Wealth and Want
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Corporate Privilege and Power

Robert G. Ingersoll: A Lay Sermon (1886)

No man should be allowed to own any land that he does not use. Everybody knows that -- I do not care whether he has thousands or millions. I have owned a great deal of land, but I know just as well as I know I am living that I should not be allowed to have it unless I use it. And why? Don't you know that if people could bottle the air, they would? Don't you know that there would be an American Air-bottling Association? And don't you know that they would allow thousands and millions to die for want of breath, if they could not pay for air? I am not blaming anybody. I am just telling how it is. Now, the land belongs to the children of Nature. Nature invites into this world every babe that is born. And what would you think of me, for instance, tonight, if I had invited you here -- nobody had charged you anything, but you had been invited -- and when you got here you had found one man pretending to occupy a hundred seats, another fifty, and another seventy-five, and thereupon you were compelled to stand up -- what would you think of the invitation? It seems to me that every child of Nature is entitled to his share of the land, and that he should not be compelled to beg the privilege to work the soil, of a babe that happened to be born before him. And why do I say this? Because it is not to our interest to have a few landlords and millions of tenants.

The tenement house is the enemy of modesty, the enemy of virtue, the enemy of patriotism. Home is where the virtues grow. I would like to see the law so that every home, to a small amount, should be free not only from sale for debts, but should be absolutely free from taxation, so that every man could have a home. Then we will have a nation of patriots.

Now, suppose that every man were to have all the land he is able to buy. The Vanderbilts could buy today all the land that is in farms in the State of Ohio -- every foot of it. Would it be for the best interest of that State to have a few landlords and four or five millions of serfs?... read the whole article

Mason Gaffney: Bottling the Air

Times have caught up with Ingersoll. Ronald Coase, prominent Chicago economist, says polluters (whom he calls emitters, to avoid bias) have as much right to emit as victims (he says receptors) have to breathe clean air. It doesn’t matter, says Coase, how we assign property rights originally: as long as property is firm, the market will sort it all out. However, since emitters have invested in costly facilities, and property is sacred... you see whither this unbiased science is tending.

Was he laughed to scorn? Au contraire, he was raised on the shoulders of his adulatory peers and anointed a demi-god (which tells you something about his peers). Having risen on wings of theory the idea found its way into practice, and today The South Coast Air Quality Management District awards "offset rights" to those with worthy track records of emitting. New emitters must buy "property rights" from old ones.

In effect, we don’t fine people for emitting, we reward them with a right to continue. Then we can pay them to stop, by buying back the right we just gave away. This is putting the free market to work, they say.  ...

And those who want to breathe? Coase says they should pay for the privilege, as they pay for indulging any personal taste. After all, they already pay those who supply them with land to live on. Only welfare bums would expect property owners to dip into their hard-earned savings and supply them with free air, when the market has a solution at hand. All they need do is buy offset rights from Ancient and Honorable Emitters. When they want to breathe, they just retire the rights upwind of them. This is a marvel of efficiency, too. They retire only what it takes to clean the air they need: no waste.

If they can’t afford to buy outright, they could rent -- markets have ingenious solutions for all problems, like any good panacea. Gas masks are another free-market solution: much better than socialistic policies that would impose uniform clean air on everyone, whether they want it or not.  ... read the whole article

Henry George: Thou Shalt Not Steal  (1887 speech)
Go into Pennsylvania, and there you will see great stretches of land, containing enormous deposits of the finest coal, held by corporations and individuals who are working but little part of it. On these great estates the common American citizens who mine the coal are not allowed even to rent a piece of land, let alone buy it. They can only live in company houses; and they are permitted to stay in them only on condition (and they have to sign a paper to that effect) that they can be evicted at any time on five days’ notice. The companies combine and make coal artificially dear here, and make employment artificially scarce in Pennsylvania.

Now, why should not those miners, who work on it half the time, why shouldn’t they dig down in the earth and get up coal for themselves? Who made that coal? There is only one answer — God made that coal. Whom did He make it for? Surely you would say that God made it for the people that would be one day called into being on this earth. But the laws of Pennsylvania, like the laws of New York, say God made it for this corporation and that individual; and thus a few people are permitted to deprive miners of work and make coal artificially dear.  ...  read the whole article

Henry George: Political Dangers (Chapter 2 of Social Problems, 1883)

[07] Thus the mere growth of society involves danger of the gradual conversion of government into something independent of and beyond the people, and the gradual seizure of its powers by a ruling class — though not necessarily a class marked off by personal titles and a hereditary status, for, as history shows, personal titles and hereditary status do not accompany the concentration of power, but follow it. The same methods which, in a little town where each knows his neighbor and matters of common interest are under the common eye, enable the citizens freely to govern themselves, may, in a great city, as we have in many cases seen, enable an organized ring of plunderers to gain and hold the government. So, too, as we see in Congress, and even in our State legislatures, the growth of the country and the greater number of interests make the proportion of the votes of a representative, of which his constituents know or care to know, less and less. And so, too, the executive and judicial departments tend constantly to pass beyond the scrutiny of the people.

[11] The rise in the United States of monstrous fortunes, the aggregation of enormous wealth in the hands of corporations, necessarily implies the loss by the people of governmental control. Democratic forms may be maintained, but there can be as much tyranny and misgovernment under democratic forms as any other — in fact, they lend themselves most readily to tyranny and misgovernment. Forms count for little. The Romans expelled their kings, and continued to abhor the very name of king. But under the name of Cæsars and Imperators, that at first meant no more than our "Boss," they crouched before tyrants more absolute than kings. We have already, under the popular name of "bosses," developed political Cæsars in municipalities and states. If this development continues, in time there will come a national boss. We are young but we are growing. The day may arrive when the "Boss of America" will be to the modern world what Cæsar was to the Roman world. This, at least, is certain: Democratic government in more than name can exist only where wealth is distributed with something like equality — where the great mass of citizens are personally free and independent, neither fettered by their poverty nor made subject by their wealth. There is, after all, some sense in a property qualification. The man who is dependent on a master for his living is not a free man. To give the suffrage to slaves is only to give votes to their owners. That universal suffrage may add to, instead of decreasing, the political power of wealth we see when mill-owners and mine operators vote their hands. The freedom to earn, without fear or favor, a comfortable living, ought to go with the freedom to vote. Thus alone can a sound basis for republican institutions be secured. How can a man be said to have a country where he has no right to a square inch of soil; where he has nothing but his hands, and. urged by starvation, must bid against his fellows for the privilege of using them? When it comes to voting tramps, some principle has been carried to a ridiculous and dangerous extreme. I have known elections to be decided by the carting of paupers from the almshouse to the polls. But such decisions can scarcely be in the interest of good government.

[12] Beneath all political problems lies the social problem of the distribution of wealth. This our people do not generally recognize, and they listen to quacks who propose to cure the symptoms without touching the disease. "Let us elect good men to office," say the quacks. Yes; let us catch little birds by sprinkling salt on their tails!

[13] It behooves us to look facts in the face. The experiment of popular government in the United States is clearly a failure. Not that it is a failure everywhere and in everything. An experiment of this kind does not have to be fully worked out to be proved a failure. But speaking generally of the whole country, from the Atlantic to the Pacific, and from the Lakes to the Gulf, our government by the people has in large degree become, is in larger degree becoming, government by the strong and unscrupulous.

[14] The people, of course, continue to vote; but the people are losing their power. Money and organization tell more and more in elections. In some sections bribery has become chronic, and numbers of voters expect regularly to sell their votes. In some sections large employers regularly bulldoze their hands into voting as they wish. In municipal, State and Federal politics the power of the "machine" is increasing. In many places it has become so strong that the ordinary citizen has no more influence in the government under which he lives than he would have in China. He is, in reality, not one of the governing classes, but one of the governed. He occasionally, in disgust, votes for "the other man," or "the other party;" but, generally, to find that he has effected only a change of masters, or secured the same masters under different names. And he is beginning to accept the situation, and to leave politics to politicians, as something with which an honest, self-respecting man cannot afford to meddle. ... read the entire essay

Mason Gaffney: Geoism, Recession and Control of Monopolies

... When GDP is adjusted for the dollars spent on the criminal justice system and clean-up costs for preventable environmental disasters, then I might have some faith in this as a bellwether of wellbeing.  ...

Only around 25-30% of households own their own homes. By good fortune, I just read something that helps resolve the difficulty. It seems that a great deal of anti-trust legislation from the Progressive Era had been aimed at monopoly in the flicks, which had started with Thomas A. Edison, who was as much a patent-litigation bully as he was a pure inventor. Much of this legislation became unravelled under President - guess who? - Ronald Reagan, spawn of the "entertainment" industry, and political voice for same. Vertical integration and media mergers and monopolization then ran wild. Disney under Eisner, of course, has played a role in this. Disney as real estate developer throws its heavy weight around brutally.

This question arose in connection with Georgist taxation, and what it would do about Mr. Eisner, and overpaid CEOs like him. The answer, I think, is that "Georgism" involves more than taxation. It also involves promoting competitive markets and smiting or breaking up mergers, monopolies, and restraints of trade, by various means. It was, after all, part of first the Populist, and later the Progressive Movements.

"Georgism" may be construed narrowly as a limited fiscal reform. Some of its votaries present it that way. As such, it is rightly suspected of being a bit cranky, and too limited. I see it as a broad front program to limit centralized monopoly control of industry, and promote free entry and free competition with proper regard for both consumers and workers.
Some free market purists may look askance at anti-trust actions. Consider, however, that we are dealing with people who hold patents, which are inherently anticompetitive, especially when used as clubs in the Edison manner. Consider also we are dealing with corporations, which are inherently combinations of capital made possible by the device of limited liability. When government gives an anticompetitive privilege, it seems fitting that government should limit the resulting abuses of power.  Read the whole article

Mason Gaffney: Economics in Support of Environmentalism

Private property: from means to end

In a proper view of things, I submit, private property is a means to an end. It is not an end in itself; it needs a functional rationale. The end is to get land put to the best use. All the private land in the world was originally granted by some sovereign public person or body, mainly for that purpose, not as a welfare entitlement. Landowners and their lawyers have slyly, over time, turned the means into an end, a fetish they endow with "sanctity." This is a term they borrowed from absolutist medieval theology. "Sanctity" means the quality or state of being holy or sacred, hence inviolable. It means property may not be challenged, or even questioned. It has become an end in itself, its own voucher.

You're not even supposed to think about it, it is above thought. Taboo!

Neoclassical economics, historically, marked the final, total surrender of the profession to this fetish. The modern economist's view runs something like this: "I pledge allegiance to the 14th Amendment, and to the overinterpretation of private landowner supremacy for which it has come to stand." It is ironic to recall that Radical Republicans passed that Amendment, at a time when a "Radical Republican" was one who favored freeing the slaves. The 14th Amendment was designed to protect the rights of freedmen. As interpreted now, the 14th Amendment means that The Emancipation Proclamation itself was unconstitutional! Fortunately, no one has brought that case - yet.

The Neo-classical economists' view of their proper role is rather like that in The Realtor's Oath, which includes a vow "To protect the individual right of real estate ownership." The word "individual" is construed broadly to include corporations, estates, trusts, anonymous offshore funds, schools, government agencies, institutions, partnerships, cooperatives, the Duke of Westminster, the Sultan of Brunei, the Medellin Cartel, Saddam Hussein, congregations, Archbishops, families (including criminal families) and so on, but "individual" sounds more all-American and subsumes them all. This is a potent chant that stirs people to extremes of self-righteousness and siege mentality when challenged.

The resemblance between Neo-classical economics and the Realtor's Oath is easier to understand when you learn that Professor Richard T. Ely, founder of the modern discipline of Land Economics, was heavily subsidized by the National Association of Real Estate Boards, the utilities, the major landowning railroads, and others of like mind and property interests.

When it comes to violating property rights, air pollution today is perhaps the greatest invader and confiscator of property.

Where do economists stand? Once a few of them tried to say, following A.C. Pigou, "let the polluter pay," and in parts of Europe they still do. In our modern backward thinking here at home, however, it's not the polluter who is invading the property of others, nor the human rights of those not owning property. Rather, when you tell them to stop, the government is invading their rights. The wage-earning taxpayers must pay them to stop, else you are violating both the 14th Amendment and the "Coase Theorem," a rationalization for polluting now dearly beloved by Neo-classical economists. ... read the whole article
1. Common Property in Land is Compatible with the Market Economy.
2. The Net Product of Land is the Taxable Surplus
A. To socialize the taxable surplus, land rent, effectively, you must define and identify it carefully, and structure your taxes to home in on it.
B. Taxable surplus is also what you can tax without driving land into the wrong use.
C. To tax rent we must be sure there is rent to tax, and we must adopt public policies to husband and maximize it, and avoid policies that lower and dissipate it.
i. Avoid "perverse subsidies."
ii. Avoid letting lessees of public land conceal their revenues.
iii. Avoid letting lessees or taxpayers pad their costs to understate their net revenues.
iv. Avoid dissipating rent by allowing open access to resources like fisheries,
v. Avoid trying to distribute rents to consumers by capping prices below the market.
D. Raising output by removing tax bias
E. Maximizing public revenue.
F. Sustaining the tax base
3. Taxing the Net Product of Land Permits Untaxing Labor
4. Taxing the Net Product of Land Permits Untaxing Capital
5. Taxing the Net Product of Land Provides Ample Public Revenues: a Master Solution to Many Problems
A. Public revenues will support the ruble.
B. Your public credit will, of course, recover to AAA rating when lenders see that there is a strong flow of revenue to pay public debts.
C. Never again need you bend to any "advice" or commands from alien lenders, nor endure patronizing, humiliating homilies from alien bankers, nor beg any foreign power for aid.
D. If you again feel the need (as I hope you will not) to rebuild your military, you will of course require strong revenues.
E. Strong national revenues are required to unite Russia, and keep it one nation.
1. Common Property in Land is Compatible with the Market Economy.
You can enjoy the benefits of a market economy without sacrificing your common rights to the land of Russia. There is no need to make a hard choice between the two. One of the great fallacies that western economists and bankers are foisting on you is that you have to give up one to enjoy the other. These counselors work through lending and granting agencies that seduce you with loans and grants to learn and accept their ideology, which they variously call Neo-Classical Economics, or "monetarism," or "liberalization." It is glitter to distract you and pave the way for aliens to acquire and control your resources. 

To keep land common while shifting to a market economy, you simply use the tax system. Taxation is the form that common property takes in a monetary, market-oriented economy. To tax is to socialize. It's then just a simple question of what you will socialize through taxation, and how; but in the answers lie success or failure.

Not only can you have both common land and free markets, you can't have one without the other. They go together, like love and marriage. You need market prices to help identify land's taxable surplus, which is the net product of land after deducting the human costs of using it. At the same time, you must support government from land revenues to have a truly free market, because otherwise you will raise taxes from production, trade, and capital formation, interfering with free markets. If you learn this second point, and act on it, you will have a much freer market than any of the OECD nations that now presume to instruct you, and that are campaigning vigorously to make all nations in the world "harmonize" their taxes to conform with their own abysmal systems.

The very people who gave us the term laissez-faire -- the slogan at the core of a free market economy -- made communizing land rents a central part of their program. These were the French economistes of the 18th Century, sometimes called "Physiocrats," who were the tutors of Adam Smith, and who inspired land reforms throughout Europe. The best-known of them were François Quesnay and A.R. Jacques Turgot, who championed land taxation. They accurately called it the "co-proprietorship of land by the state."
Since their time we have learned to measure land values, and we have broadened the meaning of "land" to comprise all natural resources. Agrarians will be relieved, and may be surprised, that farmland ranks well down the list in terms of total market value. Thus, a land tax is not primarily a tax on farms; only the very best soils in the best locations yield much taxable surplus.  ...  

Another natural resource (hence part of "land"), whose nature and value the mass of people are only slowly realizing, is the radio spectrum. In this age of communication its value is vaulting skywards even faster than the rockets launching the satellites that direct and relay signals through the spectrum. Each satellite requires a spectrum assignment, or it is nothing but space junk. One minor American entrepreneur, Craig McCaw, collected a bundle of spectrum rights for cell phones, and a few years ago sold them to AT&T for $12 billions. Then Mr. McCaw went partners with Bill Gates, perhaps the richest American, in a firm called Teledesic, to launch hundreds of satellites and amass radio spectrum rights around the entire world, including your part of the world, in the hope of dominating worldwide communications. Radio spectrum is a natural resource, and it belongs to the government, even in the capitalistic U.S.A. When Teledesic comes calling, under the auspices of our Vice President Al Gore, don't sell anything cheap! In fact, don't sell anything at all, but lease it for a limited time, so you may gain from future rises in value. And don't stint on the professional help you should hire to protect your interests: these lease contracts are complex, and are worth Billions if you play your cards right.
Hydrocarbons are a third set of valuable resources. The values involved are gigantic. The recent merger of the Exxon and Mobil oil firms was valued at $260 billions, several times greater than the Russian annual budget. Why should private parties make off with all this natural value? Several nations, including some of your neighbors, support themselves entirely from these revenues. Norway pays for a lush welfare state from its oil revenues. Its reserves are so valuable that the mere change in their appraised value in several recent years has exceeded the entire GDP of Norway. And your oil reserves? If they match your production, they may be the largest in the world.
World oil prices are down this year, as you know, but there is another side to this. The devaluation of the ruble has raised the value of your oil in Russian terms, because the oil earns "hard" currency abroad. Your government has recognized this by imposing a special tax on the resulting "windfall," but we will see below that there is a much more effective way to tax resource rents.
The American state of Alaska holds down its other taxes by socializing part of its oil revenues, which otherwise would inure to a handful of the major stockholders of two corporations (ARCO and BP). Alaska not only holds down other taxes, it pays each resident - man, woman, and child - a social dividend of over $1,000 per year. Go thou and do likewise. Your expert, Dmitri Lvov from the Russian Academy of Sciences, a speaker at this meeting, has written that you could cover most of your national budget from your enormous production of oil and gas.  
Many third-world nations like Venezuela or Nigeria have fabulous mineral oil that they fail to exploit for their own people, letting sophisticated or ruthless foreign corporations, in tandem with weak or corrupt insiders, reap the gains. The question for Russia is whether to follow their bad example and become a poor resource-colony of the west, or whether to assert your own sovereignty over your own resources for the benefit of your own people. You need look no further than Norway for a model.
Other subsoil resources have great value, too. Many nations, even backward ones, gain large parts of their national revenue from "hardrock" minerals. Bolivia, Gabon, Jamaica, Liberia, New Caledonia, Papua-New Guinea, Zaire, and Zambia have raised over 25% of their budgets this way in recent years; Chile, Thailand and Malaysia have taken lesser, but substantial amounts. Saskatchewan, a Canadian Province, raises large revenues from potash and uranium; Minnesota, an American state, from iron ore; and so on. Some other nations fail to raise much revenue from fabulous minerals from which others profit, like S. Africa with its gold and diamonds, West Virginia with its coal, or Missouri with its lead mines and reserves. Russia is a treasure-house of untapped mineral wealth that you can and should tax to alleviate the condition of the Russian people.
In arid lands, water is life, and the most valuable natural resource is water. For example, in southern California we need water so much we import it from the Feather River 600 miles north of us, pump it uphill through the long San Joaquin Valley, then over the high Tehachapi Mountain range, and tunnel it through the San Bernardino Mountain Range, all at great cost. When it gets here, it supplements and competes with local water that nature provides freely in the Santa Ana, San Jacinto, and other rivers. That local water then has a value equal to the high cost of importing the remote northern water. That value in the local waters is a taxable surplus. However, we have not learned to take that surplus value into the local treasuries; we give the water away, and worse, we actually subsidize people to withdraw water by helping them pay for dams, canals, and pipelines so they can waste water without paying for it. Thus we turn a public asset into a public liability - an extreme form of folly that is called "dissipating rent." In this age of growing water scarcities it is past time we learned to husband and nurture rent, in order to socialize it by taxing the surplus. So should you, in comparable circumstances.  
Another value from water is to generate power. Again, California witlessly fails to socialize this value, but Canada, our northern neighbor, has shown the way. British Columbia, Newfoundland (the Labrador part), Quebec, and other provinces raise large revenues from charges on the use of falling water. Russia, with some of the world's largest hydro-electric projects, can do the same, or better.
Fisheries are another source of value. In the past most nations have let this rent be "dissipated" by overfishing. In recent years the U.S. and Canada have in effect "privatized" fishing in their offshore waters by limiting the number of licenses and boats. This limitation was needed and desirable, overall. It created large rents, where previously there were little or none, by preventing overfishing and the great waste of duplicate, triplicate, and even quintuplicate fishing effort. That is a good example of husbanding and guarding rent, which is necessary before you can collect it. It was not necessary or desirable, however, to give away this net benefit to private parties.
The government did not sell these licenses, but simply gave them away to owners of existing boats, and others with political influence. Each license now sells for something like a million dollars, creating a new class of instant millionaires and "parlor fishermen." This giveaway to the few, and takeaway from the many, created an instant class society where before there were equal access and equal opportunities.
These privileges are worth so much that there are now documented cases off Alaska where the parlor fisherman takes 70% of the total catch. The captain, the crew, and the owner of the boat, who do the work and bear the dangers and discomforts and financial risks of fishing, must get by with the other 30%. Parlor fishermen are simply leeches; these rents should be socialized, relieving the workers from taxes. ...

Avoid "perverse subsidies." These are subsidies that encourage harmful things like

  • polluting air and water,
  • wasting water,
  • cutting timber whose value is less than the cost of logging, or
  • populating remote regions whose costs exceed the benefits derived.
Cape Breton Island, the northern tip of Nova Scotia, contains the most polluted area in Canada thanks to years of subsidies to sustain its uneconomic, obsolescent coal and steel industries that employ just a few people by fouling one of the most scenic jewels in North America.
We have mentioned how we actually subsidize people to withdraw scarce water from our overdrawn rivers in the arid U.S.A. The so-called water "shortage" in the lower Colorado River is entirely an artifact of such misguided policies: every major agency drawing on the Colorado is actually subsidized to do so, when they should be paying for the privilege. If they paid, they would stop wasting water, and would enrich the Treasury, which could then abate taxes on work, trade, and saving.
The U.S. Forest Service has turned a great national asset, our national forestlands, into a drain on the Treasury by subsidizing forest roads in subeconomic areas. It makes money selling good timber in good areas, but then spends $10 on roads into subeconomic areas to get $1 in revenues from sale of timber to private parties, destroying scenic values and watershed protection.
Perverse subsidies like those are unspeakably foolish and wasteful. They "dissipate rent" so there is none left to tax.

Avoid letting lessees of public land conceal their revenues. Many minerals and hydrocarbons on public lands are leased by private firms, subject either to "royalties" or "severance taxes" based on the value of output. Many of these private firms are "vertically integrated," meaning they own the downstream firms, often in other countries, to which they sell. They grow skilled at shifting profits away from where taxes are higher to where they are lower, by rigging the internal transfer prices. That is, they sell to themselves at artificially low prices, so your share of their revenues disappears. What they call "world market" prices are really their own internal prices, adjusted to help them steal from you. You must guard against that.

Avoid trying to distribute rents to consumers by capping prices below the market. This, of course, is the history of energy prices in Russia; it has also been used, in milder forms, in Canada and the U.S. What is wrong with it? In a word, it fosters wasteful use, and aborts a lot of economical production. In addition, it leaves a lot of rent in private hands, untaxed.
It is easy to understand the dire need for guaranteed fuel in a northern continental winter climate. You mustn't let people freeze, and they will bless and support you for keeping them warm. As society gets better organized, though, you can gain by guaranteeing the poor a minimum cash income with which to buy fuel and other needs at market prices, rather than lavishing them with free fuel that you might be exporting to meet other urgent needs. You can provide the cash income from the rents created when fuel prices rise, and have a lot more to spare from the resulting net gains, which I next explain. ...

Note, finally, that a cap on the price of G [gross revenues], such as discussed above, has the same effects as a tax based on G.   Read the entire article

Jeff Smith: What the Left Must Do: Share the Surplus
What does the central bank, the private consortium dubbed the Federal Reserve, lend to the US? Nothing. Given the power to create money by Congress (which the Constitution had given to Congress), from no savings at all but merely from legal standing, it manufactures credit, which the US borrows, at interest. The US exempts this interest from its income tax; people who hold US bonds – mainly the wealthy – keep this income tax-free.

The much and justifiably criticized corporation is in essence its corporate charter, given value by limiting the liability of managers, directors, and investors. It’s worth at least the cost of the insurance payments not made by the corporation, which would equal the costs imposed upon worker, customer, and nature. As the “need” arises, legislatures extend limited liability even further: Congress legally lowered the greater risk of nuclear power to benefit Westinghouse, of the Valdez oil transport spill for Exxon, and the Y2K software design bug for Microsoft. Politicians define legally “safe” amounts of polluted air and water for GM and Monsanto, keeping safe the wealth of those responsible.

Not to be outdone by any legislature, the Supreme Court has ruled in favour of compensating landowners for environmental “takings”, but has remained silent about landowners compensating the public for any “givings”, as when site values skyrocket near a new light rail stop. Molly Ivins wrote,
"Henry George must be in his grave spinning' like a cyclotron. We, the people at large, make the land more desirable; and then the landowners want us to pay them because we won't allow them to poison the air or to pollute the rivers." (1995 March)
That’s how great fortunes are made: by sloughing off private costs (which become “negative externalities”) while soaking up public benefits (some “positive externalities”). Land titles, corporate charters, and other privileges – mere pieces of paper – are worth trillions each year. The corporations – from the Federal Reserve to Exxon (both founded by the “oiligarchy”) – that receive these privileges make their owners rich or richer. Their wealth is not compensation for the exertions of either labor or capital, not profit in the market from output, but rent from present lobbying of legislatures or past conquest of others’ lands. Thus laws (“privilege” means “private law”) funnel multi-trillions of dollars each year from the many to the few.

Rentiers become the elite or rise higher up among the upper echelon, the puppeteers of our puppet state. Their ranks grow with every techno-advance that spurs a new monopoly and pushes up locational values. Read the whole article
Jeff Smith: Sharing Natural Rents to Sustain Human Society

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. ...

Drawing their cue from the public, governments tolerate "rentention", the private retention of publicly-generated land values. Lacking this Rent, states turn to taxes. But to grow the economy, all governments -- left, right, or undecided -- hustle to stimulate development; they cut taxes and slop subsidies. Going beyond the call of duty, the state excuses producers' their routine pollution and limit liability, thereby cutting the cost of insurance. Companies that don't impose on nature, worker, or customer are not benefited at all but lose a competitive advantage. On this tilted playing field, one with the lumps of subsidies and the tilts of taxes, technologies lean and clean have a hard time competing as suppliers of materials, homes, food, rides, and energy. ...

Now wipe out the taxes, subsidies, liability limits, and rent retention. Instead, replace all that with running government like a business. Charge full-market value for state acknowledgements (the seven secret subsidies):

  • corporate charters,
  • standards waivers,
  • utility franchises,
  • monopoly patents,
  • communication licenses,
  • resource leases/claims, and
  • land titles/deeds

Collecting rent for government-granted privileges would not only raise trillions but also whittle corporations down to a competitive size, less hazardous to democracy.

Besides charging what privileges are worth, government should also replace license with responsibility ("internalize the externalities"). To temper the temptation to use lands both fragile and valuable, society could impose surcharges - an Ecology Security Deposit, Restoration Insurance, Emission Permits, and fines when users exceed standards. To minimize all these charges, producers would seek sustainable alternatives. Getting and sharing rent from land titles is the centerpiece of this geonomic revenue reform. Each phase of such a revenue shift motivates sustainable choices in its own way. ...

To sustain that which we love, we must transform our relationships to nature, to government, and to each other. We need to become geonomists in worldview, theory, discipline, and policy. Geonomics creates an economy that's not at war with but aligned with the natural world.  ..  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, b. lucrative contracts, such as with weaponeers et al campaign contributors, and c. tax breaks that burden would-be competitors, such as tariffs that protect GM and Ford but not autoworkers. Even if we were to abolish subsidies (a) and taxes, eliminating the advantage of tax breaks (c), and negotiate responsible contracts (b), that'd still leave in place d. seven subtle privileges, mere pieces of paper that government grants its customers at nowhere near market value, positioning the privileged to claim all the surplus value of society.
1. The corporate charter's salient feature is to limit the liability of those choosing to profit by putting others at risk. ...
2. Pollution permits, performance waivers, land use exemptions -- whether granted by bureaucracies, legislatures, or courts - are worth much more than however much government charges and business pays. ...

3. Patents protect the basement inventor, right? Wrong. ...

4. Utility franchises create monopolies in exchange for some public service, such as providing electricity, phone communication, etc. ...

5. Communication licenses for TV, radio, cell phones, and the like are given away for free or for far less than market value, turning recipients into "instant billionaires" (the business press gleefully notes). ...

6. Resource leases for public oil, minerals, forests, and grazing land, are often let at "fire-sale" prices. ...

7. Land titles do protect the average homeowners but because they cost virtually nothing (a paltry filing fee often about $2.00), they also protect enormously wealthy absentee landlords. ... 

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

Fred Foldvary: Underprivileged or Rights-Deprived?

Poor folk are often labeled "underprivileged" and richer folk are called "privileged." For example, there is a book titled "One Nation, Underprivileged: Why American Poverty Affects Us All." But "privileged" and "underprivileged" are confused and misleading expressions. If you think the poor are "underprivileged," then you don't really understand poverty.

What is a "privilege?" The term originally meant "private law." A privilege is a special advantage or prerogative or immunity or benefit given only to some people only because they have power or are favored by those with power. If everyone is entitled to something, like freedom of expression, or if everyone may obtain an item such as a passport with the same rules applying to all, then it is not a privilege but a right.

Whether a rich person is "privileged" depends on how he got the money.  ...

So if a person is poor, it is not because he is lacking in special protections, subsidies, and other privileges. A person is usually poor because he has been deprived of the natural right to work. Governments world-wide impose barriers between labor and productive resources, keeping some workers deprived of labor and others who do work deprived of their earnings from labor.

Taxes on wages create a wedge between the cost of labor to employers and the take-home pay of the worker. More costly labor results in less employment. Taxes on the income from capital goods and on the sale of goods has the same effect. There are unemployment taxes, disability taxes, and payroll taxes that increase the tax wedge. On top of that, there are minimum-wage laws that prevent the least productive workers from getting hired. There are permits, zoning, and other rules and costs that also prevent some workers from becoming self-employed.

Deprived of the full natural right to peaceful enterprise and labor, and the natural right to fully keep one's earnings, the poor have little or no income, and depend on charity and governmental assistance. To call them "underprivileged" is a lie. The rights-deprived poor do not need privileges. They just need government to stop interfering with their right to work and save!

The biggest privilege world-wide is subsidies to landowners.  ...

There has been confusion about what is a right and what is a privilege. ...

Some consider a patent a privilege, but it too is a right. ...

Some also consider a corporation to be a privilege, since the firm has a charter from a government.  ...

Real privileges are favors arbitrarily given to some groups and not others.  ...

The really underprivileged folks are all consumers, taxpayers and those who are restricted from peaceful and honest practices or have to pay extra to the government while others are unrestricted and non-taxed. These people lack privileges which others have. The proper remedy is not to expand privileges, but to eliminate all governmental privileges. That is why libertarians and geoists alike have the motto: "Equal rights for all; privileges for none!" Read the whole article

Bill Batt: The Compatibility of Georgist Economics and Ecological Economics

The Georgist approach to taxation had many names: his contemporary Thomas Shearman wrote two books calling it the “natural tax,” 41 and more recently it has been referred to as the “incentive tax” 42 and ground rent.43 It should be noted once more that, by whatever name, the “land tax,” “site value tax,” or “single tax” to George covered a far wider scope than simply locational sites, even though today this is the base that is given the most attention. It covered any natural factor element that humanity chose to put into service. Today, some of these parts of nature which have come to be “owned” by private corporations (at least insofar as their license to such use have become entitlements) are worth millions. The electromagnetic spectrum that has been parceled out to the communications industry has sometimes been “auctioned” for one-shot revenue gains, is now for all practical purposes a freehold title in the hands of those industries.44 Were those spectrum bands retained by governments and “rented,” the revenue would likely be far greater. Whatever increased value now results accrues to these private owners instead of to society.

So also in the case of the auctioning of “pollution credits” or tradeable permits, what in fact constitute the right of power industries to treat the air as a dump to the full extent which environmental tolerances allow.45 These “credits” are now “owned” by the private sector and traded back and forth among corporations, even though all people experience the consequences of its treatment. Airport landing slots, “prime time” broadcasting, and many other time-sensitive dimensions have all been handed over to the private sector with nominal benefit to the public. London Mayor Ken Livingstone has been a strong supporter of renting the landing slots at Heathrow and Gatwick Airports, and is at this very time exploring a rent recovery scheme to pay for the upgrade of components of the Jubilee tube line.46 ...

The theme of economic justice runs throughout Daly’s work, evident of course in the title For the Common Good.122 But the formulations of justice are not explicit. One looks in vain for a statement of what if any entitlements people should possess by virtue of being human, or what nature or posterity is due in turn. Absent is anything that Harvard Law professor Mary Ann Glendon calls “rights talk.” 123 But it is clear that the ecological economists are struggling mightily with these questions. They are boldly posed elsewhere in the writing of Joan Martinez-Alier, a Spanish scholar who is widely known in the movement not just by his own writing but as editor of the journal Ecological Politica. In one article, he sees an ever-widening standing for environmental claims, as the environmental movement evolves from one based on the efficient and sustainable use of natural resources (the “gospel of eco-efficiency,” in the tradition of Gifford Pinchot), later to the “cult of wilderness” (in the tradition of John Muir and Aldo Leopold).” 124 They are evident also in the work of Bernardo Aguilar, particularly with reference to north-south trade arrangements which essentially exchange natural resources for developed nations’ currencies. 125 As people come to understand their relationship and dependence upon their natural environment, he envisions an unfolding pattern of litigation to preserve the sanctity and protection of peoples dependent upon it. Distant corporate interests will be blocked from exploiting the lands of local populations who are otherwise left with the liabilities of their repair.  ... read the whole article

Hanno Beck:  Bathroom Policy

We were four college sophomores. And we were not going to live in a dorm, no sir, we figured that we were smart, mature fellows and so we arranged to rent a house. Each person would have his own private bedroom and we would share the bathroom. Four guys, one bathroom. That sounds reasonable, right?

But let me tell you about Edward. Nobody wanted to use the bathroom after Edward, because something would be finished, gone, used up. No toilet paper? No soap? Edward somehow seemed always to be the last person to use these things. It reduced the value of the bathroom for the rest of us, yet we got no compensation. Edward was a taker. That felt unfair. ...

Our planet's natural resources are a common heritage for all humanity, just as the bathroom was a common resource for the four of us in college.

Look what happens to our planet.

  • We see people or corporations like Edward, taking more than their fair share of oil, fresh water, minerals, without compensating the rest of us.
  • We see people or corporations like Charlie, polluting the land, water and air with toxic wastes, chemicals, carbon in the atmosphere, making the world less safe, forcing others to clean up, and they are not compensating the rest of us.
  • We see people or corporations like Andrew, monopolizing resources such as land -– an urban land speculator who holds an acre out of use, anticipating a price rise, is displacing the rest of us, forcing development out into the countryside. A single acre of downtown land brought into use would save a dozen outside acres from premature sprawl development.
Those who take, monopolize, and pollute, are imposing costs on the rest of us and on the economy in general. We are forced to be less efficient, or forced to endure hardships, so that the takers, monopolizers and polluters can benefit. That is not fair.

Is there a solution? Of course there is. It's a simple solution. To respect our common interest in our planet's resources, those who take or monopolize or pollute more than their fair share of our planet should compensate those of us who they are taking from.  ... read the whole article

Peter Barnes: Capitalism 3.0 — Chapter 5: Reinventing the Commons (pages 65-78)

Property rights are useful human inventions. They’re legally enforceable agreements through which society grants specific privileges to owners. Among these are rights to use, exclude, sell, rent, lend, trade, or bequeath a particular asset. These assorted privileges can be bundled or unbundled almost any which way.

It’s largely through property rights that economies are shaped. Feudal economies were based on estates passed from lords to their eldest sons, alongside commons that sustained the commoners. Commoners were required, in one way or another, to labor for the lords, while the lords lived off that labor and the bounty of the land. The whole edifice was anchored by the so-called divine right of kings.

Similarly, capitalism is shaped by the property rights we create and honor today. Its greatest invention has been the web of property rights we call the joint stock corporation. This fictitious entity enjoys perpetual life, limited liability, and — like the feudal estate of yesteryear — almost total sovereignty. Its beneficial ownership has been fractionalized into tradeable shares, which themselves are a species of property.

There’s nothing about property rights, however, that requires them to be concentrated in profit-maximizing hands. You could, for example, set up a trust to own a forest, or certain forest rights, on behalf of future generations. These property rights would talk as loudly as shares of Pacific Lumber stock, but their purpose would be very different: to preserve the forest rather than to exploit it. If the Lorax had owned some of these rights, Dr. Seuss’s tale (and Pacific Lumber’s) would have ended more happily. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 6: Trusteeship of Creation (pages 79-100)

The California drivers’ handbook states: “At an intersection, yield to the car which arrives first or to the car on your right if it reaches the intersection at the same time you do.” (I discovered this when my teenage son took his driving test.)

Why does the car on the right get priority over the car on the left? It’s unclear. Quite possibly the rule is entirely arbitrary. But someone has to have the right of way or cars will collide. The same is true for boats at sea, and for moving objects in any complex system.

So too in a market economy. When two property rights come to the same intersection, one has to trump the other. Either capital can fire labor, or labor can fire capital. Either my right to pollute trumps your right not to be polluted, or vice versa. As they say in Hollywood, someone must get top billing.

But who? Marjorie Kelly has written a brilliant book called The Divine Right of Capital. By divine she doesn’t mean God-given. She means that, under our current operating system, the rights of capital trump everything else. The rights of workers, communities, nature, and future generations — all play second fiddle to capital’s prerogative to maximize short-term gain. This hierarchy isn’t the doing of God or some inexorable law of nature. Rather, it’s a result of political choice.

The question of who gets the top right in any society is always an interesting one. Invariably, the top dogs in any era assert that there’s no alternative. Kings said it three hundred years ago; capital owners say it today. They hire priests and economists to add moral or pseudoscientific credence to their claims. The truth, though, is that societies choose their top right holders, and we can change our minds if we wish.

Kelly locates many places where capital’s supremacy is written into our codes. Corporate directors, for example, are bound by law to put shareholders’ financial gain first. If a raider offers a higher price for a publicly traded company than its current market value, directors have little choice but to sell, regardless of the consequences for workers, communities, or nature. Similarly, it’s the fiduciary duty of mutual funds, pension funds, and other institutional investors to seek the highest returns for their shareholders or beneficiaries. This duty is embodied, among other places, in the Employee Retirement Income Security Act of 1974. Although the language of the act sounds innocent enough — a pension fund manager, like any trustee, “shall discharge his duties . . . solely in the interest of the participants and beneficiaries” — it results, ironically, in the financing of many workers’ retirements by investing in companies that shift other workers’ jobs overseas. Throw in the WTO and NAFTA, and the rights of capital stand comfortably astride everyone else’s.

What’s wrong here? It’s not that businesses pursue profit; that’s what they’re designed to do and what we want them to do. The problem is that private capital rides in the front of the bus while everyone else rides in the back.

At the moment, there’s one law that does give preference to creation’s gifts: the Endangered Species Act, which says a species’ right to survive trumps capital’s right to short-term gain. The trouble is, the law comes into play only when a species has been so devastated it’s on the brink of extinction. Even then, the courts don’t always enforce it. Recently, in a very dry year, the government reduced its delivery of subsidized water to California farmers because endangered fish needed it to survive. Some farmers sued, arguing that the government had unconstitutionally “taken” their property. A federal court agreed, the Bush administration refused to appeal, and the farmers collected $13 million in damages.

It seems to me that, if anything is divine, it should be gifts of creation. Morally, they’re gifts we inherit together and must pass on, undiminished, to future generations. Economically, they’re irreplaceable and invaluable capital. Protection of these shared assets should trump transient private gain. Broad benefit should trump narrow benefit. The commons should trump capital. This should be written into our economic operating system and enforced by the courts. ... read the whole chapter



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Wealth and Want
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