreadsheet, Table A3 (includes
capital gains in both income and fractile definitions) and LVTfan calculations
One way to read this is that of the 17.11% of income which the bottom 90% lost between 1970 and 2007, nearly 30% went to the 1-in-10,000 fellow, 26% went to the 9-in-10,000, 21% went to the 40-in-10,000, and the remaining 24% went to the 950-in-10,000. I'm willing to guess (or concede, if you will) that half or more of those 50-in-10,000 in 2007 were not in the top 50-in-10,000 37 years earlier (and that many in the 1970 top 50-in-10,000 were no longer alive in 2007).
Henry George wrote about a wedge driven through society. That was 130 years ago.
So what's your guess for 2008?
Posted on July 18, 2010 at 07:06 PM in a wedge driven through society, cui bono?, democracy, free lunch, income concentration, land includes, landed gentry, little people pay taxes, natural resource revenues, poverty machine, privatization, reaping what others sow, windfalls | Permalink | Comments (0)
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The Tax Foundation recently published a study which apparently seeks to comfort those of us who are concerned about the concentration of income in the US -- what they call "the rising gap between the rich and poor." It suggests that "snapshots of income inequality" should be considered in light of "the mobility of people up and down the income ladder."
The first graph is from Piketty and Saez, and shows the percentage of income going to the top 1% of income recipients. It shows the 1980 share as 10% and the 2007 share approaching 23.5%. The text mentions that the share of income received by the top 10% has risen from 34.6% in 1980 to 49.7% in 2007, also sourced to P&S.
The paper then goes on to show, from IRS data, the extent to which people moved from one income quintile to another between 1999 and 2007:
|Table 1 More than 50 Percent of Taxpayers Moved Out of the Bottom Quintile Between 1999 and 2007|
|2007 Income Quintile/Percentile|
|1999 Income |
|Lowest||Second||Third||Fourth||Fifth||Total||Top 10%||Top 5%||Top 1%|
|Note: Computations by author from the 1999-2007 SOI Individual Tax Panel.|
They cite the good news that only 43% of those in the bottom income quintile in 1999 remained in that quintile in 2007. A similar percentage of those who were in the top 1% in 1999 were again in the top 1% in 2007. Less than 10% of the 1999 Top 1%'ers had fallen out of the top quintile 8 years later. It was far more likely that a top-quintile taxpayer would remain in the top quintile -- 62% -- than anyone else remain where they were.
(Might I be forgiven for wishing that the study showed what percentage of income over the 9 years went to the people in each quantile in 1999, and then again for each quantile in 2007? One might come away with a different understanding.)
The remaining tables/figures show, for three different measures of income, how many taxpayers were "millionaires" for 1, 2, 3, 4, 5, 6, 7, 8 or all 9 years. (The appendix shows that the top 1% began at $339,600 in 1999, and $549,200 in 2007.)
Working with Gross Income, 675,000 tax payers had income over $1,000,000 during at least one year between 1999 and 2007. Of those, half were in that category for just one year, and only 6% -- 38,000 taxpayers -- were in the $1,000,000+ category for all 9 years. This is apparently intended to demonstrate that many more of us have one fabulous year than have consistent reported income at that level, and that this must mean that there is opportunity for all.
Narrowing the definition of income to exclude capital gains, a similar table shows that 431,000 taxpayers fell into the $1,000,000+ category at least once, of whom 175,000 were only once. So 36% of those who were "income millionaires" by the Gross Income definition were not "IM's" when capital gains were excluded.
Excluding (instead) "Business Income," the ever-an-income-millionaire universe drops to 555,000 taxpayers, and 55% of them were one-year-only income millionaires.
It would be interesting to see the aggregate income during the 9 years for each group. The author clearly has the data.
|Appendix B Persistence/Transience of Millionaires:
Data Underlying Figures 2, 3 and 4
|Number of Years a Millionaire|
|Gross Income Excluding Capital Gains|
|Gross Income Excluding Business Income|
|Source: Computations by author from the 1999-2007 SOI Individual Tax Panel.|
I suppose their conclusion is that since so many more people have one year of $1,000,000+ income than have 9 years of it, we ought not to worry about the actual distribution of income, which, as I've previously reported, is as follows:
|Top income decile:||47.19% of the before-tax income|
|Second income decile:||13.77% of the before-tax income|
||60.96% of the before-tax income|
|Second highest income quintile:||18.18% of the before-tax income|
|Middle income quintile:||11.23% of the before-tax income|
highest income quintile:
||6.72% of the before-tax income|
||2.92% of the before-tax income|
[Source: SCF Chartbook, page 7 and my calculations]
Moving from the bottom quintile to the fourth highest quintile may be considered mobility by the Tax Foundation. But when the top quintile receives 61% of the income, and 62% of those who were in the top quintile in 1999 are again in it in 2007, even a lot of mobility doesn't get one very far, in terms of economic security or return on one's labor.
Look at it this way:
This is structural. We have permitted the creation and maintenance of income- and wealth-funneling machines.
You can read more about the nature of the machine, and how to harness it to make things better, in Henry George's books, including Progress and Poverty, and Social Problems (the latter is a book of essays, and the link will take you to some material which will help you choose one of interest). Certain things in society rightly belong to all of us, and our failure to treat them accordingly is at the root of our income- and wealth concentration problems (and many others, including sprawl, joblessness, boom-bust cycles, pollution -- and I think most of us would be happy to see that there is a solution to any one of these, much less something that will lead to a solution of all of them).
Income mobility in a society where so few of us control so much is a salable proposition only to the gullible. If every one of us could spend 3 months of our lives in the top 0.25% of income recipients, then maybe our top-20%-gets-61%, top-1%-gets-23% might be consistent with our ideals of equal liberty. Maybe, kinda sorta.
Tax Foundation, look into the wisdom of Henry George. Unless, of course, your funders' interests are not the interests of ordinary Americans.
Posted on June 23, 2010 at 08:41 PM in a wedge driven through society, America in the world, boom-bust cycles, common good, connect the dots, cui bono?, economic justice, economic rent, externalities, Henry George, income concentration, land includes, landed gentry, little people pay taxes, middle class, one solution for many problems, poverty machine, privilege, SCF data, Survey of Consumer Finances data, teach your children well, unemployment and underemployment, wealth distribution or concentration, wealthandwant, windfalls | Permalink | Comments (0)
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I've found a longer version of a Landlord's Prayer which Henry George published in The Standard (late 1880s, or early 1890s). This one was reprinted in December, 1920 in an IBEW publication, and is sourced there to the Dundee People's Journal.
(By William Allan.)
Lord, keep us rich and free from toil
Are honored holders of thy soil,
Which democrats would fain despoil
O Lord, our fathers got the land
For serving men whom Thy right hand
Had chosen to be great and grand,
Tho' taken by stealth, we're not to blame;
Thou knowest, O Lord! it is a shame
To say to us of titled name
Lord, let us live in wealth's content
Lord, we are by Thy mercy meant
To rule mankind and make our rent
The birds that hunt the moors and hills,
The fish that swim in streams and rills,
The beasts that roam as nature wills,
E'en Lord, the minerals that lie
Beneath the earth's periphery
Belong to us -- Thou knowest why
Lord, on the rugged rabble frown,
Are foes to us, Thy church and crown;
Lord, bare Thine arm and grind them
O Lord, our God! we make their laws,
Which they reject with wild applause;
Be Thou a buckler to our cause
They scorn our love, Thy name and word,
They reverence neither squire nor lord;
Lord, them consume with fire and sword
Lord, they are poor and ignorant,
Compared with us, how different
In manner, garb, and lineament,
Lord, never let them get or see
The power which lies in unity.
Keep us apart from them -- for we
Protect us from their greedy hands,
Protect us from their vile demands,
Protect us in our wealth and lands,
--Dundee People's Journal.
Posted on June 18, 2010 at 09:18 PM in a wedge driven through society, charity and justice, commons, cui bono?, democracy, economic justice, ending poverty, equality, FIRE sector, free lunch, Henry George, income concentration, land includes, landed gentry, Landlord's Prayer, landlordism, natural resources, poverty machine, poverty's cause, privatization, privilege, reaping what others sow, sharecropping, slavery, The End of Poverty?, wealth distribution or concentration, wealthandwant, windfalls | Permalink | Comments (0)
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The New York Times reported recently that Dan Duncan died in March, leaving an estate estimated by Forbes Magazine to be $9 billion. He started with $10,000 and two propane trucks, and "and built a network of natural gas processing plants and pipelines that made him the richest person in Houston."
I do not begrudge his heirs the value of the plants themselves, other than the value created by any sort of monopoly they might benefit from -- which may be considerable -- and the value of the well-located land on which they sit. But the pipelines run over rights of way whose value has probably gone very lightly taxed, just as the value of railroad rights of way has traditionally been under-valued and therefore taxed lightly.
The estate includes over 100 million shares of the stock of Enterprise GP Holdings, worth $43 per share at the time of his death, shares which likely have appreciated hugely over the years without being taxed. Because Duncan's estate escaped paying estate tax, the value of the shares was not stepped up, so when the shares are sold someday, a 15% "capital" gains tax will be due, and his heirs will keep the other 85%.
Had Mr. Duncan died in 2009, while the estate tax was still in place, the $4.3 billion of shares would have resulted in a $2 billion estate tax. (That ignores his other holdings, including a 5,500 acre hunting ranch.)
The estate tax is an imperfect tool, but it is better than no tool at all to collect back for the community value which individuals during their lifetimes have managed to privatize.
The best solution, though, would be for each of us who privatize something from the commons to be required to compensate the commons, month in and month out, for that which we claim title to. Buildings, machines and pipelines are rightly private property, but the land on which they sit and the nonrenewable natural resources which they draw down are OURS, not the rightful property of any individual or corporation, and when we permit some to privatize that value without compensating society, we create wide channels for TRICKLE-UP. We're so used to it that we don't even notice.
Recall that a huge something over 70% of America's net worth is owned by just 10% of us, and over 34% is owned by 1% of us. Mr. Duncan's children are in that 1%. They have inherited the reins to a corporation which we've permitted to privatize the value of what ought to be common property.
Those who have high hopes and sincere expectations of someday winning a large jackpot in the Powerball Lottery may think it appropriate to defend the privileges associated with having large amounts of wealth (Powerball winnings, however, are income -- that's a detail) and they may think it to be in the best interests of their future lucky self to protect privileges associated with privatizing the commons. (They might want to take a look at the odds in their favor compared to the odds associated with the privilege of access to America's or the world's natural resources.)
Posted on June 14, 2010 at 09:16 PM in a wedge driven through society, Alaska Permanent Fund, commons, cui bono?, estate taxes, land includes, land, labor and capital, natural resource revenues, natural resources, poverty machine, privatization, privilege, wealth distribution or concentration, windfalls | Permalink | Comments (0)
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THE LABOR PROBLEM.
By An American.
The signs of dissatisfaction on the part of the laboring classes are clearly apparent everywhere. Labor organizations, strikes, boycotts, labor journals -- all these mean something, and what that something is we cannot find out too soon.
Is the dissatisfaction of labor simply the result of human perverseness, the envy and jealousy of idleness and carelessness at the better success of industry and thrift, or are there unjust forces operating on society producing vicious inequalities?
Has every man the same chance? Can all men attain to the same fortune if all are equally industrious and thrifty? Is there a fair field and no favor?
Certainly there is, cries a host of respondents. Is not each man the architect of his own fortune? And they quote case after case of men who began at the foot of the ladder, but who with indomitable pluck gained step after step until they conquered fortune, while others who began at the same point, neglected their opportunities and are still toiling in poverty, where they are destined to stay to the end of the chapter.
Is society so constructed that to all there is the same chance? Can all by exercising the same industry and thrift become equally wealthy? This question goes directly to the core of the labor problem. If there is the same chance to all, then what reason has the laborer to complain? A little consideration answers this question.
In how many years could society with its utmost exertions and greatest economy accumulate enough so that toil would be no longer necessary, and forever after all succeeding generations could live in idleness. No more plowing in spring, no reaping in harvest, no toiling in the mine, no sailing on the ocean — a huge, everlasting pic-nic!
Never! Toil, to restore the faded or to replace the worn out, must be as lasting as the race. Toil, toil, toil, is the inevitable.
"Men may come and men may go,
But toil goes on for ever."
Note that as fact number one and put fact number two alongside it.
And fact number two is this: Certain families now have the power of living for ever without toil. They organize no industry, invent no machine, do nothing to furnish supplies for themselves or their fellows — drones in the human hive, and yet their cruse of oil never fails.
Now, put these two facts together:
1st. Toil must be lasting as the race;
2nd. Some are now eternally exempt from toil;
Therefore, as certain as any therefore can be, some are endowed with privileges from which the rest of the race must be by an inexorable physical law for ever excluded.
Posted on May 30, 2010 at 09:33 PM in a wedge driven through society, absentee ownership, better cities, civilization, connect the dots, cost of living, cui bono?, economic justice, economic rent, ending poverty, equality, free lunch, government's role, immigration, income concentration, individualism, land includes, land speculation, landed gentry, landlordism, location, location, location, natural resource revenues, natural resources, one solution for many problems, opportunity, population, poverty machine, poverty's cause, privatization, privilege, sharecropping, unemployment and underemployment, wealth distribution or concentration, wealthandwant, windfalls | Permalink | Comments (0)
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Most Georgists reading this will respond that it was Milton Friedman who called LVT the "least bad" tax -- at least twice, first in 1978 and then again in a newspaper interview in 2006, a few weeks before he died. And they'll add, "but he wasn't a Georgist" -- he never pursued the importance or implications of that observation.
But the answer to the question, I submit, is Lowell Harriss! I had occasion to read a report dated November 9, 1966 by Weld Carter (my
grandfather) reporting to a foundation he worked for [the Robert
Schalkenbach Foundation] about a symposium of the Tax Institute of
America which had occurred the previous week. He does not report
where it took place, but mentions that the program chairman was Dr.
Alfred Buehler, who pointed out that (the quotes here refer to Carter's
report): "this was the first time since 1939 that the Tax Institute
had selected the property tax for its annual symposium. Of the present
panelists, he, [Lowell] Harriss and [Harold] Groves had all been on the
1939 program. He praised Dick Netzer's book as being the most
important since the work of Jensen in the early '30's, calling
attention to Netzer's suggested alternatives to the general property
Lowell Harriss is a professor of economics, Columbia University.
This talk was given at Hillsdale College, which is libertarian in orientation. In July, 2006, in Hillsdale's publication Imprimis, Friedman had this to say. (The interview took place in May, 2006, at an event honoring the 25th anniversary of "Free to Choose: A Personal Statement.") He failed to see that there can be a difference between common property and government property. (Too few pixels in the picture, one might say.) But despite his language -- praising as "privatization" that which Georgists would consider the socialization -- he recognizes
LA: Let me ask you about demographic trends. Columnist Mark Steyn writes that in ten years, 40 percent of young men in the world are going to be living in oppressed Muslim countries. What do you think the effect of that is going to be?
MF: What happens will depend on whether we succeed in bringing some element of greater economic freedom to those Muslim countries. Just as India in 1955 had great but unrealized potential, I think the Middle East is in a similar situation today. In part this is because of the curse of oil. Oil has been a blessing from one point of view, but a curse from another. Almost every country in the Middle East that is rich in oil is a despotism.
LA: Why do you think that is so?
MF: One reason, and one reason only — the oil is owned by the governments in question. If that oil were privately owned and thus someone's private property, the political outcome would be freedom rather than tyranny. This is why I believe the first step following the 2003 invasion of Iraq should have been the privatization of the oil fields. If the government had given every individual over 21 years of age equal shares in a corporation that had the right and responsibility to make appropriate arrangements with foreign oil companies for the purpose of discovering and developing Iraq's oil reserves, the oil income would have flowed in the form of dividends to the people — the shareholders — rather than into government coffers. This would have provided an income to the whole people of Iraq and thereby prevented the current disputes over oil between the Sunnis, Shiites and Kurds, because oil income would have been distributed on an individual rather than a group basis.
LA: Many Middle Eastern societies have a kind of tribal or theocratic basis and long-held habits of despotic rule that make it difficult to establish a system of contract between strangers. Is it your view that the introduction of free markets in such places could overcome those obstacles?
MF: Eventually, yes. I think that nothing is so important for freedom as recognizing in the law each individual's natural right to property, and giving individuals a sense that they own something that they're responsible for, that they have control over, and that they can dispose of.
Those "shares" would be better implemented as a guaranteed share of the income, not shares which could be sold to others (say, as an alternative to a payday loan). And "natural right to property" obfuscates the distinction between (a) that which nature provides or the community creates (to which all of us have an equal right), and (b) that which individuals or corporations create (to which individuals and corporations should have an unfettered right, subject to (a)!
The Alaska Permanent Fund does something similar: some of the royalty revenue Alaska collects on oil extracted within the state is used to fund Alaska's services, and some goes to the Alaska Permanent Fund, which invests the proceeds in a broadly diversified portfolio and pays an annual income to every adult and child who is a permanent resident of Alaska. See http://lvtfan.typepad.com/lvtfans_blog/2008/09/pbss-now----8108-alaska-governor-palin-and-oil-resources----who-do-they-belong-to.html
Anyway, even if Lowell Harriss was not the first to apply the term "least bad tax" to land value taxation, he said it well before Milton Friedman said it.
If you're not a regular reader here, you might want to know that there are a few other posts about Lowell, who died in December, 2009, at the age of 97.
To circle back to Milton Friedman, it is worth noting that he and his wife Rose were both at the University of Chicago in the early 1930s for economics PhDs. I don't know how large that program was, but I can only assume that students in it were aware of the research of others in the program. In 1933, Homer Hoyt's dissertation was entitled "100 Years of Land Values in Chicago." It was an analysis of 5 boom-bust cycles. I encourage you to read a couple of things which reference this book:
Posted on May 13, 2010 at 07:20 PM in Alaska Permanent Fund, better cities, cui bono?, government's role, land includes, land value taxation, landlordism, natural resource revenues, natural resources, privatization, privilege, reaping what others sow, sales taxes are wrong, socialize, tax reform, taxation, urban land value, wealth distribution or concentration | Permalink | Comments (0)
Tags: land value taxation, Lowell Harriss, Milton Friedman, natural resource revenue, oil revenue, privatization, privilege, property tax, tax reform
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The bi-monthly to which I refer is The Single Tax Review, whose 1914 volume Google Books has digitized. Here are some of the goodies I appreciate on this reading:
In fact, if a nation spends great sums in improving roads and canals and bettering the public services, these heavy expenditures increase the value of the nation's land, and this increase is taken by the landlords. If artisans, tradesmen, producers of all kinds concentrate in a locality, the money they spend on building, on the costs of living, their activity and even their presence is sure to increase the well-being of the inhabitants of this locality, a result translated into an increase of land values which the landowners pocket. If a manufacturer builds a factory in an uninhabited spot and constructs dwellings for his workmen it may result in ruin for him if he has not carefully calculated his chances, but in the meantime he will have increased the value of the surrounding land and enriched the landlords.
Now here are a few propositions, and a question:
The foregoing are Single Tax propositions. The Question is: In whose pages, other than those of Henry George, can our friends, the professional economists, find a body of principles of greater "scientific value" than the above propositions? If not in the pages of Henry George, where will they find ideas of greater "scientific value" than those which are directly deducible from self-evident truths?
Posted on April 09, 2010 at 02:18 PM in a wedge driven through society, absentee ownership, better cities, broadcast spectrum, cui bono?, economic justice, economic rent, ending poverty, equality, free lunch, government's role, greenhouse gases, Henry George, income concentration, infrastructure, land includes, land speculation, land value taxation, land, labor and capital, landed gentry, landlordism, location, location, location, monopoly -- not the game, natural resource revenues, poverty machine, poverty's cause, privilege, prosperity, unburdening the economy, unemployment and underemployment, urban land value, wealth distribution or concentration, windfalls | Permalink | Comments (0)
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