The Geonomist Volume Twelve Issue Three

Geonomics is …
more transformation than reform; it's a step ahead. Harvard economics students this year did petition to change the curriculum, in the wake of the English who caught the dissension from across The Channel. French reformers, who fault conventional economics for conjuring mathematical models of little empirical relevance and being closed to critical and reflective thought, reject this "autism" – or detachment from reality – and dub their offering "post-autistic economics". Not a bad name, but again, academics define themselves by what they're not, not by what they are, unlike geonomists. We track rent – the money we spend on the nature we use – and watch it pull all the other economic indicators in its wake. We see economies as part and parcel of the ecosystem, similarly following natural patterns and able to self-regulate more so than allowed, once we quit distorting prices. To align people and planet, we'd replace taxes and subsidies with recovering and sharing rents.

In Brazil, the bill to institute a Citizens' Basic Income in 2005 advances step by step. Last December 2002, the Brazilian Senate approved the bill introduced by Senator Eduardo Suplicy. After a favorable report by Representative Paulo Bernardo of President Lula's ruling party, the Chamber of Deputies' Fiscal and Finance Committee approved it October 8. Now the Justice and Constitution Committee must examine it. If approved by them, the Chamber of Deputies will likely pass it. Then President Lula will sanction or veto it. If signed into law, it will institute the Citizen's Income gradually, starting with those most in need. The amount will reflect the availability of resources. (US BIG Newsletter, fall)

Venezuelan President, Hugo Chavez, poorly portrayed in the US press, is quite popular with some of his fellow countrymen. At an August 31 ceremony with farmers, he handed over the deeds to lots of land. The government's Plan Zamora transfers millions of hectares of farmland to tens of thousands of poor rural families. As they say in Latin America, “land is life”. Yet it also spells death; over recent years, mercenaries have killed 79 agrarian activists. If Chavez were to balance his land reform with shifting taxes off useful enterprise, his administration might survive the staunch opposition from wealthy owners and US investors.

Elsewhere in the South, Namibia is woefully behind its target acreage of transferred farmland. Ironically, Namibia has a land tax but only targeting foreigners; while its cadastre remains out of date, the law is useless. Further, it'd work better and be fairer if applied to all owners, no matter their background or connections to the ruling party. In South Africa, their supreme court upheld a tribe's claim to land now containing a diamond mind, explaining that the mining company's takeover had been racist. (Progress Report)

This late in the fall, Northwest rivers are still low and lazy. Nobody has time to lounge by to watch the wafting water, instead working more than 40 hours per week. Come Christmas Eve, I'll knock off for a day or so, then hope to cheer the New Year with some of you other over-workers. The Fed says we work more because we're taxed less. They ranked the G7 countries by tax burden and workweek and found them inversely correlated. (Wall Street Journal, Oct 20) Yet for many, both burdens have been growing. And some in the highest tax brackets brag about putting in the longest hours. Maybe we don't work more because we can but because we have to. Since lighter taxes let land values inflate, those nations also carry the heaviest mortgages (the source of bankers' income). If those ground rents, and all other rents, were instead shared among us all, I'd ride a raft downstream. And water levels would be higher, too, as the lost rains return. Happily, sharing rent while de-taxing effort would also unshackle the energy technologies alternative to burning fossil fuels. That'd halt global warming, alas, but in the Northwest we really hadn't adapted yet to so much sun anyway.

To the victor go the spoils: the power to tax and to control land. In one of the US's war zone, while millions of displaced Afghans are living in camps or in makeshift housing, the US-backed govern-ment hands over homes and public land to military commanders. Refugees returning to their homes have found them occupied by officers who refuse to leave. In Kabul's hot real estate market, which has ballooned with the influx of thousands of foreign journalists, advisers, and aid workers, commanders who'd bought a lot from public land for about $1,000 each resold some for more than $80,000. "We're developing a kind of land mafia," said Yusuf Pashtun, the governor of Kandahar who had been the minister of urban development. When developers tried to demolish mud homes next to one of Kabul's most exclusive neighborhoods, residents who'd lived there for a quarter-century went to the United Nations who moved in troops, halting the demolition. Displacing citizens costs the new government credibility and plays into the hands of the Taliban, now fighting as a guerrilla force. (Philadelphia Inquirer, Sept 20, via Richard Biddle via Ken Ford)

Anti-marketeers criticize trade for the race to the bottom – governments lowering standards to attract dirty industries. More precisely, the problem is not with trade per se but with trade rules, rules written for governments by businesses with scant regard for workers, consumers, and nature. When rules respect our rights to a healthy environment or product or workplace, trade can benefit everyone, even drive a race to the top. For example, to sell produce in Western Europe, which limits the pesticides on fruit, the Thai government started banning the same poisons already banned in the West. Once cleared, Thai growers can sell in the more lucrative Western markets, and Thai fieldworkers can recover from the illnesses caused by inhaling toxic fumes. (Seattle Post-Intelligencer, Sept 8) Instead of leave the World Trade Organization to business interests, reformers might try to democratize it and promote trade treaties that raise the bar. Redefine “free trade” to mean “trade in goods free from exploitation”.

Great Britain's five main insurance underwriters refused to offer coverage to farmers considering growing genetically modified (GM) crops, or to non-GM farmers seeking to protect their businesses from GM crop contamination. The five firms felt unable to insure farmers against potentially huge compensation payouts if widespread fears about GM food and farming proved true. The companies said that too little was known about the long-term effects on human health and the environment of growing GM for them to be able to offer any form of coverage. Some firms even compared the risks of GM to the Thalidomide scandal of the 1960s – in which vast sums in compensation were paid out when babies were born with deformities resulting from the drug. Others cited the payouts caused by the use of asbestos. (The Guardian, Oct, via the Progress Report) If governments refuse to grant GM seed sellers any special exemption from liability and instead defend people's right to a healthy environment, then GM food is still a long way off from English tables, if it ever will prove itself save enough to show up there.

Fleeing high land prices and the threat of terrorism, Americans flock to Mexico where 600k gringos live, more than in any other foreign country. To enjoy the weather and weak regulations, many settle in Baja California, more closely connected by highway to the US's alta California than to the Mexican mainland. A comfortable home, on beachfront yet, is 1/5th the price of a comparable home across the border in San Diego. To circumvent the Mexican constitutional ban on foreigners owning the shoreline, Mexican banks set up land trusts for foreign trustees. Finding enough water for the newcomers where rainfall averages five inches annually may force developers into sustainable apt-tech design. From the thousands of Yank immigrants, Mexico gains precious capital; from the millions of Mexican immigrants, America gains cheap labor. Americans, saddled with unaffordable housing, must spend too much; Mexicans, shackled by joblessness, can't make enough. For some, trading places works. (The New York Times, Oct 26)

Eventho' you pay an owner for land, you're not compensating him for producing the location's value; the surrounding society and nature provide that. Before the South California fire the size of Rhode Island, a San Diego couple asked $750,000 for their three-bedroom home. Afterwards, $350,000 for the fire-cleared lot. (LA Times, Nov 2) In Maryland after Hurricane Isabel blew thru, waterfront properties were still worth a million whether the bungalow was still standing or not; most buyers would've replace the shack with a McMansion anyway. (Baltimore Sun, October 13) Buyers of a condo in Santa Monica pay $750,000 for one with a view of the mountains, $1 million for a view of the ocean; in San Franciso, $1.4 million with a view of the Golden Gate and bay, $800,000 without; and in New York, $1.5 without a view of Central Park, $2.4 with (NYT, Spt 18). Under a busy El platform station near DePaul U and Lincoln Park in Chicago, the rent for a hot dog stand, an area of about 25 square feet, is now $2,500 per month (Chicago Tribune, Nov 10, via Sue Walton). In rural Oregon, one owner offers 100 acres near nowhere free to new business; to accept, call Mike McArthur, 541/565-3416.

Do families squander money on big-screen TVs, SUVs, and eating out? In the 1990s, the average family's credit-card debt rose 53%; middle-class families saw a 75% increase, very low-income families a 184% jump. Interest rates that Jimmy the Leg-breaker didn't charge 25 years ago transfered billions every year from families to a handful of big banks. In the past 25 years, bankruptcies rose 400%. This year, more children are going thru their parents' bankruptcies than their parents' divorces. By decade's end, 6 million families with children – 1 in every 7 such families – may declare bankruptcy. Elizabeth Warren, a Harvard prof, notes when middle-class mothers got jobs, a new expense was child care. Plus, parents budgeted more for homes near a desirable school, bidding up their price. When one parent lost their income, they couldn't cut back on the heavier mortgage. So that families can live in affordable neighborhoods while sending their kids to good schools, Warren, co-author of The Two-Income Trap, proposes public school vouchers. (Christian Science Monitor, Spt 17) If we fund those vouchers from ground rents, we'd turn these sky high costs into public benefits.

Not only is household debt growing, it also never ending. Before finishing one mortgage, most people start another. Rather than pay off one mortgage in 15 or 30 years, people pay the home loan lender their entire working lives, even beyond. According to the National Association of Realtors, homeowners stay in their homes an average of six years. Census data show nearly one in five had moved in the 15 months before the latest census. Less than one in ten households stays in the same home for 30 years, the typical length of the mortgage, and the first few years of payment are nearly pure interest. (NYT, Nov 21) Thus many home “owners” do not finish paying off their mortgage but carry that debt their entire lives. Of homeowners 65 years or older, in 2000 over 28% still owe mortgages; in 1990 it was 20.7%, in 1980 it was 18.9% (USA Today, Nov 10). They'd be better off paying ground rent to their community forever and not paying any taxes while getting back a dividend.

In California, while the new governor admits to getting some, his state isn't getting any – rent, that is. Their budget is about $100 billion. Because of all the creative accounting, estimates of the deficit range from $8 billion to $32 billion. Mason Gaffney (member and UC Riverside prof) notes that homes valued at $1 million or more, if taxed at 1%, would yield $15 billion; taxed at 5%, $75 billion. Eventho' he has sworn not to, taxing the other 97% of all homes in California, the commercial buildings, the agricultural and mineral land, etc, would let the guv balance the budget, pay off the debts, and abolish all other taxes. The state could even soon pay a rent dividend, instead of limit the tax on land values.

South of LA, Lido Isle was acres of salt grass and weeds. In 1932, you could buy lots for $550. By 1935, most of the 800-plus lots remained unsold. Fast forward to a quiet jewel of a community surrounded by Newport Harbor. What sold for half a million in 1990 is now $1.1 million. The house aged, but demand jumped. According to the 2000 Census, the median sale price is about $1 million, with an accompanying property-tax bill of about $10,000. Thanks to Proposition 13, some pay much less. One resident paid taxes on assessed value of $141,538 but sold her house for more than $1 million. Another who bought a two-story home in 1968 pays only $2,240 in property taxes while a neighbor who bought a smaller home only yards away in 1999 pays nearly seven times as much. (LAs Times, Spt 29)

Pittsburgh PA, even while losing population was named America's Most Livable City back in the 1980s, when the Steel City taxed land value six times more than buildings. Since returning to the conventional property tax in 2001, the city hugely reduced construction starts, well below the state average. Now the city faces bankruptcy and had its bond ratings lowered to junk status by Standard & Poor's. Politicians want to tax sales, yet Pittsburgh – home to HJ Heinz Co, Alcoa Inc, PNC Financial Services Group Inc, and Mellon Financial Corp – has steep site values downtown, waiting to be recovered (Bloomberg News, Oct 16) In Oregon, Portland's taxes on business drove the corporate HQ of Kuni, which owns car dealerships, across the River Columbia to Vancouver, where Kuni can save hundreds of thousands of dollars annually (Oregonian, Spt 18). Rather than tax sales or profits, charge for using sites, quite valuable in city centers. Land dues drive down land prices, so downtown businesses don't pay more. And not owing for succeeding in sales, business booms. They employ more residents and pass on the tax savings as lower prices, benefiting consumers, too. It worked once in Hong Kong.

You hear GM and you think cars, right? Yet making cars loses GM money, relatively; profit declined 91% from this time last year. Still, last quarter they posted nearly a half billion profit. From what? From financing, raking in $630 million; mortgages alone boosted earnings by $100 million. GM also saved by reducing its reserves for recalls and under-funding their pension for their workers. (Reuters, Oct 15) Even for manufacturers, the real money is the rent for land under homes. Like early industrial magnate Andrew Carnegie said, it's tough work to make money in production but any laggard can get rich in real estate.

Eating natural foods and medicines, indigenous people around the world used to be healthier than industrial people; now industrial pollutants have made them the highest-risk people. Here in the Northwest, bout 2,000 to 3,000 Yakama tribal members survive on subsistence living. The average tribal member in the Northwest consumes 8.3 times more fish than an average non-Native American, a staple laced with toxic chemicals. Tribal children who regularly consume fish from the Hanford Reach, where the nuclear power plants are and the last undammed stretch of River Columbia, develop central nervous system disorders and immune diseases 100 times more often than do non-tribal children (The Oregonian, Spt 21)

Lake Erie is dying again. In the 1970s, the stench of dead fish was enough to force government to curb polluters. For a while, the lake got better. In recent years, for weeks each summer a dead zone develops deep in the center of this big body of fresh water. Ecologists wonder if the clean up measures went far enough. (USA Today) And the gulf waters off Florida are too fouled to yield food, too. No one knows for sure why.

Mining corporations complained that federal law did not give them enough room to pollute. The 1872 Mining Law, which lets companies claim public land for nearly free, allowed five acres for "mill sites", but modern mining needs more to work a standard 20-acre claim. Starting in the late 1970s, mining companies adopted cyanide leaching, which turns several tons of ore into an ounce of gold at a profit. But where can they dump the massive quantities of toxic mining waste? The sympathetic Department of Interior, rather than collect security deposits or require restoration insurance, under Bush now allows companies that mine gold, silver, and other precious metals as much public land as they need. (Los Angeles Times, Oct 12) Contrarily, when Indians didn't get the agreed upon payment for land that whites took, they took the Interior Department to court, asking for a full accounting. When the judge ordered the accounting to proceed, the government bureaucrats got some Congressmen to introduce an amendment to the Interior's appropriation bill that would delay the reckoning. (Indian Trust ListServ, Oct 25)

Revising themselves yet again, the Bush administration now admits that quitting fouling our nest does pay off. While industry complains about the cost of curbing their pollution, after they do, the benefits dwarf the earlier expenses. Trying to clean up the air we all breathe, over the last 10 years industry and government spent from $23 to $26 billion to retrofit plants. The resultant fewer sick days, hospital visits, and premature deaths saved from $120 to $193 billion; benefits outweighed costs by five to seven times. Earlier Bush's OMB had said the costs and benefits were just about even. (Oregonian, Spt 27) For industry to reduce both its pollution and its costs, it needs to use an energy alternative to burning fossil fuels. The various solar energies – wind, photovoltaics, etc – become cost-competitive sooner if we abolish subsidies to all fuels and taxes on all earnings while recovering natural rents. That'll shift investments from the inefficient entrenched ways into perfecting clean energy technologies.

Microsoft keeps losing in court. It's a monopoly. It overcharges. To settle class action suits, Microsoft established a reserve of $1.55 billion (a fraction of Bill Gates' paper worth). It paid California consumers $1.1 billion in January, Floridians $202 million in April, West Virginians and Montanans earlier this year, and Kansas, North Dakota, South Dakota, Tennessee, North Carolina, and the District of Columbia customers another $200 million in October. Similar suits are pending in five other states. Microsoft agreed to give vouchers for buying computer hardware and software, including products produced by competitors. MS agreed to turn over half of any unclaimed amount to schools needing computer upgrades. Earlier in the year, Microsoft settled a claim by AOL Time Warner. It has yet to settle antitrust accusations by the European Union and a legal challenge from Sun Microsystems. (New York Times, Oct 29) Wouldn't it be tidier to just charge Gates and crew the full market value for their patents and copyrights, toss those billions into the public kitty, and pay citizens a dividend from that?

Just one big liar among many, Freddie Mac finally admitted to not just understating but also overstating its earnings by, oh, a billion or so. These financial criminals are getting caught – a lot – but are they getting punished? At the rate that Bush's SEC is filing enforcement actions against the ABCD of accountants, brokers, CEOs, and directors for lying and stealing, they'll break the record of 598 set last year by a baker's dozen. Enforcement actions are up 25% from four years ago. While it's heartening to see the guys in white hats round up the criminals in white collars, it's disheartening that they're so many of them who've done so much harm. Perhaps they'd stepped on the wrong toes and now are destined for more than a slap on the wrist. Perhaps these actions are needed to bring the wary back into the market. Certainly the enforcement efforts of New York State's Eliot Spitzer have raised the bar, forcing the feds to catch up and do a better job defending investors. Perhaps to let the federal guard dogs get back to napping on their watch, Congress is considering a bill to keep state regulators out of enforcement of rules for dealing stock. (The Chicago Tribune, Spt 10)

In October, residential construction hit the highest level in 17 years. Builders broke ground on 1.96 million units, a 2.9% increase from September's pace. Opposite sides of the nation went in opposite ways: in the West, residential building projects jumped 17.7% while in the Northeast they plunged 18%; in the Midwest they fell 8% while in the South they rose 4.9% (The Associated Press, Nov 19) Might such frenzy be the death throes of the present phase of the 18-year land price cycle?

In the second quarter, homebuyers paid only 0.78% more, the lowest increase since 1996. Climbing much faster than home-site prices was mortgage debt, up 14%. That shrunk the equity in the location from 55.3% to a record low of 54.3%. The number of people behind in their mortgages rose, after a few quarters of fewer delinquencies. The second quarter they rose from 4.52% to 4.62%; first-time homebuyers rose from 11.65% to a record 12.59%. (Wall Street Journal, Spt 11) The commercial mortgage delinquency rate climbed steadily. From a low of about 0.75% four years ago, it's now 2.37% (MBA website, Spt 17).

Down where the airport is called “Bush”, inability to meet the mortgage has reached the upper middle class. More homes priced up to $600,000 end up on the auction block in SRO halls. The number of foreclosures in October was 10% higher than last year, the highest total since December 1989. The low interest rates over the past two years helped first-time homebuyers purchase homes too big and/or too spendy for their incomes. And the Fannie Mae loan program lightened up on income ratios, credit requirements, and equity requirements, so borrowers intending to apportion more of their paycheck to the mortgage still got approved, could even finance more than 100% of the purchase price. Easy credit inevitably backfires by inflating land costs. Then servicing a bigger debt increases the chance of default, especially now as Houston companies lay off executives (Houston Business Journal, Nov 28)

If the government doesn't revise downward (again) their 7.2% third quarter growth rate, that'd be the fastest spurt since 1984. Yet most of the new spending comes from debt: government spending more on war while taxing the rich less, and households taking on second mortgages to buy big-ticket items before bankers raise their rates. In October, manufacturers responded with their most active month in 20 years.

Given that manufacturers use less than 73% of their capacity (New York Times, Oct 19), more manufacturing does not mean more jobs. And shades of 1984. Paul Krugman notes that during October, each week headlines declared that unemployment fell from the previous week; a week later, the past week's number was revised upward, and the hailed improvement disappeared (New York Times, Oct 31). For a recovery, this one is not very ecumenical. For the first time since 1939, a recovery reached the 31st month without replacing all lost jobs. For the first time since 1959 (with the exception of one slump with only an 0.1% decline), a recovery reached the 30th month without restoring all lost wage and salary income; since March 2001, it has fallen by 1.2%. (Economic Policy Institute, Price with Fungard)

Deriving all that output from so little labor, productivity rose 9.4%, also the biggest jump in two decades (USA Today, Dec 4) When all that output comes from so little factory capacity, you could say capital productivity is high, too. Imagine if those gains in either productivity were sustained and translated into shrinkage of the workweek; in about a decade it'd be a workweeklet with five days off.

Even if Bush's cronies and campaign contributors were to end up owning every square inch of Iraq, the loot would never leave the country if Iraq's next government uses taxes or fees or dues to recover the rent for land and resources. And rather than corrupt the new rulers, those rents could uplift the people. Such a scenario is promoted by mainstream US media:

The New York Times (Spt 10): “One Iraqi proposed a simple solution instantly endorsed by the other men on the sidewalk: 'Divide the money equally. Give each Iraqi his share on the first day of every month.' That is essentially the same idea in vogue among liberal foreign aid experts, conservative economists and a diverse group of political leaders in America and Iraq.”

The Christian Science Monitor (Spt 16): “Iraq should distribute its oil revenues directly to its 25 million citizens, with each individual receiving $600 to $700 per year or $3,000 to $3,500 for a family of five. Beyond supporting basic human needs, much of this cash would be invested in small businesses, services, agriculture, and the other ingredients of a vibrant economy – without political strings. People should be trusted not only with the political life of the nation but with its economic life as well.” Bruce M. Everett, ex-manager for the Middle East for ExxonMobil's natural gas department 1992-1997, now at Tufts University.

In Russia, a powerful man, the president, jailed a rich man, an oil baron. While Putin came to power via the KGB, Khodorkovsky came to wealth via stealing from the commons, the underground assets. Western media portrays his arrest as a return to authoritarian ways. It warns that Putin's attempt to staunch the hemorrhaging of public values into a few private pockets – which has been capitalism's modus operandi thru-out its history – would cripple the attempt to metamorphose into a market economy. Actually, it's just what the transition needs. Most Russians understand natural rent is not to be hoarded but shared. Supporters include prominent politicians: Sergei Mironov, Chairman of the Federation Council; Yevgeny Primakov, Head of the Chamber of Commerce & Industry; Gennady Zyuganov, leader of the Communist Party; Boris Nemtsov, leader of the Union of Right Forces; and Sergey Glazyev, member of Russia's Duma and head of Homeland (Moscow News, Nov 4).

Peter Barnes, founder of Working Assets, posts his Report on the Commons on the web. It broadens the commons to include quiet but subtracts from the commons by leaving out home sites and farmland. He worries about losing public land, yet no matter who holds the title, isn't all land worth protecting? And can land, whether public or private, be property? Ownership does not overturn the right of all living beings to Earth in a healthy, if not pristine, condition. Better than property is Borsodi's proposal of "trusterty" (holding Earth in trust), and trusts (trust funds) can still pay dividends. Best of all, Barnes' Report did extol the dividend.

Natural Assets: Democratic Ownership of Nature, by James K. Boyce and Barry G. Shelley (Island, 2003), in Part I explores the wealth of nature. It lists four ways to turn natural resources into natural assets, one of them being “redistribution”. Yet if nature is a common asset, sharing her rent is not redistribution but simple distribution, even predistribution, disbursed before an elite or state has a chance to misspend it. Anyway, the authors cite Tom Paine's call for an Alaska type dividend.

The Economist (Oct 25) in “The End of the Oil Age”: “By introducing a small but steadily rising tax on petrol, America would do far more to encourage innovation and improve energy security than all the drilling in Alaska's wilderness. Crucially, this need not be, and should not be, a matter of raising taxes in the aggregate. The proceeds from a gasoline tax ought to be used to finance cuts in other taxes.” (via Bernard Rooney)

Southampton University's Transportation Research Group report, "Economy, Finance and Equity": “Public investment in transport infrastructure and services improves access and in turn property values. It is therefore appropriate that such value increases be considered as a source of transport funding.”

The Institute for Public Policy Research, Tony Blair's favorite think tank (Evening Standard, October 30): “Prosperous areas of the UK should bear more of the costs of extra spending required to deal with the problems of success. This could be done through congestion charging and capturing increases in land values.”

Samuel Brittan, British author and commentator (The Financial Times, Nov 21): “Never forget the taxation of property, in which both No 10 and No 11 Downing Street are interested. Nor can there be any valid free market objection to taxing pure increases in land value if this can be done without unintentionally taxing enterprise too.”

Philadelphia's Tax Reform Commission voted 14 to 1 to recommend cutting taxes on business, workers, and buildings, shifting the property tax from weighing heavily on buildings (3:1) to equal on built value and land value (50/50), and to correct assessments from the current 70% of real market value up to 100% of actual selling price. (Bruno Moser, Asst Controller, Oct 16)

The Greater Hartford Coalition for Equity and Justice (thousands of people from 40 congregations) set out an agenda that demanded a two-tier tax structure for Hartford and surrounding towns that would lower the tax rates on homeowners and small businesses and raise taxes on owners of vacant and blighted buildings. (Hartford Courant, Oct 31)

David Brunori, contributing editor, State Tax Notes, professor, George Washington U (Governing, Dec): “the concept of split-rate taxation, which involves taxing improvements at lower rates than land, should be seriously considered. Reducing the tax burden on improvements could have a significant impact on development by creating an incentive to develop underutilized space, such as empty buildings and vacant lots. Politically, split-rate taxation can work since most homeowners would see their property tax burdens decrease.”

The Cleveland Scene (Spt 10): “Cities offer tax abatements like dowries for a homely daughter. Another way is right under our feet – land-value taxation, a scheme by which property taxes concentrate on land rather than buildings. The idea is credited to Henry George, a 19th-century populist. Society made land valuable, so society should receive the benefit. He promoted a single tax on land and the elimination of all others and greatly influenced Tom Johnson, the visionary businessman who was elected mayor of Cleveland in 1901. The Johnson statue on Public Square clasps a copy of George's manifesto, Progress and Poverty.”

Prof Frank Stilwell of U of Sydney, School of Economics and Political Science, submitted to the federal Productivity Commission Inquiry Into First Home Ownership a paper comparing the advantages of taxing land value all along over taxing land sales as they crop up.

Places that charge landowners land dues spur in-fill and overall efficient use of metro land. As suburbs turn into edge cities, we let people switch from driving to walking. Because cars are fattening, land dues ultimately help Americans deal with their obesity problem.

The New York Times (Oct 19): “If the United States eliminated the subsidies, the world prices for cotton would rise, helping farmers overseas but having minimal effect on consumers (there is only about a dollar's worth of cotton in a pair of jeans). It would save the American taxpayers billions of dollars, and it would allow Americans to strike a very visible blow for fairness between rich countries and poor.”

The Wall Street Journal (Spt 16) cited the same reasons in its editorial against subsidies for agri-business. By subsidizing corn at home we make it cheap. To make it profitable, food giants “add value”. Their resultant cornstarch, corn sweeteners, and corn-fed meat – all loaded with calories – make Americans obese. (The New York Times, Oct 12) Instead of paying farmers to overproduce, let's pay everyone a Citizens Dividend, letting farmers find other work, other land uses, relax, even let their land relax.

DC's Taxpayers for Common Sense: “If developers and others want to gamble against Mother Nature by building in risky areas, taxpayers shouldn't have to cover their bets if they lose. As damaging as Hurricane Isabel was, it is still not the 'big one' that weather experts are predicting. A major hurricane striking a bigger city on the east coast could cost more than $100 billion and would expose the U.S. Treasury to massive long-term liabilities.”

Steven Hayward, a free-market scholar at the conservative American Enterprise Institute, and social critic Mike Davis, author of City of Quartz and Ecology of Fear, agree that the fire insurance system needs to stop subsidizing unwise development in fire-prone areas. (The New York Times, November 2)

Byron Auguste, partner at a global management consulting firm, and Mark Strama, a technology executive and ex-director of programs at Rock the Vote, are directors of the Hope Street Group, a nonprofit organization of young business professionals: “American taxpayers paid $332.5 billion in interest last year on the national debt, equal to 11% of the total federal budget. Today's average American household pays $3,153 in taxes annually just to service the debt. At $6.6 trillion (and growing), the national debt is the equivalent of $62,000 on each family's credit card.” (The Boston Globe, Nov 3) Better get serious about cutting out that pork cited above and much more. Donald Rumsfeld, secretary of defense, admitted two years ago that the Pentagon's own financial reporting system could not, by some estimates, “track $2,300 billion in transactions” (Transparency International).

In the 1780's (the era of French Enlightment), the Danish king abolished hereditary landed servitude as well as his nobles' adscription of peasants. The kingdom granted hundreds of thousands of smallholders freehold of land against payment to the Crown of the annual rent of land, the hartkorn tax. In 1802 to pay for the Napoleonic War against Great Britain, Denmark also subjected agricultural land belonging to the estates of the nobles to land-value taxation (the hartkorn tax).

American Socialist Eugene Debs (1918 speech): “They are urging you to cultivate war gardens, while at the same time a government war report just issued shows that practically 52% of the arable, tillable soil is held out of use by the landlords, speculators and profiteers… to pocket the millions of dollars of unearned increment. Who is it that makes this land valuable while it is fenced in and kept out of use? It is the people.” (via Mark Monson)

George Orwell (1944 Aug 18): “If giving the land of England back to the people of England is theft, I am quite happy to call it theft. England is 'owned' by a few thousand families. These people are just about as useful as so many tapeworms. The ground-landlord in a town area has no function and no excuse for existence. He is merely a person who has found a way of milking the public while giving nothing in return.”

In her latest book (2003), Arianna Huffington, wealthy Republican turned scathing political critic, writes with biting wit, relaying the details of America's corporate greed and corrupt politicians. After describing the opulent expenditures of the new and unduly rich, she presents the symbiosis of campaigning politician and donating business. One especially galling episode was when bankers, brokers, and accountants contributed enough to Congressional campaigns to thwart reform, opening the door for the staggering multi-billion dollar scandals of recent years, decried by the very politicians who had earlier buried the reform bill – another reason “why Washington should file for moral bankruptcy.” Lacking a historical perspective, each scandal is treated as unique and comes across as fresh. Of course, using the tax and spend powers of the state to benefit insiders is as old as the state, is the reason for the state. It reaffirms my conviction that reform need simplify, and nothing could be simpler than abolishing taxes in favor of user fees and subsidies in favor of rent dividends. Another book, Land Where My Fathers Died by Joe Edd Morris (2002), the saga of a young man's search for lost relatives in Mexico, sincerely develops the link between lineage and land.

America owes the world trillions; are we the next Argentina? The tango dancers missed a $3 billion payment to the IMF (International Misery Fund) and owe $90 billion outstanding to private global investors (NYT, Spt 10). As the US dollar loses value, Warren Buffett, who was nice enough to highlight the unfairness in California's Prop 13 (last issue), changed part of his billions into other currencies. He says rich foreigners may use their dollars to buy American assets in order to collect rent from us. So to re-raise the dollar's value vs. other currencies, we're to import less and to work more – despite the swelling workweek. Some day, the dollar will return the favor. (Fortune, Oct 26) Meanwhile as it drops, imports cost more. So we switch to domestic goods and sell more abroad, generating more jobs. If foreign capital flees, we owe them less dough. If immigrants exit, wages rise. If your landlord speaks with an accent, so? Rich Yank landlords have homes in other countries, too. The problem is not paying foreigners for goods but paying anyone for land. Worrying about money flowing out we miss rent flowing up. To keep rent circulating locally, have owners pay land dues, and let residents get dividends.

According to homebuilders (NAHB; 800/368-8480), only half (51%) of the cost of constructing a new house is labor and materials, the actual stuff that becomes the new dwelling. The other half of the cost is half land cost (24%), financing 4%, and the rest overhead (dealing with regulations) then profit. So instead of oppose geo-nomics, builders should be gung-ho for. As land dues go up, land prices go down, taking financing charges with them. And as taxes on buildings disappear, developers want to put up quality structures; they don't have to regulated into it. And as owners, spurred on by the new higher land dues, develop central appropriate sites, they forget about sprawling onto suburban sites. Rules could wither, taking compliance costs down the drain. So as spending on land, debt, and regulation would drop, housing costs would fall even as profit would rise, along with new homes in every price range.

Over many parts of the world, indigenous people now catch so few of their traditional staple fish that, rather than oppose a ban on fishing, they ask for it (Chicago Tribune, Spt 10). Another way to conserve fish, besides the political method of denying permission to fish, is the economical way of selling permission to fish. That is, have wanna-be fishers bid on a limited quantity of fishing licenses, more when fish are more, fewer when fish are fewer. People who know how to fish most efficiently will bid more, enriching the state's coffers while steering less talented fishers into other endeavors. In a jurisdiction where everyone receives a dividend from the rent for permits to fish, farm, homestead, corner a market, etc, all residents will have enough wherewithal to enter the auction hall, putting the bidders on a level playing field.

Bill Grennon, NH activist (Spt 16): “For small farmers or folks that carry out small-scale sustainable resource extraction like maple syrup or fire wood, taxes are already a tremendous burden. If we levy land dues on them, would they need to avoid the charge by becoming a land trust? I suppose it'd depend on where those activities are taking place.”

JS: Right. They could be farming far enough away from a metro area that their land value and land dues would be quite low. Yet wherever they're farming, land dues could be less than the taxes they pay now on their home, barn, tractor, animals, income, etc. Plus, de-taxing sales makes their seeds and equipment cheaper to buy. Plus, organic growers could capture more market share, as the chemical ones must raise prices to meet the newly required insurance coverage and Ecology Security Deposit, etc. Then toss in the Citizens Dividend and small extractors should come out way ahead.

Dave Wetzel, UK geo-activist supreme (Spt 9): “What's your approach to conservatives?”

JS: I cite some of their heroes who've endorsed the shift of taxes off private earnings, onto public rents: Churchill, Eisenhower, Ford, Carneigie, etc. I balance my talk about recovering rent with zero taxes on income. I compare them having to pay higher rent to making an investment that every rich person must make simultaneously, leaving no more dogs in the manger, creating a climate where investors in buildings, stocks and bonds can make even morer money – all untaxed. Yes, big landlords and big lenders might take a hit, but most have diversified portfolios. If the transition were unduly harsh on any one, we could give them geo-consuls to tide them over. Long term, a society that's safer, less strifeful, well, wouldn't you be happier being rich in a rich society than filthy rich in a filthy society?

Following scandals, Brits trying to save for old age feel cheated by the insurance and investment industry. Looking elsewhere, 40% see sinking cash into real estate as the best way to build equity, despite bubbles; 27% favor a company pension, and 15% a stakeholder pension. To retire at 65 with a pot of £100,000 – at current yields, £6,600 a year – each month a worker must save £260; yet 40% save less than £100. Under-savers can't bet on bricks and mortar; their prices must fall 15% to 20% over the next few years. (Daily Mail, Nov 24) More certain than individually buying and selling is everyone paying dues and getting dividends. Buy-and-sell depends on timing and infinte population growth. Dues-cum-dividends de-motivates speculation, thus it'd flatten the business cycle. Residents benefit from not just their own home site but also from the much more lucrative commercial and mineral sites, and not from their land rising in price but from the entire region rising in value; even if you don't sell or don't develop, you still benefit. Is it winnable? Just try separating Alaskans from their oil dividend, which was $1,100 this year, down from its high of $2,000 in 2000.

John Watkins, Simple Society President (Oct 3): ”Dividend in pocket, will people still work?”

JS: Hopefully not as much, so people won't feel compelled to take lousy jobs ranging from telephone solicitor to lawyer/barrister. Or to oppose progress. The internet makes travel agents, stock brokers, realtors, et al. superfluous. Already some web-based realtors pass their savings on to homebuyers as smaller commissions, down from the usual 5%-7%. Irate old guard realtors deny the rate-cutters use of the Multiple Listing Service of homes on the market. The Justice Department is investigating an anti-trust action. (USA Today, Nov 12)

Besides need, there're other motives for working: producing something you want, earning money for trade or saving, to show off, or to feel useful. But if getting something for nothing were really so counter-productive, we should outlaw being born rich – even as the Bushites enshrine such good fortune – and figure out a way to charge people for the air they breathe, as we've done for the water they drink – and we're getting there fast.

In Victoria, two talk shows – one on TV, The New VI, and one on radio, which has also had Vincent Bugliosi, Helen Caldicott, Noam Chomsky, and Frances Moore Lappe – interviewed me. The Philadelphia Public Record published my letter solicited by the wise Joan Sage, “Be Like Hong Kong” (Issue 199, Nov 6), on subsidizing the dredging of the Delaware River vs. de-taxing shippers, as a free port works better than a deep port. Portland newspapers, alternative radio, and internet announced my talk on a car-free future.

In September, spoke on funding mass transit with rent in the Belmont Library to eight newcomers. In October, spoke at the Downtown Library with the Free Skool organizer on doing a walking tour of Portland historical and real estate sites, at the Unitarian Church on shrinking the workweek with rent dividends before 75 (including students), and before 40 Green Party leaders on a new tax plank for their platform. Grant writer Michael Linder, member Jeff Strang, and myself have been meeting weekly to prepare proposals to Northwest foundations. I've met with two local artists, Sean Seidell and John Kendall, who are working on illustrating our newsletter, The Geonomist, and our Power Point presentations. A local student has volunteered to intern with us.

In Canada's BC on November 25, sponsored by the University of Victoria Law School and organized by Caspar Davis. Fifty people came, including Green Party leaders and a former member of the legislature. Before the talk, we met with the BC Assessment Authority CEO Doug Rundell, who remembered their former CEO and our society member Ted Gwartney fondly. Their assessment ratio province-wide, land to buildings, is 3:2, much more realistic vis-à-vis market values; such realism would be unusual for a US assessment authority. One oddity is their annual income from the forests is greater than the value they gave the trees as an asset (both roughly one billion dollars).

UK's WIT Press published the proceedings of a 2002 conference in Italy, “Sustainable Planning & Development”, which included my talk. At the Boston Society of Architects conference on density (350 attended), people took 100 copies of this newsletter. At events around Portland where I spoke, people took over another 200; in Victoria, another 50. Two members of the Oregon Legislative Com't on Tax Reform – Reps Betsy Johnson and Diane Rosenbaum – accepted my offer to show how shifting the property tax off buildings, onto land, would help the state close the budget deficit both this year and in future years. The goal of the committee is to draft a measure to put on the ballot for 2004, a presidential election when more of the electorate turns out to vote, and a higher turnout increases the chance that a progressive measure, such as our tax shift, would pass.

Joe Robinson, founder, Work to Live (Oct 12): “Your Fall issue is loaded with interesting stuff. I'm going to have to set aside a few hours to go through it all.”

Pete Coleman, Co-ordinator of the Tax Justice Network (Oct 13): “I see merit in your idea to tax socially generated wealth instead of taxing sales and privately-generated wealth; the only question is, how do we distinguish the two? Interested in your ideas.”

Rich Nymoen, Twin City worker (Sep 30): “Thanks for the most recent issue of The Geonomist. Normally I read it on-line, but the cartoons really add something. I even used the one on the back at our ISAIAH meeting last night, along with the map you sent last spring. They went over pretty well. We're getting ready to have the bill (to shift the property tax) re-introduced and are optimistic about at least getting some enabling legislation passed this year. If we can get the whole organization behind us, we may have a chance at getting the statewide commercial/industrial tax shift passed in '05. I'll keep you posted. I decided to join ISAIAH's Low Wage Worker issue committee this year to introduce the dividend concept into the mix.”

Bryan Kavanagh, Aussie land evaluer (Oct 9): “Fall Geonomist: Excellent stuff, written with punch (as usual). I'll send it thru one of our newslists.” Thanks.

Tim Meyer, Aussie (Nov 3): “i heard someone talking about geonomics and thought it sounded very interesting, so i took a look at your site. from what i can understand it is an amazing and logical concept, but to be honest the amount of information was overwhelming. i'm not the smartest cookie but would really like to understand geonomics. can you tell me if there is any material which simplifies the ideas. like 'geonomics for idiots'. if you can help i would appreciate it.”

Steve Porter, Olympian conservative insurance salesman ex-restauranteur (Sep 30): “The website is excellent. Keep up the good work.”

Gene Denardo, Portland remodeler (Oct 5): “i have two rental houses in the north area that were falling down when i bought them and i propped them back up. that area is kinde happening now. prices are too high; your ideas are right on and would correct some of that as would getting government out of the housing market. i have heard that the portland developement commission is the biggest developer in town. throw money at anything and the price goes up. giving people tax deductions for their mortgage interest just benefits the banks and realtors and pushes prices. but i'm preaching to the choir!”

Hanno Beck, operator of the Progress Report (progress.org) (Oct 23): “Thanks for all your work, along with Fred Foldvary's during last week's 'Taxes Without Tears' e-forum. I learned several things, and two in particular thanks to points of yours:
(a) doggone it, people react badly when we propose eliminating the special privilege of limited liability for corporations. Even people who should be on our side. I had a similar experience on two other occasions, once on an Alliance for Democracy email listserv and once at one of those United for a Fair Economy workshops. From now on I am only going to propose 'selling liability insurance at fair market price' and 'letting government charge fair market value for insurance coverage that it provides, whether flood insurance or deposit insurance or liability insurance.' That sort of thing. Gets the same job done but without causing anybody to faint, I hope.
(b) at one stage, after about a zillion messages from people bemoaning the regressive effects of any tax that is greater than zero, you made an excellent point that every price in the market is regressive in this same sense. Every price takes more of a poor person's income than a rich person's. So unless someone comes up with a glorious way to have sliding scale prices for every item under the sun (and a complete financial dossier on each individual who wants to make a purchase), we are left with but one solid way to mitigate the problem of 'regressivity' – decrease poverty. I am going to use this observation of yours in future conversations, that's for sure.”

Mel Forde, Seattle retired accountant (Oct 20): “At the turn of the last century, William S. U'ren won the initiative and referendum for Oregon to put the Single Tax on the ballot – where it was defeated.” It put such a fright into speculators that they got politicians to amend the state constitution, prohibiting different tax rates on land and buildings.

Todd Boyle, monetary reformer (Nov 12): “This guy, Jeff Smith visited Seattle last summer. His solution seems more equitable: the current occupant of land pays the community around him for his occupancy rights instead of having permanent unconditional title to property. 'Property' is really a bundle of rights to exclude everybody. Why then are we paying the whole $300,000 to the previous owner? This is insane. It is the cause of war and genocide, and more than half the planet has not yet settled their titles! This system of absolute property is man-made and can be fixed. Look to Jeff Smith's pages for the right questions, ignored by the oft-cited DeSoto, and indeed, Jeff Smith has identified many of the right answers. Jeff, we wish you would visit Seattle and tell us again, and again, and again, these wonderful things you know.”

Happily, yet already you know these things quite well. BTW, we agree DeSoto is wrong to push people into debt, and right that nations wanting to develop can-not obstruct so much. In Mozambique to register a company takes 214 days. In Guatemala to enforce a contract takes 1,460. In Brazil to seize pledged collateral takes five years. (http://rru.worldbank.org) This makes doing business legitimately too hard and the corrupt path the only rational way to go. And none of this obstruction protects the populace. Get rid of favors for insiders and collect all rents, then stand back and watch business grow and benefit everyone.

Lisa Moore, Seattleite (Nov 24): “I recently heard that Jeff Smith was speaking in Victoria this week. Is he going to be speaking in other cities, and if so, do you have a speaking schedule for him? Thanks so much.”

Paul Justus, NH activist (Oct 28): “Keep up the good work. I'd like to give more but we're in the process of moving. However, I've been developing some marketing ideas I want to discuss with you.” I'm all ears.

Mel Leasure, Virginia communitarian (Oct 27): “The last issue was full and fascinating. Enclosed please find a check to be a stalwart.” I found it, I found it!

Last quarter, the Robert Schalkenbach Fdn supported our work in the upcoming Eastern Economics Assoc conference and in the Australian Green Party tax plank discussions. Australia's Henry George League also came thru with a very flattering honorarium for my talks Down Under last spring. Individuals pitched in mightily, too, as our fall issue swayed many: double stalwarts Jake Himmelstein (Philly) and Marina Pavlova (Portland); stalwarts Mel Leasure (Virginia), John Morales (Missouri), and Grey Young (Missouri); sustainers John Morales (again), Ronald Rosenberger (Pittsburgh), and Jeff Strang (Portland ex-Peace Corp); supporters Charlie Ellinger (New York), Paul Justus (Arkansas planner), Syd Mayers (NYC), Don MacGillivray (Portland), and Frank Peddle (Ottawa); and subscribers Gib Halverson (Wisconsin fireman), Joe Johnston (NC faithful), Vern Saunders (NY, upstate), and Nadine Stoner (Wisconsin activist), sub-totaling $1,035. The talks in Sydney, Victoria, and Portland brought in another $715, totaling $1,750. Thanks to all for re/joining, donating, and granting. If you don't see your name on this list and know it belongs there, just send a check. We'll know what to do with it.

In Washington, DC next winter from Feb 20 to 22 is the Eastern Economics Assoc annual meeting. We're in the track of the US Basic Income Group. It'll be US BIG's 3rd Congress. Come to our panel, “Can Rents Fund an Extra Income For All?”, featuring the OMB's Ed Clarke, VPI's Nic Tideman, and dynamic Alanna Hartzok. To attend, register with the EEA. Indicate on your registration form that you will be attending the USBIG conference (on Capitol Hill at the Hyatt Regency, 400 New Jersey Ave NW) and you can register at the members' price ($45 in advance and $60 on site) without paying the EEA membership fee (saving $50). Pass this announcement on to others. More info on the EEA conference is at iona.edu/eea, more on BIG is at usbig.net.

John Morales, stalwart extraordinaire and General Semanticist, made a career of helping administer the Panama Canal, which Carter returned along with $2 billion worth of city. John sent this from his cohort (Dec 3): Panama's Parque Nacional Volcan Baru, a World Heritage Site with pristine tropìcal cloud forest, has many species endemic to only that tiny locale. President Mireya Moscoso wants to build a road thru the National Park, which, as luck has it, would pass by her own property. An opinion poll showed 81% of Panamanians against the first lady's road. Dependent on trade deals with the US, Madame Moscoso is sensitive to feedback from members of the US Senate and Congress, who in turn reflect the voiced concerns of their constituents, if you're in the mood to write.

Mimic Greg Young of the Show Me State (Nov 28): “I've had a good year, so I'm jumping up to stalwart. Please send copies of '20 Ways Georgism Got Derailed' and 'What the Left Must Do'. Call me or let me know when to call you.” Others want to see copies? This being the season of giving, it'd make all our lives simpler if we here could plea for support just this once each year, and readers would respond with alacrity. We'd not need to record when one joined; each year they'd all renew at the same time. And donors would have their receipts in time for the end of the tax year. Sound like a plan?

THE GEONOMIST

Vol. 12, No. 3
Editor: Jeffery J. Smith

THE GEONOMIST

Vol. 12, No. 3 Editor: Jeffery J. Smith

Vol. 12, No. 3
Editor: Jeffery J. Smith