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Basic Principles of Geonomics
Nic Tideman

A geonomy respects the freedom of individuals, the limits of the environment, and the claims of future generations. Individuals must be free to organize their economic lives as they wish, within bounds determined by the equal freedom of others and the recognition that land, natural resources and environmental amenities are the common heritage of all generations.

For an economy emerging from central control, the first principle of geonomics is free enterprise. Individuals must be free to set up new enterprises, to charge whatever prices they and their customers mutually agree, and to pay whatever wages they and their workers mutually agree. Free enterprise requires free trade and freedom to use internationally valued currencies. There should be no taxes or other restrictions on what can be imported or exported and no restrictions on the use of foreign currencies.

Currency and trade restrictions arise primarily because governments resort to printing money at rates that cause currencies to lose their value. This practice transfers resources from citizens to governments and causes citizens to desire to hold their savings in foreign currencies. Governments must have other sources of revenue so that they do not feel forced to print money to survive.

The first source of revenue for a government should be the rental value of land. This is just, because no one made the land, so that no one can justly claim a disproportionate share of its value. It is efficient because, unlike other factors of production, land does not withdraw its services when taxed.

There should be private possession of land. Individuals and enterprises should be guaranteed that they will never be removed from the land they improve (unless it is needed for an essential public purpose, in which case they should be compensated for their improvements and relocation costs). Individuals and enterprises should be able to use their land as they choose, up to the point where they cause harmful effects on their neighbors. They should be able to transfer their land and improvements to whomever they choose, on whatever terms are mutually agreed. To justify the exclusive use of land, every user should make an annual payment to the local government with jurisdiction over the land, equal to the rental value of the land, so that rental value can be shared equitably.

The rental value of land can be determined by having local assessors acquire, each year, samples of sites with little or no improvements. These would be auctioned as unimproved land, on the basis of bids that represented offers of payment for the first year, with payments in future years determined by future bids for similar sites. The rental value of each site in the initial year can then be determined by comparisons with sites that have been auctioned. There are several other sources of revenue that are equally just, efficient and necessary for a well-functioning geonomy. Some of these sources are, as collection of the rent of land is, payments for natural opportunities that must be assigned to someone. In this category are

  • payments for parking on crowded streets,
  • payments for the right to broadcast on particular frequencies, and
  • payments for depletion of natural resources.

The other just and efficient sources of public revenue involve payments for activities that impose costs on others. In this category are fines for causing pollution or engaging in other activities that reduce the rental value of surrounding land, charges for driving on crowded streets, and fees for public services, determined by the costs of providing those services, including the costs of congestion and delays experienced by other customers.

To the extent that the rental value of land is raised by the provision of public services, the money collected from users of land should be allocated to pay for those services. To the extent that the rental value of land is purely the product of nature, it should be regarded as the equal income of all and shared equally among all citizens in a locality, unless they decide democratically to use it for some other purpose.

Levels of government higher than the local level should be supported by charges on localities. These charges should vary with the services that localities receive from the higher levels, with extra charges on localities with disproportionately large amounts of land, natural resources, or initial social capital relative to their populations.

An economy emerging from central control must also arrange for the future management of enterprises that have previously been managed centrally. Enterprises that are monopoly providers of local public services such as water or electricity should be managed by localities. Other enterprises should be privatized in such a way as to transfer their value to all citizens in proportion to the number of years they have worked. This can be done by transferring the ownership and control of enterprises to mutual funds whose managers are rewarded in proportion to the profit of the enterprises they control. Shares in these mutual funds would be given to all citizens in proportion to the number of years they have worked. Any citizen would then be permitted to withdraw and reinvest his or her assets as desired.

To summarize, the basic principles of geonomics are:

1. Equal sharing of land and natural resources, achieved by:

a. public collection of the rental value of land and of appropriate fees for broadcast rights and other opportunities that must be assigned exclusively, for depletion of natural resources, and for causing pollution or engaging in other activities that reduce the value of surrounding land;

b. equal sharing among the population of that part of rent and other public revenue not attributable to public services;

2. Elimination of taxes on labor, capital and enterprise, limiting government revenue to the items mentioned in 1.a. above;

3. Economic freedom, encompassing free enterprise, free trade, and freedom to use foreign currencies;

4. Assignment of the ownership of previously centralized enterprises to all workers in proportion to the number of years they have worked, through shares in mutual funds whose managers are rewarded in proportion to the profits earned.

For further information contact Jeff Smith, Institute for Geonomic Transformation, P.O. Box 157, Santa Barbara CA 93102, U.S.A. Phone: (805) 969-7024

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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper