The Geonomist Volume Fifteen Issue Three

Geonomics is …
a term I coined in order to shorten “ecological economics” and to focus on the whole earth, not just natural habitat. Others have borrowed or coined the term. Years after I began this newsletter, CNBC cablecast its “Geonomics Report”; they meant “global economics”, specifically trade that favors US corporations and investors. And a vintner uses “geonomy” as his URL (why?). Literally, geonomics is "earth economics" or "earth management". It sees economies as part of the ecosystem, operating by similar laws of feedback and balance. It suggests that if prices are accurate – and now we distort them with taxes and subsidies – then markets can be, in theory, perfect for both people and planet. So, the idea is to replace taxes with Land Dues, similar to Sydney Australia's land tax, and replace subsidies with a Citizens Dividend, similar to Alaska's oil dividend. In effect, people would share the worth of Mother Earth, instead of tax their efforts to produce value. Everywhere any version of the idea has been tried, it has been successful.

Norwegian academic Ole Gunnar Austvik, a specialist on oil leasing, explained that government should take most of oil's economic 'rent' (the profit above 'normal' profit, risk adjusted). On top of Norway's corporate tax of 28%, the government levies upon the companies leasing oil off Norway's coast a 50% special tax, making oil companies pay 78% of total profit. Seventy-eight percent of profit sounds perhaps like too much, but companies have been queuing up in each licensing round for years. (Vue Weekly, Edmonton, Canada, November 15; via Mark Monson) Could the US and American states, which now recover only a quarter or less of oil's economic rent, learn to strike a harder bargain? Oil companies rake in billions each quarter – then squeal hardship whenever Congress whispers about ending their subsidies or tax breaks. But once the people do get the rent for oil, our “oiligarchy” would fall. Rather then wage oil wars, we might address peak oil and global warming – in time.

We moved again (closer to Reed College, my mom's alma mater). Shops are no longer walkable, so rent is lower. The neighbors are quieter (noise pollution is maddening!) – until the pool opens next summer. Meanwhile, my fellow Oregonians complain about rural owners getting compensation for not being allowed to develop. Yet these same concerned citizens expect to sell their urban homes for twice what they paid for them. We all have a right to profit from land. The problem is we do it now by buying and selling rather than by sharing. We could pay Land Dues – the annual rental value of our location – in to the public treasury and get “rent” dividends back. For most of us, who don't own acres of forests or prime blocks downtown, the net gain would be hundreds of dollars each month. Then we could afford to do without so many subsidized services and hence lower or eliminate other taxes, those on buildings, business, and income – another big savings. But it begins with realizing that the growing value of land and resources is here for all of us to share. May your Winter Solstice of 2006 be your merriest ever.

In Australia, the State Government of Victoria pays wanna-be homebuyers first-time grants, nearly $450 million per year. Using the money, the recipients bid against each other, as sellers well know, and raise the cost of housing. In the suburbs where the “lucky” recipients spend their grants, the increase in housing prices over the last two years was double the rest of the Melbourne region. In September, affordability fell to its lowest in three years. Instead of help would-be buyers, the subsidies merely enrich sellers and their agents. One original argument for the grants was that urban growth boundaries had curbed supply, inflating prices. Since the grants are not helping the intended, some now argue that the money should be given to builders to erect affordable housing. (The Age, November 11; via Phil Anderson) Subsidizing builders would again enrich the rich and keep all decisions as to location and quality up to suppliers, not disadvantaged consumers. A better solution is, yes, pay grants, but to all regional residents and draw the revenue from the region's site values, quite high in the downtown business district. Having to pay Land Dues, landowners quit speculating and put their locations to highest and best use. That adds to the supply of housing, keeping down its price, while the dividend enables wanna-be buyers with the wherewithal to meet the price. Aspen CO does something vaguely similar.

In Japan, the six biggest broadcasters plan to open the new world's tallest structure in 2011. At 618 meters, it will handily top the current tallest structure, Toronto's CN Tower at 553 meters. (Associated Press; via Phil Anderson). Usually, each new tallest structure opens after the business cycle has peaked, which one Asian economist called the “Erection Index”. New York's Empire State Building opened in 1931, two years post-peak. If the patterns holds, Japan's economy would begin receding in 2009 or 10.

Arms sales to the most unstable regions – many already engaged in conflict – grew to the highest level in eight years. The US supplied $8.1 billion worth of weapons to developing countries in 2005 – 45.8% of the total and far more than second-ranked Russia with 15% and Britain with a little more than 13%. The US transferred weaponry to 18 of the 25 countries involved in an ongoing war. More than half of the countries buying US arms – 13 of the 25 – were defined as undemocratic by the State Department's annual Human Rights Report. Arming poor allies risks fueling conflicts rather than enhancing collective defense. Yet making weapons also keeps factories running in certain congressional districts. When a United Nations panel voted to study regulating the sale of conventional arms, the United States was the only country out of 166 to vote no. (Boston Globe, November 13; via Bill Batt)

If instead we were to export geonomics – a fair and efficient system that reinforces our connection to Earth and a species-wide identity – this poor planet could be such a peaceful place. That's my Christmas wish.

How much tax the superrich pay is something the Irish authorities release – 184 people taking in more than Ł1m last year paid no personal taxes – but English ones don't. On their own, private investigators figured the 54 UK billionaires paid taxes totaling Ł74.5m. Like their fellow Englishmen, billionaires, too, are liable for VAT and council tax. On their Ł126 billion combined fortunes, their income tax came to Ł14.7m. One person, James Dyson the inventor worth Ł1,050m, paid Ł9m, over half the income tax paid by the billionaires. The Ł14.7m puts their effective income tax rate at 0.14%. At least 32 of the individual billionaires or family groupings escaped paying any income taxes. Of the 22 billionaires who did pay, it was mostly on share dividends paid by their companies, not on a conventional salary, as the tax on dividends is at 25% rather than the 40% on income. While middle-class Britons face an increasing tax burden, the country is increasingly regarded as an “onshore tax haven” by the superrich and their advisers [which must work wonders for the Brits' sense of social cohesion]. Some of the world's wealthiest people now use London as their base. (The Sunday Times – Britain, December 03, via Carol Wilcox)

If some have too much, why give it to them? Why pay out corporate welfare and funnel all rents into few pockets? Better than trying to claw back wealth once amassed is to spread it around initially. That is, recover and share society's surplus, the worth of Earth.

Forbes magazine used to list millionaires. Now the 400 richest Americans are all billionaires. As a group, they're worth $1.25 trillion, up $130 billion from last year. The top ten is dominated by owners of new tech, such as top dog Bill Gates, Wal-Mart inheritors, the lone stock trader Warren Buffett, and Sheldon Adelson who owns casinos and hotels not just in Las Vegas but also in Macau China where gambling is a huge part of the culture; his hourly wage was $1 million. The two Google founders, Sergey Brin and Larry Page, took in $13 million each day. (The Oregonian, September 22)

In mass markets in rich or big countries, one must expect some concentration of wealth, but this much? The concentration would be much less in a fair economy, one where we would run parts of our government like a business. Specifically, government would not hand out monopolies for free. Instead, our collective agent would charge full market value for its corporate charters, discovery patents, gambling licenses, etc, just as private business charges full market value for its insurance coverage and bank loans. Then government would pay out the revenue as a dividend to citizens, enabling workers to hold out for higher wages and afford classier goods, popping the Wal-Mart bubble. Once today's holders of such valuable pieces of paper pay the going rate for their monopolies, then Forbes goes back to listing millionaires, not billionaires.

From 1996 through 2005, at least 850 CEOs backdated their stock options to when their company's shares were at their lowest monthly price. Doing so is often illegal and always dishonest. And the earlier date occurred before the executive took over as CEO. Buying the stock at the lowest possible price then selling it in real time, when if all goes well its price is higher, on average stuffed an extra $1.3 million to $1.7 million into executive pockets. (Too Much, November 27; via Ed Dodson) Failure to report this executive perk, an expense, also lets the company's stock price reflect too much value. Now as companies confess to backdating, the loss in their value has so far reached $10 billion and should greatly exceed that, losses born by all other stockholders (The Oregonian, October 25).

Backdating is cheating. It's the sort of thing government is supposed to punish. New York elected a new governor, Eliot Spitzer, with a record for prosecuting such abuse. If voters elect more fair-minded candidates, perhaps a critical mass will become attuned to distinguishing between private wealth and common wealth, between earnings and windfalls, and de-tax what's yours or mine and recover and share what's all of ours.

People and jobs are moving away from cities in search of land that's not so expensive. Yet the parts that have seen the greatest growth since 2000, the Sun Belt, lack extensive mass-transit. Even in car-addicted places, Blacks and Hispanics are more likely to carpool or use public transit than drive alone to work. Some people leave early to avoid congestion. About half of the people who work in Phoenix and Riverside CA get to work between 5 and 7 a.m. Nationwide, 28% get to work early. Despite cities sprawling onto less pricey land, the share of homeowners spending more on their mortgage than they can afford – 30% of their income or more –went from 27% in 2000 to about 35% in 2005. (USA Today, Oct 3)

Spending more time in cars, one-third of children and teens, about 25 million kids, are overweight and get winded easily, which increases their risk of having diabetes, high cholesterol, high blood pressure, and other illnesses as adults (USA Today, October 3).

If both housing and transportation are to become affordable – and leisure possible – then regions must recover and share their sky-high site values. Speculators will take less land or none, and others will use what they take efficiently. That in-fills cities and towns so people don't need cars – which are fattening – and can get about on buses, bikes, or foot.

While retailers that attract higher-income consumers continued to do well in November, others, especially Wal-Mart, did not. Wal-Mart's November sales were down 1%, and the company predicted December sales would be flat. The November decline was Wal-Mart's first monthly drop since 1996 April. Moody's still has an Aa2 rating on Wal-Mart, making it the highest-rated retailer in the world. Its low-budget customers may still be feeling the pinch of high fuel prices, as may others. More shoppers plan to buy online this year, 43% compared with 36% last year. More planned to use catalogs, too: 16% vs. 13% last year. (USA Today, December 1)

This is part of the scenario dubbed the end of suburbia, painted by those who note our energy use has passed peak oil. If such trends continue, Wal-Mart will need to find other uses for parking lots besides park cars. The transformation could come sooner, too, if jurisdictions shift the property tax off buildings onto land, making asphalt-covered aprons a financial drain.

National parks are seeing 20% fewer campers than 10 years ago, probably due to a slumping economy, higher gas prices, more competition for people's time, and changing demographics. The long weekend is replacing the two-weeks off, and groups that seldom visit parks, such as minorities, are growing. Overnight stays in national parks fell by 13.8 million, or 20%, between 1995 and 2005 and have fallen an additional 4.3% in the first eight months of 2006. Tent camping dropped 23%, backcountry camping 24%, and RV camping 31% in the 10-year period. Visits to "gem parks" – which include Yellowstone, Grand Canyon, and Rocky Mountain – dipped between 2% and 15% during that time. (USA Today, Sept 28). As more people lose touch with nature, does that make it harder to win a critical mass for sharing Earth's worth?

After years of operating strictly as public agencies, airports are becoming more entrepreneurial. Besides serve airlines, they've always granted concessions to retailers, parking, and rental cars. Now airports are developing malls, office parks, and golf courses. They are also pursuing agricultural projects, drilling for gas, and marketing consulting services. In doing so, they rely less on the shaky finances of struggling airlines. Getting a high percentage of revenue from non-aviation sources earns airports an “A+” bond rating. Commercial airports last year generated about $13 billion in operating revenue, more than half of it from landing fees and various services to airlines, and 47% from non-aviation sources, mainly parking fees as well as rent from retailers and car-rental agencies. (USA Today, Sept 25) Sooo, land no longer matters in the modern economy, huh? For airports, both land (the stuff) and location (the proximity) generate revenue.

Labor's economic slice – including wages, health insurance, and pension benefits – declined 2.5 percentage points from 2000 to 2005, to 56.5% of GDP. Workers in Germany lost 3.1 percentage points over the last half-decade. In Japan the decline was 3 points. Overall, the workers' share of the economy fell in four of the Group of 7 industrialized nations. In real terms, the wages of non-management employees in the US are now 10% below their level in the early 1970's. (New York Times; via Heather Remoff)

San Francisco Federal Reserve Bank President Janet Yellen: income inequality has risen to such a level that "there are signs that (it) is intensifying resistance to globalization, impairing social cohesion, and could, ultimately, undermine American democracy." She noted that during the past three decades, much of the increase in wealth had gone to the people at the top. Yellen said inequality is higher in the US than in other industrial nations and the safety net less generous. “Inequality has risen to the point that it seems to me worthwhile for the US to seriously consider taking the risk of making our economy more rewarding for more of the people.” (USA Today, November 7)

How risky is it for the economy to serve the people instead of vice versa? In the same article, former Fed chairman Alan Greenspan said that while the housing market has not hit bottom, "The worst is behind us."

Today's median-earning, median-spending family sends two people to jobs but has about $1,500 less for discretionary spending than their one-income middle-class counterparts of a generation ago. They spend less on food, clothing, major appliances, and fun in order to spend 75% of their income on mortgage, car payments, insurance, and childcare. (Elizabeth Warren, Harvard professor of law; via Alanna Hartzok) From 2000 to 2005, real estate prices escalated while incomes stagnated. Mortgages are burdening a growing number of people not only in fast-growing areas of California, Colorado, and Texas pay but also in the Midwest and in suburbs nationwide. On average, Americans spend 21% of income on housing; spending 30% is when housing becomes a burden. (The Oregonian, October 3)

While house prices have leveled and in some places are dropping, rents are rising. The share of renters spending 30% of income also jumped, from 37% to about 46%. In a poor city like Newark NJ and in some Southern California towns, over 70% of renters are paying burdensome amounts. In some Western campus towns, about half the renters spend at least half their income on housing. (The New York Times, October 3; via Heather Remoff)

To raise income, don't tax it. To lower the cost of land, do tax it or charge Land Dues. Then direct a hefty portion of the revenue into a dividend to residents.

In 55 cities during the first six months of this year, the overall number of homicides rose 4.2% compared with the same period in 2005. In 2005 the nation's murder rate increased1.8%, after a two-decade low in 2004. While homicides have declined in some cities in 2006, of those 55 cities, 19 had double-digit percentage increases in homicides. More than 40 cities reported jumps in robberies. (USA Today, October 13)

David Hackett Fischer (The Great Wave) noted that for centuries crime followed inflation. Prices rose when population growth (demand) outstripped output of a basic necessity (supply) such as firewood. Today's fastest inflation rate occurs in Zimbabwe – 1000% annually; there the state's land seizures have discouraged work; everything's scarce. In the US and the rest of the West, immigration exacerbates declining oil reserves.

For prices to stay up and not return to “normal”, more money gets issued than goods and services produced. In Britain, as mortgage approvals return to boom levels and consumers start to borrow more on credit cards again, money supply is growing at its fastest rate in 16 years. Some members of the Bank of England expect inflation to rise, too (The Times, October 31). In Zimbabwe, those with enough money speculate in real estate and foreign currency exchange while the state keeps printing new notes with strings of extra zeroes (The Economist, Aug 26).

Another impact on the US dollar is foreigners trading them in for other currencies, which also expands the domestic money supply. Result: inflation, meaning the cost of living overly burdens people at the bottom, where most crime is committed.

In August, the median sales price of existing homes fell on a year-over-year basis for the first time since 1995 April. It was just the sixth drop in the past 38 years of the Realtors survey. Over the past five years, prices had been rising at an annual rate of 7.5%. As late as 2005 October, prices were up 16.8% on a year-over-year basis. Even after this decline, prices are still up 27% over the last three years. (CBS MarketWatch, Sep 25)

In September, the median price of a single-family existing home fell to $219,800, a drop of 2.5% from the median price in September 2005. That was the biggest year-over-year price decline in records going back nearly four decades. Sales of existing homes fell for a sixth straight month. (USA Today, Oct 25)

In September, the median price of a new home dropped from $240,400 a year earlier to $217,100. The 9.7% decline was the biggest drop since an 11.2% year-over-year fall in 1970 December. The median price was the lowest since 2004 September, when it was $211,600. Thanks in part to falling prices, purchases rose for the second month in a row, after falling for three straight months from May through July. (Associated Press, October 25)

While more than 100 metro areas posted price gains over the summer, 45 did not, and not just in industrial cities, where job losses have taken a toll on housing, but also in the Sun Belt. The 45 metro areas that saw year-to-year price declines in Q3 were the most since the Nat. Assoc. of Realtors began keeping records in 1979. (USA Today, November 21)

Treasury Secretary Hank Paulson, who built a $700m private fortune at Goldman Sachs, is re-activating the 'plunge protection team' (PPT). Otherwise known as the working group on financial markets, it combines the heads of Treasury, Federal Reserve, Securities and Exchange Commission (SEC), and key exchanges. After the Wall Street tumble in October 1987, Ronald Reagan created it to buy stocks, currency, and credit futures whenever a crash looms. During the 1998 global crisis triggered by Long Term Capital, the Fed orchestrated all of the major banks to prop up the currency markets. They have an informal agreement to do the same for stocks. (UK's Telegraph, October 30)

Keep their number handy. A chart plots the National Association of Home Builders' confidence against the Standard & Poor's 500 stock market index over the past ten years. Not only did the NAHB index presage the start of the post-1994 bull market in stocks, but its decline starting in 1999 foreshadowed the equity market collapse the next year. Builder confidence rebounded in 2001 November – a year ahead of the stock market upswing that began in 2002 October. Over the past year, builder confidence plummeted 54%. Were stocks to follow suit, the S&P – 1400 in late October – would be south of 700 this time next year. We've had 11 sharp declines in the housing market since World War II, including this one. Eight of the last ten preceded a recession. (Fortune Magazine, November 13)

Could be coincidence; ten years are not much in the history of cycles. There was another eye-popping chart: the exponential J-curve growth in using homes as cash machines – cash you pay back with interest.

Investment in residential structures plunged at an annual rate of 17.4% in the summer months, the steepest slide in 15 years, since a 21.7% drop in 1991 Q1. Investment in commercial structures helped offset the housing collapse by rising at a 14% annual rate. Conventional economists said back in July that GDP in Q3 would hit 3.1%; in October they revised themselves downward to about 2%. Nouriel Roubini, a professor at the Sterns School in NYU, back in July forecast 1.5%. GDP came in at 1.6%, its weakest growth since the beginning of 2003, when it was emerging from the 2001 recession. For Q2, economists on average had expected the GDP to grow at 3.2%, while Roubini had forecast 2.5%. It reached 2.6%. Roubini predicts a housing-led recession to be in place by 2007 Q1 or Q2 at the latest. (MarketWatch, October 27)

Financial Times (London Edition, October 20): What is needed now is a shift of the discussion from funding local authorities to the gradual use of land levies to enable workers to protect their living standards and, if possible, transfer to them some of the gains from a single world economy. (Via Mark Monson)

Guardian (UK, Spt 29): “Taxing land values is an old idea, but one as relevant today as it was when Lloyd George first proposed it.” (Via Mark Monson)

The Gazette (Montreal, September 11): Land-value taxation makes it costly for speculators to sit on vacant land because they pay the same tax as the owner of an office building on comparable land. Land-value taxation discourages speculation, encourages development, and helps curb urban sprawl. The idea developed with Henry George, a 19th-century editor and political economist in the United States who argued speculators shouldn't profit from rising land value because they've contributed nothing to it. The system would be best applied uniformly across Quebec and Canada. (Via Mark Monson)

ISAIAH, an ecumenical alliance of 80 congregations in the Twin Cities metro area: We need an incentive system in place that makes speculating in sites less attractive and instead encourages investment and productive use. Land Value Taxation has been a powerful redevelopment force. We support efforts to bring this innovation to Minnesota. (By member Rich Nymoen and Sarah Gleason in The St. Paul Pioneer-Press, November 22; via Mark Monson)

Nobel laureate Joseph Stiglitz in the Miami Herald (November 15; via Ed Lawrence): “A global externality can best be dealt with by a globally agreed tax rate. This does not mean an increase in overall taxation, but simply a substitution in each country of a pollution (carbon) tax for some current taxes. It makes much more sense to tax things that are bad, like pollution, than things that are good, like savings and work.”

LA Times (November 20): “Since 1986, Washington has taken about 15,000 steps backward, enacting an average of 750 new or modified exemptions, deductions, and other wrinkles to tax law every year. Two Democrats — Sen. Ron Wyden of Oregon and Rep. Rahm Emanuel of Illinois — have introduced bills that would simplify and flatten federal taxes. Lawmakers should eliminate all but the most vital and effective tax breaks and tailor those as precisely as possible to the goal they want to achieve.”

John Stossel, host of ABC's 20/20 (September 27): “Big business and big government prosper from the perception that they are rivals instead of partners (in plunder). Politicians like it that way because they get power and prestige, and businessmen like it because they get protection from competition. They knew regulation would burden smaller companies more than themselves. Regulation isn't the only form of protection that big business gets from government. Companies with political clout get cash subsidies, low-interest loans, loan guarantees, and barriers to cheap imports. Even foreign aid is a subsidy to big business because governments receiving the taxpayers' money buy American exports.” (Via Mark Guttman of the DFCP)

Ex-Bush Sr. advisor, Catherine Austin Fitts (July 24): “Cui bono? Who benefits? There is no place on Al Gore's time line that shows the growth of consumer, mortgage, and government debt; the corporate model's economic dependence on subsidy that drives up debt … is a critical piece.” (Via Kathleen Walsh)

It's not just Congress. States and localities also put lots of pork in their budgets. Here in Oregon, tens of millions in grants intended for country doctors end up in the pockets of rich plastic surgeons, covering malpractice premiums (Oregonian, Sept 21). And the City of Portland subsidizes the Chamber of Commerce.

USA Today (October 25): “US taxpayers shouldn't help create the next catastrophe in the Big Easy. The federal program collected only $2.2 billion last year in premiums but will pay out more than $20 billion in Katrina claims, leaving taxpayers on the hook for the rest. Worse, the program encourages development in areas subject to flooding – not just in New Orleans, but everywhere – by offering insurance at bargain rates in areas where private insurers fear to tread. If local authorities allow residents to rebuild in the most dangerous areas, it should be at their own risk.”

LA Times (October 31): “Few US growers would be in the cotton business if not for one of our most obscene corporate welfare programs. Much of the roughly $3.5 billion every year goes to large corporate operations or wealthy families. The payments encourage overproduction and make it almost impossible for African farmers to compete. This doesn't just hurt people overseas. The US government last year spent about $23 billion on farm subsidies. What did taxpayers get for their money? A fat agribusiness industry and inflated land values. When other nations subsidize industrial exports that compete with our goods, we cry foul, and this incessant hypocrisy contributes to anti-American sentiment in much of the world. While the United States spends billions of dollars a year on foreign aid, it spends even more on agricultural subsidies that make it harder for those countries to wean themselves off outside support. Enough already.”

The Christian Science Monitor (November 20): “Reducing barriers to both trade and capital flows can promote a more peaceful world. Examining military conflicts from 1816 through 2000, countries that rank lowest on an economic-freedom index are 14 times more likely to be involved in military conflicts than are countries whose people enjoy significant economic freedom. Economic freedom is about 50 times more effective than democracy in diminishing violent conflict.” By Donald J. Boudreaux, chairman of the economics dept at George Mason University.

Creating a Sustainable World: Past Experiences, Future Struggles is edited by Trent Schroyer and Thomas Golodik (Apex Press, 2006). Essayists include: Robert Engler, author of The Politics of Oil, Vandana Shiva, Wolfgang Sachs, Peter Montague (editor of the blog Rachel), Ward Morehouse, Alanna Hartzok who recently won a contract from the UN to put Land-Value Taxation on the web, among others. The authors reckon that neo-liberal politics and neoclassical economics have been subjugated to corporate power, which abuses both natural and human resources unsustainably. Each contributor interprets what is happening, speculates about the consequences, and opines how to sustain our world. Introductions to each section of the book integrate the material well. The book's four sections are: sustainable development, the impact of corporate power, requirements for a sustainable lifestyles, and redesigned social systems that might achieve them. Their answers urge us to limit corporate power, return to local economies and polities, reassert the commons, rebuild sustainable agriculture, and strengthen local democratic institutions – which would only reverse the prevailing trends of the last three centuries. Some of the articles were a bit prolix yet Creating a Sustainable World offers hope to a readership, likely to be comprised largely of students, who need encouragement and direction. (This digests a review by Bill Batt which appeared in Groundswell, November.)

Dean Baker, author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer, in an editorial published by Truth Out (October 24): “In the recessions in the mid 70s and early 80s, housing fell off by close to 50%. However, house prices had not gotten so out of line with fundamentals in those earlier periods, nor had housing wealth fed so directly into consumption. In the fall of 2000, six months after the stock market crash and just a few months before the beginning of the last recession, not one of the 'Blue Chip' 50 economic forecasters saw a recession on the horizon. In fact, the most pessimistic forecast for the next year was that the economy would grow at a modest but respectable 2.2%. This time, tens of millions of families bought homes at bubble-inflated prices and now face the prospect of seeing their life savings disappear in the housing crash.” Baker is Director of the CEPR in DC which frequently appears in the mainstream press and wins funding from major foundations. (via Paul Martin)

Barron's, (Oct 2): The housing market downturn means option deposits on land and joint ventures could come back to haunt some homebuilders, their financial partners, and their stockholders – not to mention the economy. If orders dry up and homebuilders abandon optioned land, they have to spread the sunk costs of developing a community – which range from architectural plans to the construction of model homes and swimming pools – over fewer homes. Walking away from unfinished communities would kill their reputations. Under accounting rules, options on land are considered assets plus builders need not disclose debt, no matter how many millions, if it's a minority stake in the equity used to buy land. Yet if builders are forced to write off their land options or off-book investments, that they must disclose. Significant use of options and joint ventures put downward pressure on these companies' Moody's ratings relative to companies with more straightforward financing. Some builders could face substantial hits to book value. Housing bulls argue that those shares already reflect such losses; the Standard & Poor's Supercomposite Homebuilding Index is down 41% from its high of 2005 July [so bad news is good news?]. When homebuilders forfeit their option, the landowner presumably would shop the property anew, and at a reduced price, particularly if it carries debt. Selling at 25% to 50% off would impact the rest of the land market and thus the economy.

Fortune proposes a voucher

Fortune magazine (November 13) proposed a health voucher for all Americans, which would be a partial Citizens Dividend. The authors would not fund the voucher from rent but would replace the Medicare tax on wages with a national Value-Added Tax. People could spend the voucher on any health provider, which would stimulate competition. The reformers would also replace malpractice insurance with federal adjudicators who could also ban bad doctors. Lowering malpractice costs while raising competition should lower overall medical costs.

Except for the VAT, which would certainly grow over time, the plan appears to be an improvement over the present costly system that caters to rich dying people. A better funding source might be the source of so much illness – pollution, especially the burning of hydrocarbons; the feds could auction of emission permits and raise extraction leases to full market value. Once people grow accustomed to recovering the value of nature and receiving a universal benefit, they'll be ready for total geonomics – no taxes on efforts while sharing all of society's surplus.

Fred Harrison, author, Ricardo's Law (Oct 17): “The Alaska/Alberta model – population-poor/resource-rich – is not representative of most regions. Once people have paid for all the benefits they receive in the locations they occupy, I don't see a surplus left to share out as a Citizens Dividend. ”

Editor: Every region has a metro center of sky-high values. Across America, people spend at least 40% of GDP on rights to or use of nature. Redirect that immense flow from a few owners and lenders to everyone.

John Watkins, founder, Simple Society (October 18): “A Citizen's Dividend means every human in this country from birth to death would receive $600 a month – $900-$1,000 a month if children are not included.”

Editor: It's not that kids are excluded, exactly. Say you did include them directly. Probably you won't give $500 bucks monthly to an infant. Probably you'd give it to their parents to hold or spend for the kid, pretty much the same thing, or set up some bureaucracy to hold the dough til they come of age, which unduly complicates things. Plus, savings imply debt. You save their share, the bank lends it to somebody else, who has to pay it back with interest. Better than debt – which created money, absentee owners, and class historically – is a constantly falling cost of living. You can rev up the pace of techno-progress if you don't save but spend all the rent today, so when kids reach maturity, their cost of living will be minuscule. Thus parents are not just spending their kids' inheritance but also bringing about a better future sooner.

Mark Porthouse, Brit (Oct 21): “If the dividend goes to citizens, what about struggling immigrants?”

Editor: Better to struggle in a society that's prosperous, open, and just – one's bound to reach their goals sooner. Also, if citizens share rent, eventually, the idea will spread, even all the way back to the immigrants' homeland; at that point, they'll no longer have to emigrate, as their homeland will be prosperous, too.

John Kromkowski, Baltimore lawyer (Oct 3): “If the Citizens Dividend is the solution, what would it matter economically how the CD is funded: by Income Tax, by Land-Value Tax, by Real Estate transfer tax.”

Editor: If the source of the CD is not site values, then paying the CD would just inflate site values. To recover site rent, you don't need LVT. The mechanism could be the deed fee, collected annually, like some states do for cars. Or try a land use fee. Or Land Dues. Also, recovering site values motivates the recycling of sites, which increases housing supply, lowering the cost of housing, letting the CD go further. The CD is a dividend, literally, a share of regional site values. If local land values are high, your CD is high; so, the less affordable the land, the fatter your CD.

Alanna Hartzok, Pennsylvania activist (Oct 17): “One other way is to join LVT to the Peoples Budget process. People could then decide what services to fund and how much to put into CDs.”

Editor: Put the Budget on the Ballot was a campaign I waged a couple decades ago with our VP Gary Flo now at the U of Vermont. We got a little ways with the Greens. It cheered us greatly to see some Brazilian towns (in the commie south) adopt the reform. While I no longer devote much energy to it, certainly I would not oppose it. One drawback to combining the political and the economic is that it's biased towards those who are more political, who like the sound of their own voice, who like to stand up at meetings and argue. A CD is much cleaner, sparing those who'd rather get on with life and leave the debates to the barbershops.

Bent Straarup of Denmark, a nation that has had more LVT than most countries (October 20): “I so agree with you! Thank you for your arguments on simplicity and equal shares to every one! The point is to me that we should not expect every citizen to go deep into this subject. Everyone should, however, understand that he or she has a birthright to fight for.”

Richard Reid, Oregon reformer (November 14): “The builders claim home ownership is the American Dream. We won't make much progress without reclaiming the rhetoric. Millions get diverted to subsidize development – go Intel! Growth could be sustainable if it pays its own way, meets community needs, spreads the wealth. That's why I like your Citizen Dividend so much. If people saw the whole picture, they'd get angry. A simple cartoon, if drawn fairly and clearly and placed in the right places in public discourse, would make it difficult for the real estate industry to push back even with their millions in ill-gotten gains. Thanks again for keeping the Geonomist going. It's so very good to know that progress is continuing around the world.”

Howard Kronish, Portland, ret (October 5) on Lewis & Clark College's environmental conference: “You got the land aspect of the environmental movement just right. I could see the preparation it took to fashion the brief talk into the main topic at hand. I really enjoyed your presentation, as I think the audience did too. I was observing their concentration and interest. It wouldn't surprise me if you get many inquiries from your talk. Too bad you didn't have more issues of The Geonomist on the table for the audience to take.”

Editor: At the beginning of the day, the table had a pile of newsletters. Their disappearance gives me hope!

The American Journal of Economics and Sociology in July and a new book, Natural Resources, Taxation & Regulation, edited by Laurence S. Moss, published my annotated bibliography co-authored with Tom Gihring, “Financing Transit Systems Through Value Capture”. It's also reprinted by the Urban Land Institute and posted at the Victoria Transport Policy Institute website. Bill Sell, a Milwaukee businessman bitten by the land-tax bug, in three interviews with his County Supervisors and/or staff, peddled his essay and my transit bibliography.

The editorial team of Re-public has decided to publish my essay, Beyond Ownership, in their forthcoming special issue, 'The promise of the Commons', in both English and Greek. The Portland Tribune printed our letter (September 21) that urged putting the property tax shift on the ballot. Wetzel Dave, Vice-Chair, the Mayor's Transport for London, wondered if I had available a short essay on using rent to fund a Citizen's Income. In fact, I've a stable of pre-used articles that I'd happily provide anyone.

The fall Geonomist elicited enough renewals and newals to cover the costs of copying and postage: from super stalwart Jing Chen (U N BC economist); stalwarts Chuck Metalitz (IL activist), John Morales (MO ret. Panama Canal); sustainers Stephen Bezruchka, MD (Seattle activist), C. Lowell Harriss (NY ret. prof), Heather Remoff (PA author); supporters Karen Harding (OR activist), Joan Sage (Philadelphia activist); and subscribers Meta Heller (WA retiree), Howard Kronish (Portland retiree), among others. 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.

John Watkins, founder, Simple Society (October 7): “The fall issue of The Geonomist is exceptional. Hard work too, I'll bet. It's interesting the way you fund your efforts; you must live in doubt all the time. One of the benefits of your membership in The Alliance is that you can give up to 50 free subscriptions to Simple Solutions every month. If any of them ever gives a gift subscription to a friend, or orders a transcript of one of our forums, your Forum on Geonomics earns 30%. It starts small but can grow fairly large.”

Editor: Check out John's good work at http://simsoc.org. If you'd like a trial subscription to his newsletter, please get in touch.

Alan Durning, founder of Sightline Institute, nee Northwest Environment Watch, posted (September 18): “A 2003 survey of legislators and local elected officials found that some 63% believed that land-value (or split-rate) taxation would be a positive stimulus for urban development.” (Via Mark Monson) Are your elected representatives among the majority? Are they acting on their beliefs? Our supporter Al Hartheimer is helping his new governor act positively. The governor-elect of Massachusetts has on his Transition Committee Working Group for Economic Development a friend of Al named Michael Wilcox. To turn Massachusetts around, Al suggested instituting a state land tax while reducing the state income and sales taxes. Michael wants to know who else think this is a good idea. Besides telling him, if you know anyone on any of the governor's other transition committees, write to them directly; if not, submit your thoughts at http://patrickmurraytransition.org. Let Michael Wilcox know at mfw at mfw.us that there are lots of people who think these are good ideas. And cc Al at ahartheimer at yahoo.com.

What you can do Meta Heller, Olympia WA retiree (October 20): “Eventho' I live in subsidized senior housing and would otherwise be out on the streets, I send $15 (not $50). However, send me a T-shirt and I will wear it in the legislature where I will testify for tax reform.”

Editor: Next batch of T-shirts, you definitely get one. Anyone else so eager? However much you can afford, it all helps us highlight a path to a better world. Send what you can; we'll do even more to deserve it. Happy Winter Solstice of 2006!

THE GEONOMIST

Vol. 15, No. 3
Editor: Jeffery Johnson Smith

THE GEONOMIST

Vol. 15, No. 3 Editor: Jeffery Johnson Smith

Vol. 15, No. 3
Editor: Jeffery Johnson Smith