The Geonomist Volume Ten Issue Two

Condolences from Afar --

Martín Chaverri Roig, professor of former presidents of Costa Rica (Sep 12; in Spanish): "We are horrified and stunned by the diabolical attack of yesterday, that only people with the soul of a Nero, Hitler, or Stalin are capable of carrying thru. I believe that this makes it necessary for us to struggle for a society more dignified and humanitarian and unify ourselves even more. I was at a meeting on our problems of urban development sponsored by the local public universities; everybody there was equally moved. I remain forever with the hope for a better future." I'm with you. We must work harder and smarter together to win the world we all want.

Tanya Roskoshnaya, Ruski president of an international union for land and liberty (Sep 11; in English): "Dear friends, we are all terrified with the tragic events of today. Our very sincere condolences. Definitely something is very wrong in this world which makes such tragedies possible and huge amount of ordinary people are suffering and even dying. I love you all. My children and my colleague Galina Titova (of St. Petersburg's Land Research Institute) join me."

Geonomics is... … a neologism for sharing "rent" or "social surplus" - the money we spend on the nature we use. When we buy land, such as the land beneath a home, we typically pay the wrong person – the homeowner. Instead, since land cost us nothing to make and is the common heritage of us all, rather than pay the owner, we should pay ourselves, our neighbors, our community. That is, we should all pay land dues to the public treasury, then our government would pay us land dividends from this collected revenue. It's similar to the Alaska oil dividend, almost $2,000 last year. Indeed, the annual rental value of land, oil, all other natural resources, including the broadcast spectrum and other government-granted permits such as corporate charters, totals several trillion dollars each year. It's so much that some could be spent on basic social services, the rest parceled out as a dividend, as Tom Paine suggested, and taxes (except any on natural rents) could be abolished, as Thomas Jefferson suggested. Were we sharing Earth by sharing her worth, territorial disputes would be fewer, less intense, and more resolvable.

Readers of our response to the terrorist attack said:
Chuck Woolery, Issues Advocacy Director, World Federalist Association, Washington, DC: "I like your ideas and suggestion but have other projects in the fire (as you can imagine). Have you tried submitting it as an op-ed to a national newspaper or even a local paper?"
From Australia, Bryan Kavanagh, who runs a real estate valuation practice with 40 employees and a soul: "Extremely good stuff."
From Japan, Yumi Kikuchi: "Thank you for sharing your highest thought. I don't believe what TV reporters say; 90% of Americans support the retaliation. So many American friends of mine are thoughtful, compassionate and trying to face the root cause of this incident. Let's turn off TV for a while and be a part of the solution."
Hanno T. Beck, Banneker Center President: "Would it be okay if the Progress Report published your article on the terrorist attacks? Nonexclusively, of course – you remain totally free to use it elsewhere, etc."
To sum it up, how many of us cope is by focusing on root causes in order to fashion a word where madness cannot flourish. As Americans we must ask more of our government: With no more delay, settle this land dispute peacefully and permanently. Advance what works – sharing the land by sharing her annual rental values. And let's admit that some rich Americans do use US muscle to increase their already vast wealth. By arming dictators of impoverished nations at the expense of US taxpayers (we gave aid to the Taliban, etc), we alienate ordinary folk. Instead of wasting aid on corrupt elites, let foreign producers trade with America.
Television showed males celebrating in a street in Palestine. Yet note: they all wore American sport shirts, American jeans, American sneakers. Like it or not, we are the world leader. We cannot get away with being good, we must be the best. For us to live in safety, let us live in harmony, make fewer enemies and more friends, be as fair as we are powerful, using our power and prestige not to favor a few but to raise up the many. To begin, uphold the virtue of sharing Earth's worth.

Without waiting for the "world's leader", Europe has since 1990 been shifting taxes, and gee, the results confirm the theory. Eight Euro nations did things like lower taxes on payroll and raise them on pollution, such as carbon or sulfur oxides. Not only are these Euro economies cutting carbon emissions, they're also hiring more people and keeping growth stable. (Andrew Hoerner, Center for a Sustainable Economy, via the Progress Report, www.progress.org)

In a Canadian woods, men digging up earthworms for fishing competed, argued, and fought. In the melee, one clubbed another with a baseball bat, fracturing his skull. It's tradition, recurring every summer. What some guys, even gentlemen of the north, won't do for a worm. (Globe and Mail, Aug 28)
The remaining white farmers in Zimbabwe pleaded with government to defend them. The state instead looked the other way, since it was black President Mugabe who organized the attacks to polarize voters in the upcoming national election. While most Africans seek land justice and racial redress, in one town they voted the opposition into power. (The victors, the Democratic Alliance, are circulating a petition to Bush to send election observers and recall Zimbabwe troops from the Congo; Godfrey Dunkley, landtax@global.co.za, Aug 24 & Sept 6) As a way to atone for its colonial past, Great Britain has agreed to fund compensation for white farmers. If Mugabe adheres to form, he's likely to give the farms not to the landless poor but to his political cronies. (Christian Science Monitor, Sept 10)
In Russia, wannabe monopolists put out contracts on each other. The one left standing, now lone owner of Russia's aluminum, can't win over customers and investors, wary of his bloody reputation. Some of the surviving losers are suing him in the US and Switzerland. (Globe and Mail, Aug 28) Probably figures if he can hang in there, he should do all right, since most fortunes have bloody origins.
While some still kill for land and resources, humanity has also evolved to the stage of paying for land. One can even buy an entire island for one's exclusive use, now online at a website of islands for sale. Surf over to privateislandsonline.com. (Globe and Mail, Aug 28)
But if you're going to buy an island, to whom should you pay? Whoever made the island? If they left no forwarding address, then whom? The first occupant? Their direct descendants? The most recent occupant? Answer: The ones to pay are the ones you'd exclude, both present occupants and neighbors. Once that's widely understood, then disputes over worm, farm, and aluminum become resolvable; accept the ethic, settle the dispute, just as the virtue of equality had to precede the abolition of slavery.

The average Canadian family spent more money on direct taxes than any other item, almost one in every four dollars. The second biggest expense – one of every five dollars – is housing. The next two biggest bites were cars and food. If you're one of those who gets bugged by trade beyond local borders, forget about Walmart, McDonalds, and imports; the two biggest drains on local cash flows are taxes and mortgages. (The Montreal Gazette, August 28) Both leaks would be plugged by geonomics. Ending taxes ends that siphon. Collecting rent drops the cost of housing and the profit in lending, so big banks sniff elsewhere, leaving the home mortgage business to local lenders. Geonomics also dries up the two lesser leaks – cars and food. Collecting sites rents (while not taxing buildings) impels owners to in-fill cities. Compact cities require less car driving and leave lots of suburban lots open for gardening.

More than ever, to afford their taxes and mortgages – more than their SUVs and favorite restaurants – Americans work longer hours than anyone, including the Japanese. From 1999 to 2000, our work year grew by an extra week while Japan's shrunk by almost four weeks; they take off 2 ½ weeks more vacation than Yanks do. The other developed countries also shrank their work year. Only here in the US, do kids start younger, mothers return from births to jobs sooner, brokers, lawyers, and other professionals camp in the office 60 hours, and poor people have two, even three, low-paying jobs. Meanwhile, US workers keep increasing their productivity, yet none of the new efficiency gets translated into time off. Good thing we lack a Polynesian Play Ethic or we'd really be frustrated. (Pittsburgh Post-Gazette, September 1) A great way to shrivel the workweek – better even than mandating it by law which does nothing for the jobless or those working at home or for themselves – is to pay ourselves an extra income apart from the human factors in production (labor and capital), to pay it from land, the factor that snags the heaps of value that the other two spin off; e.g., microchips drive up off-campus locations. Getting a share of collected rent, people could work as long or as short as they wanted to (and with or without whomever they wanted).

Baby Boomers are aging. That generation is the biggest in America (29%), Japan, and other developed nations. There's more of them than younger people (barring unchecked immigration) to take care of them. Their future could be 60 year-olds taking care of 80 year-olds, because we still attach income to employment. (Globe and Mail, August 28) Yet automation does much of the real work and globalization out-sources much of the rest. These gains in productivity and cost-savings get absorbed into higher site values, especially in central business districts where locations cost 200 times more than a rural homestead. Those rising land values could fund a growing Citizens Dividend. In a Geonomy, this CD, plus a falling cost of living thanks to techno-progress and zero taxes, could replace social security for the elderly. And if that's not enough, we could defer their land dues. And if that's still not enough, we could scale the CD according to tenure, as Tom Paine suggested over 200 years ago, ensuring all the elderly live in grace.

Mexico's Vicente Fox, one of the few world leaders to call for ending the power of drug lords by de-criminalizing drugs, wants an open border with the US, more like the one between the US and Canada. Fox figures lowering tariffs and subsidies would increase trade and investment and raise the Aztec standard of living, so campesinos would no longer feel pressured to leave their homeland. Due to immigration and a fast birth rate, Hispanics are the fastest growing ethnic group in the US.
On the birthday of revolutionary Emiliano Zapata, thousands of farmers protested in Mexico City against President Fox's elimination of agri-tariffs and subsidies to farmers. Worldwide, tens of thousands routinely protest against so-called neo-liberalism. (The Monterey Herald, August 9) It's a policy strikingly similar to geonomics. Ending taxes, subsidies, and bureaucratic red-tape are necessary for development, but not sufficient for lifting all boats. The key component of geonomics – collecting and sharing natural rents – must be part of any reform package to ensure the new economy benefits everybody. In his presidential campaign, Vicente Fox did applaud Alaska's oil dividend. Mexico is soaked in oil, and Mexico City has high site rents. The rent is there for a Mexican Citizens Dividend.

Junichiro Koizumi, new Prime Minister of Japan, wants to do the right thing, but when's the right time? The US economy has slowed, and the terrorist attack may shrink it further. If Americans buy too few goods from Nippon, then Nippon cannot recover. Powerful advisors claim it's better for the Japanese state to keep digging itself deeper into debt funding useless infrastructure, and to let big banks keep pretending that the speculators who blew the 1980s real estate bubble will pay back loans (this millennium) and that their stock holdings are worth what they paid for them. Of course, the "experts" gave the same advice even before the current crisis. (Washington Post, September 18) The reality isn't pretty. Trying to push up then rescue their stocks, banks would lend the firm more cash, sending good money after bad. That's one reason why it's illegal for banks to buy stocks in many countries. Defaults total $1 trillion, and their stocks are down $58 billion. (USA Today, September 19) To re-start their shrinking economy, the Nipponese cut interest rates again, almost to zero, 0.10%, leaving no wiggle room there. (Baltimore Sun, Sept 19) Instead, the Japanese could do what worked for Denmark back in the 50s and 60s – de-tax earnings and collect more rent from locations. These twinned moves would both pull and push new economic output.

Luciano Pavarotti, the Italian opera star, is wanted by the Italian police. This Romance government wants to tax the singer's million-dollar income. Yet he'd moved his legal residence from Modena to the border town and tax haven of Monte Carlo. (USA Today, September 19) Fellow celebs Willie Nelson and Peter Max ran afoul of the US Government over this same issue – whose money is it? If the money is earned, how can it be contested? Sure, government needs money, but it gives away very valuable privileges for virtually free: corporate charters, standards waivers, utility franchises, monopoly patents, broadcast licenses, resources leases, and land titles. Instead, run government like a business: charge full market value for these pieces of paper, raising trillions each year, and forget about taxing crooners or anyone, no matter how temptingly fat. Then distribute the surplus revenue to the stakeholders, the citizens, as a dividend and you can forgo subsidizing social services.

A tropical people called the Garifuna, living a laidback idyll off the coast of Honduras, are threatened by development. New hotels to be erected for tourists would rob the natives of the land that has sustained their way of life for centuries. The Honduran Government is willing to compensate these black indians, but the people, who say they don't own but belong to the land, don't want to sell. (National Geographic, Sept)
While compensating the displaced sure beats outright eviction or extermination, is it just enough? Do the mainlanders have the right to develop the island beaches – as have others elsewhere before them – thereby raising their standard of living? Or, do the current occupants – who're certainly not the original occupants on a continent settled for over 10,000 years – have the right to keep the islands just as they now are?
Within society, we have criteria for determining when to preserve historic buildings and "old towns". We need to develop the same for older ways of living beyond society. Might letting the past live follow from owning the land in common? There already is a geoist paradise in paradise. In Fiji, 80% of the islands, including prime commercial sites and ocean front lots, is held communally by the indigenous.
What could geonomics contribute to a resolution? (1) Construction projects are typically backed to the hilt by government in league with the local elites. Stopping subsidies would prevent premature or excessive development. (2) There's more than one way to raise a people's standard of living. Sharing rent via a Citizens Dividend would make people less desperate, more open to exploring all the options besides just seeking the tourist dollar. (3) Every place has some sites under-utilized and other pristine ones that shouldn't be touched. Collecting rent impels owners to use land most efficiently. Using some sites more intensely means others sites get used not at all. (4) Taxes tend to make states arrogant and citizens sneaky; neither are used to operating by a moral code that might allow one to see the POV of others satisfied by a lo-tech way of life. Ending taxes clears new moral ground.
People will always dispute the best use for an attractive area. Yet let's make these four geonomic changes. Then displacement might be less arbitrary.

Before Congress on March 9, the son of the famous minister, Rep Jesse Jackson, Jr. introduced an amendment to the US Constitution to guarantee all Americans the "right to a clean, safe, and sustainable environment, which right shall not be denied or abridged by the United States or any State." HJR 33 was quickly referred to the House Subcommittee on the Constitution. On May 16, Rep Conyers, John, Jr. was the only one to co-sponsor putting this basic new right into our federal constitution. So, what are you waiting for? Spread the word! Congratulate the Honorable Jackson! Find him some more co-sponsors (your own rep?).

Farmers in other countries are taking over the job American farmers used to do – feed their own people. That costs US growers market share. Twenty years ago, they hogged 85% of exports of soybeans; in 2000 it was 55%. To make up the income shortfall, farmers grow more, flooding the market, dropping world prices even lower. So the US pays even more subsidies than before, making up about half of net ag-income. (ChScMr, May 1)
Cheap imports are a holiday for consumers but a challenge for producers. Farmers especially, once bereft of tariffs and subsidies, would lose lots of market share and be at risk of losing their land. So that tillers of the soil don't bear the brunt of reform by themselves, government could require any bank that threatens foreclosure to first pay off all taxes – past, present, and near future. That should sway any wanna-be re-possessers to back off and renegotiate or even write off their loans. Banking is the one sector of the economy that can afford and is obliged to absorb bad loans.
Plus, bankers, farmers, and everyone benefit from zero taxes; people keep more while all products cost less. Similarly, getting a Citizens Dividend remunerates everyone and replaces the farmer's ex-subsidies. With this cushion, growers could stay in business most years – and occasionally give their land a year off.

To welcome the school year, New York Mayor Rudy Giuliani used to suspend for a week the city sales tax on shoes and clothes. Shoppers saved, stores profited, and the city took in more revenue. Taking a cue from the city's success, New York State quit taxing sales of items under $110. As logic would have it, by shrinking its tax base, the state raised its tax take. In 2000 from March 1 to November 30, the trimmed sales tax took in $200 million more than in the same period in 1999. (WSJ, Feb 28) Eliminating taxes on sales, incomes, and buildings makes sense any time, but now that the Big Apple wants to rebuild its skyline, ending taxes in favor of collecting site rents makes more sense than ever.

For high-income people, the decisions of lawmakers, judges, and treasury officials about taxes mean a huge difference, like between vacationing in Aspen for a week or in the Alps for the whole season. Watching the to and fro of government rulings is like watching a tennis match. Back on the summer solstice, one court stymied the IRS which was trying to limit a tax shelter used by UPS. About a month later, some guy in the Treasury Department disallowed a tax shelter that very rich Americans and corporations used (was that a smart career move or what?) at least 200 times to evade capital gains taxes by manipulating rules on foreign investments. Next month, we'll have to wait and see. Stay tuned. (The New York Times articles by David Cay Johnston, June 22 & July 27; thanks to reader Matteo Luccio)

Nationally, two-and-half times more families fall below basic family budget levels than below the federal poverty line. In Pennsylvania, it's one in four families with young children who can't always afford basic necessities: they either had to go without food, were evicted or had to "double up" in housing with another family, or lacked medical care during an acute illness. Poor nutrition leads to other health problems. In 49 states, childcare costs are greater than tuition to public colleges.
About 1/3 of families that can't afford the basics live in the suburbs, 1/3 live in cities, and 1/3 live in rural areas. The majority are two-parent families, often with one or more workers; more than 3/4 are headed by a worker with a high school degree or more; nearly half are headed by a worker over the age of thirty. "Work alone doesn't ensure a decent standard of living," said Heather Boushey, an EPI economist and lead author of the study. "Our safety net is full of holes," said KRC Research Fellow David Bradley.
("Hardships in America: The Real Story of Working Families", Economic Policy Institute in Washington, DC and analyzed by Pennsylvania's Keystone Research Center, via The Progress Report)

Some people make money staying one step ahead of the business cycle, shifting investments from stocks to real estate trusts then to bonds and back. They hinge their bets to the 18-year land price cycle, embedded in housing costs. Even before terror toppled the stock market, signs were mixed.

"The UK's Labor government of 1945 was committed to the nationalization not of land but of land values – or, more precisely, the increments of land values as property prices rose. The cause of land taxation has now been taken up by Don Riley, a property developer whose sites and buildings in south London are within walking distance of the Financial Times. Mr Riley's office looks out over a site that was available in 1980 for £100,000. In January 2000 it was sold for £2.6m. It should surely have been possible to tax some of the very large gains that have been created by public policy. And this tax revenue could be used to finance the capital costs of Tube construction, leaving the passengers to pay for the running costs. A levy on windfall gains in land and property values would be a good way to tackle transport congestion." (Samuel Brittain, FT)

"Philadelphia does receive federal, state and county aid to assist in redevelopment. This is a signal for speculators to buy up all available land and sit on it. A land tax will make it less easy to hold onto land that could be developed more quickly.
Exempting improvements to houses for a period of years is good. Yet what if some homeowners or business owners have already fixed up their homes before the program takes effect? The possible resentment of "missing the boat" can be lessened by a general program of tax reduction for all improvements. Taxing land value only (LVT) is an abatement that applies to all. No one has to go to City Hall to fill out applications.
If buildings are taxed less, the city will have more and better buildings. Harrisburg, Pa., has employed LVT to great success. In 1982, Harrisburg had 4,200 vacant structures. Today, there are less than 500. Philadelphia has too much under-used, potentially profitable (for both business and government) land: nearly 37,000 vacant parcels. Higher tax rates on land will provide an incentive to develop or to sell to someone who will.
Numbers from the City show that 73% of ALL taxable properties in the city will see at least some tax savings. Taxes on people owning vast tracts of unused land will see increased tax liability. They will finally bear the tax burden that productive citizens and companies have been paying all these decades.
From all standpoints, it appears that Philadelphia would be able to take advantage of land value taxation. For further information on the Land Value Tax, please call the Greater Philadelphia Association of REALTORS the 'Voice for real estate in Philadelphia since 1908.'"

Joel S. Hirschhorn, Director, Natural Resources Policy Studies, National Governors Association Center for Best Practices (Sep 21): "I've looked over your papers on your site and, I agree, this policy tool (the Property Tax Shift) is important; I will get up a link to your article from Terrain, which seems closest to our work. I hope you saw that we did mention this in our recent new governors report, but did not highlight it."

This cutting-edge institute periodically keeps coming out with some inkling of how to make the world work right. Founder Lester Brown, in Montreal at the annual conference of the Canadian Society of Ecological Economists, told this questioner that the Property Tax Shift is a vital component of the overall green tax shift and cited the WW book, The Natural Wealth of Nations by David Roodman, as their voice on the topic. Alanna Hartzok, a Green Party congressional candidate in Pennsylvania, found in a new Worldwatch publication, #156, City Limits: Putting the Brakes on Sprawl by Molly O'Meara Sheehan in the chapter "Erasing the Incentives to Sprawl": "Most property taxes merge two distinct taxes, one on buildings and one on land. Buildings that require space for elevators and stairs are more expensive to build per square foot of usable space, so taxes on buildings fall disproportionately on taller structures. Generally, the effect of taxes on buildings is to raise rents, disperse construction, and discourage urban redevelopment. A tax on land value, in contrast, is relatively benign. The worth of the land under the building depends only on location, so, theoretically, a tax on the land would neither deter an owner from making improvements nor promote spread-out development."

Doug Scribner, Vice Chairman, Libertarian Party of Orange County, California; At Large Member Libertarian Party of California Executive Committee (Sept 18): "I'm ccing Mark Hilgenberg (another high party official) who also shares our views (reject taxes in favor of land dues and other ways to collect natural rents and reject subsidies - corporate, public schools, etc - in favor of one Citizens Dividend paid to everyone). You are right on. I'm happy to report an increase in Georgist interest among most of my LP friends. Yea!"

In Scotland, there is a move-ment toward a Citizens Dividend, a social salary funded from collected rents. Peter Gibb of the land reform society say it's advanced by the Citizen's Income Trust & Study Centre in the London School of Economics and Poli Sci (where Mick Jagger went to college). Another advocate is one of Gibb's Specialist Advisers, Stuart Duffin, director of the Scottish Institute for New Economics, co-founded by geonomist James Robertson in cooperation with followers of Rudolf Steiner, founder of the Waldorf Schools.

Is the pot calling the kettle black? Some people at the World Bank, that seemingly imperturable monolith, not only listen to reason but also speak it. Perhaps buoyed by the popularity of Hernando de Soto's latest book which critiqued corruption in lagging, tropical economies (and was reviewed in our winter issue), now World Bankers have done the same in their annual World Development Report. They also echoed a work most "experts" have forgotten, The Story of Land by John Powelson (1988; reviewed here 1999 Summer); the bank's new report (perhaps recalling the fiasco of transition in the former Soviet bloc) noted that transplanting institutions does not work; better ones must be built on what's already there. (Wash P, Sept 12)

The editors at this Motor City daily pointed out (August 28) that Aregentina is not helped but held back by loans. What their struggling economy needs is not aid but trade, not debt ($130 billion) but mutual gain. "Argentina will first have to lower the tax burden on its citizens and release their productive potential… The United States could make some contribution by relaxing trade restrictions that have limited Argentinian exports such as wheat and cash crops… Giving Americans access to Argentinian goods – instead of Argentinians access to American taxpayers' pockets – may be the best way to help both." Well, part of the best way. The other part, the key, is collecting and sharing natural rents.

A Harvard man who led the Fed and was the nation's first Economic Advisor, under FDR, the Canadian Lanklin Currie: "Controlling land was the key to civilization... It is a striking example of our economic illiteracy that we have more or less quietly acquiesced in the private appropriation of socially created gains, letting fortunate owners and their heirs levy tribute or claim a share of the national income to which they have contributed nothing… The rise in land values (and, to a small extent, building) that results from growth in numbers and income of a community is a reflection of pure scarcity. It arises from the community and should belong to the community." Ecistics, 244, March 1976, p 137-143.
President Franklin Delano Roosevelt himself, 1939: "The man who, by good fortune, sells a narrow right-of-way for a new highway makes a handsome profit through the increase in value of all of the rest of his land. That represents an unearned increment of profit – a profit which comes to a mere handful of lucky citizens and which is denied to the vast majority." ("Corridor reservation: implications for recouping a portion of the 'unearned increment' arising from construction of transportation facilities: final report", 1994, Virginia Transportation Research Council, Charlottesville, Va. Series title: VTRC; 94-R15 by Robert J. Borhart)

Jared Diamond's deserved bestseller notes (p 108), "All other things being equal, people seek to maximize their return of calories, protein, or other specific food categories by foraging in a way that yields the most return with the greatest certainty in the least time for the least effort." Well over a century ago, Henry George made the same point, positing it as a principle by which we can understand economic behavior. While economists criticize George for exhuming axiom, academics forgive Jared. Diamond concluded with guidelines for making history into a hard science, the same goal old Henry set sight on for economics. While it's probably too late for that superstition (economics is to geonomics what astrology is to astronomy, alchemy is to chemistry), hopefully Diamond's insights into why one society prevails over another (the former's environment is bountiful and their geography is non-axial) are received in time.

Subtitled, How Misused Tax Dollars Harm the Environment and the Economy, it's out this year from Island Press by Norman Myers and Jennifer Kent. This book belongs in the Corporate Hall of Shame with Take the Rich Off Welfare (1996) by Mark Zepezauer and Arthur Naiman. As did the earlier work, it tallies up the tax dollars from public treasuries to deep private pockets. PS then shows how this revenue fuels waste of the natural world. The book is thorough; it cites many examples of our public pipeline to polluters (almost all the ones we cited in our article published in Rhizome, the newsletter of the Environmental Studies Association of Canada, last summer). And better yet, it reaches geonomic conclusions, albeit shyly, saying even for a worthy cause like defending the environment, no subsidies may be better than green subsidies. Thus people who normally find all sorts of projects for tax dollars now question the entire process. Seems left and right may yet meet on geonomic ground. Again, the world is catching up to us!

Todd Litman, BC's Victorian Transportation Policy Institute (August): "Nice work (bibliography: transit from rent). Thank you very much! Are you planning to post this somewhere? If not, may I incorporate it as a chapter into our Online TDM Encyclopedia? Of course, I'd give you full credit." Sure! Thanks for asking. Taste this.
William Vickrey, Nobel laureate economist, said mass transit systems should keep fares at marginal cost (close to zero in a well-used system) and fund itself from site rent. Is it possible? A perusal of 58 academic articles found two who thought so – Rybeck, who tallied the new values yielded by Washington's Metro, and Riley, who did the same for a London Tube extension. Plus, Hong Kong's trains receive no public subsidy; they're operated by public corporations at a profit.
A few researchers bothered to compare the rise in rent to the cost of the system. Bruce Allen of the Federal Reserve found Philadelphia's Lindenwold Line raised site values by more than its construction cost. Alex Anas found Chicago's proposed southwest line would raise enough site rent to fund 36-40% of its capital cost. Other investigators found lesser amounts in other cities. In New York, moving a concession stand in a station only 20 feet doubled the rent the government collected.
Altho' the "capital" cost of constructing a transit system now includes acquisition of land, land price would be decreased by the collection of ground rent. When the public gets more, that leaves less land rent for private owners to capitalize into price. Were land prices thereby lowered, then collected rent would not have to cover such an enormous bill for transit.
Most researchers examined only nearby property prices. Tideman points out that's shortshighted; higher land values means more tax revenue where there's a land tax or property tax. Borhart, who worked for government, not in academia, noted this, too. Plus, mass transit systems could tap into the savings from reducing congestion and pollution; both congestion pricing and emission permit fees could be used to help fund the transit system.
Stepping out of their "neutral observer" role, many researchers recommended co-developing land in a public/private partnership, which is less politically risky than taxing land. By themselves, private developers often build transit systems and recoup the cost from the sales of the new developments. Economists accept such profits as commonplace, but when the examined transit system is public, then the amount of the value of the new development becomes controversial.
Ask for a copy of the complete annotated bibliography.

Our letter in The Oregonian, "Property tax has good effects" (July 23) inspired three readers to write me: Jerry Alexander replied with a letter three times longer (Jul 27), noting in part: "Oregon has a greater tourist trade than New Hampshire, thus a sales tax here would lower income and property taxes by taxing the tourist." Assuming politicians would actually shift the tax burden rather than just add another tax. But what's wrong with touring Oregon? Doesn't everyone have a right to travel, to visit nature anywhere, unimpeded by taxes?
"As well, we have three times the number of cars on the highways. A sales tax on cars would help to improve our roads." If it were earmarked specifically for this expenditure. Still, a sales tax on cars is less of a user fee then a gas tax. And improving roads raises site values along the roads, giving those owners a free ride, unless the increase in land value is collected for all of us.
"Florida, Nevada, Arizona and Washington all have low or no property taxes as a result of their sales taxes." They also have more poverty and higher land costs, necessitating more borrowing. There's lots of advantages to less debt in society.
"Property taxes tend to deprive the elderly of their property." As did the abolition of slavery.
"California's Prop 13 helped the elderly against high property taxes." And now their children and grandchildren cannot afford to live in their grandparents' state. Instead of reducing the property tax, remove it from buildings, go ahead and collect the land rent, then rebate it to residents, helping homeowners stay put.
"Our main problem with the tax structure is that we have run-away government spending." So rebate revenue to residents.
"The services are needed." The state could fund some from collected revenue (such as the police), some from user fees (infrastructure). Residents could pay for others from rebates (schools).
"If we had better controls on the waste in government, there would be know need to discuss property, income or sales taxes." If we used dues and fees, there'd be no talk of taxes. If we used dividends, there'd be no talk of waste. Taxes are misleading. What's overlooked are publicly generated values. To evolve beyond taxing the values that individuals create, let's share the values which we together create (which attach to land which none of us created).
Michael Hoffmann, neighborly reader of letters in The Oregonian (July): "I wholeheartedly agree with the views you expressed regarding property taxes. As a new homeowner in NE Portland, I hate the thought of being penalized, via higher property taxes, because of improvements I have made to my property. This is a terrible disincentive to up-keeping one's property. I could spend that taxed money on either paying off more of my mortgage (lowering debt) or purchasing various goods – both of which are beneficial to the economy. I am curious though – you mentioned that Pittsburgh has been successful through "taxing land" (by this I assume you mean that individual property improvements are NOT taken into consideration) – how then are property taxes for different areas determined, if not by the general quality of buildings/homes in the area? Much of my concern revolves around feeling somewhat guilty for being part of the gentrification that I fear will displace a lot of the good people in this neighborhood who have lived here for many years. I would greatly appreciate any further insight you may have on this issue."
Pittsburgh for a couple decades up until just a couple months ago was taxing land six times as much as buildings. They enjoyed the most affordable housing and by far the lowest crime rate of any major US city. Got named "America's Most Livable" twice by Rand-McNally. But that was not good enough for the speculator lobby. Land taxes are determined by the value of the location. In New Zealand, when a town switches from the conventional property tax to a land value tax, the number of appeals to the local board goes down. Assessing is easier and more straightforward when one does not have to argue over every new bathtub or granny flat. The process of assessing site value might seem hard to us but the places that tax only land, or lease land such as Hong Kong where even under the British all land was/is public, there are no major problems.
Gentrification will displace people in your neighborhood who have lived here for many years until they shift the property tax from improvements to locations. Then gentrification will take place everywhere thru-out the jurisdiction, so no one place will be especially and singly desirable and over-priced. Also, the shift promotes jobs, raising wages in the area. Plus, some of the sky-high site values could be rebated on a per capita basis, as Alaska does with oil rents.

Specalists took a lively interest in "The Shape of a Sensible Energy and Environment Policy" by Nicolaus Tideman. He suggested that countries who use more than their share of environmental resources pay countries who use less. Each country would propose a rate of payment and a global agency would take the population-weighted median. Countries could lower their charge or increase their credit if they curtail their emissions or their population growth or both. If some nations owing others refuse to cooperate, the rest of the world could place import duties on products from those nations, reflecting the unpaid environmental costs of producing them.
Those who can mitigate global warming through actions such as planting trees should, with compensation for extra effort and charges for sub-par effort. Countries could choose to tax fossil fuels in proportion to their carbon content. This will raise the price of coal most, the price of oil and gasoline less, and the price of natural gas slightly. There would be less of these fuels and more solar power, wind power, hydro power, etc. By taxing harmful activities, countries gain a "double dividend" – a reduction in such activities and revenue for reducing other taxes. And if other nations are still owed, shifting taxes may raise revenue for compensating them.

Portland's only daily, The Oregonian, ran our letter on the virtues of the property tax (thanks to having the land tax embedded within it), which sparked some lively replies (above).
VTPI NEWS by the Victoria Transport Policy Institute (Smr; Vol. 4, No. 2): "New & Updated Reports: The following documents are posted at http://www.vtpi.org. 'Does Public Transit Raise Site Values Around Its Stops Enough To Pay For Itself, Were The Value Captured?,' by Jeffery J. Smith. This paper examines research on the land value impacts of public transit service, and particularly whether the value increases can repay some or all of public transit service costs. It summarizes the results of more than 70 studies. Jeffery J. Smith is the President of the Geonomy Society, a group of academics and activists who provide information about how the flow of natural rents impacts economies, societies, and the environment. (Posted with permission.)"

Martín Chaverri Roig, professor of former presidents of Costa Rica (Sept; in Spanish): "Despite feeling that life has changed and will keep changing since the attack by fanatics on New York, we also feel that we have to keep moving forward with our ideas for a better world. I attended two conferences on urbanism, sponsored by the universities, which took place in the Legislative Assembly. Many of the rectors, I knew. I distributed copies of my work on Metropolization and copies of your document, 'Giving Life to the Property Tax Shift', coauthored by yourself and Kris Nelson; it served as the basis of mine. I'll distribute more at the next conference. At the Government's presentation of the National Urban Plan, by chance I sat behind the Minister of Housing, to whom I of course gave a copy. Tho' our efforts are often thankless, at least I should thank you. This work is very good, eventho' I don't think it helps Libertarians join our group; when I brought up the rent of land, they threw the telephone at me." Confused and irritated, people will throw anything handy. At least we can be grateful they're not great shots.

July in Minnesota at the inaugural conference of the US Society of Ecological Economists, on how rents and taxes now tilt the playing field against nature. Pennsylvanian evolutionary biologist Heather Remoff (July): "Thanks, Jeff, this report on the conference of the US SEE is wonderful. You certainly seem to be where the action is or else you have a way of making the action happen. Keep us posted on your potential book deal. I'm excited for you – and for the geonomic movement."
We gave our rap and gave away hundreds of pieces of literature. Copies of the reports and the presentations (above and below) are available to all.
August in Montreal at the annual conference of the Canadian Society of Ecological Economists, on shifting the property tax. There we learned that the actual cost of meeting regulation was at most half of what the affected businesses had predicted. Businesses that were forced to clean up their act did not for long lose money but soon gained. They cut pollution by cutting byproducts by getting more from less. Their greater efficiency enabled them to grow their market share at the expense of international competitors who lagged behind the clean-up curve. In Pittsburgh at the annual conference of Georgists, we learned that back in 1870, when Henry George was writing Progress and Poverty, each year in the steel mills in Allegheny County alone, 500 people were killed and 500 more were maimed. Crippled for life, back then you did not collect workman's comp, food stamps, or much of anything. On such carnage were Carniege-like fortunes raised.
Georgists recently lost one of the best real-world examples of collecting rent when Pittsburgh politicians leveled the tax rate on land, which had been six times the rate on buildings. They excused themselves by pointing to the huge number of complaints received after the city updated the value of residents' property, after decades of failing to keep assessments current. The firm hired to do the reassessing was also paid $100 per every appeal. At 70,000 appeals, let's see, that's an easy $7 million bonus. Two other cities in Allegheny that had to update assessments at the same time (due to a court order) had no problems; their rate on land was three times higher than Pittsburgh's old 6:1 rate.
After the conference, we leafleted the Labor Day parade. In a union town like Pittsburgh, everybody was marching, very few were watching from the sidewalk. If workers take to heart those leaflets, they'll take back their land tax and keep their affordable neighborhoods. Notes < donors & others

Ed Clarke, OMB economist (July): "Great issues – both the quarterly and what's in them. Enclosed are my annual dues. Bestest!" My gratitude can't top that.
Maurie Fabrikant, Aussie jazz musician (July): "Regarding my contribution to your service, I'll be happy to be classified as a 'supporter' and, therefore, shovel $US25 in your direction. Until I hear from you again, I wish you 'Gesundheit!' Let's hope it's catchy.
C. Lowell Harriss, Columbia emeritus (May), cum hefty check: "I didn't know that I'd fallen by the wayside. Send nothing but The Geonomist." And well wishes plus, rather than periodic reminders to each, yearly pleas to all.
Mel Leasure, Virginian intentional communitarian (August): "The Geonomist gets better and better." Bit by bit.
Wayne Roberts, Co-ordinator, Toronto Food Policy Ccl, Dept Public Health (Aug): "The food banks and many other NGOs have to spend an enormous amount of time and a huge portion of their donations on real estate. Why would the City sell off properties in the private market when they could be leased to NGOs on a cost recovery basis? It preserves the value of City real estate while earning revenue and providing support for partners. The NGOs make Toronto a livable city that commands good rents; why should they have to pay top value for value they, not the landlords, create? (I may have been reading too much Henry George.)" Then again, maybe not.

For joining or rejoining, thanks to sustainers Dr C. Lowell Harriss, Al Hartheimer, and Mel Leasure, supporters Dr Polly Cleveland, John Fisher, and Cmdr. Hamlet Hilpert, and subscribers Dr Robert Andelson, Joe Casey, and Ed Clarke. Anyone else, if so moved, please contribute dues. We're not yet up to mass mailing or reminding members of when their year is up. Instead we make intermittent hints and maybe one big pitch during the season of giving, which should never go out of fashion.

GW did not exactly repeal the estate tax; Congress merely shelved it for a decade. So years from now, when both the law is ready to expire and worn out Baby Boomers may be willing to, too, bear in mind that in Oregon, physician-assisted suicide is legal – just in case you want to time your exit and bequest just right.

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THE GEONOMIST

Vol. 10, No. 2
Editor: Jeffery J. Smith

THE GEONOMIST

Vol. 10, No. 2 Editor: Jeffery J. Smith

Vol. 10, No. 2
Editor: Jeffery J. Smith