~

~

~

~

~

THE AGE comics 21 JANUARY 2012

~

I’ve mentioned before (including here and here) the cry “Overpopulation!” amounts to a diversion, fostered by the 1% and their unwitting pawns, a detour away from reforming a terribly flawed distributional system which channels the land and resource rents of the people to the uber wealthy.

David Brooks takes a look at the new Malthusians in this new PDF –  FE People-2012.

A chapter in Michael Hudson’s “Super Imperialism” also takes the World Bank’s neo-Malthusianism to task.

Zeepoppers are misguided.  Malthusianism is knee-jerk, and doesn’t the 1% love it? 😉

ECONOMISTS EXIST TO MAKE WEATHERMEN SEEM INFALLIBLE

Well now, so the World Bank and IMF believe the financial crisis is going to get worse? OK, c’mon now, who let the cat out of the bag? I mean, those people aint the sharpest tools in the workshop–they didn’t even see this crash on the horizon–and couldn’t possibly have figured out things are going to get worse all by themselves.

Yes, World Bank and IMF, it is going to get much worse. And the only thing, the only thing, the ONLY thing that will ameliorate it is abolishing taxes and governments capturing economic rents instead.

You are reading the situation several years too late, World Bank, IMF – get with the (economic rent) program, or you’ll be partly responsible for it getting worse! Have you noticed even Italy appears to have discovered the annual value of its electromagnetic spectra, guys?

I enjoyed this ABC interview between Tony Eastly and Michael Janda about the IMF now reducing its forecasts.

FROM ALANNA HARTZOK AT THE EARTHRIGHTS INSTITUTE:

On this day, a federal holiday in the United States honoring the Reverend Martin Luther King, Jr., Democracy Now! presents two powerful speeches of Dr. King:

His “Beyond Vietnam” speech, which he delivered at New York’s Riverside Church on April 4, 1967, as well as his last speech, “I Have Been to the Mountain Top,” that he gave on April 3, 1968, the night before he was assassinated.  Watch/Listen/Read here.

Some quotes:

“We are on the wrong side, of the wealthy and the secure, not the poor.”

“These are the times for real choices, and not false ones.”

“Our nation is on the wrong side of a world revolution.”

And the JFK quote from five years before Dr. King gave his Beyond Vietnam speech:

“Those who make peaceful revolution impossible will make violent revolution inevitable.”

I highly recommend you watch, listen, read the transcript of Dr. King’s speeches.

King’s words resonate as strongly with us now as they did those several decades ago. As economic inequality increases in our country and throughout the world, we still seek to install that deeper justice that King stood for. Here are two of his quotes from our Land Rights course website. I strongly urge you to complete the course at http://www.course.earthrights.net because it is a program detailing deep economics of peace and justice.

More quotes from King:

“I am sure that each of you would want to go beyond the superficial social analyst who looks merely at effects and does not grapple with underlying causes. True compassion is more than flinging a coin to a beggar; it understands that an edifice which produces beggars needs restructuring.” – Letter from Birmingham City Jail

“An intelligent approach to the problems of poverty and racism will cause us to see the words of the Psalmist – The earth is the Lord’s and the fullness thereof – are still a judgment upon our use and abuse of the wealth and resources with which we have been endowed.” – A Testament of
Hope: The Essential Speeches and Writings of Martin Luther King Jr.PP 629-630.

Lastly, this relevant article from the New York Times, January 15, 2012

HOW FARES THE DREAM?
By Paul Krugman

“I have a dream,” declared Martin Luther King, in a speech that has lost none of its power to inspire. And some of that dream has come true.
When King spoke in the summer of 1963, America was a nation that denied basic rights to millions of its citizens, simply because their skin was the wrong color. Today racism is no longer embedded in law. And while it has by no means been banished from the hearts of men, its grip is far weaker than once it was.

To say the obvious: to look at a photo of President Obama with his cabinet is to see a degree of racial openness — and openness to women, too — that would have seemed almost inconceivable in 1963. When we observe Martin Luther King’s Birthday, we have something very real to celebrate: the civil rights movement was one of America’s finest hours, and it made us a nation truer to its own ideals.

Yet if King could see America now, I believe that he would be disappointed, and feel that his work was nowhere near done. He dreamed of a nation in which his children “will not be judged by the color of their skin but by the content of their character.” But what we actually became is a nation that judges people not by the color of their skin — or at least not as much as in the past — but by the size of their paychecks.
And in America, more than in most other wealthy nations, the size of your paycheck is strongly correlated with the size of your father’s paycheck.

Goodbye Jim Crow, hello class system.

Economic inequality isn’t inherently a racial issue, and rising inequality would be disturbing even if there weren’t a racial dimension.
But American society being what it is, there are racial implications to the way our incomes have been pulling apart. And in any case, King — who was campaigning for higher wages when he was assassinated — would surely have considered soaring inequality an evil to be opposed.

So, about that racial dimension: In the 1960s it was widely assumed that ending overt discrimination would improve the economic as well as legal status of minority groups. And at first this seemed to be happening. Over the course of the 1960s and 1970s substantial numbers of black families moved into the middle class, and even into the upper middle class; the percentage of black households in the top 20 percent of the income distribution nearly doubled.

But around 1980 the relative economic position of blacks in America stopped improving. Why? An important part of the answer, surely, is that circa 1980 income disparities in the United States began to widen dramatically, turning us into a society more unequal than at any time since the 1920s.

Think of the income distribution as a ladder, with different people on different rungs. Starting around 1980, the rungs began moving ever farther apart, adversely affecting black economic progress in two ways. First, because many blacks were still on the lower rungs, they were left behind as income at the top of the ladder soared while income near the bottom stagnated. Second, as the rungs moved farther apart, the ladder became harder to climb.

The Times recently reported on a well-established finding that still surprises many Americans when they hear about it: although we still see ourselves as the land of opportunity, we actually have less intergenerational economic mobility than other advanced nations. That is, the chances that someone born into a low-income family will end up with high income, or vice versa, are significantly lower here than in Canada or Europe.

And there’s every reason to believe that our low economic mobility has a lot to do with our high level of income inequality.

Last week Alan Krueger, chairman of the president’s Council of Economic Advisers, gave an important speech about income inequality, presenting a relationship he dubbed the “Great Gatsby Curve.” Highly unequal countries, he showed, have low mobility: the more unequal a society is, the greater the extent to which an individual’s economic status is determined by his or her parents’ status. And as Mr. Krueger pointed out, this relationship suggests that America in the year 2035 will have even less mobility than it has now, that it will be a place in which the economic prospects of children largely reflect the class into which they were born.

That is not a development we should meekly accept.

Mitt Romney says that we should discuss income inequality, if at all, only in “quiet rooms.” There was a time when people said the same thing about racial inequality. Luckily, however, there were people like Martin Luther King who refused to stay quiet. And we should follow their example today. For the fact is that rising inequality threatens to make America a different and worse place — and we need to reverse that trend to preserve both our values and our dreams.

Financial Times (UK)

February 20 2004

WHY ON EARTH NOT PUT A TAX ON LAND?

By Martin Wolf

“Roads are made, streets are made, services are improved, electriclight turns night into day, water is brought from reservoirs a  hundred miles off in the mountains – and all the while the landlord sits still….To not one of those improvements does the land monopolist, as a land monopolist, contribute…. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived.”

Thus did Winston Churchill explain, in 1909, the morality and the efficiency of taxing land (or pure location), rather than development.

It is moral because owners, as owners (rather than managers or developers), contribute nothing to land’s value. It is efficient, because taxing land distorts nobody’s choices. On the contrary, a tax on site values encourages owners to use what they own more efficiently.

Always desirable, a land value tax is now an idea whose time has come.

As John Muellbauer of the University of Oxford notes, a tax on site values has the following hugely desirable features in contemporary Britain: it offers a tax base that cannot run away, unlike capital or labour; it encourages desired development; it imposes the greatest cost of holding undeveloped land where prices, and so values in alternative uses, are highest; it captures for the public purse a part of the benefits accruing to landowners from investments in infrastructure and other amenities by the public sector; and it makes user costs of ownership of land positive more often, improving the country’s allocation of resources.

The last of these points needs elaboration. If expected capital gains on land are large, because prices are forecast to continue to rise at a rapid rate, the user cost of holding the property becomes negative. The reverse is true where house prices are falling. This makes the cost of land (and so of the housing built on it) lower where prices rise faster and vice versa. This reinforces the movement of economic activity and people towards the most dynamic regions from the least dynamic ones. A national land tax would partially offset this perverse operation of the price mechanism.

Uniform site – or land – value taxation is a “no-brainer”. But what makes it particularly attractive today is its superiority to other taxes now imposed on property.

The council tax and the uniform business rate are imposed on land that is both occupied and developed. These taxes encourage dereliction and discourage development. Council tax has the additional disadvantage of being imposed at higher rates on the cheaper properties in poorer places, thereby reinforcing the perverse regional effects of differential user costs of housing. Again, stamp duty, now at the steep level of 4 per cent on properties worth more than £500,000, is a tax on transactions. But why would anyone wish to lower mobility and reduce liquidity in this way?

What the UK needs, then, is a national tax on the value of land holdings. As is pointed out in the interim report on housing supply by Kate Barker of the Bank of England’s monetary policy committee, discussed here a fortnight ago, Denmark does already imposes just such a tax.

If, as seems plausible, the country should move in this direction only cautiously, the obvious place to start is with the uniform business rate. Prof Muellbauer suggests we could reform the business rate by halving the rate and replacing the lost part with a land value element.

A floor value might be set at, say, £10,000 a hectare, which would exempt most farmland. He also suggests that a tax below 1 per cent a year would be sufficient.

What are the objections to such a modest reform? One would be that it is hard to value the land component in property values. But insurance valuations might be used to place a value on structures, in which case land value is simply total value less the value of the structures on it. Another objection is that such a tax would impose cash costs on people with no incomes. A possibility here, also applicable to current discussions of reform of council tax, is to roll up tax and recoup it when the asset is sold, developed or bequeathed.

In the long run, a national land value tax, at a uniform rate, seems at least a partial substitute for council tax as well. But that would reduce local autonomy and further weaken the incentive for local authorities to promote development. I intend to turn to these topics – local fiscal autonomy, planning and infrastructure provision – in a future column. For the moment, however, the big point is that the taxation of property is a mess. This is one reason the housing market and regional policy work so poorly.

National land-value taxation is a part of the solution. It is both fair and efficient. It should be adopted.

IT TAKES A CERTAIN TYPE OF MENTALITY, DOESN’T IT?

A number of other social pathologies develop once you come to believe that land may be ‘owned’ instead of held for exclusive possession upon payment of its economic rent to the public purse.

First of all, if the full rent of a piece of land is not captured publicly, that part permitted to be privatised becomes capitalised into a land price. This tends to increase over time and has the effect of denying access to those who can’t afford the payment.

The response of the mentality that can’t see anything wrong with increasing land prices is usually “Stiff!”, it not being accepted that those on the planet are born with a right to access. “Whaat! A right!” Yes, a right.

“Wait a minute, they can borrow, like we all had to!”

Yes they can.  And therein arises another problem.  Before society came to permit private ‘ownership’ to subvert this most basic human right–now even Christian churches manage to skirt around the biblical injunction that land must be rented, not ‘owned’ (Leviticus 25:23)–the churches used to preach against usury and interest. Once they fell, hook, line and sinker for the commoditisation of land–that land may be purchased in perpetuity for a capital sum–they could no longer continue to preach against interest and bank usury, so it seems both are OK now.

“Oh, but morality can change!”

The result in this case? Just as land prices would reduce towards zero with the capture of the rent of sites, so also would interest rates.

However, increasing land prices permit interest to develop into usury. Those who might claim that the charging of interest on bank mortgages does not equate to usury may contemplate whether the combination of land price, pathological in itself, with interest charged thereupon for thirty years, constitutes an even greater societal ill.

Next: once land price denies some people of their basic right to land, it is left to private landlords to provide their accommodation at a private rental that includes the land rent owed to the community, plus the landlord’s return on the dwelling.

“But this is a public good!” Oh? A public bad, surely? Especially when the alternative is for government to capture the publicy-generated site rent instead of delivering the greater part of this economic rent to banks and the 0.1%?

Society having foregone its most fundamental moral responsibility to capture publicly-created land rent, it then becomes necessary to tax private productivity, industry and thrift. This is a form of theft, the fundamental cause of inflation, and adds to prices and unemployment.  It’s arguable that unemployment and prices of goods and services would at least halve under a rent-capture regime.

Worst of all, a mindset that blissfully denies access to sites upon payment of the site rent–as, for instance, was required in the early years of the city of Canberra–will find it a short step to deny other rights.

Economic depression is born of this mindset, and it is not too sweeping to say wars also.

As have many other moral philosophers, the social philosopher Herbert Spencer made the claim in Social Statics that land can never be treated as private property – but he recanted once he established himself in society and began to rub shoulders with the lords of the land.

Those who wish to study how this mentality came to be achieved by Herbert Spencer might read Henry George’s A Perplexed Philosopher which includes Spencer’s Social Statics chapters “The Right to Land” and “The Right of Property”.

RENTIERS TRICKLING UPON THE CHINESE

Whether in capitalist or communist countries, the rentier class has been able to channel most publicly-generated land and natural resource rent unto itself because the 99.9% doesn’t understand the manner in which the tax regime facilitates this perversion.

In either system the 99.9% is told to be patient as wealth will “trickle down” to them. Meanwhile, we are stupid enough to allow ‘alpha males’ at the top of the tree to do the trickling, whilst those below are expected to be grateful as they are trickled upon.

China’s growth rate is expected to fall from 9.2% to 8.5% in 2012. Underpinning much of its growth has been a property bubble without parallel as 50% of rural people have drifted to China’s cities.  Alpha male apes are permitted to seize the bananas in China, too, just as surely as they have been in the west. The poor are left to make do with the skins.

Where is the great difference between capitalism and communism?  Freedom for whom?

Unless China captures a far greater part of its land rent to the public purse, it is only a matter of time before she joins the west in this mocking wealth divide that threatens social stability.

What a shocking indictment at the beginning of the 21^st century that so few comprehend the distributional mechanism that has delivered this social and financial collapse!

Tasmania has pulled the plug on its review of the state’s taxation system. Although it wasn’t, they said it was too hard to do on their own.

Pity.

It had received an excellent proposal from the Land Values Research Group spelling out how simply Tasmania might get an economic edge over Australia’s other states.

And doesn’t little ol’ Tassie need it?

This wasn’t the time to drop your bundle, Tasmania!

GREECE

If you believed Greece had any chance of coming up to scratch, you’d give up any such thoughts after hearing BBC World News’ Sarah Montague’s “HARDTALK” with the EU Commission’s Vice-President Olli Rehn last night.

[This is only a part of the interview, but it carried on along the same lines, with Sarah tripping Rehn up at each and every searching question. Mind you, he didn’t miss a beat, but his responses were just as defensively vacuous.]

Maybe when she grows up Karen Brockman from “Outnumbered” is going to be Sarah Montague?

RON PAUL

Absent anyone who’s seen the cat, I’d like to see Ron Paul get up as leader of the Republicans.

That’s because he’d put the wind up the military and up munitions manufacture, arguably one of the few remaining great US industrial successes these days.

And that’s the main reason Ron Paul won’t make it.

Many Americans are only too aware of how success and leadership is beginning to wane in the world’s greatest democracy, and it will be possible for his competitors to generate enough irrational fear that having Ron Paul as leader of the Republican Party equates to the US losing its military supremacy.

Like all disciples of Von Mises, Rothbard, et al, Ron Paul is unfortunately more concerned with money, exchange and the determination of prices than with the laws of production and distribution of wealth which supporters of Henry George know take precedence over money, credit and prices.

Paul’s near-coherent economic policy is better than that of his opponents though, but like Austrian economics in general, it suffers the fatal flaw of not being able to distinguish land from capital. Conflating them won’t allow the distinction that needs to be drawn between earned and unearned incomes to defeat the depression.

But you do have to give Paul credit for the accuracy of his forecasts. They’re almost as good as Georgists such as Fred Harrison, Michael Hudson, Fred Foldvary and myself. (He, like the few non-Georgists who managed to forecast this financial and social collapse, uses credit as a proxy for speculation in land prices.)

Nevertheless, bon chance, Ron!