LVTFan's Blog

The Church(es) in Politics

I'm reading through the first issues of Henry George's newspaper, "The Standard," a weekly which was published in NYC beginning in January, 1887.  It was started shortly after the mayoral race of 1886 (chronicled in Post & Leubuscher's December, 1886 book), and in the 4th issue there is a very explicit article about the role that Rome was attempting to play in NYC politics by removing from the priesthood an activist priest, the much-loved Dr. Edward McGlynn, of St. Stephen's Church, on 28th Street in Manhattan, the largest parish in the city.  (This was before the creation of New York City by combining the five boroughs.)

For over 20 years, McGlynn had been living among New York's poor, hearing the confessions of the poor, and knew how hard their lives were.  He knew the situation in Ireland which had brought many of them to the U. S., and when he read Henry George's 1879 book, "Progress and Poverty," he found the cause of their suffering, and saw how to correct the underlying cause of poverty.

The article to which I refer is entitled, "From a Brooklyn Priest"

The Body of the Catholic Clergy Sympathize With Dr. McGlynn

The Brooklyn Times prints an interesting interview with “a well known parish priest” of that city. His name is not given "for obvious reasons,” but those acquainted with the Catholic clerics of Brooklyn have little difficulty in attributing it to the most popular and influential of the Catholic clergy of that city. We make the following extracts:

“The sympathy of the body of the Catholic clergy in New York and Brooklyn is undoubtedly with Dr. McGlynn. I have talked with a great many of my brother priests of both cities on the matter, and almost without exception, they have taken Dr. McGlynn's side in the controversy, though they would be loth to do so publicly for manifest reasons. The sentiment of the body of the Catholic clergy of the two cities is that whatever has been done in Dr. McGlynn's case has been done by inspiration from this side. Of course the question at issue does not at all touch matters of faith. It is purely a question of discipline. The authorities at Rome know little or nothing of the real state of affairs at this side of the Atlantic except as they are inspired by the archbishop of the different provinces. Archbishop Corrigan is in daily communication with Rome by cable, and the views of the controversy between Dr. McGlynn and his superior that are entertained at Rome pending the personal appearance of Dr. McGlynn in the Eternal City, are the views of the archbishop of New York that are telegraphed and written there.

“I do not mean to imply that Archbishop Corrigan would willfully misrepresent the situation here, but I do say that Dr. McGlynn, with all his experience as a priest in the American metropolis, with all his practical knowledge of the condition of the poor and of the working classes in that city, is a better judge of the political needs of the masses in New York than Archbishop Corrigan is, who has spent the greater part of his career as an ecclesiastic in the state of New Jersey; and I hold that Dr. McGlynn and every other Catholic priest has the right to take an active part in the politics of the country. To say that a man of the acknowledged piety and the blameless life of Dr. McGlynn sympathizes with anything that smacks of communism or anarchy is the veriest nonsense to anyone who knows him — and who does not know everything about him today? Dr. McGlynn, as a priest, knows the awful burdens which the laboring classes of New York city have to bear through political misrule and the corrupt combination of capital to oppress them. He knows how anomalous that condition of things is which allows one man to accumulate a hundred millions of dollars within 25 years and compels another to work for a dollar a day, nay, while thousands, anxious for work, are starving for the lack of it. Hence his support of the candidate of the labor party for mayor. Dr. McGlynn did not believe that anarchy or communism would follow in the wake of the election of Henry George to the mayoralty of New York any more than he believed that Mr. George, as the chief executive of the municipal government across the East river could put his land theories into practical operation in the metropolis. Any possible change in the government of New York city must be a change for the better, so far as the poor are concerned.

“If the bishops of the dioceses in the United States were taken by Rome from among the clergy of these dioceses who thoroughly understand the social and political conditions of their people, there would be none of these disciplinary troubles. What sense is there in sending an Italian priest to Canada or an Irish priest to Guatemala as bishop? Or why should a bishop be transferred from a city in the state of New Jersey to preside over the archdiocese of New York when there are many able and holy priests in the metropolis worthy of election to the prelacy who have spent their lives among the masses of the people? In countries where the canonical law of the church is in practical application the parish priests of a diocese in which the bishopric becomes vacant send three names to Rome by majority vote. One is set down as dignus, or worthy, another as dignior, or more worthy, and a third as dignissimus, or most worthy. Any one of the three may be selected, and it sometimes happens that it is the lowest on the list who is chosen. The pope has the absolute power to go outside the list sent to him from the diocese in which a vacancy occurs, but it is a power rarely exercised and only for the most exigent reasons. If the canon law applied in America, which is only yet a missionary country and subject to the propaganda at Rome, Dr. McGlynn could not have been turned out of St. Stephen's church as he has been and his salary would have run on despite his suspension until his case was finally decided at Rome.

“It is most unfortunate that the canon law does not apply in the United States, and that the political, social and educational situation in this country is not better understood at Rome. Wealthy Catholic politicians have too much to say on church policy in this country; and unfortunately that is today the trouble in New York city. The masses of the Catholic clergy say, 'Hands off.' As long as bishops, with whom wealthy politicians are most powerful, practically say who shall be elected to the prelacy in the United States there will be a chance for trouble among the laity.

“I am satisfied that if a majority of the Catholic clergy of the dioceses of New York and Long Island could do it Dr. McGlynn would have been elected archbishop and Archbishop Corrigan would have been allowed to remain in New Jersey. I unhesitatingly say that if the votes of the Catholic clergy in these two dioceses could do it Dr. McGlynn would be restored to St. Stephen's parish tomorrow. No old priest of New York city wanted to succeed Dr. McGlynn in that parish, for they all knew how his congregation idolized him. I am also free to say that if Archbishop Corrigan had not been brought from the state of New Jersey to New York city this trouble would never have occurred.

“Mgr. Preston is the bitterest foe that Dr. McGlynn has in the diocese of New York. I do not mean to imply that the monsignor entertains personal animosity toward the ex-rector of St. Stephen's church, but he is utterly opposed to what Dr. McGlynn stands for as an American citizen. Mgr. Preston is an aristocrat and the associate of aristocrats. Even converts to the Catholic church who know Father Preston well have admitted that the monsignor dearly loves the privileges which attach to church dignitaries in Catholic countries, and is inclined to ape the civil ceremonial of such communities in his intercourse with his flock. Dr. McGlynn is poor, is of the poor and loves to associate with the poor. He is in this respect the antithesis of Mgr. Preston, and the latter is a confidential adviser of Archbishop Corrigan.”

This article, more than anything else I've read, brings home to me the extent to which the rich manage even the Church for the benefit of the rich, to the detriment of the poor.   When a priest who seeks to correct the unjust structures is deprived of his priesthood because he might upset the privileges of the rich, the country and the church are both in trouble.

When churches benefit from contributions from wealthy contributors, they will tend to act to enforce the structures which enrich those wealthy contributors, rather than rocking the boat in any way.  When economic structures funnel the community's wealth into a relative few pockets, the Church will tend to embrace those pockets, not challenge the structures.  Money in elections is not the only corrupting force.

 

The Earth-for-All Calendar: March 17 - Dove

We are fully aware that there exists in the minds of many persons a vague apprehension, that if the present laws relating to landed property were to be disturbed, evils of the most malignant character would invade the society of Britain. Nothing could be more absurd, more puerile, more dastardly. The very same fears have prevailed with regard to every other change that has taken place.

— PATRICK EDWARD DOVE, Theory of Human Progression (1850),

Chap. III., Sec. 3, pp. 294-5 (Edition of 1895).

The Land Questions: #38: Mining

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?

 

The Earth-for-All Calendar: March 8 - Emerson

"I find this vast net-work, which you call property, extending over the whole planet. I cannot occupy the bleakest crag of the White Hills or the Allegheny Range, but some man or corporation steps up to me to show me that it is his."

— EMERSON, The Conservative.

Extended excerpts from The Conservative (an 1841 speech) follow ...

Tax property, not people, for a fairer society

The UK Guardian had an article of this title today.

It begins,

Amid all the talk of rebalancing the economy, there is little mention of the most powerful lever the government could pull to generate growth, which involves a switch from taxing income to taxing wealth.

It is a subject that tends to get little coverage, mainly because its supporters are considered on the fringes of the political spectrum. Ultra-lefties support wealth taxes for obvious reasons. Ultra-capitalists support them because they understand that allowing the rich to ring-fence much of the nation's assets and protect the mechanisms that allow values to increase without any serious government interference robs their children, and everyone else's, of any incentive to work harder.

Skipping ahead,

What they are all talking about is the adoption of a land value tax. Purists would abolish all current taxes and replace them with an LVT that asked for a payment in line with the value of land under ownership.

Someone earning £40,000 a year would stop paying around £7,000 in income tax, £1,000 to £2,000 in VAT, £1,600 council tax and any of the transaction charges that fill the exchequer's coffers. No more capital gains tax or stamp duty on property sales or the sale of shares. Instead they would pay a fixed annual sum, to be paid monthly, on the value of their land, which could have a wide range, depending on how much the land is worth.

Move out of town and work locally, and your overall tax bill could be a fraction of its current total. Buy an expensive piece of real estate in the city centre and you would probably pay more.

and then,

Under the proper working of the council tax, increases in property values, as opposed to land values, lead to higher taxes, which is a disincentive to carry out those improvements in the first place.

Mark Wadsworth is an economist, blogger, sometime Tory Bow Group adviser and campaigner for land value taxes. He recently told Economic Voice website: "I'm an economist not a politician, and I can only repeat what all the great economists have said down the centuries: taxes on land values are the least bad taxes because they do not depress or distort economic activity, ie wealth creation. Land value tax is easy to assess, cheap to collect and impossible to evade.

"Not only that, LVT is an entirely voluntary tax: you decide how much you are willing to pay and you choose a house or a flat within that price range. Only, instead of handing over all the rent or purchase price to the current owner, the location value would go to the government."

What he means by this last sentence is that property prices would necessarily settle at a lower level because a buyer will deduct the location value, knowing they must send it to the exchequer in the form of a tax.

Yes!  Think about the ramifications of this: as a buyer, you'd be paying the seller only for the value of the house itself, not the site on which it sits, which he did not create.  A, say, 10% downpayment would be affordable to many more people, and, because one would not need to borrow from a mortgage lender to pay off the seller, that credit would be available for other purposes --- entrepreneurs could invest in the goods that would make their business work better.

The article goes on to report that the OECD wants to keep the VAT too, apparently in an attempt to influence consumer behavior -- I assume by discouraging it.  

What we tax, we get less of.   What do we want less of?  Land speculation, or jobs?

Who chooses?  Whose interests do they have at heart?

Do tax structures affect aggregate economic growth?

Do tax structures affect aggregate economic growth? Empirical evidence from a panel of OECD countries.

Do tax structures affect aggregate economic growth?  Empirical evidence from a panel of OECD countries 

This paper examines the relationship between tax structures and economic growth by entering indicators of the tax structure into a set of panel growth regressions for 21 OECD countries, in which both the accumulation of physical and human capital are taken into account. 

The results of the analysis suggest that income taxes are generally associated with lower economic growth than taxes on consumption and property.  More precisely, the findings allow the establishment of a ranking of tax instruments with respect to their relationship to economic growth.  Property taxes, and particularly recurrent taxes on immovable property, seem to be the most growth-friendly, followed by consumption taxes and then by personal income taxes.  Corporate income taxes appear to have the most negative effect on GDP per capita. 

These findings suggest that a revenue-neutral growth-oriented tax reform would be to shift part of the revenue base towards recurrent property and consumption taxes and away from income taxes, especially corporate taxes.  There is also evidence of a negative relationship between the progressivity of personal income taxes and growth. 

All of the results are robust to a number of different specifications, including controlling for other determinants of economic growth and instrumenting tax indicators.

The full study, 28 pages, is at http://www.oecd.org/officialdocuments/displaydocumentpdf?cote=eco/wkp%282008%2951&doclanguage=en

Readers of this blog will know that I favor shifting to a tax on land value, and eliminating the portion of the conventional property tax which falls on buildings and other improvements to land.    But I'm fascinated that their analysis shows that even taxing buildings and other improvements to land, along with land value, is superior to taxing consumption or personal income or corporate income, in terms of the effects on economic growth.

So I'll leave you with this question: if we know that income taxes and consumption taxes discourage growth more than the conventional property tax does, in whose interest is it that we not rely heavily on the property tax?   Cui bono?

Go to the root of the problem.  Recognize who benefits from the status quo.  They like the current system just fine, and will fund heavily efforts to conserve it.

And when California (Proposition 13 forces reliance on wage and sales taxes to "protect" property owners) and other states, including soon Indiana, start complaining about a lack of economic growth, and when New York State's new Governor Cuomo starts talking about "property tax relief," understand that this is code for "we'll take care of our friends who own the choice urban sites, the ordinary man be damned!"   This is called conservatism.  Like Aleve, it works for them.  Does "landed gentry" still resonate?

Notice that this study has been around for two years now.  How many times have you heard about it? (It was news to me.)  Even the "FairTax" (23%+ consumption tax) folks haven't mentioned it, as far as I know.

<p><a title="Do tax structures affect aggregate economic growth? Empirical evidence from a panel of OECD countries" href="http://www.oecd.org/LongAbstract/0,3425,en_2649_34325_41487020_119684_1_1_37443,00.html">Do tax structures affect aggregate economic growth? Empirical evidence from a panel of OECD countries</a>.</p>
<blockquote cite="http://www.oecd.org/LongAbstract/0,3425,en_2649_34325_41487020_119684_1_1_37443,00.html"><strong>Do tax structures affect aggregate economic growth?&nbsp; Empirical evidence from a panel of OECD countries&nbsp;</strong></blockquote>
<blockquote cite="http://www.oecd.org/LongAbstract/0,3425,en_2649_34325_41487020_119684_1_1_37443,00.html">This  paper examines the relationship between tax structures and economic  growth by entering indicators of the tax structure into a set of panel  growth regressions for 21 OECD countries, in which both the accumulation  of physical and human capital are taken into account.&nbsp;</blockquote>
<blockquote cite="http://www.oecd.org/LongAbstract/0,3425,en_2649_34325_41487020_119684_1_1_37443,00.html">The results of the analysis suggest that income taxes are generally associated with lower economic growth than taxes on consumption and property.&nbsp;  More precisely, the findings allow the establishment of a ranking of  tax instruments with respect to their relationship to economic growth.&nbsp;   Property taxes, and particularly recurrent taxes on immovable property,  seem to be the most growth-friendly, followed by consumption taxes and  then by personal income taxes.&nbsp; Corporate income taxes appear to have the most negative effect on GDP per capita.&nbsp;</blockquote>
<blockquote cite="http://www.oecd.org/LongAbstract/0,3425,en_2649_34325_41487020_119684_1_1_37443,00.html">These  findings suggest that a revenue-neutral growth-oriented tax reform  would be to shift part of the revenue base towards recurrent property  and consumption taxes and away from income taxes, especially corporate  taxes.&nbsp; There is also evidence of a negative relationship between the  progressivity of personal income taxes and growth.&nbsp;</blockquote>
<p style="padding-left: 30px;">All  of the results are robust to a number of different specifications,  including controlling for other determinants of economic growth and  instrumenting tax indicators.</p>
<p>The full study, 28 pages, is at <a href="http://www.oecd.org/officialdocuments/displaydocumentpdf?cote=eco/wkp%282008%2951&amp;doclanguage=en">http://www.oecd.org/officialdocuments/displaydocumentpdf?cote=eco/wkp%282008%2951&amp;doclanguage=en</a></p>
<p>Readers of this blog will know that I favor shifting to a tax on land value, and eliminating the portion of the conventional property tax which falls on buildings and other improvements to land.&nbsp;&nbsp;&nbsp; But I'm fascinated that their analysis shows that even taxing buildings and other improvements to land, along with land value, is superior to taxing consumption or personal income or corporate income, in terms of the effects on economic growth.<br /> <br />So I'll leave you with this question: <strong>if we know that income taxes and consumption taxes discourage growth more than the conventional property tax does, in whose interest is it that we <em>not rely heavily on the property tax?</em>&nbsp;&nbsp; Cui bono?</strong></p>
<p>Go  to the root of the problem.&nbsp; Recognize who benefits from the status   quo.&nbsp; They like the current system just fine, and will fund heavily   efforts to conserve it.</p>
<p>And when California (Proposition 13 forces reliance on wage and sales taxes to "protect" property owners) and other states, including soon Indiana, start complaining about a lack of economic growth, and when New York State's new Governor Cuomo starts talking about "property tax relief," understand that this is code for "we'll take care of our friends who own the choice urban sites, the ordinary man be damned!"&nbsp;&nbsp; This is called conservatism.&nbsp; Like Aleve, it works for them.&nbsp; Does "landed gentry" still resonate?</p>
<p>Notice that this study has been around for two years now.&nbsp; How many times have <em>you </em>heard about it? (It was news to me.)&nbsp; Even the "FairTax" (23%+ consumption tax) folks haven't mentioned it, as far as I know.</p>

A thought about Glenn Beck, churches and social justice

Glenn Beck, a cable TV personality, urged Christians to leave their churches if the words "social justice" were used.  He is quoted as saying,

I'm begging you, your right to religion and freedom to exercise religion and read all of the passages of the Bible as you want to read them and as your church wants to preach them . . . are going to come under the ropes in the next year. If it lasts that long it will be the next year. I beg you, look for the words 'social justice' or 'economic justice' on your church Web site. If you find it, run as fast as you can. Social justice and economic justice, they are code words. Now, am I advising people to leave their church? Yes.

This makes me think about some of what went on in Alabama a few years ago -- the notion that churches should be dispensers of charity, and that they should not be campaigning for social justice because if there were social justice, there would be no need for charity! 

As I read some of the comments on a NYT blog, 

"Lord, when was it that we saw you hungry and gave you food, or thirsty and gave you something to drink? And when was it that we saw you a stranger and welcomed you, or naked and gave you clothing? And when was it that we saw you sick or in prison and visited you?' And the king will answer them, 'Truly I tell you, just as you did it to one of the least of these who are members of my family, you did it to me." (Matthew 25)

I am led to wonder whether people understand the difference between charity and justice.  To me, Matthew 25 merely describes charity.  Helping an individual in difficult circumstances, without seeking to correct the structures which put him into those circumstances and will put the next person in those circumstances.  If he is hungry because he has no job and no skills, feeding him will keep him alive another day, and training him will aid him if a job is available -- but if there is no available land for him to labor on, you've not moved a step toward justice. Welcome, and clothing, and visits are all wonderful -- but they don't change the structure which makes it impossible for some people to provide for their own needs and the needs of their families.

Susan Pace Hamill, the University of Alabama law professor who has made extensive studies of Alabama's tax system and the federal tax system and is now running for the state legislature in Alabama, said of the churches a few years ago -- I'm paraphrasing -- that even if they deserve an "A" for charity, if they earn an "F" in justice, that does not come out to a "C"; it is failure.   If I recall correctly, the Alabama chapter of the Christian Coalition was opposed to tax reform (reducing sales taxes on groceries, raising the state income tax threshold to approximately the poverty line -- no one was even talking about reforming the perversely low property tax) on the basis that churches would no longer have as many objects for their charity if Alabama moved in the direction of economic justice.   They'd be depriving the churches of poor people to serve!

I wonder whether Mr. Beck considers our current society to already be perfectly socially just and economically just, and, if not, what entity(s) he considers should seek to move us in that direction if he specifically excludes the Christian churches from having a concern for these issues.

To me, social justice and economic justice start with treating that which nature -- God, if you prefer -- provides, and that which the community creates -- as our common treasure, and treating that which individuals and organizations create as their private treasure.  Glenn Beck, Dick Armey and Grover Norquist may be very focused on that second portion, but if they fail to get the first half right -- first! -- they will not create a stable -- or just -- economy or society.

Income Concentration

I stumbled across a webpage, created by William Domhoff of UCSC, which contains some fascinating data on income distribution and wealth distribution, or, if you prefer, income concentration and wealth concentration.

I've posted the wealth concentration data separately; here, I'll focus on the concentration of income.  Table 6 draws on work of Edward Wolff, of NYU, not yet published. 

Income Distribution, 1982 and 2006
	1982	2006	Change
Top 1%:	12.8%	21.3%	+8.5 points
Next 19%:	39.1%	40.1%	+1.0 points
Bottom 80%:	48.1%	38.6%	-9.5 points

Turning to Capital Income -- by which I assume they mean income derived not from wages but from other sources, which includes that which the classical economists called land, and which the neoclassical economists subsume under "capital" as if they were identical:

		1979		2003
Top  1%		37.8%		57.5%		+19.7 percentage points
Next 4%		20.1%		15.7%		-4.4 percentage points
Next 5%		8.8%		6.2%		-2.6 percentage points
Next 10%		10.2%		8.0%		-2.2 percentage points
Bottom 80%		23.1%		12.6%		-10.5 percentage points

Is this something we're proud of, or think we ought to be exporting to other countries?  Is it consistent with our ideals, about life, liberty and the pursuit of happiness being the right of every American, of every person on earth?

We're permitting the privatization of things which rightly belong to the commons -- to all of us.  What things?  The value of natural resources flows into whose pockets?  The annual value of urban land flows into whose pockets?  The value of water rights flows into whose pockets?  The value of the airwaves flows into whose pockets? (Hint: look at the distribution of capital income!)  The value of 8am landing rights at LaGuardia flows into whose pockets?  The value of geosynchronous orbits so necessary to certain businesses and systems flows into whose pockets?   The bottom 80% of us?  The next 19% of us?  The top 1%?  The owners of so-called "small" businesses?

These are privileges.  Structures which divert to individuals and corporations things which all of us create.  They reap what we together sow, and then we are led to respect them as "self-made men" and success stories.

They are not eternal.  They are not immutable.  Each can be reformed, and each can provide a significant revenue source to meet our communities' need for revenue for common purposes.  Collecting this revenue this way will not damage our economy as our current tax structure does.  It will, however, lighten the portfolios of some who are used to considering themselves blessed by our current way of doing things -- those born on 3rd base who think they hit a home run.  And create some opportunities for those who want to works, and for those who want to be compensated for their work with wages which begin to line up better to the cost of living.

There IS enough to go around. Not enough for all of us to live like the top 1%, perhaps, but certainly enough for many more of us to live at the sort of level we call middle class, and even at the, say, 70th percentile -- without despoiling the earth.

Children in Poverty, Children in low-income families

As I listen to the discussions about the health care legislation, and the effort to write abortion coverage out of the plans, I am reminded of some data I came across recently.  It comes from a series of studies called "Overlooked and Undercounted" which are siblings to the Self-Sufficiency Standard studies I've posted about from time to time. 

Most people acknowledge that what the Census Bureau says about the Federal Poverty Guideline is true: it is merely a statistical measure, with no particular relevance to the cost of living anywhere in America, much less in the places where most people live.  Places with relatively low cost of living have higher official poverty rates, and places with relatively high cost of living often have lower, even negligible, official poverty rates.

The Self-Sufficiency Standard studies work with a highly reproducible and logical methodology to develop a bare-bones, no-frills, just-getting-by cost of living, in a lifestyle in which all of a family's most basic needs -- including the age-appropriate child-care which permits all the adults to be employed full time -- would be met, but with no room for savings, for debt repayment, for anything but a home-cooked meal, for gifts, or entertainment; with no provision for replacing the necessary clunker every few years.  The SSS studies provide this analysis for individual states, by county, for various configurations of families.   They are called SSS because they represent the cost of living without depending on anyone for free childcare, or meals, or other necessities. They take into account local tax structures, including tax credits, and are based on all meals prepared at home under the USDA low-cost food plan, which requires careful shopping and a fair amount of food preparation time and allows (October, 2009) about $2.06 per person per meal for a family with two school-age children.

In the least expensive counties in America, the SSS is about 170% of the Federal Poverty Guideline.  Relatively few people live in those counties; they're rural, with few jobs and few of the amenities that larger communities offer. 

Many more of us live in places where the SSS is 200%, or 300% or even 400% of the FPL.  And in the places where the SSS is high, there is still a need in the workplace for people to perform the tasks which aren't very well paid: janitor, child-care, retail, etc.  

The Overlooked and Undercounted studies quantify the number of households in a particular state whose income falls below the SSS in their particular county for their particular household configuration, and break out various demographics.

But I think the most important figure of all is one they have failed to provide: the percentage of America's children who are growing up in families with insufficient income to meet everyone's most simply defined needs.

I've calculated this figure for all the studies I could find.  Doing so required making a single assumption: the average number of children in a family with 4 or more children (3 or more in Connecticut).  I assumed 4.5 (3.5 in CT).

Here's what I found.  The percentage of children living in families with less income than the FPL and the local SSS for their configuration of family:

State	Census data year	Below FPG	Above FPG but Below SSS	Total Below SSS	Above FPG as pct of Below FPG
	(1)	(2)	(3)	(4)	(5)
Colorado	2000	9.8%	24.9%	34.5%	254%
Mississippi	2007	26.3%	17.5%	43.8%	67%
California	2007	15.0%	34.0%	49.4%	227%
Washington	2000	11.3%	22.6%	34.0%	200%
Connecticut	2000	9.0%	22.9%	32.0%	254%
Pennsylvania	2007	13.5%	21.7%	35.3%	161%
New Jersey	2005	9.7%	22.5%	31.5%	232%
Source: Overlooked and Undercounted Studies

The next question is, what percentage of the children below the SSS are in families with more children?

• Colorado: 13.4% of all children are in 4+ child families; but they represent 26.0% of children who live below the poverty line and 25.6% of children who live below the SSS.  36.9% of all children live in families with 3 or more children; they represent 54.8% of children who live below the SSS. Two thirds of Colorado children in 4+ child families live below the local SSS.  Even in married couple households, over half of children in 4+ child families live below their SSS level.
• Mississippi: 14.6% of all children are in 4+ child families; they represent 27.3% of those who live below poverty line and 24.1% of children who live below the SSS.  38.1% of all children are in 3+ child families; they represent 54.9% of children who live below the SSS and 52.7% of those who live below the SSS.   Even in married couple households, over half of children in 4+ child families live below their SSS level. 
• California: 16.9% of all children are in 4+child families; they represent 33.1% of children in poverty and 26.9% of children below the SSS. Children in 3+ child families represent 42.1% of all children, but 63.3% of children below the FPG and 57.2% of children below the SSS.  Even among married couple households with 4+ children, 74.6% of children live below the SSS.
• Washington: 14.7% of children are in 4+ child families; they represent 30.2% of children below FPG and 27.1% of children below the SSS.
• Connecticut: 37.1% of children are in 3+ child families; they represent 53.4% of children below FPG.  Even in married couple households, 35% live below the SSS level.
• Pennsylvania: 14.7% of children are in 4+ child families; they represent 30.4% of children below FPG, 29.1% of children between FPG and SSS, and 29.6% of children under the SSS level.  25.2% of children in married-couple families live below the FPG; in the 4+ child category, they are 33.8%.
• New Jersey: only 10.9% of children are in 4+ child families; they represent 22.7% of those below FPG, 20.9% of those between FPG and SSS, and 21.9% of those below SSS.

So we are going to take away the possibility of employer-provided health insurance which provides abortion coverage to women who want it?  

Do we really mean to promote policies which make it difficult for American couples to control how many children they bring into the world?   Birth control isn't 100% reliable, and despite all best efforts, even married couples often can simply not afford another child.

Here are the statistics, straight from the O&O studies: The percentage of families (not of children) with incomes below their local SSS:

The Percentage of Families with Various Numbers of Children Whose Incomes Fall Below Their Local Self-Sufficiency Standard Level
	1-child families	2-child families	3-child families	4+ child families	all families w/children	childless families
1. Colorado	22%	26%	43%	66%	29%	14%
2. Mississippi	32%	34%	53%	72%	39%	25%
3. California	34%	38%	60%	79%	43%	20%
4. Washington	22%	26%	41%	63%	29%	15%
5. Connecticut	21%	25%	46% (3+ children)		27%	12%
6. Pennsylvania	21%	26%	43%	71%	29%	15%
7. New Jersey	22%	24%	39%	63%	27%	14%
range:	21% -  34%	24% -  38%	39% - 60%	63% -  79%	27% -  43%	12% -  25%
Source: Overlooked and Undercounted studies

These seven states are widely dispersed geographically, and together represent a significant share of US population.  I'm guessing their data is fairly representative of the US as a whole.

Children in larger families are significantly more likely to live in situations without sufficient income to meet their most modestly defined needs. Should we promote policies which lead to more children?

Shouldn't we be looking for the underlying cause of insufficient wages?  They aren't inevitable.

And those who have explored this blog will probably know that the underlying cause is a structural one, not an individual one.  Or has your town figured out how to get along without school bus drivers, janitors, retail or child care workers, to name just a few categories of low-paid workers we rely on.  Are they entitled to have children, to have a life, or are you willing to support policies which ensure that their children will be brought up under straightened circumstances?  (I'd always thought that was spelled "straitened" -- as in "dire straits," but just discovered I was wrong.)

Conservatism

"Cardinal Newman says that a conservative is a man who is at the top of the tree, and knows it, and means never to come down."

Quoted in "The Public" October 31, 1903, a few days before election day.

To that might I add that some of today's conservatives aren't at the top of the tree, but have high hopes that they will get there, and want the privilege of being held up should they somehow managed to get there.

I seem to recall reading that 19% of us consider ourselves to be in the top 1%.  And if that is so, how many more think that they will actually make it into the top 1%?? 

Lottery ticket sales and gambling revenues suggest that many of us think our best chance lies in that department, rather than in labor, saving and investment.

Yertle the Turtle, and Tax Reform

One of my heroes, Susan Pace Hamill, law professor at the University of Alabama, provides an interesting analogy for tax reform:

http://www.al.com/news/huntsvilletimes/local.ssf?/base/news/1241860572260150.xml

For tax reform, topple 'turtle stack'

By VICTORIA CUMBOW | Times Staff Writer [email protected] | Saturday, May 09, 2009

Prof finds 3 reasons most voters oppose altering state charter

A law professor is using a Dr. Seuss' "Yertle the Turtle" yarn as a metaphor to argue for an overhaul of Alabama's tax system.

Susan Pace Hamill, who teaches law at the University of Alabama, said the Seuss character wants to sit as high as possible, so he arranges a stack of turtles to sit on. The turtles near the bottom experience pain and suffering thanks to all the turtles sitting on their backs.

"The turtle stack can be compared to Alabama," Hamill said by phone before she spoke at a Madison County Democratic Women's dinner Thursday night.

After voters overwhelmingly rejected Gov. Bob Riley's tax reform plan in 2003, Hamill struggled to understand why. She said the plan would've eased the tax burden for at least half of state voters. She set out to find out exactly why the "plan failed miserably."

After years of listening to voters' stories and concerns, she said, she found three reasons:

1. Anytime someone is forced to decide on a change this drastic, there's a fear that things will get worse.

"When you don't trust that a change will help you," she said, "you will never back a change."

2. Many Alabamians do not want to take a stand against their ancestors' support for the 1901 constitution, Hamill said.

3. Her third finding dealt with alienating friends and family.

"It's very tight," she said of the bonds of friends and family. "If you break away ... and offend others in your network, you risk being cast out."

Her solution to those problems? Newcomers to the state.

"This is why the heaviest of the heavy lifting would have to be done by newer arrivals," she said, "by folks who have been here a while and committed to staying, but who are not disabled by these three problems."

© 2009 The Huntsville Times. All rights reserved.

When we structure ourselves so that some get fine views at the expense of their fellow human beings, we're doing something wrong.

He who sees the truth, let him proclaim it, without asking who is for it or who is against it. This is not radicalism in the bad sense which so many attach to the word. This is conservatism in the true sense.

-- Henry George, The Land Question

An Hour with the BBC World Service

20 years ago, one of the (many) pleasures of a visit to Bermuda was the opportunity to listen on ordinary radios to the BBC World Service. 

Even in the New York metro area, the only way we could listen at home was via shortwave radio.  And that involved keeping track of what time it was according to Greenwich Mean Time, and consulting a chart to determine on which, if any, frequency the BBC could be heard locally at that time of day.  I imagined English-speaking people all over the world listening via similar radios.

Now my local NPR affiliate carries the BBC during the night. And by day, I can listen to it on XM satellite radio at my desk and in my car.  Most of my listening is during the night; when I can't sleep, I put on headphones and listen.

As I listened for an hour this morning, I was led to wonder how many -- if any -- BBC reporters stationed around the world have encountered the ideas of Henry George, and how the experience would alter their reporting of so many stories.

So many of the stories of poverty, of strife, of terrorism are ultimately, at bottom, about access to land, access to natural resources, and how a people treats the natural resource revenues, including the revenue from urban land value.

Where all have access to land on an equal basis, by paying rent to the community, there need be no poverty or unemployment.  Where some claim as their own privilege the right to collect that rent for their own portfolios, there is poverty, and there are people -- often the vast majority -- robbed of their birthright.  They may not know the exact nature of the problem, but they clearly know that they're being wronged, day in and day out.  Some cope.  Some become terrorists.  Some figure suicide can't be any worse than what they're dealing with.

When natural resources revenues are used to fund government spending, to provide the infrastructure which makes a city a better place to live, and the excess refunded to the community in the form of individual Citizens' Dividends, life tends to be pretty good for most people.  When natural resources accrue to royalty, or to a plutocracy, or to foreign corporations' shareholders and management, and are not reinvested in the community, not surprisingly, we get human misery and inferior infrastructure and schools.

And it would seem quite rational for people living in such situations, particularly young men, to rebel against such a thing.  Not knowing precisely what the problem is, they do not seek to solve it, only to avenge their loss.

The BBC's website says this:

There is a relatively small number of things which BBC must not do. For example, it must not carry advertising, neither can it express its own editorial opinion about current affairs or matters of public policy, other than broadcasting. That is not to say, of course, that controversial programmes are never broadcast, but great care is taken to ensure that arguments are well balanced.

Balance!  Ah!  Let's balance the privileges of those who claim the world's natural resources as their own entitlement, with the birthright of all the people of each country to those natural resources.  We all learned in elementary school what each country and region of the world produces and exports.  What we didn't talk about was who in each country (or beyond its borders) is considered to be entitled to the natural resources revenue, or how public spending there would be financed when the natural revenue source was diverted into private pockets, or what the privatization of these resources does to a country's economy and wealth distribution.  That is political economy.

Report the news.  Don't talk about what underlays it.  Wouldn't want to rock that boat, would we?

Where do they do this?  Try Alaska, for starters.  Just a starter, but no state in the US has less income inequality -- despite their high cost of living.  

For a look at what happens when this is ignored, look for the upcoming film The End of Poverty? from Cinema Libre Studio. (It premiered at Cannes last year, and will be in theaters this fall.)

And to explore the ideas of Henry George, start with some of his speeches, at wealthandwant.com followed by his landmark best-selling book, Progress & Poverty.

The UK Rich List -- some additional thoughts -- with reference to America, as well

I spent some more time going through the 2000 or so entries on the UK "Rich List," which starts at http://business.timesonline.co.uk/tol/business/specials/rich_list/rich_list_search/.  (See the blog entry below for further comments.)

The top 25 entries, whose 2009 holdings range from £10,800m down to £1,400m, include 16 which came from

• oil
• steel
• property
• mines
• metals
• water
• diamonds and
• mining.

The combined value of the top 25 fortunes is £73.88 billion.  At 5% per year, that produces £3.7 billion in income -- quite a sizable amount to be shared among 25 families!  (£1,400m is $2.1 billion US; £3,700m is $5.6 billion US.)

Notice that each of these fortunes is fundamentally from natural resources.  Yes, there is capital involved, and labor.  But under the laws of most countries, natural resource holdings and extractions are taxed lightly if at all, and labor is taxed heavily.

Susan Pace Hamill: The Vast Injustice Perpetuated by State and Local Tax Policy

Hamill-HofstraSubmission.pdf (application/pdf Object). or http://ssrn.com/abstract=1272155

Susan Pace Hamill, one of my heroes, has published a new paper in the Hofstra Law Review, and while I share her concern for the poor and for economic justice, and I respect her scholarship, I think she's missing the most important questions!

Here's the abstract; the emphasis is mine:

State and local tax policy is one of the most important areas of public policy affecting the lives of the most powerless and vulnerable segments of the population – children from low income families. Focusing on the funding of primary and secondary education, especially in high poverty school districts, and the scheme for allocating the tax burden, this article empirically proves that all fifty states have unjust state and local tax policy, with thirty-one states inflicting an extreme level of injustice on poor children and their families. This article argues that the people in most states, as well as their political leaders, are compelled to reform state and local tax policy because they claim to practice Christianity or Judaism, and, in addition to being unjust under secular-based ethical models, their state and local tax policy also violates the moral principles of Judeo-Christian ethics. This article also argues that the moral context of a faith-based appeal offers the best chance to inspire people to support tax policy, requiring greater levels of sacrifice from wealthier Americans, a group that must be part of the reform effort in order to change the state and local tax picture from a vast sea of injustice to a tool of justice protecting our most vulnerable and powerless citizens.

I would counter that our tax policies should not require "greater levels of sacrifice" from anyone.  But Professor Hamill, like 99% of the rest of the people who think about public finance and economic justice, seem to be stuck in a box, and it is the wrong box!

I'm not thrilled with our choices in November

I hate the idea of voting for the lesser of two evils because the other candidate scares me more.  I like the rhetoric of one party better than that of the other, but I don't regard either one of the parties or the presidential slates as being good choices. 

I am unable to vote for the libertarian candidate because they pandered to the people who think they should be able to insert themselves into the relationship and decision-making between a woman and her doctor.  They aren't serious about what they claim to stand for.

When I cast my vote, it will because of the sort of Supreme Court nominations I think each is likely to make.   It will be because one candidate seems less likely to fly off the handle than the other.  It will be because I am far more comfortable with one VP nominee than the other, and with the sort of judgment that went into the choice.  It will be because I think one candidate is likely to be consulting people who mean somewhat better for the ordinary American's interests than does the other party, despite both being largely ignorant about how things actually work and how we might intervene to make things more just and more efficient.  It will be because one presidential candidate is a high-stakes gambler, a man who called his wife names he acknowledges are offensive (google "trollope" with his name for more detail), a man with little foresight or depth.  It will be because I prefer a president with a grasp of and respect for constitutional law, particularly after one who abused us with his signing statements.  It will be because one candidate may have some serious health problems which to date he has not considered the business of the voters.  It will be because I care about how the other 95% of the world regards us. It will because I think one slate is more likely to be reality-based than the other, even if neither of them have really good lenses through which to understand reality.

Can I suggest lenses that will clarify their understanding of reality?

Absolutely.  Start with some of Henry George's speeches ... The Crime of Poverty, Thou Shalt Not Steal and Thy Kingdom Come.   Move next to Bob Andelson's essay, "Henry George and the Reconstruction of Capitalism."  Then read Progress and Poverty and Social Problems, a collection of essays.

Am I sufficiently indifferent between the two major party candidates that I will write in the sort of candidate I want?  No.  For me there is enough difference that I must vote for one of them, and continue working to promote my best understanding of how we can transform America into the country we say it is and is meant to be.    

Democracy is not enough to produce widely-shared prosperity.  And our current form of capitalism, which might reasonably be termed land monopoly capitalism, is a poverty machine, a wealth concentration machine -- but a machine which can be very easily transformed into a machine to produce broadly shared prosperity.  All we need is an understanding of the mechanics of that machine, and we'll be on our way to retooling it.  We need to understand which sorts of wealth ought to be socialized, and which ought to be privatized, and then to act on that understanding.

Spreading the Wealth: Some kinds of wealth OUGHT to be spread!

One candidate speaks of spreading the wealth.  The other derides the notion as socialism.  But I suspect that neither of them have read, or thought deeply, or discussed in any context what sorts of wealth OUGHT to be spread around, and what sorts OUGHT NOT to be spread?

Not all wealth is the same.  We can divide it first into that which is created by individual or corporate human effort and that which is provided by nature or by the workings of the community as a whole. The former can rightly be privatized.  The latter must not be.

Another benefit of civilization and government

A recent Boston Globe article about a small town in Alaska (also described elsewhere as the state's 4th or 6th largest city, depending on whether one accepted a population figure of something like 6,000 or another estimate of 8,000) mentioned that as recently as the past decade, it had no building codes, and that its mayor seemed to be quite proud of that during her tenure. 

It seems to me that building codes and their enforcement by inspectors during the construction process are one of the very worthwhile protections that increasing population density and civilization brings us.  If I am thinking about buying an improved property, I want assurance that it was properly built, that it was built to reasonable standards at the time.  I want it to be built to withstand earthquakes, if those are a known issue in the area, and hurricanes, if those are a real possibility locally.  I don't want to have to research the reputation and finances of the builder at the time he built the building, or take it on faith that all was done properly. 

DIvision of labor is a fine thing, and it seems worthwhile to me to have such services be part of what one pays for through user fees and local taxes on land value.

Rich in Natural Resources

But what if our natural resources are in private hands?  Are we rich in natural resources if the Jed Clampetts own the land under which our natural resources reside?

Or are we rich in privileged people, whose trickling down the rest of us must be content with?

A significant share of Alaska's oil revenue flows to the state and to the Alaska Permanent Fund because the oil sits under state-owned land.  But in the lower 48, our oil is on privately owned property, or under corporate property, and the revenues flow not to the American people, or to the people of one of our states, but to private portfolios.

Is this consistent with the notion that we hold it to be self-evident that all men are created equal?   Discuss.

Pulitzer Prize Winner Stresses Ethical Taxation

Pulitzer Prize Winner Stresses Ethical Taxation. Pulitzer Prize Winner Stresses Ethical Taxation September 29th, 2008 · Events · Posted by Behnaz Abolmaali

The fundamental starting point for democratic government began with taxation, said David Cay Johnston, a Pulitzer Prize-winning author and former New York Times investigative journalist, during a speech to McCombs accounting students Sept. 24.

Johnston, who came to UT as part of the Lyceum Speaker Series, told students that the ideas about taxation and society that have prevailed since Ronald Reagan’s time favor a system in which money is systematically funneled from the poor to benefit the rich.

“People who think that taxes are a cost will do virtually anything to eliminate that cost,” Johnson said. “Taxes are not a cost. Taxes are a moral obligation.”

The ancient Athenians, he said, developed democracy by instilling a guiding moral principle in tax laws: that the greater the wealth one has built up, the greater their moral obligation to helping society continue.

As readers of this blog know, I am a great admirer of David Cay Johnston.  I generally think he is on the right track, and/but (shifting metaphors and transportation systems) think he has some blinders on.

In the quote in the preceding paragraph, I think he is bringing up a vitally important matter, but he hasn't followed it to its logical root, and is thereby missing perhaps the most vital aspect of the subject.

He who sees the truth ...

He who sees the truth, let him proclaim it, without asking who is for it or who is against it. This is not radicalism in the bad sense which so many attach to the word. This is conservatism in the true sense.
-- Henry George, The Land Question

Auctioning leases on our common assets: far better than giving away the asset or auctioning it once and for all

The FAA is moving ahead with plans to auction off a 10-year lease on a takeoff and landing slot at Newark Airport.  The Bloomberg article quotes DOT Sec'y Mary Peters' general counsel as saying that the 10-year lease could fetch hundreds of thousands of dollars.  At $100,000, and 3652 days, that means that an airline would be paying ... are you ready for this? ...  $27.38 per day for that pair of arrival and departure.    At a final bid of $500,000, the winning airline would be signalling that it would be worth $137 per day to them, to have a plane arrive and depart from Newark Airport!  

Do you think there are any airlines who would be unprepared to outbid such a bid in order to take part in the NYC market?

Further, the article indicates that the FAA plans to sell as many as 208 New York-area slots before January 20.  Assuming they are all 10-year leases, and the average winning bid is $50,000 ($13.69 per day), we're talking about revenue of $1,040,000 per year ($10.4 million over 10 years).  If the average winning bid is $200,000, that's revenue of $4.16 million per year ($41.6 million over 10 years).

By definition, there is a market-clearing price.  I suspect it is far above $69 per flight ($500,000 for a 10-year slot lease).   And I'm very pleased that our DOT Secretary recognizes that this asset belongs to us, not the airlines, and that its value should be collected.

I hope that only a small fraction of the slots will be auctioned off each year; if the economy is healthy, airlines will be willing to pay more next year than they are this year.

Separately, Sec'y Peters is suggesting a switch, at least in the Washington, D.C., area to "direct pricing" for area highways: tolls on all major roadways -- tolls with 'congestion pricing' to discourage use during peak driving periods.'    Bravo!   Bill Vickrey would be pleased.

Valuing life, and applying fiscal stimulus, and setting us all equal

If we are going to claim to value every life, and encourage every pregnant woman to bring every fetus to term, we need to acknowledge that every child born is the equal of every person already born.  Interestingly, Alaska has been doing something important in this regard, for more than 20 years.

Every man, woman and child who lives in Alaska receives an annual income from the Alaska Permanent Fund, which represents dividends from the invested proceeds of Alaska oil revenue, and which, if properly managed, will continue to provide an annual income for every Alaska long after the oil has all been tapped. And Alaska's governor has had the fortitude to increase the share of the public in Alaska's oil revenue due to the high price of oil. (See another post on the subject from a few days ago.)

(And much of Alaska's state government spending comes from oil revenues, too.)

Our oil is not the only resource that needs to be treated this way.  Urban land values can be hundreds of thousands of times the value of an acre of agricultural land.  There is an acre in Manhattan said to be worth $400,000,000 to $1,100,000,000 -- as a teardown.  If we were to tax that land value at, say, 5% per year, at $400,000,000 it would produce $20 million in income for we-the-people, relieving the need for $20 million in sales taxes, or $20 million in payroll taxes, or $20 million in income taxes.  Talk about fiscal stimulus!  Talk about a permanent tax holiday! Talk about getting the incentives right!  

How do people who are created equal share resources equitably?

7 people, all paying the same price, are sharing a 7-bedroom apartment.  Not all the bedrooms are of equal size.  How should the scarce resource -- the larger bedrooms -- be allocated?

One approach is to say that whoever arrives first gets to claim the room he wants, and call it his own.  The last to arrive takes whatever is left.

Another approach is to say that the oldest person gets to claim the room he wants, and then the next oldest, and so on.

A third approach is to draw straws, so that the privilege is randomized.

A fourth approach is for the extra value attached to the choicer rooms to be valued, and for those who want the better rooms to bid for them, and to pay into the common treasury the excess value, to fund something that benefits the entire apartment.  Alternatively, the payment could go to the person who gets stuck with the least desirable room.

A fifth approach is to rotate rooms part way through the year in some way that gives everyone equal access to the prime resources.

A sixth approach is to add up the total square footage -- if that is the only difference among the rooms -- and then have each person pay their share based on their share of the total.  Those with larger than average spaces would pay those with smaller than average spaces.

How do we run our society? We permit those who arrive first to choose their spaces, and keep them forever.   Their heirs, if they don't want to live in them, can rent them out to others, or sell them to the highest bidder, and the next child who doesn't stand to inherit a place to live and a place to work needs to enter that bidding, and mortgage the next 30 years of his wages.

We hold these truths to be self-evident, that all of us are created equal.

Fannie & Freddie: Privatization of Gain, Socialization of Loss: Who Benefits?

Who benefits from the ways we protect Fannie and Freddie's shareholders?  The Wealth Concentration Tables on wealthandwant.com wil give you a pretty good notion.  Unless, of course, you think for some reason that Fannie and Freddie's shares are held strictly by poor widows and orphans in the bottom 90% of the wealth spectrum, different from other equity holdings. [Cut to the chase: the bottom 50% of us hold 2% of the value.  The next 40% of us hold 26% of the value.  The top 10% hold the remaining 72%]

Consider also the advice that a prudent investor should not be concentrated in a single stock or sector, particularly if one is employed in that sector, as the employees of Enron learned very publicly not all that many years ago.

So whose portfolios are we protecting when we give gifts from the commons to the shareholders of Fannie and Freddie?  The poor widow whose advisor suggested she invest in those two stocks?   Right.

HG quote for today

There is danger in reckless change; but greater danger in blind conservatism. The problems beginning to confront us are grave -- so grave that there is fear they may not be solved in time to prevent great catastrophes. But their gravity comes from indisposition to recognize frankly and grapple boldly with them.