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| Wealth and Want | |||||||
| ... because democracy alone is not enough to produce widely shared prosperity. | |||||||
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The Georgist movement has its own Jeff Smith, and while we
haven't sent him to Washington for more than a few days at a time, he has
a lot to
say, and we should be listening to it. Like Frank Capra's Mr.
Smith,
what he has to say is not to accrue to the benefit of any
special interest. He speaks eloquently about things that are in
our
common interest, reforms which will lead to happier lives lived in
equal liberty. Jeff Smith and Kris Nelson: Giving Life to the Property Tax Shift (PTS) John Muir is
right. "Tug on any one thing and find it connected to everything
else in the universe." Tug
on the property tax and find it connected to urban slums, farmland
loss, political favoritism, and unearned equity with disrupted
neighborhood tenure. Echoing Thoreau, the more familiar reforms have
failed to address this many-headed hydra at its root. To think that the
root could be chopped by a mere shift in the property tax base -- from
buildings to land -- must seem like the epitome of unfounded faith. Yet
the evidence shows that state and local tax activists do have a
powerful, if subtle, tool at their disposal. The "stick" spurring
efficient use of land is a higher tax rate upon land, up to even the
site's full annual value. The "carrot" rewarding efficient use of land
is a lower or zero tax rate upon improvements.
Jeff Smith Share Rent, Transform Society If society decided to share
among its members all the
annual value of society's sites and resources and air space, what
would happen?
... It doesn't matter who owns what. What matters is who gets the rent. We have millions of acres of forest we Americans own together, and we are losing rent on it. The word property cannot convey the distinction between rent and land. ... A word for that is geonomics, earth-focused economics. It hones in on all this flow of rent that is so overlooked. Shift the focus to sharing; then owning of land loses importance and belonging to earth regains its importance. It is a different identity for human beings as parts of the economic system. ... In the past, land owners owed services to king, but in this age of equality then we owe our neighbors. We have an equal right to the earth. The community creates rent. Land value rises when infrastructure goes on land. Technology progresses when the community becomes more tranquil and density goes up. Density is a really good measure of land value. No one owner by himself is responsible for density. Rent from land value is justified because all should share in the rent. If the community collected the rent, it would motivate owners not to speculate in anticipation of a higher future return. There would be a tendency to infill in the city and make cities more efficient. ... When built, BART (Bay Area CA Rapid Transit) did a study and found it could run BART free. If we had free mass transit, people would choose to ride instead of drive. It becomes more efficient and more people use, increasing the mobility of citizens in the region. If we get people out of cars, that reduces air pollution, noises, run off, and use of resources. It is not just collecting ground rent but also untaxing other systems. Untax labor and make it more affordable. Enterprises such as recycling and reforestation, weatherization, reconstruction, and health enterprises are labor intensive and made more expensive artificially by taxing labor. We subsidize business: free roads for the timber industry, cheap water for agribusiness. Stop those subsidies and recycling could compete. Now the public is paying for private parties. That is not fair.
What other social relations might change? Increase land
ownership participation in community and it benefits community, with
town hall meetings and block parties. Those kinds of communities have
less crime. ... Read the whole article
Jeff Smith: What the Left Must Do: Share the Surplus What would you do if you could
work two days and take five off? Write?
Play soccer? Tend to the community garden? Time off is an option made
increasingly viable by our relentlessly rising rate of productivity.
French Marxist and media critic Jean Baudrillard, while still advancing
the interests of labor, implores the Left to move on from seeing humans
as workers to seeing workers as human beings, with more needs than
merely the material. Enabling people
to live their lives more fully is an issue made to order for
rescuing the Left from the doldrums that descended when “history ended”.
What would single mothers do with enough income to stay home? What would minorities do with the wherewithal to begin their own businesses? What would communities do if they did not leak resources up to an upper class and out to a distant lender or tax collector? What would the elite do without our commonwealth? The means to these ends is an extra income apart from labor or capital (savings), that is, a “social salary” from society’s surplus, a “Citizens Dividend” from all the rents, natural and governmental, that people pay for land and to the privileged, redirected to everyone equally. Merely demanding a fair sharing of the bounty from nature and modern society would raise people’s self-esteem, a key component for political involvement. Actually receiving an income supplement would transform our lives and restructure society. Unless humanity needs militarism, corporate welfare, and debt service, it’s fair to say most public revenue gets wasted. Demanding a dividend – similar to Alaska paying residents a share from oil royalties – forces a new dialog on spending priorities. Beyond arguing “bread not bombs”, a dividend replaces expenditures by politicians (necessarily influenced by donors) with spending by citizens, the people who generate the surplus in the first place. With a dividend, citizens get to see themselves as direct beneficiaries from reigning in the wild spending spree on imperial aggression, disloyal multinationals, and on “borrowing” money that never existed until “lent” by the Federal Reserve. ... Meanwhile, ignoring our common assets guarantees that we continue to pay rent rather than begin to receive rent. Conversely, insisting upon a fair share could win us the world we want. While it breaks an old habit to leave jobs behind in favour of fair distribution, just recognizing surplus empowers people. It reaffirms the very existence of our commonwealth and challenges the narrow view of property as exclusively private. While the Left gets excoriated for wanting to be big spenders, demanding a dividend in lieu of waste and a shift of taxes from individual effort to social surplus helps refurbish the Left’s image. The call to share the commonwealth enjoys an unshakable moral base and gets high marks for real world success, unlike taxes upon true earnings. Once implemented, sharing rent will grant us leisure – time enough to evolve and reconnect with friends, family, and neighbours – and drain away fortunes rather than let the fortunate continue to soak society. Hence support for shifting taxes and paying dividends to the citizenry grows already, without the Left’s leadership. It’s time to run with the banner of an extra income for everyone, in the halls and capitols of governments everywhere. To liberate humans from exploitive labor, let us advance the sharing of society’s surplus. To prove I'm not tilting marx-ward, I fear I may one day soon have to write "What the Right must do (or quit doing)," too. Read the whole article Jeff Smith: How Sharing Earth Brought Peace Since forever, humans have
claimed and counter-claimed every
square inch of this planet. Occasionally, these disputes have ended
peacefully. What has worked in other times and places might work
again in the Mideast. Delivering a double dividend, what settled land
disputes also developed moribund economies and revived developed
ones. Among others, New York, now aiming to rebuild, has used this
policy before. Because it's growing popular among environmentalists,
greens could lead the US to geonomics.
... These cases involved different classes, not different cultures. Yet with a new twist the rent rebate that worked within society may work between societies. The Koran urges landlords to not gouge tenants but to consider land a trust. In Israel, admonished to not own land forever, since the land is Mine (Leviticus), the National Trust leases all the land to the occupants. These strictures could lead to geonomics. Israel and Palestine would establish a steward to collect land dues and disburse rent dividends a la Alaska's oil dividend. Since land is more valuable in Israel than in Palestine, Jews would pay in more than Arabs, yet everyone would get back the same. And since Israelis prosper, they drive up land values; having Jews as co-owners developing land, raising its value, fattening everyone's Citizens Dividend Arabs might accept that. Profit does make for strange bedfellows. Two archrivals, China and Taiwan, recently agreed to explore for oil together. While sharing rent may soothe hurt
feelings, collecting it
stimulates development. ...
Using geonomics, people have turned some of the poorest lands into the richest economies. Hong Kong is a barren rock owned by the public. The city collects enough site-rent to keep taxes on effort way down. ... Where to draw a line in the sand becomes a lot less contentious when land and oil are no longer spoils of war and when neighbors do not endure drastically different standards of living. Growing up, we learn to not fight over toys but to take turns. Societies need to learn this, too. Early last century, Gifford
Pinchot, first head of the US Forest
Service, said: "The earth belongs of right to all its people and not
to a minority, insignificant in numbers but tremendous in wealth and
power. The people shall get their fair share of the benefit which
comes from the development of the country which belongs to us all
with equal opportunity for all and special privileges for none." A
man in a Republican administration could say that then. We need to
hear it again now. Read the whole article
Jeff Smith: How Profit
Shapes Urban Space
Like the rest of the universe, US
cities keep expanding. Some time before the
universe begins to contract, American metro
regions may, too. What counterpart to gravity might suck
suburbia back into the hole of our doughnut cities? One of the most
fundamental forces in the world - money.
Jeff Smith: Planning by
MarketsIt was the lure of cold cash that drove urbanites out of downtown. The usual suspect, the car, was merely a convenient ride. Despite our present dependency on cars, the drive to profit is powerful enough to bring people back. Local governments have begun to modify the profit motive. Rather than meekly pick up the ever-rising tab for expanding the infrastructure, some localities now charge developers a portion of this cost. While this move may stymie development at the edge, what’s needed is something to draw development into the urban core. Without spending a penny of subsidy, cities can make urban renewal more profitable than suburban development. How is about as commonsensical as Einsteinian physics, but like "e=mc2", it works. The trick is to forget subsidies and lower one tax while raising another. That is, levy a tax or charge a fee to collect land value while eliminating any tax on buildings or improvements. The present property tax works backwards, like an intruder from the anti-universe. It increases as owners improve their property; it decreases when owners let buildings dilapidate. "Save money, create slums," cities tell owners. ... Read the whole article Taxes -- an aspect of politics,
not markets -- motivate misuse of
land.
While taxes are creatures of legislatures, ground rent is a phenomenon of markets. What's political is what we do with it. Most of us forget it's there, letting it reward speculation and sprawl. ... How long would it take to
ecologize cities after shifting its
property tax? While Johannesburg (South African) levied a rate of
only 3 percent on site value, it enjoyed the fastest site-recycling
rate in the world, a little over 20 years. Within a couple decades,
we could have those cities we'd love.
As cities grow more livable and lovable, their site values rise. The resultant increase in land dues would push owners to continually convert to highest and best use automatically. In this positive feedback loop, cities would constantly renew. While generals and anarchists
might not easily find common cause,
planners and markets can, when planners paddle with, not against, the
mighty current of rent. Correcting the market, so that taxes and
rents no longer interfere with the choices of owners and developers,
would attain highest and best use of sites automatically. Read the whole article To get rich, or more likely to
stay rich, some of us can develop
land, especially sprawling shopping centers, and extract resources,
especially oil. While sprawl and oil depletion are not necessary,
they are more profitable than a car-free functionally integrated
city. Under the current rules of doing business, waste returns more
than efficiency. We let a few privatize rent -- ground rent and
resource rent -- although rent is a social surplus. As if rent were
not profit enough, winners of rent have also won further state favors
-- tax breaks, liability limits, subsidies, and a host of others
designed to impel growth (20 major ones follow herein).
If we are to sustain our selves,
our civilization, and our
eco-system, we must make some hard choices about property. What we
decide to do with rent, whether we let it reward our exploiting or
our attaining eco-librium, matters. Imagine society waking up
to the
public nature of rent. Then it would collect and share its surplus
that manifests as the market value of sites, resources, the spectrum,
and government-granted privileges. Then we could forego taxing labor
and capital. On such a level playing field, this freed market would
favor efficiency - the compact city - not waste - the mall and
automobile.... Read the whole article Wearing pajamas outdoors in the
winter, one wouldn’t expect
to retain body heat. Yet, people do try to sustain community while
hemorrhaging its commonwealth. Losing it, residents must work more
than necessary.
When residents import food and energy, they deprive others in the community of income. Yet, the loss pales when compared to paying mortgages and [income] taxes. A recent study of Oakland, CA found torrents of dollars pumped out of town headed for the treasuries of distant capitols and the bank vaults of distant lenders. While mortgages and interest
elevate an elite elsewhere, they keep
debtors on a treadmill at home. To those anxious over every next
payment, how appealing is an economy no longer expanding its girth?
In addition, what’s their debt for? Credit? The total savings of
all members of a community should suffice. Local bank "used to" be
the norm.
The other major drain, taxes, at about 40% of the average worker’s income, usually total more than the value of government services received. And who receives them? Corporate loggers, miners, factory farms, and tractor trailers. Lose such subsidies, leveling the playing field, and local recyclers, family farmers, and freight haulers could compete. Their success would plug the visible leaks - imported food, energy, and materials. While a community might not be
able to command a distant capitol
to turn off the subsidies, a locality may be able to avoid federal
and state taxes.
... Read the whole article Jeff Smith: Subsidies at Their Worst: Privileges Money is the mother's milk of
politics. Yet the milk invested by
lobbyists and those they represent is a drop in the bucket compared
to the flow they get back from the public tit, thanks to the milkmaid
state. Politicians grant well-connected big businesses:
a. direct cash outlays, such as cash to corporations for advertising overseas, Land titles are the granddaddy of all privileges. Historically, titles preceded all others and created a class of elite owners with the power to win the six other indirect subsidies, along with the more direct ones – grants, contracts, and tax favors. To undo and reverse this history, it's necessary to collect and share the natural rents from all seven inconspicuous privileges. For these pieces of paper, government should charge full market value. ... Getting a Citizens Dividend would not only eliminate poverty, it'd also erase any rationale for subsidies - direct or indirect - to the poor or to the privileged. Repealing the free ride of privileges would be like repealing capitalism. Without those subtle detours imposed upon public revenue, owners would have to work to amass a fortune, and work is one of the worst ways known to strike it rich. What you can do: Dry up the
milkmaid state. Dispense with the
notion that the state must meddle in enterprise. Dispense the notion
from others, too. Focus government on its lone raison d'etre - defend
rights. Demand your right to a fair share of natural revenue. ...
Read the whole article Jeff Smith: The Property Tax Shift Jeff Smith: What To Do About the Real Estate Bubble What’s bubbling, and until when?
Sellers are happy. So are developers and speculators. Real estate has gone all bubbly, and that bubble has gone ballistic. What goes up, however, must soon do something else. ... Actually, it’s not housing whose price has entered the stratosphere. Buildings age – get older, more worn out. What’s getting more valuable is the land, the location – whether it has a building on it or not. Buildings you can make more of, but land you can not, especially locations along the coasts or on the good side of town. None of that would matter if you could ever get buildings to hover around in the air. Meanwhile however, speculators are happy. ... What’s seemingly good for landowners is not necessarily good for the economy. As people spend more on land, something nobody produced, they spend less on output, things people do produce. As producers get less money spent on their products, eventually they take the hint and produce less. "Produce less" is another way of spelling recession. Plus, more expensive land means heavier borrowing to buy it. More debt means more inflation and less stability. When producers cut back, borrowers have a much harder time paying back their debts. As people go bankrupt, they drag others down with them. A collapsing house of cards is another way of spelling depression. Preventing bubbles? If land values didn’t get inflated, of course they would not have to get deflated.Call it mutual compensation for deprivation from part of our common natural heritage. While in rhythmic systems, prices must rise and fall, but they need not boom then bust; they could climb then glide. What would temper economies, preventing bubbles? Rather than let a few lucky owners collect land values, neighbors would have to recover land values for themselves. Nobody made land, and no lone owner made its value; the presence of society in general did that. Plus, for excluding everyone else from their sites, owners owe everyone else, as each one of us owes everyone for excluding them. To recover land value, government could either transform the property tax into a land tax or replace it and other taxes with land dues or land use fees or an annual deed fee. ... To pay the land dues, owners use their land efficiently; owners who had been speculating get busy and develop. No longer allowed to tax anything that moves, local governments, too, which presently let acres of abandoned urban land and buildings lie fallow, get busy, too, and make sure to get those acres into the hands of ambitious owners who’ll pay land dues. More locations put to use and more buildings put up increases supply, which dampens price. Better still, as government recovers land rent, that leaves owners with less land rent to capitalize into land price. Hence buyers need not borrow so much. ... Land would still rise in value. With every discovery of a nearby natural resource. With the opening of every new bridge. With every techno-advance, as silicon wafers did for Silicon Valley. With every jump in income and drop in crime, land value rises. But no longer into a bubble. Because every rise would find its way – via land dues and rent dividends – into everyone’s pockets. ... If the 18-year average holds for this cycle, then real estate still has a few more years of sucking all the investments and purchasing power out of the rest of the economy. Land is still able to soak it all up, and lenders are still willing to pump more in. So despite the premature panic (markets almost never do what everybody says they’re going to do), Mankiw’s 2007 would be the earliest that the current bubble would burst, and 2008 is just as likely. Then land prices will fall for a few years. Since the run-up was steep, the drop will be, too – after correcting for inflation, maybe as much as 50%. Which will be an enormous relief for the economy – just what the doctor ordered. With land affordable again, a new cycle can get under way. Whether the new one will be boom and bust or climb and glide is up to us, whether we’re willing to practice geonomics, to forego taxes and subsidies in favor of land dues and a Citizens Dividend. While I don’t mind the current gambling, I do mind the widening of the cavernous gulf between haves and have-nots, and I boil over while workweek grows more onerous, and just seethe watching vacant lots and abandoned buildings push development out from urban cores to sprawl on suburban farmland. To reverse that, let’s let go of the individual owner’s hold on land rent and share Earth’s worth equitably among us all. We’ll all be glad we did. ... Read the whole article |
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Wealth
and Want
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www.wealthandwant.com
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... because democracy
alone hasn't yet led to a society in which all can
prosper
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