Rent, Wealth and Want
in the News
The newsmedia and internet are full of stories that relate to the issues you
read about on the WealthandWant.com website.
Here are a few recent ones:
Thursday, June 15, Wall Street Journal
In Poverty Tactics, An Old Debate: Who Is at Fault? Today,
the Pendulum Swings Away From Government To Small-Scale Projects;
The Price of 'Dependency' By DAVID WESSEL
The Wall Street Journal article briefly touched on the right answer at the
end of this paragraph ...
"Either you blame the poor -- 'the poverty is in the people' -- or you
blame the system," says James T. Patterson, a Brown University historian. "It
is a constant divide." If the poor are primarily responsible for their
plight, then government ought to prod them to change their ways. If poverty
is primarily the consequence of economic and social forces largely beyond
their control, then government ought to give them money and change the
rules of the
That last phrase -- "and change the rules of the economy" -- is apt, but then
they only talk about current proposals to increase the minimum wage, increase
income taxes and spend more on "programs."
Wessel goes on to say,
Eradicating poverty in the U.S. is an old goal. In the frothy days of 1928,
Herbert Hoover said, "We shall soon, with the help of God, be in sight
of the day when poverty will be banished in the nation." Incomes did
rise sharply in the 1920s; the working class did better; life expectancy
he was wrong about poverty.
But the history of the effort to eradicate poverty needs to be examined in
more depth. Fifty years earlier, Henry George laid
out both the causes of poverty and the remedy in Progress
and Poverty. The book
was a bestseller, and some would say that it kicked off the Progressive movement.
George identifed the economic laws and the related structural problem in our
economy -- "the rules of the economy" that would need to be changed, in Wessel's
Wednesday, May 10
House passes tax cut bill: Measure extends capital gains cuts, trims
taxes by $70 billion over 5 years
Updated: 6:26 p.m. ET May 10, 2006
WASHINGTON - The House Wednesday passed a bill sought by President Bush to
deliver tax cuts worth $70 billion to investors and to keep 15 million taxpayers
from being hit by the alternative minimum tax
The House passed the measure by a 244-185 vote. The Senate is expected to
clear the bill Thursday.
The bill provides a two-year extension of the reduced 15 percent tax rate
for capital gains and dividends, currently set to expire at the end of 2008.
Who benefits from this? Take a look at the ownership of "equity" in the
90-9-1 tables, and you'll
see that nearly 37% of the ownership is in the hands of the top 1% of
us, and another 42% belongs to the next 9% of us, leaving 21% for the other
90% of us! (That's based on the distribution of wealth.)
Based on the distribution of income, the top 1% of income recipients
received 57.5% of capital income in 2003! The top 10% received 79.4%.
See Who benefits when we reduce the taxes on capital gains and dividends?
It would also extend, for this year, recent changes to the alternative minimum
tax — originally aimed at making sure the wealthy pay at least some taxes — to
prevent it from hitting more upper middle-income families.
The debate divided starkly along partisan lines, with Republicans crediting
the tax cuts, first enacted in 2003, with a surging economy, millions of new
jobs and surging tax revenues. Democrats countered that the deficit-financed
tax cuts are tilted in favor of wealthy investors and that the economic benefits
are not as great as advertised.
“Our tax relief sparked this economic growth,” said House Speaker
Dennis Hastert, R-Ill. “And by extending key provisions of that tax relief,
today’s legislation adds just another spark to the already booming economy.”
Added Treasury Secretary John Snow: “It sends a terrific message to
the markets that we’re going to continue to have low rates on capital.”
Critics, including most Democrats, attacked the tax rate reductions on dividends
and capital gains as being skewed in favor of the rich. They noted that is
was the second half of a GOP budget package that began with $39 billion in
benefit cuts over five years, many of which came from programs for the poor
such as Medicaid.
Check out the May, 2006, issue of Harper's Magazine.
The cover article, featured on the overleaf as "The House Trap:
How the Mortgage Bubble will Bankrupt Americans in 20 Easy Steps" and
titled The New Road to Serfdom: An Illustrated Guide to the Coming
Real Estate Collapse, is written by Michael Hudson. (A couple
of Michael's other articles appear here as Essential Documents.)
The article is available from the Schalkenbach online bookstore
It speaks to issues closely related to some of WealthandWant's concerns: economic
rent, boom-bust cycles, housing
affordability, poverty's causes, the
FIRE [Finance, Insurance and Real Estate] sector of the economy, wealth
from land appreciation, wealth
different from capital, capital gains, depreciation, rentiers, land
monopoly capitalism, land includes and slavery.
Alaskans See Bright Side to Soaring Pump
By Sam Howe Verhovek, Times Staff Writer,
May 7, 2006
... But while Ginnis and other Alaskans are clearly irked
by high prices at the pump, some also see an upside — a very big upside.
"Alaska is an oil state," said John Pearson, a pipe fitter filling
up his Chevy Tahoe, his face creasing into a very slight smile. "No one
likes high prices. But maybe high prices for oil are less bad for us than people
"Outside" is the standard term Alaskans use for
any place, well, outside Alaska.
Inside the Last Frontier, where every man, woman and child
received a dividend check last year for $854.76 from the state's optimistically
Fund" of oil-generated wealth, there is a sense that record-high oil prices
might not be the worst thing that ever happened here.
In fact, legislators in Juneau, the state capital, say they
are anticipating a windfall in the budget this year, leaving them with as
much as $2.4 billion
in unexpected revenue to spend on capital construction — including the
state's share of two projects that critics describe as "bridges to nowhere" and
which have become symbols of congressional pork-barrel spending run amok.
"While the rest of the country is squirming with high gas prices, we're
laughing all the way through the capital budget," said Sue Libenson, an
organizer with the Boreal Songbird Initiative, an environmental group critical
of the bridge projects.
Alaska developers say the bridges are no laughing matter, but instead will
be vital spurs to economic development, and they have persuaded state lawmakers
to set aside more than $90 million for each project.
- One bridge would cross over the waters of Knik Arm in Anchorage to a currently
undeveloped stretch of peninsula nearby.
- The other would connect Ketchikan, a city of about 9,000 at the very
southeastern tip of Alaska, to an island, population 50, where its airport
is located. The
two have been linked for years by a six-minute ferry ride.
After specific federal earmarks for the bridges received the
Taxpayers for Common Sense "Golden Fleece Award" last year for wasteful spending,
Alaska's congressional delegation agreed to remove them — but then quickly
secured such a large pot of federal highway money for the state that design
and other planning for the bridges went right on ahead.
Many in Alaska are confident that oil- and gas-fueled prosperity will continue
indefinitely, sustaining a tax structure in which there aren't a lot of taxes.
Alaskans pay no state income or sales taxes, for instance. Since the oil-fund
payout plan was launched in 1982, residents have received more than $13.5 billion
in such dividends.
How much does the Alaska Permanent Fund pay directly to Alaska's residents
each year? Here's a recent article:
This fall’s PFD forecast at $1,000
By BILL WHITE,
Anchorage Daily News Published: April 18, 2006
This fall’s Permanent Fund dividend should total around $1,000, based
on the Alaska Permanent Fund’s profits for the first nine months
of its budget year, fund officials said Tuesday.
Through March 31, the $34 billion state oil-wealth savings
account has posted a $2.1 billion profit, fund officials said. Profits for
the year that runs
through June 30 will be averaged with profits from the previous four years
to calculate the size of this year’s dividend, which is to be paid in
October. Last year’s dividend was $845.76.
In the January-March quarter, the Permanent Fund showed a 4.5 percent return
on its portfolio of stock, bond and real estate investments, fund officials
said. For the first nine months of its budget year, the investments grew by
11.9 percent, they said.
The state pays the dividend to all residents of at least a calendar year who
apply by March 31 each year.
Sitting on a jackpot
Open land in Boulder City, Nevada, is worth enough to make all 15,000 residents
Kathleen Hennessey, Associated Press | May 6, 2006
a few excerpts:
No neon. No slots. No showgirls. This desert enclave, 25 miles southeast of
Las Vegas, never has been interested in cashing in on its proximity to Sin
Until now, that is. Local activists say Boulder City, where gambling has been
banned since its founding in 1931, is sitting on a jackpot: 167 square miles
of undeveloped open land in one of the hottest real estate markets in the country.
They've developed a plan to cash in and make millionaires of every man,
woman and child in this community of about 15,000. (It's too late to move.
living here as of March 31 qualify.) ...
One proposal would require the land to remain untouched, set aside for the
preservation of the endangered desert tortoise, public recreation and development
of solar power.
The other would force the council to sell the property to the highest bidder,
with 10 percent of the money to pay off city debt, build a bypass highway and
fund education. A tax-exempt trust of 90 percent would be doled out to residents.
An average vacant acre sold for $152,000 in the third quarter
of 2001 and $700,000 in the same period in 2005, so the sale could yield
for every "resident of record." ...
Rattner compares the arrangement to Alaska, where citizens get an annual check
for their share of royalties from the trans-Alaska oil pipeline.
More fundamental, the city attorney said, the land doesn't belong to the residents
of Boulder City in the first place.
"The deed that's on file in the County Recorder's Office says the city
of Boulder City, not the people of Boulder City. Boulder City is a corporate
entity that exists at the pleasure of the Nevada state Legislature," he
Copyright © 2006, azcentral.com. All rights reserved.
wealthandwant comments: We applaud the impulse that
all should share in the bounty of something that no individual created, but
have some issues about how they propose to do that.
What about the next child born in Boulder City, to a Boulder City
resident who qualifies? Is that child somehow unequal to his or her siblings?
How about the next child adopted there? How about the next person to move in?
A better way, just to everyone: Acknowledge
that the economic value of Boulder City's land — all its
land, not just the acres owned by the city itself — is
common property of all who live there, and collect its economic value as the
common treasure. Don't tax buildings: they represent human effort. Don't
tax sales (ditto). Don't tax incomes (ditto). At 25 miles from Las Vegas, it
will become a desirable
attract residents. Use some of that revenue to provide efficient public transportation
to Las Vegas. Use some to make an attractive downtown, with good schools and
good services. They might think about these issues before selling any of the
commons to some other private entity.
Take a look at these themes: citizen
dividend, Alaska, land
as common property, created equal, sprawl, rent
as provisioning for all, windfall, free lunch
Global Warming — Get ahold of the May
issue of Vanity Fair magazine, which will be going
off the newsstands shortly, or check out the articles on their website.
It is the Green Issue, and the lead article — one among several on
environmental topics — is entitled "A Threat Graver
Than Terrorism: Global Warming — How much of New York, Washington and
other cities will be underwater?"
Perhaps you're wondering why Wealthandwant is featuring
this story. What does global warming have to do with wealth and want?
Everything! Check out a few of these themes
to get a feel for why: sprawl ... perverse
incentives ... externalities ... wealth
concentration ... density ... infrastructure ... environment ... ecological
economics ... privatization ... fences
and small bandages ... green taxes ... population
growth ... pollution ... polluter
s soon as you move beyond the question of "what can I
do, in my individual life, to help save the planet?" — obviously
an important question — you get to "how do we align the
incentives so that we all — individuals, countries, corporations — tend
to act in ways that will help save the planet?" Wealthandwant
has a framework for exploring the questions, and some answers.
And if you are curious about who is benefiting financially
from our current state of affairs, go up and look at the wealth distribution
data, particularly as it pertains to STOCK, BUS, NMMF and RETQLIQ. It isn't
as big a group as you might be led to believe. Wealthandwant's tables provide
you evidence from the Federal Reserve Board's Survey of Consumer Finances.
There was a wonderful quote in a syndicated column by Paul
Campos, law professor at the University of Colorado, about the late John
Kenneth Galbraith (find it in the Sacramento Bee, 5/2/06):
Ask Professor Pangloss of the University of Chicago what
we ought to do about capital gains or the inheritance tax or unions, and
he will dazzle you with equations supposedly demonstrating that the political
outcomes sought by the wealthiest Americans are also best for society as
Referring to Galbraith, the article ends,
That so many of his academic colleagues ended up arguing
that the increasingly vast gulf between America's rich and everyone else
is actually a desirable state of affairs, did not, I suspect, surprise
Why is wealthandwant interested
in this? Take a look at warping of
economics , and special interests.
April 28, 2006 — Atlantic City May Lose in New Monopoly http://www.nytimes.com/2006/04/28/nyregion/28monopoly.html
wealthandwant comments: The game of Monopoly has
a very different history from what the New York Times reported:
When Monopoly was devised in the 1930's, Atlantic City was chosen because
it epitomized the kind of glittering tourist destination that many Depression-era
Americans could only fantasize about visiting.
Charles B. Darrow, an unemployed salesman, sketched the prototype board
game on a tablecloth at his home in the Germantown neighborhood of Philadelphia,
using 21 street names from Atlantic City. (The final space, Marvin Gardens,
was a name taken from the neighboring community of Margate City, where
it is spelled Marvyn.)
The Parker Brothers game company rejected Mr. Darrow's
proposal, so he went to a printer and began selling it himself. It caught
on so quickly
that Parker Brothers eventually reversed itself. It began mass-marketing
Monopoly in 1935, and that year it became the world's best-selling board
game. Pat Riso, a Hasbro spokeswoman, said it decided last year to poll
fans to see how they might recast the game if it were to be developed today.
So the "here and now" version will replace railroads with airlines.
Utilities will be updated (Ms. Riso would not say with what, but allowed
that Internet providers is a good guess.) Rents will rise, along with the
cost of bail and the $200 payment for passing "Go."
In one uncharacteristic bow to the past, free parking will
remain free. ...
Well, they've got a lot of facts wrong. For starters,
- First, Monopoly was not "devised"
in the 1930s.
- Nor was it created by Charles Darrow. Rather, it was created
by Elizabeth Magie before 1903, in order to teach the ideas that
the wealthandwant website seeks to share. Her game was called The Landlord's
Marvin Gardens is a misspelling of the conjunction of the first
of Margate and Ventnor.
If you'd like to read the whole story — and it is a good one — check
website for the Henry George School and birthplace in Philadelphia,
which tells the story.