The Geonomist Volume Fourteen Issue Two

Geonomics is …
a discipline that, compared to economics, is as obscure as Warren Buffett's investment strategy, compared to conventional investment theory, about which Buffett said, “You couldn't advance in a finance department in this country unless you taught that the world was flat.” (The New York Times, Oct 29). The writer wondered, “But why? If it works, why don't more investors use it?”

Good question. Geonomics works, too. Every place that has used it has prospered while conserving resources. Yet it remains off the radar of many wanna-be reformers. Gradually, tho', that's changing. More are becoming aware of what geonomics studies – all the money we spend on the nature we use. Geonomics (1) as an alternative worldview to the anthropocentric, sees human economies as part of the embracing ecosystem with natural feedback loops seeking balance in both systems. (2) As an alternative to worker vs. investor, it sees our need for sites and resources making those who own land into landlords. (3) As an alternative to economics, it tracks the trillions of "rent" as it drives the "housing" bubble and all other indicators. And (4) as an alternative to left or right, it suggests we not tax ourselves then subsidize our favorites but recover and share society's surplus, paying in land dues and getting back "rent" dividends, a la Alaska's oil dividend. Letting rent go to the wrong pockets wreaks havoc, while redirecting it to everyone would solve our economic ills and the ills downstream from them.

People must learn to stop whining so much and feel enough self-esteem to demand a fair share of rent, society's surplus, the commonwealth.

Republican Gov. Linda Lingle signed into law a tax on real estate sales. The revenue from the new tax on some property transactions – expected to be $35 million a year – is earmarked for affordable-housing projects and land preservation efforts. Median home prices on Oahu alone have increased $115,000 since the end of last year, topping out above $600,000. The tax kicks in on deals greater than $600,000. Based on 2004 figures, only 7.4% of transactions would be above the threshold. From the tax yield, 10% would go to buying land for conservation, 25% to watershed protection, 30% to the Rental Housing Trust Fund, and the remainder goes to the general fund. (Honolulu Star-Bulletin, Jun 24, via Mark Monson) The new tax is similar to the title transfer tax that Aspen Colorado levies for affordable housing. The Hawaiian County of Hawaii taxes land values and the City of Honolulu used to, too.

The Finnish government decided to raise the land tax rate for the Helsinki region, targeting fallow land that could be built upon. The Environment Ministry recommended raising the tax rate on buildable land without a municipal level decision. (Finnish News Agency STT, Spt 1, via Mark Monson) In a nation with a population less than many American states, and with farmland scarce being so close to the arctic and shriveling under sprawl, the federal level taking action might not be as be as undemocratic as it might seem.

This issue is two months late. Inexcusable. Instead of putting it together while on the road, laptop in tow, I found too many Europeans to be hospitable, interesting, and sympathetic to the victims of Katrina. Plus, the weather was still summery – blustery on the Mediterranean but nothing like hurricane force. Then upon my return, reacquainting myself with the family and catching up on the backlog of work – reports due, networking with the Sierra Club, writing treatments for three original screenplays, et al – took another month. During the autumn delay, we got to see signs that the “housing” bubble has peaked. If you're selling, you got a couple more years of peaked prices. If you're buying, you'll save money if you can hold on and wait and rent for the next few years; then your turn will come. Now, I'll spend some daylight on editing and save some darknight for dreaming about Geotopia, the third story in my trilogy.

A deputy in Nicaragua's National Assembly, José Francisco Salas Ramos, proposed to geonomize the nation. His bill would replace most other taxes – on income, property, along with some other taxes – with a tax on land. Cities would collect it and transfer 90% to the national government. Land value is enough to fund the present national budget plus three times all of the municipal governments. Three counties may test this tax shift prior to the bill going up for a vote in the National Assembly (via Karl Wiilliams, Aug 10).

When Sandinista leader Daniel Ortega and former right-wing president Arnoldo Aleman allied to oppose the current administration, elected with help from the Bushes, the US canceled visas for two of Aleman's adult children and the country's attorney general, threatened to revoke the visas of others, and threatened to withhold millions of dollars in aid. (USA Today, Oct 5)

The Inter-American Development Bank lent $10.8 million to Brazil to fund completing and updating their cadastre of rural land. Brazil has around 500 million hectares of farmable land spread over some 4.5 million rural properties, but only two thirds of such properties are titled. Private land registered with property titles covers 41% of the total area of Brazil, but there are significant discrepancies between the information on many property titles and the actual status and size of parcels. A high degree of legal insecurity, especially acute in some areas, limits the efficient use of farmland and the income of farmers. The new system will facilitate government collection of the rural land tax. (Harold Doan and Associates Ltd, via Mark Monson)

One and a half years ago the IMF required the Kyrgyz Government to levy a VAT, or lose loans. Large agricultural producers evaded the VAT legally by splitting up farms and enterprises. Yet rural residents still yearned to repeal the VAT. So the IMF agreed to cancel the tax if Kyrgyz raised the tax rate on land. In 2006, they'll recover enough land rent to cut the tax on both personal and corporate income by 10% and payments to the Social Fund from 31% to 29%. (Kyrgyzstan Development Gateway, Spt 5)

Even in poor nations, land value swells. Since 1990, the price of Namibian land has risen 200% (The Free Press of Namibia, Aug 5). In developing nations, it skyrockets. In South Korea over the past 14 years, real estate doubled to surpass 2,000 trillion won ($2 trillion). Comparing their value to perhaps outdated data, Koreans figure their real estate is seven times higher than France, six times higher than Canada, and half that of America. Seoul, the capital, a half percent of Korea's surface, had a third of the country's value. A square meter of its land was $1,300; the same size area in the mountainous Kangwon Province cost about $4. (The Korea Times, Aug 3) To deal with the pricey land and resultant unaffordable housing, the current administration has proposed raising the tax rate on land value. Some housing groups worry even that hike is not enough.

Over the past three years, housing values are up 48% in France, 63% in Spain, and nearly 100% in South Africa. In Hong Kong, apartment rents are up 30+% from two years ago as are office costs, moving the island city on public land from the 19th most expensive office market in the world to the 14th. (USA Today, May 30) In the past year, home prices have risen 19% in Hong Kong and 48% in Bulgaria. Following that flow, banks in the 12 nations that use the euro increased mortgage lending at an 8% annual rate since the end of 2000 while expanding corporate lending only by 5%. In the UK, they expanded mortgage lending 20% annually while increasing business lending at an 8% rate. Banks in the US grew mortgage lending by 11%, in Japan by 6%, while curtailing business lending in both countries. Slower growth in corporate debt has kept bond yields low in the US and below 5% in Canada, the UK, France, Germany, and Japan. Low yields from bond join a wishy-washy stock market. The Dow Jones World Stock Index is down 1% so far this year, up 11% in the past 12 months and down 14% over the past five years. Fleeing that, many investors sought the gains from inflating real estate. Yet prices are showing signs of slowing or even falling in some places. In Australia, median home prices rose about 60% during 2002 and 2003, but have fallen slightly in the past year. In the UK, the Netherlands and Korea, they also have lost some momentum. (The Wall Street Journal, Jun 16)

During 2004, Chinese peasants rioted 74,000 times, up from 58,000 in 2003 and 10,000 in 1994. At least seven major riots last year involved up to 20,000 villagers in battles with thousands of police. Property has been destroyed, people hurt, tear gas and rubber bullets used. Government declared martial law in a number of areas and mobilized thousands of police with regular and paramilitary People's Liberation Army troops. While industrial pollution is deadly, developers in league with corrupt government officials evict farmers from land and urban pensioners from small old flats without paying compensation. Of over 2,000 cases, half of them involved land disputes. The collusion of politicians and speculators enriches only themselves, leaving over a billion Chinese no better off. (The New York Times, Aug 24) A senior Communist agricultural official said protests were inevitable as the country undergoes huge changes and bloody riots were a sign of democracy. (Australian Radio National, July 7)

And this is to be the Century of China? Oil will be $90 barrel by March next said Zhang Weiping of the China Institute of International Studies. Since 2003 in China, growth of energy demand has outstripped GDP growth. Due to lack of economies of scale, over reliance on high-energy industry vs. services, and outdated production technology, for each unit of GDP, China uses three times more energy than the US, five times more than Germany and Japan. Residential heating requires 50-100% more energy than OECDE countries. The good news is saving one ton of oil costs 1/5 the cost of delivering one ton. (Interfax, Spt 6)

Soaring energy prices bestowed upon Exxon Mobil Corp record-high quarterly earnings of nearly $10 billion on income of more than $100 billion. Its third quarter gain jumped nearly 75% from year-ago to $9.92 billion. Royal Dutch Shell was not far behind. Together, the 29 major oil and gas firms are expected to clear $96 billion this year, up from $68 billion last year and $43 billion in 2003. These stratospheric sums would have been even higher if not for Katrina disrupting Gulf Coast refineries. With crude oil prices double what they were two years ago, some members of Congress have talked of imposing a windfall-profit tax on the oil giants. (LA Times, Oct 27) That may sound like heresy, living loyally in our oiligarchy, but in Europe gas costs three to four times as much as in America, and over half the cost is from taxes. A better target to tax than profit is oil in the ground. If you wait until your intended payers have enriched themselves, then they can wield enough political influence to elude any tax. Plus, having the public auction off oil in situ puts oil extractors in competition among themselves, making it hard for them to pass on their bids to customers at the gas pump, and encourages them to extract the easiest oil first, leaving the less accessible oil – and the land above it – alone. However, since most oil lies outside any such public-spirited jurisdiction (except perhaps Norway), maybe the next best levy would be (dare a geonomist say it?) a tariff on oil imports, geared to world prices. Oil companies would still pass on the tax to consumers but having to pay it closer to their investment end, further from their pay-off end, helps them consider alternative sources with smaller upfront costs.

Gasoline prices have hit hard the core low-income customers of Wal-Mart Stores, which is going international. Wal-Mart itself, which operates one of the largest US trucking fleets, estimated that it spent $30 million more this quarter to move goods from its distribution centers to the stores. Hence Wal-Mart posted its smallest quarterly profit gain in four years. Earnings rose to $2.8 billion, or 67 cents a share, in the second quarter ended July 31 from $2.7 billion, or 62 cents a share, a year earlier. Because it draws more than 100 million US customers each week, Wal-Mart is considered a barometer of consumer sentiment. In hopes of bringing in wealthier shoppers who are less sensitive to fuel prices, the company has started offering more upscale goods. (Reuters, Aug 16) As goes Wal-Mart, so goes the rest of suburbia – priced out by scarce oil?

Modern fishermen use longlines in the open ocean. They float for up to 70 miles on the water's surface, with baited hooks reaching down to 1,000 feet below. They are the most widespread type of fishing gear. Due to overfishing, over the past half-century the variety of tuna, marlin, swordfish and other big ocean predators has declined about 25% in the Pacific and about 50% in the Atlantic and Indian oceans. Researchers who had previously reported an overall decline in the abundance of big fish now say there has also been a significant drop in the number of different types of big fish such as tuna. They did find, however, five places where fish are still abundant. (USA Today, July 28) Fishing companies need to bid on licenses with the floor amount set at the scarcity value of the fish.

Texas is one of eleven states plus the District of Columbia – states with lots of poor people, mostly Southern ones – that exempt back-to-school goods for kids from the sales tax for a weekend in late summer. Most clothing and shoes under $100 become tax-exempt. In 1999, Texas Comptroller Carole Keeton Strayhorn began the state's first tax-free weekend. She predicted this year Texas shoppers will save $47.4 million in state and local sales tax during the tax-exempt period. (News 8 Austin, Aug 4) Next year, Tennessee and Maryland will bring the number to 13 states granting the tax holiday.

In June, sales of existing homes rose to another record, 4.4% above year-ago; their price posted the biggest yearly increase, 14.7%, since 1980.

In July, sales of existing homes could not keep pace with June but the pace was the third best on record. Their price rose 14.1% from last year to $218,000, a new record, while the price of new homes dropped to $203,800, their lowest since 2003 December. The inventory of houses for sale was up 12.6% from 2003 July, while the number of newly issued building permits rose 1.6%, the highest level since February 1973. Incidentally, the official value put down on those permits is about half the actual market value of the permitted structure, figures researchers with the Home Builders Association (800/756-4140).

In August, sales of existing homes had their second highest record for that month while their prices had the biggest jump in 26 years, up to $220,000, up 15.8% from a year ago.

In September, sales of new homes increased 2.1% after an 11.6% slump in August but were flat from a year ago. In the past six months, sales have averaged 1.272 million annualized, down from 1.286 million a month ago. The six-month average peaked at 1.295 million in July. All three average projections beat 2004 when 1.203 million new homes were sold.

Mortgage-application volume declined 7.9% and fell to a six-month low; refinancing applications dropped 8.5%. All the indices were seasonally adjusted. (USA Today, Oct 26) Inventories of unsold homes on the market increased to a record 493,000, representing a 4.9-month supply, the same as in August. It's the highest inventory-sales ratio since late 1996. (CBS Market Watch, Oct 27) And bottom line, everything else aside, median prices, while up 13.4% from a year ago, declined 5.7% from last month to $212,00 (USA Today, Nov 2).

Every cycle, some builders are the last to accept the fact that their ship has sailed and keep busily churning out what many others have lost interest in – new homes. Hence housing construction starts rose 3.4% to the highest level in seven months and permits for future groundbreaking, an indicator of builder confidence, surged 2.4% to a 32-year high, matching the pace in 1973 February, a sure sign this cycle is at its peak. (USA Today, Oct 19)

In October, the 30-year mortgage hit 6% for the first time since March. Rising interest rates could put a clamp on interest-only loans that have been fueling the real estate market. Many investors have sold their homebuilder stock. From their 52-week highs, 22 of the USA's biggest builders have plummeted 30%. Now the SNL Homebuilder Index is up only 1% for the year, compared with the 40% year-to-date gain it had as of July 20. Despite the sell-off, the stocks are still up 1.5% this year on average, beating the 2.8% decline of the S&P. (USA Today, Oct 18)

Outgoing Fed head, Alan Greenspan, who had praised inflating housing costs, confessed they weren't permanent. When lenders suspend easy loans, speculators can't borrow and keep bidding up prices. Home-plus-site values would fall, leaving less for owners to borrow against and spend, tho' he thought a recession may not follow. (CBS Market Watch, Aug 26)

Six hot markets face a greater than 50% chance of price declines the next two years, predicted PMI Mortgage Insurance. (USA Today, July 26) National City Corp. examined 299 metro areas accounting for 80% of the US housing market. They compared historic price data, area income, mortgage rates, and population density — a proxy for land scarcity. In 29% of areas, prices outpaced income growth by at least 10 percentage points. They concluded single-family home prices are “extremely overvalued” in 53 cities that make up nearly a third of the overall US housing market, putting them at high risk of price declines. An area is extremely overvalued if prices are 30% above where they should be; the 30% threshold is based on prices in 63 areas since 1985 where housing prices declined. At the start of 2004, just 2% of markets were in bubbly territory vs. 31% in the first quarter of 2005. (USA Today, Aug 16) But they didn't say when's the day of reckoning.

As we've said, the curve must flatten, probably next year, before it falls, most likely in 2007. It'll fall for a few years, losing anywhere from 25% to 50% off real estate prices. Could be worse for land speculators. Japan's in their 15th straight year of decline, of getting back to where prices should not have left.

In New York, northern New Jersey, and Fairfield County Conn., while commercial real estate kept firm the housing market softened at the high end; New Jersey homebuilders could not raise their prices, despite a post-hurricanes spike in the cost of materials. In New York City, the average sales price was $1.15 million, up 10.1% from a year ago but down 12.7% from a record $1.32 million in the second quarter. (USA Today, Oct 19) New York City's Chief Economist devoted his September newsletter, Economic Notes, to the housing bubble, why it's cooling, and possible consequences. Writing for the investment capital of the nation, if not the world, he cited the possible implosion following a major devaluation of Fannie Mae and Freddie Mac, the two quasi-public insurers of mortgages who have been cooking their books.

In Los Angeles and Orange counties, many sellers of homes worth more than $750,000 dropped their asking prices an average of about 5% since the spring. Pricier homes had to sit on the market 60 to 90 days. A similar trend emerged last fall as the market entered its slowest time of the year; then many sellers de-listed their homes, inventories tightened, so housing activity resurged by the spring. This year, with fewer buyers and more unsold houses, the slowdown in pricier homes is typical of the latter stages of a housing boom, as the quickening of expensive properties marked the beginning of the boom. (LA Times, Oct 20)

The proportion of buyers whose down payment was less than 5% of the purchase price rose from 30.6% in 2000 to 38.1% this year. Speculators bought as many as a quarter of all homes sold last year. Speculation is so popular, two cable channels offer shows on flipping houses (The Oregonian, Aug 14) Using easy credit and competing with buyers of long-term residences, speculators bid up the price of home+site.

While housing prices skyrocketed, wages remained stagnant. Over the last year and half, the annual income needed to qualify to purchase a median home, which cost $220,000, rose from $54,855 to $71,354. (The Oregonian, Aug 9) Last year, median pretax income, $44,389, was at its lowest point since 1997, after inflation. Households kept income from falling by working more hours than they did in 2003. (New York Times, Aug 31)

Fifty years ago, Americans owned, on average, 3/4 of their house and the lender owned the rest. These days, it's approaching an even split. Between 1997 and 2003, the percentage of people who owned their own homes outright, without any mortgage debt, declined from 38.9% to 34.6%. Homeowners took $59 billion in cash out of their houses in the second quarter, double the amount a year ago and 16 times the average rate of the mid-1990s. In 1997, the median length of time remaining on an older homeowner's mortgage was a decade. By 2003, the median was 14 years. During that time, the number of older homeowners who owed more than $300,000 on their home went up tenfold. Most are old enough that earning enough to pay back the debt won't be easy – and retirement will be harder. (LA Times, Aug 28)

In June, the personal savings rate fell to zero, the lowest since a one-month buying binge in the aftermath of the 9/11 attacks. Americans are on track to record a savings rate for the year below 1%. That would be the lowest since the depths of the Great Depression, when the rate turned negative. (The Christian Science Monitor, Aug 9)

One factor that enabled universities to inflate tuition is banks grant home equity loans for tuition. Excess debt can inflate the price of everything – and it has. Inflation at the wholesale level in July increased by the largest amount in nine months, by 1%. In September, the consumer price index jumped 1.2%, its biggest increase since 1980 (The Oregonian, Aug 15). In October, it jumped 1.5%. Core inflation – minus fuel and houses – rose 0.5%, the biggest jump since January. Usually, such figures spur the Federal Reserve to raise their lending rate, thereby slowing growth. If growth slows, stops, and recedes, that'd be a recession, triggered by the Fed (The Oregonian, Aug 18)

While oil gets blamed for inflation, as oil costs go up, other prices should go down, as people shift their spending from other goods – demand down, price down – to gasoline and heating fuel. The overall price index does not level out like that because the amount of money in circulation is constantly infused by a fresh flood of cash from debt – excess government spending, in the hundreds of billions annually, and excess consumer spending, thanks to home equity loans.

Higher lending rates will shrink demand for mortgages. Already, the gulf between median incomes and median homes has shrunk the pool of those qualified to borrow. When sales slow, then home+site values will fall. More borrowers will default, rather than pay off a loan worth more than the house. Too many defaults would bankrupt the lenders, their insurers, and their investors – a rather serious recession.

The portion of Americans without health insurance remained roughly steady at 16%. A smaller percentage of people than in 2003 were covered by their employers, but two big government programs, Medicaid and military insurance, grew. The poverty rate increased to 12.7%, from 12.5% in 2003. The rate had reached a low of 11.1% in 1973, from more than 22% in 1960. (The New York Times, Aug 31)

The rates of al violent crimes are down 2% to a 30 year low (Christian Science Monitor, Oct 18)

More than half of all Americans who submitted to skin pricks tested positive to one or more allergens, double the percentage who reacted 30 years ago. Most responded to dust mites, then rye, ragweed, and the cockroach. Most have not yet developed allergies. About 20% of US residents have hay fever and half that have asthma, which has increased 74% over the last 30 years. Those most responsive to allergens were 20 somethings, males, minorities, Westerners, and people not exposed to cigarette smoke. Some researchers speculate people spend too much time indoors – 90% of their time – or children, having themselves and everything they touch washed so often – do not develop their immune system sufficiently. None mentioned the long-term effect from inhaling various pollutants of various sizes with every single breath over several generations. (USA Today, Aug 8)

William F. Buckley Jr. (Oct 18): “Henry George, the eminent social philosopher of a century ago, turned attention to the indefeasible factor of land scarcity. Capital and labor can increase; land cannot. Since land is forever limited, it must be thought of and treated as common property. And therefore the rental value of one acre should constitute a tax (the single tax) on the person who sequesters it for himself. The single tax aimed most directly at land speculators.” (Yahoo News via Mark Monson)

New York Democratic mayoral candidate, Fernando Ferrer, ex-Bronx borough president, would increase taxes on vacant land to discourage speculation. Over 10 years, the higher rate would raise $8.5 billion and yield 167,000 inexpensive homes. (The New York Times, Aug 5, via Heather Remoff)

The latest World Development Report, argues against export taxes and for a land tax, tho' it also argues for the value-added tax. (Sundaram Economy Bureau, New Delhi, Spt 21, via Mark Monson)

The Age (Canberra, Aug 3): “Younger Australians' home ownership rates are plunging. Stamp duty on house purchases should be scrapped and replaced by an expanded land tax to cover all property, said Melbourne Institute director John Freebairn and Julian Disney of the University of NSW.” (via Karl Williams)

Councilor John Illingworth (Spt 23): “Under Land Value Taxation, vacant or partially developed sites pay the full whack, and maximum development attracts very little additional tax. One of many beneficial effects is to push vacant or underused sites onto the market at attractive prices, available to anybody with the drive and enthusiasm to press them into use.” (via Dave Wetzel)

Friends of the Earth Guernsey suggest abolition of income tax, an increase in fuel duty, an overhaul of the energy tariff, a land tax, and a so-called basic income for all. Paying everyone £275 a week would gradually phase out the island's benefit system. (July 13, via Alanna Hartzok)

Dave Wetzel, City of London Transport (Spt 21): “Owner-occupation of housing does not change the need for a Land Value Tax (LVT). There are a number of alternative solutions including: Create a per capita Citizen's Dividend from the receipts of LVT. This would offset LVT paid and would give greatest benefit to those with the lowest incomes.”

John Prescott, the Deputy Prime Minister of GB, backed a tax on rezoned land, on what the Brits call the Planning Gain Supplement. (Daily Telegraph, July 14, via Josh Vincent)

Daily Kos (Oct 8): “People need to FOCUS on the economic payoff from zoning changes and the public should demand that WHOEVER develops land after a zoning change has to pay the public for the windfall from the zoning change.”

The Christian Science Monitor (Oct 18): “Trim the mortgage interest deduction. Homeowners and homebuyers convince themselves not to worry about all the borrowing because the interest on the loan can be tax-deductible. The bigger the mortgage people can afford, the more they can pay for a house, and the more real estate brokers and developers [not to mention lenders] rake in. The deduction discriminates against renters, and even homeowners of moderate means, who're likely to take a standard income tax deduction.”

Harper's (July): “In the past we had isolated thefts on behalf of constituents; today we have a professional crime syndicate with tentacles not only in long–established pork-barrel sectors such as public works and military but also in academic research and community programs. Those seeking government largesse no longer need to procure backroom meetings thru congressional aids; most members of Congress now have simple 'appropriations request forms', which are easy to complete. The majority party assigns at risk members to seats in the appropriation committee to direct pork projects to their home districts and tap recipients of earmarked spending for donations. Senator Byrd said, 'You may as well slap my wife as take away my transportation funding.'”

The Philadelphia Inquirer (Aug 6): “In the federal highway bill, the pork-barrel piggishness is nearly mind-blowing, given the backdrop of huge federal deficits and the push for more tax cuts.”

Cato Institute Daily Dispatch (June 28): “Cato's Jerry Taylor: 'The energy bill is almost completely devoid of economic merit. It once again demonstrates that politicians will leave no lobbyist behind in their campaign to rig markets and dispense corporate welfare.'” (Via Fredrik V. Coulter)

National Review (July 18): “For decades, powerful sugar growers have gotten politicians to enrich them with a protectionist scheme that inflates domestic sugar prices to the detriment of American consumers, American manufacturers, American farmers, and the American economy as a whole. The consequence is that sugar in the US has, over the past decade, cost two to three times the average world price.”

Joshua D. Angrist, economist, MIT (New York Times, Spt 11): "It is possible that we are not spending enough on levees, and it is also possible that the people moving in behind those levees are not being charged enough – for flood insurance, for example. If they were required to pay for flood insurance, they might not build there."

David Maurstad, acting director of FEMA's mitigation division (USA Today, Oct 18): “Flood insurance subsidies need to be phased out and vulnerable properties moved to higher ground. FEMA's latest estimate is that it could be $23 billion in the red for more than 225,000 flood claims from Katrina and Rita. Those two storms' payouts would exceed the total $15 billion distributed since the program began in 1968. Currently, discounts of roughly 60% are given to owners of properties that existed before flood insurance was required in certain communities. Properties with repeated losses from flooding make up 1% of those covered under the flood insurance program, but account for as much as 30% of all claims paid.”

Checks from the Alaska Permanent Fund to every Alaska resident are $845.76 this year, down slightly from last year, due to the declining stock market. The recent ballooning in oil prices is swelling the fund, but it must still be invested successfully to pay hefty dividends to Alaskans. Elsewhere, the oil-rich Alberta government is sharing its surplus with residents, sending out checks of $400 (Canadian). In oil-rich New Mexico, Governor Bill Richardson and prominent members of the state legislature have been discussing a $50 tax rebate per person. Newsweek International mentioned the oil dividend as one way to reform Russia's oil industry. The Weekly Standard and Reason on line argued for the oil dividend in Iraq. Petroleum.com suggested an oil dividend for Venezuelans. (US BIG Newsletter, Spt-Oct, Karl Widerquist)

US Steel's ex-right-hand-man to the CEO, Oscar Johannsen (in The Gargoyle, the newsletter of the Henry George School in New Jersey, 1962 Jan): “Well, how should the rent [the money we spend on the nature we use] be distributed? This writer believes it should be distributed on a per capita basis.”

“There would be at once a large surplus over and above what are now considered the legitimate expenses of government. We could divide this, if we wanted to, among the whole community, share and share alike.” (The Land Question, Chapter 14)

In Ireland in the 1840s, almost 100,000 died in Mayo from the famine epidemic and close to a similar number emigrated. Almost 47,000 families were evicted. The Mayo-born patriot Michael Davitt had been hugely influenced by a book, 'Progress and Poverty' by Henry George. Michael Davitt's Land League broke the spirit of servility, and paved the way for the emergence of a modern democracy. He was among the first leaders of Irish nationalism to recognize the potential of the United States as a place where Ireland's ills could be given the sort of worldwide recognition that was always going to be denied by our Imperial rulers. His speaking tours in America ensured that the Land League of County Mayo – and later of All-Ireland – became a truly global event at a time when communications were exceptionally limited and news traveled at a slower rate than the proverbial ass. His sympathy and concern ranged from tenant farmers to agricultural laborers, the British working class, prison conditions, social reform, the Boers in South Africa and the Jews in Russia. The Castlebar-based Telegraph, which is among the oldest newspapers in Ireland, was centrally involved in the Land League movement. (Western People, Mayo, Ireland, Aug 31)

To celebrate the board game's 70th birthday, the media diffused an LA Times article (Sarasota Herald-Tribune, Jun 20). Down Under, the Australian Financial Review (June 20): “The board game Monopoly is often regarded as a paean to the pleasures of capitalism, but its inventor, a Quaker from Virginia named Lizzie Magie, actually had a surprisingly different intention: she designed it as a demonstration of the virtues of land tax. Magie based "The Landlord's Game", as she called it, on the work of Henry George, chief 19th century proponent of land tax. Although George's theories have largely fallen by the wayside, a rarefied essence remains: every state and territory government in Australia except the Northern Territory levies a land tax. These governments are expected to reap almost $3.5 billion from these taxes in the coming fiscal year, amounting to 8.4% of their total tax revenue. However, every one of them raised the tax-free threshold by a considerable margin and many also took a scythe to the tax rates and scales.”

Dying to Win: the strategic logic of suicide terrorism is by Robert Pape (2005) of the University of Chicago. He has studied every suicide bombing throughout the world since 1980 in great detail and collected in this book groundbreaking evidence. He uses this unprecedented research to debunk widely held misconceptions about the nature of suicide terrorism and to explain the strategic, social, and individual factors behind this growing threat. Some of his findings: Most attacks are not by Islamist fundamentalists, many are not related to religion at all, such as the Tamil Tigers in Sri Lanka, who commit most suicide attacks. Most terrorists are not poor or uneducated fanatics but middle-class activists who see themselves doing what's necessary for their neighbors, as a brave soldier might throw himself on a grenade to save his comrades. Nearly all attacks are part of a coherent campaign with widespread public support. The number of such attacks has risen dramatically since the invasion of Iraq. And the single most common factor in suicide terrorist bombings is land – land that is considered precious for some reason by the terrorists, and is occupied by foreign combat forces: e. g., US troops on the Arabian Peninsula, Russian troops in Chechnya, Israeli troops in land the Palestinians consider theirs, and so forth. He also offers some suggestions for resolving the US/Islam conflict: abandon the ambition of a New World Order based on greed, something free trade and zero weapons trade helps accomplish, and support democracy in troubled regions, something a free press and visa-free travel helps accomplish, and wean ourselves off oil, something a tax on natural resources helps accomplish. (via Heather Remoff)

Places that draw accolades from the critics, like Pittsburgh winning the title of America's Most Livable City twice in the 1980s, are often places that recover more ground rent than do other places; back then, the Steel City taxed land six times more than buildings. Richard Florida of the University of Pittsburgh writes about places winning awards, attracting people. His 2002 Rise of the Creative Class cited Harrisburg and Allentown yet left out how both based their remarkable recoveries on shifting their property taxes off improvements, onto locations. His latest book, The Flight of the Creative, notes how places like Sydney Australia, New Zealand, and Estonia are able to attract talented people, but again overlooks that those places tax land – something The Economist magazine did not miss in Estonia's case but credited. What is it about the modern mind and the most venerable factor – land – that makes them such a bad fit? Many people can't see downtown vacant lots, so they surely miss the lots displacing development outward, creating sprawl – which is so bad in Kentucky that the Bluegrass Region, where they thorough breed horses, is on the list of the 100 most endangered sites, alongside castles, temples and ancient ruins. And people miss the wasteful land use pattern ratcheting up costs of infrastructure and transport. They miss speculation in land widening the income gap, driving politics, and defining history. As long as those blind spots persist, people will keep trying to solve problems with what doesn't work and ignore what does work. What can you do to focus attention on the worth of Mother Earth? Tell everyone we should share it.

Katharine Bradbury, senior economist with the Boston Federal Reserve (The Oregonian, July 18): “The official US jobless rate understated the severity of the slowdown in 2001 and has overstated the strength of the recovery since then. Millions of potential workers who dropped out of the labor force during the recession four years ago have not returned and are thus not counted in the official unemployment statistics. The official rate has fallen from a peak of 6.3% in 2003 June to 5% in 2005 June. This low rate probably understates the true level of joblessness by 1 to 3 percentage points, putting it back at its peak of 6+% or even higher, to 10% without gainful employment. Previously, labor-force participation rates would rebound sharply following recessions. This time, the labor-force participation rate remains close to 15-year lows of 66%. The labor-force participation rate has changed dramatically over the past 40 years as more women entered the work force and more teenagers and young adults continued their education. At the same time, participation rates for adult men declined, as more took early retirement and disability benefits improved.”

Commentaryettes

Oxfam (BBC, Jun 25) reported that after last year's tsunami killed 200,000 people, most of the aid went to the already well off landowners and businessmen, widening the gap between rich and poor. Even well-intended subsidies backfire. In the wake of speculators following in the wake of Katrina, many New Orleans and Gulf Coast home sites have jumped 10%-20% (AP, OCT 1). This newsletter reported the same phenomenon after a hurricane blew apart waterfront bungalows in Maryland. The home is damaged, so that is worth less. What's worth more, as always, is location, location, location. A flyer from a Portland realtor reads: “In the heart of Belmont” – as if the seller created the heart of Belmont. Another flyer for a nicely restored home and yard: “Best of all, it's in the great Mt. Tabor neighborhood.” Yes, it's the surroundings that are the best of all, not the actual home for sale. As high home costs push people out of California and elsewhere to Oregon, the newcomers push up prices here and deplete inventory. Normally, inventory, measured by how long it would take to sell all the homes being offered, is about four months; here in Portland it's six weeks.

The Wall Street Journal (Aug 23): “Markets can help achieve environmental goals. Power plants that can reduce their emissions more cost-effectively may sell their allowances to more heavy polluters. Today, the program has exceeded its goal of reducing the amount of acid rain to half its 1980 level.” Auctioned off emission permits might also help cut greenhouse gases, which would render tropical storms less severe.

Editor: Sure, it's human nature to want to stick it to the winners, but people ignore how some got to be winners. It's not from working or even investing smartly, but by lobbying successfully, winning subsidies (corporate welfare) and no-bid contracts and low or no taxes on the values we all do produce together. Those values mainly adhere to locations but also to resources like oil and to the EM spectrum. We also create value when we grant monopolies, as to utilities, etc. If we were ever to corral all our own values by charging fees and dues, thereby correcting the flow upstream, we wouldn't need to resort to taxing unearned fortunes downstream. Unearned fortunes wouldn't exist to tempt the taxists.

Mike Dill, Peak Oil Group (Oct 24): “To move land use back into a more sustainable and equitable future for the common people, how about land trusts, LLCs centered around land, and group private ownership? Imagine a future where land will no longer be 'owned' but managed in perpetuity by trusts, groups of caring people following mission statements and bylaws. We have a lawyer within the group. How does your tax shift work within these entities?”

Editor: A prominent land trust in Boston was stressed because the rise in land value was tempting even their members. Also, their newfound prosperity increased land values on their periphery, so they attracted speculators. Many land trusts older than a generation end because the descendants want to inherit the value of "their" land. It's natural, and not necessarily wrong. What's wrong is trying to do it individually – since the value is not created individually. What's right is doing it as a society, since it is society that generates that value. We can effectively end land as an object of speculation and put all land in trust – not by lawyers – but by dues and dividends; that is, charge land use fees to all landowners then use the recovered revenue to pay residents a dividend. The guy who invented the land trust many decades ago, and who advocated geonomics, Ralph Borsodi, called this legal ideal “trusterty”. It has four parts: (1) claim land openly, in public, (2) use land privately, excluding the public, (3) compensate those whom you exclude, as they compensate you; i.e., pay "land dues" or land taxes or land-use fees, and get back land dividends, and (4) use your land as a steward, balancing use with carrying capacity; i.e., users pay, abusers pay more.

Sven Aerts, Euro Green (Jul 30): “Installing solar power, rainwater recovery, insulation – people are not informed enough to figure out the return for themselves of these investments.”

Editor: That's why we have markets and prices, so the one datum – price – informs people well enough that they don't have to be an expert about everything else. It's crucial to let prices become precise. Then markets could work right for everyone. To thus empower markets, free them of (a) taxes, (b) subsidies, (c) liability limits, and (d) rent retention, and replace all that with (a) user-fees, (b) rent dividends, (c) full liability, and (d) land dues. For more on how limited liability shields a corporation's imposition of risk, see the book, It's Legal but It Ain't Right, by Nikos Passas and Neva Goodwin. Once business becomes liable for its actions, and taxes and subsidies are replaced with dues and dividends, then in such a fair market, "house doctors" could compete with energy utilities.

Sven Aerts, Euro Green (Jul 30): “Where do you get the money to pay for the care-taking for all these retired people? How are you going to pay their pensions? Same as the working generation is paying with their tax money for the pensions of the retired persons of now?”

Editor: Phase out pensions and the phony notion of dependence on grunt labor – machines do most work, and much other work need not be done except to qualify some worker for an income. Instead, replace pensions with: (1) their own savings; (2) the income of their children; (3) their share of social surplus, the Citizens' Dividend; and with (4) the constantly falling prices, unmasked by reversing inflation.

Mats, Sweden's Green Party: “Hi. We are discussing basic income. How is it possible to pay this social stipend with rents? We could pay it from less bureaucracy, from income tax and other taxes. But with rents?”

Sean Brooks, Democratic Freedom Caucus activist to that group's list (Aug 27): “Where'd you get rent being 40% of GDP? Was the 40% total current rents, or did it account for increases in realizable rents due to abolition of harmful taxes?”

Editor: Actually, that 40+% referred to FIRE (Finance, Insurance, & Real Estate), a close cousin of the multi-trillion rent flow, the money we spend on sites, resources, EM spectrum, ecosystem services, and privileges like corporate charters. And that estimate does include the initial beneficial impacts from shifting taxes off our efforts. While rent is not easily revealed by official statistics, our spending on FIRE is. So FIRE being the biggest sector in the economy shows that an estimate of rent at 40% is in the ballpark. If that guess were too generous and rent is only 15%, and were it divvied up among citizens, that'd still be $1000 per registered voter in the US. Probably it'd be the same in Sweden, too.

The Democratic Freedom Caucus' Adam (Apr 28): “How do we present Robert Reich's framework for articulating a political campaign, utilizing each of those four stories he sees American voters responding to?”

Editor: (1) “Triumphant Individual” – Tell the story of tax abolition, unleashing American genius to move us forward by leaps and bounds. (2) “Rot at the Top” – Tell the story of charging land dues, so even the 3% who own 97% pay for what they take. (3) “Barbarians at the Gate” – Tell the story of zero subsides, like foreign "aid", weapons exports, welfare for illegals. And (4) “Supportive Community” – Tell the story of citizens' dividends, of sharing that constant flow of values we all generate together.

The US Society for Ecological Economic's Spring Newsletter printed our call for chapters to our college textbook to be published by the UK's Elgar, Inc, and our forthcoming talk to the Southern Economics Association. Wyn Achenbaum asked for permission to post my piece about Dr. Steve Cord proselytizing Pennsylvania and other articles I've written at her website. Michael Strong sent to his FLOW list a note on Geonomics, describing it as important and fascinating. Todd Boyles to the Seattle Port list (Oct 24): “There is an authentic genius and creative, right nearby in Portland. He speaks in Seattle on occasion. Here is one of his works, 'Financing Transit Systems Through Value Capture: An Annotated Bibliography', available at the Victoria Transport Policy Institute website.” The Conifer, the newsletter of the Oregon Chapter of the Sierra Club, ran our article which invited members to join a committee working for amending the state constitution to incorporate the geonomic shift of taxes and subsidies.

In July, presented at the meeting of the US Society for Ecological Economics in Tacoma WA. After his keynote Bill Baarsma, Mayor of Tacoma, endorsed the shift of the property tax and asked for more information. After the August gathering of geoists in Philadelphia, Karry Skanda (Sep 10): “Jeff, brother, I didn't quite get a chance to thank you for your input into the CGO conference. I told you it has been a pleasure seeing you, but I'm also grateful for your long lasting work and commitment. I'm looking forward to further cooperation and encounters with practical consequences.” In late August before going abroad, we put on another class on the workweek, tax-free wages, and dividends from rents, but this year it failed to compete successfully with the beautiful weather. In September in Malta, presented to a conference on social capital the idea of enriching our social trust and relationships by improving economic justice via implementing geonomics. Those sociologists suggested their modus operandi – interviews, focus groups, and surveys – to know how to best package our message. My papers are available in hard copy and Powerpoint.

Ed Dodson, retired from Fannie Mae (Sep 7): “Good job as always, Jeff.” Editor: Deep thanks.

Mark D. Nedleman (Jun 5): “My concern with Peak Oil and other global 'wildfires' is they tap into people's fear, creating a climate of reactivity, not level-headed responsiveness. The existing economic system is basically corrupt. We desperately need to find local sustainable ways to co-exist. Your work on geonomics offers a viable alternative to business-as-usual economics."

Lenny, organizer, Onward Oregon (June 10): “This summer Onward Oregon is going to have blogs. Maybe you want to host one on land-use?” Ed: Yup.

Enzo Piccone (piccone@peoplepc.com, August 3): “Hi, there. May I have a copy of your annual summary of activities, please?” Editor: Sure. Anyone else?

John Barrows, Portland realtor who had an op-ed in the main daily, The Oregonian (Aug 16): “Thanks for the info on PTS (the Property Tax Shift) – a way to have both the easy street and a vibrant main street. I love it!”

Karry Skanda, ex-Euro actor/model (Oct 19): “Just read your screenplay treatment. I think it is outstanding and would make an exciting film. You have a great gift for writing.”

Bret Barker, California teacher (Oct 16): “Second reading. I really like this, Jeff. I wish you luck.”

Kathleen Walsh, Oregon counselor (Oct 16): “Your script descriptions are quite engaging and really do carry the imagination along. I enjoyed the story of Henry George because I like real life stories, but think Geotopia would best lend itself to commercial production. All three have so many layers of plot and interest, plus room for emotional expression and appeal. Together they make such a nice neat presentation package.”

Editor: Y'all are too kind. If anyone else wants a peek at a 1000 word treatment of one of my scripts, or all three for my trilogy, to give feedback on concept, plot, and character arc, do get in touch – especially if you know anybody in the movie making business.

The Robert Schalkenbach Foundation made it possible for me to attend conferences abroad and follow up with contacts made. The Henry George School of New York made it possible to offer classes this academic year on geonomics. Our summer Geonomist elicited enough renewals and newals from stalwarts Mel Leasure (Virginian leader) and Marina Pavlova (Oregon teacher), sustainers Christopher Anderson (Cincinnati planner), Herb Barry (emeritus University of Pittsburgh), John Morales (Missourian retired from the Panama Canal), and Bruce Oatman (New York social worker), supporters Hamlet Hilpert (ret US Navy, Washington St), Nadine Stoner (Wisconsin activist), and Kathleen Walsh (Oregon counselor), and subscribers Mike Curtis (Delaware activist) and Ted Gwartney (Connecticut assessor), and others to cover the costs of copying and postage. Big thanks to all for re/joining, donating, and granting. If you don't see your name above and know it belongs there, just send a check. We'll know what to do with it.

In Portland on November 4, there's the Oregon Land Use and Affordable Housing annual confab; organizers let me place our info on the registration table. November 14 at a fancy downtown hotel, the Lincoln Institute for Land Policy granted me and a guest two scholarships to attend their all-day workshop for 30.

Then we're also putting on our own event, “The Housing Bubble Pops: then what do you do?” The American economy for the next five years should repeat what it's done for the last 300 years – follow the real estate cycle. Since it's susceptible to speculation, now lenders and big owners are the puppet masters. Yet the cycle also yields to community sharing of land value, similar to what Aspen Colorado does. Learn how to redirect the value of land to benefit everyone and to prepare yourself for the cycle's next phase. With Phil Anderson, Director, Economic Indicator Services, Melbourne, Australia. The Center Ring, near Powell & Foster at 5339 SE Foster Rd. November 12, Saturday, 9.30am - 5pm. $10, yet no one turned away.

In conjunction with the Southern Committee on Resource and Environmental Economics, the US Society for Ecological Economics will hold two sessions at the Southern Economic Association annual conference, November 18-20th at the Grand Hyatt in Washington DC. Ecological Economics I (chair: David Martin, Davidson College), Paper 4 (of 4): Jeffery Smith (Forum on Geonomics), “Who Gets Rent Determines How Green Your Economy.”

Godfrey Dunkley, South African tax reformer who sent my one-pager, “Geonomics for a World Working Right for Everybody”, to parliamentarians, academics, and others of influence (Spt 1): “Greetings. This is a summary of land taxation from an American expert. I think you may find it interesting.”

Joel C Magnuson, professor of economics at PCC (Aug 21): “At Rock Creek Campus I and some of my colleagues started a program called Open Mind/Open Mic. It is a forum in which we have guest speakers, students, or faculty address issues that are not well represented in the media. I could arrange for you or someone from Geonomy Society to come, give a presentation, and hopefully recruit students for geonomics or political activism. These people really need the extension of your outreach. Let me know approximately when you would like to come.” Ed: Anytime. Anyone else got a venue?

Our new T-shirt is ready in time for Thankindians and for Chrassmis. Wear it on your midwinter vacation to the tropics and all thru summer; plus it tucks in nicely under your tux or wedding gown. The art is a Himalayan scene of gurus seated on mountain peaks, one higher than all the others. The text below is: “'For keeping everyone else off our part of Mother Earth, we owe them, as they owe us,' eh? 'Owners owe,' eh? 'Pay neighbors, not departers,' eh?” The text in the bubble above from the top guru is: “I said that?” The text in the footer is: “www.geonomics.org.” It's black on white, pure cotton, in all sizes. How many would you like?

Alice Tang, Californian inventor (Sep 10): “The Geonomist is a good publication and I enjoy reading it. I guess I was not aware that my subscription had expired. Tell me; I would send money at a respectable rate and intervals.”

Hamlet Hilpert, ex-Naval officer (Aug 2): “According to the Chinese Calendar, 1907, the year of my birth, was a Year of the Goat. I can be officially referred to as an 'Old Goat'. Time marches on. My log of contributions indicates my last to you was over a year ago. The enclosed will help you buy a few stamps.” Editor: Huge thanks. Anyone else overdue? Or underdue, about ready to take the plunge?

John Morales, ex-Panama Canal accountant (Jly 5): “There are other factors involved in a successful society besides property rights. Enclosed is 'pocket money' for you, a 'scholar's honorarium'.”

Kathy Rentenbach, Oregon activist (May 2): “I heard you speak at the Unitarian Church. Here is my tax-deductible yearly donation. I look forward to the books.” Editor: Huge thanks. A T-shirt is on the way, too.

Michael Neil, Californian healer (Aug 18): “Your update so moved me when I read it that I was ready to make an additional contribution on the spot.”

PayPal: “You've got cash! Dear Forum on Geonomics, Michael Neil just sent you money with PayPal.”

Editor: Thanks to Michael, now we accept PayPal, so everybody can go on line and deliver the goods. Connect to the account for the Forum on Geonomics.

Where society jumped the track is at rent, its own surplus – people overlooking all the money they spend on the nature they use. Win geonomics, so sharing society's surplus is the norm, and we'll make the world work right for everyone.

THE GEONOMIST

Vol. 14, No. 2
Editor: Jeffery Johnson Smith

THE GEONOMIST

Vol. 14, No. 2 Editor: Jeffery Johnson Smith

Vol. 14, No. 2
Editor: Jeffery Johnson Smith