Who owns the environment? Can some of us pour pollutants into it as part of making our livings without compensating others?

Henry George: Thy Kingdom Come (1889 speech)

The story goes on to describe how the roads of heaven, the streets of the New Jerusalem, were filled with disconsolate tramp angels, who had pawned their wings, and were outcasts in Heaven itself.

You laugh, and it is ridiculous. But there is a moral in it that is worth serious thought. Is it not ridiculous to imagine the application to God’s heaven of the same rules of division that we apply to God’s earth, even while we pray that His will may be done on earth as it is done in Heaven?

Really, if we could imagine it, it is impossible to think of heaven treated as we treat this earth, without seeing that, no matter how salubrious were its air, no matter how bright the light that filled it, no matter how magnificent its vegetable growth, there would be poverty, and suffering, and a division of classes in heaven itself, if heaven were parcelled out as we have parceled out the earth. And, conversely, if people were to act towards each other as we must suppose the inhabitants of heaven to do, would not this earth be a very heaven?

“Thy kingdom come.” No one can think of the kingdom for which the prayer asks without feeling that it must be a kingdom of justice and equality — not necessarily of equality in condition, but of equality in opportunity. And no one can think of it without seeing that a very kingdom of God might be brought on this earth if people would but seek to do justice — if people would but acknowledge the essential principle of Christianity, that of doing to others as we would have others do to us, and of recognising that we are all here equally the children of the one Father, equally entitled to share His bounty, equally entitled to live our lives and develop our faculties, and to apply our labour to the raw material that He has provided.  ... Read the whole speech

• Thus, if a man take a fish from the ocean, he acquires a right of property in that fish, which exclusive right he may transfer by sale or gift. But he cannot obtain a similar right of property in the ocean, so that he may sell it or give it or forbid others to use it.
• Or, if he set up a windmill, he acquires a right of property in the things such use of wind enables him to produce. But he cannot claim a right of property in the wind itself, so that he may sell it or forbid others to use it.
• Or, if he cultivate grain, he acquires a right of property in the grain his labor brings forth. But he cannot obtain a similar right of property in the sun which ripened it or the soil in which it grew.

For these things are of the continuing gifts of God to all generations of men, which all may use, but none may claim as his alone.

To attach to things created by God the same right of private ownership that justly attaches to things produced by labor is to impair and deny the true rights of property. For a man who out of the proceeds of his labor is obliged to pay another man far the use of ocean or air or sunshine or soil – all of which are involved in the single term “land” – is in this deprived of his rightful property; and thus robbed....  read the whole article

A system of quantitative controls can be efficient if the overall level of control is appropriate and permission to pollute is completely transferable. But these conditions are rarely met. It is particularly difficult to know the optimal level of pollution control when the costs of pollution are continuous, upward sloping and not catastrophic. And systems of quantitative controls almost always lack fairness. They grant permanent privileges to those who have a history of having caused harm. If a system of quantitative controls provided that pollution rights would be auctioned, and all the proceeds would be collected publicly, then it would be in accord with a principle that all persons have equal rights to natural opportunities. But there would still be the difficulty of determining the right number of permits to sell.

A system of managing the harm from pollution is most likely to be both efficient and fair if it is conceived in terms of taking account of effects of pollution on land values. Pollution can also affect the value of structures, but these effects are harder to quantify, because they operate somewhat differently on each structure. Furthermore, pollution can raise as well as lower the value of structures. An old structure that would be ready to be demolished in a clean environment can have continuing economic value in a polluted environment. Pollution can also have effects on the utility of individuals apart from its effects on the value of land and structures. If person A is harmed by pollution more than person B, who would move in if person A moved out, but person A does not move because of the costs of moving, then the difference between the costs of pollution to persons A and B is a pollution cost that is not reflected in the value of land and structures. Nevertheless, measuring the cost of pollution by its effects on land values is a good first approximation.

To manage pollution efficiently and fairly, one would estimate the effects on land values of various levels of pollution and derive a "supply schedule" of pollution based on the marginal cost of pollution at different levels of pollution. One would then ask polluters how much polluting they would want to do at different prices of pollution. As long as there were more than a handful of polluters, their incentives to report anything other than their true marginal valuations of pollution rights would be inconsequentially small. Thus one could aggregate the responses into an aggregate demand schedule for pollution rights and use the intersection of the supply and demand schedules to determine simultaneously the efficient quantity of pollution and the price that would achieve the efficient quantity. The payments that individuals made could be construed as payments for appropriating for themselves land rent that was everyone's common heritage.

Pollution sometimes crosses international borders, as when sulfur dioxide from coal-fired electricity generating plants in the U.S. Midwest crosses into Canada. While there are unresolved scientific issues regarding the amount of harm that such international pollution causes, the economic question of what should be done when the magnitude of damage is know is straightforward. When one country sends pollution to another, the resulting decrease in the value of land in the second country represents an increase in the proportion of natural opportunities that the first country is appropriating. The polluting nation owes corresponding compensation.

Without a theory of equal rights to natural opportunities, one could argue that international pollution could be controlled just as well by identifying the optimal quantity and limiting emissions to that level. A theory of equal rights to natural opportunities does not permit such privilege for polluters.

When the area affected by a pollutant is very large, as with the gasses that exacerbate the ozone hole, measuring damage by changes in land values becomes less attractive. Changes in land value are a suitable measure of damages when the choices that people make between land that is affected and unaffected permit the market to reflect the damages. But if all of Australia is affected by the ozone hole, then the damage that the ozone hole does to Australia would be measured by land values only if it affected migration between Australia and the rest of the world. Such effects happen slowly, and their consequences for land values are difficult if not impossible to measure.

Nevertheless, one can apply the principle that natural opportunities are everyone's common heritage. No one has a right to a disproportionate share of the opportunity to emit the gasses that increase the ozone hole. We should seek to identify the marginal cost schedule of emissions of these gasses, and charge a fee that equate the marginal cost and marginal benefit of emissions. All persons in the world should share equally in the proceeds of such fees, after nations such as Australia that bear a disproportionate burden have been compensated for their costs.

With CO2 and other greenhouse gasses, the issue is yet different. Particularly cold areas may benefit from the global warming caused by greenhouse gasses, and no area of planet is immune from the effects of global warming. Still, the principle of equal rights to natural opportunities can be applied. All people have equal rights to emit greenhouse gasses. People have different ideas about what the right level is. The appropriate way to give expression to the idea that we all have equal rights to the environment is to use a structured democratic and market process.

Consider CO2. Start by having every nation propose a quantity of permitted emissions of CO2 per capita. Weight each nation's proposal by its population, and take the weighted median of the proposals. That is an initial entitlement that represents a majority rule equilibrium, a reasonable expression of equal rights for all. Unlike the current global climate negotiations, in this entitlement no preference is given to nations of the basis of their having a history of high emissions.

Next, ask each nation how much money it would be willing to pay for reductions in global emissions below the entitlement levels, and how much money it would regard as adequate compensation for emissions above the initial entitlement level. (These question presume that nations want lower emissions. If a nation desires extra global warming, the questions would be reversed.)

To motivate nations to respond honestly to these questions, the "demand-revealing" process would be used to charge nations for their answers. That is, each nation would pay for the cost that it imposed on other nations (or receive the benefit that it provided to other nations) by having the preferences that it had instead of the average of the preferences of other nations.

The next step is to ask each nation for an offer schedule of how much it is willing to pay for the right to emit CO2 in excess of its allocation, or how much it would regard as adequate compensation for emitting less than its allocation. The (vertical) sum of the answers to the questions about the costs that nations would experience from emissions provides a "supply schedule" of emission rights. The (horizontal) sum of the answers to the question of how much nations would pay to emit more (or accept as compensation for emitting less) provides a demand schedule for emission rights. The intersection of the two schedules specifies the efficient level of emissions and the price that will induce nations to emit the efficient amount of CO2. This is the price to be paid by nations that want to emit more than their entitlements, and received by nations that want to emit less than their entitlements. In addition, all nations pay or receive something for the net cost to other nations for their having preferences that deviate from the average of the preferences of others. These payments ensure that nations are motivated to report their costs of emissions truthfully. ... Read the entire article

• resource extraction
• non-sustainable energy production
• commerce and industry
• forestry and non-sustainable agriculture

Bill Batt: Stemming Sprawl: The Fiscal Approach

We do an awful lot of driving just to do what we need to do. This is because transportation engineers and land use planners have confused two fundamental concepts: access and mobility.

By confusing these two principles, we spend an inordinate amount of money on transportation services, most of it on roads and highways. One 1993 study calculated that the total costs of motor vehicle transportation to our society equal approximately a fourth of our gross domestic product (GDP).[3] The study concluded that "when the full range of costs of transportation are tallied, passenger ground transportation costs the American public a total of $1.2 to $1.6 trillion each year. Just the costs of automobile crashes represents a figure equal to 8 percent of the American GDP.[4] Japan, by way of comparison, spends an estimated 10.4 percent to satisfy all its transportation requirements, although the figure might be a bit low because not all externalities are included in the calculation.[5] Road user fees in 1991 totaled only about $33 billion, whereas the true costs to society were ten times that;[6] put another way, drivers pay only 10 percent of the true costs of their motor vehicle use.[7] The balance is paid by society, effectively subsidizing highway use by paying for all but the marginal out-of-pocket operating costs. ...

Such are the savings for living closer to the urban center by ten miles. If the urban resident has to rely on a car nonetheless, subtracting some $3,000 annual travel expenses will still leave him paying again that much (and likely more) to own a car. Author James Kunstler put the true costs along with other experts at about $6,100 annually seven years ago.[9] The American Automobile Association calculated that a car driven 15,000 miles in 2001 cost 51 cents per mile, or $7,650.[10] This figure reflects only direct costs to the driver, not the additional costs passed on to society.

The latter figures include externalities such as pollution and the costs of highway crashes. Hortatory public pleas for people to tune up their engines so that they pollute less, to inflate tires properly, and to drive more safely are not likely to change the reality that people are forgetful and fallible. Pollution-free cars are not available; people must drive to participate in this society. The consequences of sulfur dioxide, carbon dioxide, and ozone are no longer a matter of debate; they are scientific fact. Despite frequent headlines about replacing the internal combustion engine, all the realistic substitutes also ultimately rely on fossil fuel power, solar-powered cars are far in the future, if at all, and also fail to deal with any transition. And every person driving his or her own car multiplies the probabilities of accidents. When people step into a car, they are seldom mindful of such odds. Yet if the direct pecuniary costs of driving increase in any substantial way, there will surely be significant changes in the trade-offs involved in housing/transportation choices. As will be made clear later, making costs visible and linking them to private personal behavior is one way to ensure that transportation pays its own way. ... read the whole article

Mason Gaffney: Bottling the Air

Mason Gaffney: Red-Light Taxes and Green-Light Taxes

What are these distinguishing postulates we share?

A. There is a paramount public interest, at the least, in how resources are owned and used; at most, many of us hold that The Earth is common property that no owner has a right to abuse, misuse, or withhold in excess.

B. We would assert the common interest mainly within the market mechanism, whose positive merits we appreciate.  ...

C. Green taxes hew to the principle of untaxing goods to tax bads.  ...

D. Green taxation reconciles Allocative Efficiency with Distributive Justice. ...

E. We favor containing urban sprawl (and other kinds of scattered settlement), reserving more land for ecological habitat and environmental services.

In sum, we agree that land and resources are our common heritage; we have a right and duty to manage them to prevent waste in the common interest; and green taxation, used to modify the market, is the best tool of management. ... read the whole article

Lindy Davies:   The Top Ten Reasons Why Land is More Important than Ever

Georgist tax policy acts to abort subeconomic extensions of public works, as noted just above. Not only does this save public funds, it protects the environment. Saving public funds and saving wildlands and waters are perfect complements.

• logging roads (too many, too long, on land too steep);
• clearcutting; and
• slow replanting.   

• the number of car-miles for any given level of urban linkage, with smog generated in proportion.  (The unforgettable demonstration of the last came in 1967 when Mayor Henry Maier closed all Milwaukee gas stations for a week, because of arson and riot threats.  As a by‑product Milwaukeeans saw, for the first and last times, what clean air really looks like — glorious!)  
• paved areas, with salt and roadside litter both spread in proportion.   
• "and sudden death."  Auto accidents, the ultimate "negative externality," kill some 40,000 Americans per year, maim many times more, and intimidate everyone.   
• grading and denuding new lands, generally upstream and more sloping.  Three-quarters of the pollutant loadings in the Menominee River come from urban non-point sources.  Developing urban areas cover only 2.6% of the watershed, but contribute 37% of the suspended solids and 48% of the phosphorous.  (Bauman et al. 1980, cited in Falk, 1985, p. P-II-B-2)
• number of homes on septic tanks.  
• diversion of sewer funds from treating sewage to collecting it.   
• larger lots and lawns, longer driveways.  
• inhabited areas without good fire protection, with more grass and brush exposed to humans.  
• private wells puncturing aquifer caps.  
• settlement and industry beyond gutters and storm drains.  
• withering of mass transit.   
• longer, wider utility rights-of-way, with higher voltage and pressure and hazard.  
• filling wetlands
• occupying floodplains, so more flood control reservoirs are needed.   
• automobile dependency creates its own treadmill effect.  The car itself is the major consumer of urban space, space which must in turn be traversed, using still more car-miles.  Pedestrians and cyclers are maimed and intimidated into becoming motorists.  Mass transit withers away.  The market does not lead us to optimal outcomes in such a world — this world.   

On what basis shall habitat-savers identify with median Americans? We share a problem: we are all victims of private property rights carried to extremes. Abraham Lincoln, the original Radical Republican, once spoke to the effect that whenever landless people cannot find work and shelter, then the rights of private property have been carried too far and must be curbed. We have seen what Gifford Pinchot said.

"... natural resources must be developed and preserved for the benefit of the many and not merely for the profit of a few. ... the people shall get their fair share of the benefit which comes from the development of the country WHICH BELONGS TO US ALL."

Belongs to us all? Was Pinchot a Communist? Not likely: he was a Republican, an active political one, twice Governor of Pennsylvania.

We have too little time together to develop that fully, but here are some ideas. First, environmentalists might rethink what we mean by "open space." To Pinchot, "open" meant the space had public access. Today it often means the reverse: golf courses, duck clubs, sacred Indian lands, private beaches, cemeteries, farmlands, vacant speculative holdings, unpoliced parks taken over by gangs, protected and posted habitat, water from which swimmers are excluded for power boats, rights-of-way closed to hikers, University experimental plots, and so on. In this sense, there is more open land in downtown Manhattan than in many of our rural and sylvan areas. Many a water reservoir is open to beavers, ducks and geese, who routinely powder their noses there, but not to humans who seldom do, and can be trained not to.

To get more support for habitat, find ways to open it to people, putting more funds and effort into behavioral controls if necessary. In Pinchot's day, people spoke unblushingly of "character training," and practiced it. Pinchot himself said, "the training of our people in citizenship is as germane to it (conservation) as the productiveness of the earth." Wilderness clubs preached and taught responsible behavior in the wilds. The Boy Scouts taught it, churches taught it, schools taught it, forest rangers taught it, camp counselors taught it, community leaders taught it: you heard it all around, and it did help shape your character. It was a great community effort, enlisting broad support and conviction. Then, in that less mobile, less commercialized, more communitarian age, social control over public behavior came naturally. We came to take it for granted, until it silently slipped away. Today it may take more conscious effort, but it was done then, it can be done now. ...

Gifford Pinchot, the father of Conservation, was not against developing land. In his own words:

"The first principle of conservation is development, the use of the natural resources now existing ... for the benefit of the people who live here now. There may be just as much waste in neglecting the development and use of certain natural resources as there is in their destruction by waste. ... Conservation, then, stands emphatically for the use of substitutes for all the exhaustible natural resources, ... (water power and water transportation are his examples). ... The development of our natural resources and the fullest use of them for the present generation is the first duty of this generation. ...

In the second place conservation stands for the prevention of waste. ... "

So Pinchot was against waste, so what? Who isn't? This could be just a banality, but he gives it a new turn. To him, waste means failing to use renewable resources. His example was hydropower, which he would substitute for coal and oil. That is not such a good example today, when we cherish our few remaining wild rivers, but today urban land makes an even better example.

"Urban land?", you may ask. "What has urban land in common with falling water?" Economists (who are not all bad) classify urban land as a "flow resource." They liken it to flowing water because its services perish with time, whether used or not, and we are trapped in the one-way flow of time. Likewise, urban land is not depleted by use. It is an even better example of a "flow resource" than flowing water itself, because, as we are so conscious today, "unharnessed" flowing water may have other downstream uses. Even in wasting out through the Golden Gate, it may repel salinity. The unreaped harvests of idle land, however, flow down the river and out the gates of time like lost loves dimming, and golden moments we let slip away beyond recall.

What is this "service" of urban land, that we should be mindful of it?

• For one thing, using central urban land conserves all the hydrocarbons and other resources otherwise needed to traverse it. Compact urban settlement is a direct substitute for oil, with all that implies - and it implies a great deal, which I will leave you to fill in.
• Second, using good central land saves all the costs of settling on other land - including the cost of taking more of the shrinking habitat from endangered species. ...

I could wax rhapsodic about the results to expect from such taxation, but have done so elsewhere and will leave it with a word: visit Sydney, Adelaide, Brisbane, Copenhagen, or Johannesburg, which have made use of this principle to excellent effect.

These are basic issues, and call for bold actions. Do not waste your time on wimpish meliorism, or "Goo-goo" thinking. For example:

It is said we need a land use inventory. We already have lots of them: people have been classifying land for decades. The question is, what shall we do with them?

It is said we need "risk ratings." These are subject to manipulation and juggling, like benefit/cost analyses of recent ill fame. The question is, who will control the ratings, and to what ends?

It is said we need fire models. We have fire models; they were already chic in 1950. The question is, how to keep scattered homes out of fire-prone areas, where they make prescribed controlled burning nearly impossible. The question is how to keep the State and the fire insurance industry from cross-subsidizing these homes by averaging their risks in with others.

Rather, let us study how to emulate the model of Butchart Gardens, near Victoria, B.C. Butchart doesn't sound like a gardener's name, and sure enough, Mr. Butchart was a hardrock miner who attacked the earth and left a great ugly gash in it. Ah, but Mrs. Butchart, she wanted space for a garden, so she made one there. She rediscovered the truth that land is not just the matter that occupies space, it is space, always renewable and reclaimable. Now Butchart Gardens is one of the world's great beauty spots, drawing visitors from everywhere - in the summertime you hear every language there. Our decayed central cities, too, may bloom again like Mrs. Butchart's garden. Let us make it our model.  read the whole article

In other respects, to “green up” Georgism we need to free it from its exclusive focus on the virtues of a land tax levied in the form of a property tax (Gaffney, 1998). George himself stated his central thesis in another form: “We must make land common property.” To him, the property tax was simply the most convenient and practical tool to that end, one directly at hand.

Now, we need at least two modifications.

• One is to recognize the occasional virtues of taxes on the extraction or withdrawal of natural resources from the earth. (Gaffney, 1967, 1977, 1981, 1982, 1983, 1998). This has become the common meaning of “green taxes.” An obvious modern case is the withdrawal of water from rivers and wells (Gaffney, 1992). Another obvious case is levying effluent charges on polluters, where that is feasible (Gaffney, 1965). This proposal harks back at least to A.C. Pigou (1928), and often bears his name.

  Obvious as may be the virtues of such green taxes, polluters have successfully rallied behind an alternative, the tradable pollution permit. This idea entered academia through J.H. Dales and Ronald Coase, who challenged the “polluter pays” principle. It entails a massive validation of pollution, making it a kind of property right, based on “ancient and honorable histories” of pollution. This is not the place to skewer it as it deserves, but obviously Georgists should help put it down.

• A less obvious, but more challenging case is dealing with “non-point” pollution. Here, simple market-oriented policies are hard if not impossible to apply. I have to agree with a Marxist like Burkett that some problems call for systemic changes that make us think outside the box of the market and its logic. I have offered up a package of such changes elsewhere (Gaffney, 1987). Read the whole article

• George reconciled common land rights with private tenure, free markets, and modern capitalism.
  a. Those who got the upper hand by securing land tenures would support public services, so wages and commerce and capital formation could go untaxed.  
  b. To pay the taxes, landowners would have to use the land by hiring workers (or selling to owner-operators and owner-residents). This would raise demand for labor; labor spending would raise demand for final products.
  c. To pay the workers, landowners would have to produce and sell goods, raising supply and precluding inflation. Needed capital would come to their aid by virtue of its being untaxed.
• George's proposal lets us lower taxes on labor without raising taxes on capital.
• Georgist tax policy reconciles equity and efficiency.
• A state, provincial, or local government can finance generous public services without driving away business or population.
• Georgist tax policy contains urban sprawl, and its heavy associated costs, without overriding market decisions or consumer preferences, simply by making the market work better.
• Georgist tax policy makes jobs without inflation, and without deficits.
• George's land tax lets a polity attract people and capital en masse, without diluting its resource base.
• Georgist policies let us conserve ecology and environment while also making jobs, by abating sprawl. It is a matter of focusing human activity on the good lands, thus meeting demands there and relieving pressure to invade lands now wild that are marginal for human needs. Urban sprawl is the kind of sprawl most publicized, but there is analogous sprawl in agriculture, forestry, mining, recreation, and other land uses and industries.
• Georgist policies let us strengthen public revenues while in the same process promoting economy in government.  Read the whole article

MG - Economic analysis, properly used, can serve the cause of environmentalism. The neo-classical economists abused both economics and the environment badly, as a byproduct of their drive to discredit classical political economy, and Henry George. John Bates Clark wrote that land is not scarce, that mankind can convert capital into land without limit, and create as much as we please. He wrote that natural resources have no value to mankind until and unless they are privatized; that privatization itself is what creates value. Our universities churn out thousands of new economists yearly, imbued with such attitudes. When Rachel Carson kicked off the new environmentalism in 1962 with her "Silent Spring," most economists trashed or disdained her: they 'd been trained that way.

Faced with the obvious growth of environmental sentiment, economists dealt with it as they have with other problems: they absorbed it in the discipline, then marginalized it. Now they can say it is part of economics, while they proceed to ignore or trivia lize it in their major policy pronouncements, wherein endless territorial expansion continues to be not just a goal, but a necessity to make the system work.

The legitimate goals of environmentalists, they coopt and distort. Here are two examples.

• They'll tell you that it's not OK to promote oil conservation by taxing withdrawals, but it is OK to do so by monopolizing the industry - monopolists are our best friends.
• They'll tell you it's not OK to check polluters by taxing their effluents, but it is OK to give them property rights to pollute, based on past emissions, and then buy those rights back from them at their price. You think I'm just making that up? I wish I were! The EPA is actually applying that idea around the country.

TPR - If Earth's ecosystem and poorest people will be the largest beneficiaries of the reform you advocate, how will it ever gain public acceptance in America's increasingly money-driven political system? If the press will never acknowledge it and the education system is so lost and blind, how can this reform ever happen? Are Georgists like the character in 1984?

MG - Every system must purify itself from time to time, or be destroyed. How long that takes depends on how strong a base you started from, and how strong your rivals are. The USA started from a strong base, built in part by the Progressives (including many Georgists) and the New Dealers (in spite of some of their destructive moves). Now, our leaders think we are riding high, just because the stock market is rising, even though real wage rates have fallen for 25 years, our debts are staggering, our liabilities and contingent liabilities exceed our assets, our biggest growth industry is building jails, our population is losing its literacy, our major cities have decayed, and so on. Marx was right about one thing, at least: the system carries the seeds of its own destruction.

Our leaders have done a good job of subverting our rivals, in part by forcing on them the ideas of neo-classical economics, the ideas that originated as part of the anti-Georgist campaigns. Japan gave us a good run for a while, but got suckered into aping our worst habits, and hence a good old-fashioned American-style land boom and bust that has knocked them out of the race for a while. Most of S.E. Asia has now followed suit.

It's a delicate balance. The haves can brainwash the have-nots just so long, until reality breaks through, as in 1929. When it does, you want to be ready with a plan tailored to the times, which Georgists at that time were not. Meantime, we keep the idea alive by recording and publicizing important facts, such as that the prosperity of Hong Kong was a product of Georgist policies; likewise that of Taipei, Sydney, Johannesburg, and other great cities.

• We support object lessons like those in Allentown, Pa., and go for a really visible one like Philadelphia.
• We combat moves to raise sales and income and payroll taxes, and awaken people to the benefits of lowering them.
• We awaken people to the possibilities of including more land income, and less payroll income, in the base of the income tax.
• We support efforts to democratize the media.
• We alert people to the corruption of academia and the kept think-tanks, and provide alternative venues by mobilizing the resources of the few Georgist-oriented foundations.
• We get on social action committees of various churches, and try to give their well-meant but often foggy-minded efforts some clearer focus, with more punch and less platitude.
• We remind people of their common rights, and the history of common property in land.
• We expose and ridicule the inconsistencies and hypocrisies of kept economists, hoping that embarrassment will convert those whom truth will not.

We avoid the temptation to play Jeremiah, but seek to join the system and make it work better, even as Henry George and his friends did.  Read the whole article

Some environmentalists raise the concern that citizen dividends and social services based on petroleum and other nonrenewable resources rents makes it that much more difficult to shift to renewable sources of energy. Alaskan representatives frequently have voted to open up the Alaska National Wildlife Refuge and other areas for more oil drilling. This writer¹s first response to this concern is that if citizens do not get a rightful share of these resource rents, then corporations will capture even greater amounts of surplus profits. While this is true, we need to look at the issue in a holistic way.

From the vantage point of a planetary civilization, we clearly need to shift to renewable energy sources. There is clear and compelling scientific evidence of of global warming. Climate change is one of the most pressing environmental problems of our time. Carbon dioxide and other gases released by fossil fuel consumption and deforestation is trapping heat in our atmosphere for 100 years or longer, with devastating environmental consequence. It is time to go full throttle in addressing this enormous challenge.

We need to use oil resource rents to shift to renewable energy and sustainable economies. Both the Alaskan and Norwegian petroleum funds invest in stocks, bonds and real estate. Interest from these investments are distributed as citizen dividends in Alaska and for social services Norway. The priorities of the fund portfolios need to be scrutinized and revamped. Currently the investment portfolios are mandated to follow the ³prudent investor rule² meaning that managers must find the balance point between highest profits and lowest risks. Fund investments are not based on or screened for socially and/or environmentally responsible criteria.

Furthermore, those of us working for a full range of resource rents as the basis for earth rights democracy view oil rent fund investment in real estate worldwide as an expropriation of surface land resource rents from other nations and thus are not a just source of interest income for the citizens of oil rent fund countries like Alaska and Norway.

The Alaskan and Norwegian funds, and the Nigerian fund if it is established, needs to have socially and environmentally responsible criteria. Investments should be made in renewable energy - wind, solar, green hydrogen, microhydropower - and in reforestation and other environmental restoration activities. A portion of the funds should be made available as interest free (suggested 2% - 3% management fee) revolving loan funds to people in developing nations to help finance their efforts for sustainable development.

A criteria of the loans should be that the communities receiving the loans begin implementing surface land value (ground rent) recapture in their towns, regions and nations. Land value based resource rent funds, if full ground rent is collected for the people as a whole, promotes land reform and affordable land access for current and future generations in addition to generating funds for public benefits and citizen dividends.

In the US about one half of corporate profits comes from real estate related activities so we know that resource rents from surface lands could be a substantial source of funds for basic income and citizen dividends. In addition to land sites, rents from the electromagnetic spectrum, water power points and satellite orbital zones should be sourced for citizen dividends in the future.  Read the entire article

Nic Tideman: The Interaction of Moral and Economic Approaches to Ecological Protection

Harm to humans differs from harm to other species, for three reasons.

• First, we recognize greater obligations to humans than to other species. We recognize obligations to each human individual, while our obligations to other species tend to be seen as obligations to the species as a whole.
• Second, because of the possibility of communication with humans through language, we can have information about the adequacy of compensation to humans in a way not possible when seeking to compensate other species.
• Third, humans are ordinarily concerned with the well-being of other species, not just because other species are required for the advancement of their selfish interests, but also because humans acknowledge an obligation to all species for their own sakes. Thus any harm to other species is a harm to humans as well, while we ordinarily do not think of other species as being harmed by harm to humans.

As beings with awareness of right and wrong, humans have potential moral obligations to all species. There are at least three types of effort to protect other species that a person can make out of his own moral convictions, while asserting at most a minimal right to impose his morality on others. For each type of effort, two levels can be identified:

1. He can adopt personal rules of conduct. He can apply these rules first to his own direct conduct, and then to others, as a condition for cooperating with them, as through trade.

2. He can engage in moral dialogue with others, seeking to persuade them to voluntarily adopt his practices of respect for other species, first with respect to their own conduct, and then as a condition for cooperating with others.

3. He can persuade his community to adopt a standard of behavior that will be required of members of the community. Anyone with a contrary opinion can join another community. In this way, for example, communities outlaw cock fights. Because there are always some costs of relocating, there will be some harm to those who disagree. Such standards are least likely to infringe on the rights of dissenting individuals when they are most local. At the second level, a person can persuade his community to require a standard of behavior of its trading partners. Such action is likely to be most persuasive when the proscribed action is directly related to a traded commodity, as when the Unites States outlawed the importation of tuna caught with nets that killed large numbers of dolphins.

In the absence of perfect universal divine revelation, it is virtually inevitable that people will disagree about the extent of their obligations to other species. Thus, in addition to seeking a common understanding of our obligations to other species, we must seek ways to justly accommodate disagreements about these obligations. This is where theories of economic justice enter.

In addition to the efforts listed above, which a person can pursue on the basis of personal moral conviction, with almost no interference with the rights of others who do not share his moral conviction, a person can also advance a theory of justice that permits him to limit the harm to nature that others cause. In my view, the best basis for claiming a right to limit the harm that others do to nature is a classical liberal theory of justice, similar to that developed by Henry George in Progress and Poverty (1879) or by Bruce Ackerman in Social Justice in the Liberal State (1980). A classical liberal theory of justice recognizes the rights of all persons to equal shares of natural opportunities (that is, everything outside of human beings and the value created by human effort) and the right of each individual to pursue his personal conception of the good. Thus under a classical liberal theory of justice, any individual can assert a right to protect his share of the environment.

The idea that all natural opportunities belong equally to all humanity is a radical idea with profound implications for many areas of human activity, from public finance without coercive taxes to world peace to the meaning of human freedom. The management of the environment under such a liberal theory, with each person potentially having a different conception of the protection that other species deserve, provides a challenge for economic theory but not an insurmountable one.

Consider, for example, the protection of whales. If whales are not persons (which they might become if we found ourselves in moral dialogue with them), then hunting whales may be allowed but limited, either because some humans wish to exercise their rights to nature by protecting whales, or because a reduction in the number of whales impoverishes the world for this generation and for future generations. If the fraction f of the world's population wishes to protect whales, then that fraction of whales is off limits to whale hunters. For the fraction of whales that may be hunted, if hunting causes a loss to other potential hunters in this generation, then those who kill whales should be charged a fee for the economic losses that their behavior causes, with the proceeds shared equally among all potential hunters. If the level of hunting is so great as to cause the number of whales per capita that are available to the next generation of humans to fall below the number available to this generation, then the hunting fee should be the larger of the value of the loss to other potential hunters in this generation and the value of the loss of environmental quality to the next generation.  Read the whole article

Nic Tideman: The Structure of an Inquiry into the Attractiveness of A Social Order Inspired by the Ideas of Henry George
 I. Ethical Principles

Jeff Smith and Kris Nelson: Giving Life to the Property Tax Shift (PTS)

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. ...

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):

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

Partly wrong, although some economists are guilty as charged. Economics, properly pursued, deals with how best to meet human wants. Recreation, fishing, wildlife, amenities, clean air, pure water, sustained resource supply, watershed protection, good health, and conservation are legitimate human wants.  ... 

Here are four reasons why environmentalists and economists are natural allies.

(a) Economizing is conserving.
Rationalizing water use, the proper aim of economics, is inherently conserving. For example, if we put the Santa Ana River to its highest and best use, it would obviate megatons of water imports, and with them the associated environmental damage.

I myself possess a share of this river, which rises naturally in an area of intense water shortage, yet I waste it. Why? There is hardly any variable charge imposed on me for using more. There is a yearly fixed cost, at about $20 per acre-foot for a 'standard' amount. The 'standard' hasn't changed in a century, and is much more than I properly need.

Incidentally, the small charge covers expenses of the Gage Canal Co., which delivers to me in the cheapest old-fashioned way, by gravity, in rotation with other users. There is no charge at all for water as such.

Meantime, the State is importing water here at a true social cost of about $2,000 per acre foot, 100 times what I pay). If there were a market where I could sell my 'right' for a tenth of that price I would surely do so, but there isn't, so I am waiting. If there were a price charged to me at a tenth of that cost, I would not buy, but there isn't, so I am taking. Thus I, and thousands like me, just stand pat and waste water.

Abuse of local waters in arid areas of high demand, like Southern California, results in 'hydro-imperialism.' The prevailing ethic is mixed-up macho. Conservation is for sissies: Real Men don't conserve water; Real Men prove they possess predatory genes by preying on peaceful people's waters. The predators can build more golf courses in the Sonoran desert of the Coachella Valley.

(b) Subsidy wastes both dollars and ecologies.
Hydro-imperialism is the common enemy of Sierra Clubbers and economists. That is lucky for economists, because Sierra Clubbers have more clout. For example, twenty years ago some pork-barrellers proposed pumping water from the lower Mississippi River up to West Texas, to overcome drought in Lubbock. It was to be one of the The Great Boondoggles -- a real record-smasher for pure waste.

I laughed when I read ecologists were fighting it to save the habitat of some unremembered nothing-bird, say the 'Least Southwestern Shiny-rumped Fleapicker.' ...

'You have no right to stop growth,' says the hydro-imperialist. I agree, but insist on the counterpart: we have no duty to subsidize growth. Hydro-imperialists and allied land speculators have no right to demand subsidies. Water supply and flood control and navigation projects, the traditional kinds, are heavily subsidized. Subsidy generates waste almost by definition, in the amount of the subsidy. If it is a subsidy to withdraw water it also creates scarcity of water where nature may have given us plenty. Consider the lower Colorado River.

Every major user is subsidized, mostly by Congress. No one pays a dime for water at the source, but everyone gets paid to suck it up and take it home. No wonder there is a shortage. No wonder there are 82 golf courses operating in the Coachella Valley, a Sonoran desert, and 50 more planned.

No wonder The U.S. Bureau of Reclamation can't even find takers for water carried to Phoenix in its multi-billion dollar Granite Reef Aqueduct. I could go on, but exhorting Congress not to waste money is scolding sinners in Sodom. Come on, ecologists, find an endangered species!

(c) Correct economic analysis prescribes more water for fish
Twenty years ago a study on the S... River of B.... prescribed sacrificing the fishery to a proposed power project, reasoning as follows. The fishery has no value because it is overcrowded; 'its rent has been dissipated by the tragedy of the commons'.

The value of the catch is only great enough to pay the fishermen. The fishery as such therefore has no residual value; it adds nothing to the total value. Take it away and nothing is lost, net of costs.

That is a profound fallacy. You will have noted it is a way of 'dehumanizing' fishermen and assuming away their unemployment costs, but that is not my main point. It says you should remove water from the use that is crowded with people, and dedicate it to the use of fewer people. This violates the basic law of diminishing return'; (a.k.a. variable proportions). It violates good marginal analysis, a bedrock of economics. ...

(d) Correct economic analysis presumes public trusts
Another thing some economists do right is to acknowledge that 'entitlements' -- the initial assignments of property rights - have a major effect on the relative bargaining power of different parties.

For years, economists would ask, say, canoers what they as individuals would pay to keep a river wild.. They got rather low valuations, and duly reported them as the value of recreation. This was an effective defensive strategy for dam builders.

One day it occurred to some unsung genius to ask not what the canoer would pay for the wild river; ask what the power company would have to pay the canoer, and all potential canoers, to extinguish their entitlements.

The second question presumes that canoers, as citizens, already own the wild river.

In recent years ecologists have been catching onto this point and rubbing the noses of legislators and bad economists in it. In the currert lingo, one arguing ex parte the canoers stresses that canoers' WTA (Willingness to Accept) is the relevant dollar value, and it is higher, perhaps much higher, than their WTP (Willingness to Pay). 

In defense, the black-hat economists are developing the new defensive strategy of trivializing the matter by claiming WTP = WTA.

They follow a Chicago-School guru, one Ronald Coase, who has written it doesn't really matter how you assign entitlements so long as it is clear and firm. Then just call the signal for 'Free Market!' an punt: everything will work out for the best. Property will be allocate the same, no matter who starts the game with all the chips, because WTP = WTA.

Bunk! You are not surprised when someone says 'My home is not for sale. I will not sell at any price' even in our highly mobile, commercially oriented society. They can take that attitude when they hold the initial entitlement.

You would be amazed to hear anyone say 'I will pay any price,' There are many documented instances of a person swearing under oath his land is worth no more than $X for tax assessment purpose and soon thereafter swearing again it is worth $15X when being condemned for a park or other public use, because he wouldn't sell it for less.

Modern' micro-economics is a throwback to the old Manchester School, some of whose members carried Adam Smith far beyond Smith's intent. They prescribed 'free trade in land' as the solution to all resource problems -- free trade beginning with entitlements inherited from millennia of conquest, corruption, aristocracy, confiscations, negligence, covin and fraud.

In this narrow view, everyone is an economic man; everyone has his price; all decisions are marginal; etc. Facts are forced to fit that theology. One modernist works the northwest Pacific Coast these days taking questionnaire surveys to put a value on environmental values. He has written that he rejects and screens out WTA answers when they exceed WTP answers by more than 5%. They don't fit the model, so they are invalid 'aberrations.'

If so, aborigines are aberrations. Consider Indian tribes with Treaty Rights to fish. Their WTP for those rights is minimal, partly because their ability to pay (ATP) is minimal. In addition, the mere hypothesis they are the ones who must pay implies they are impoverished and cannot pay anything.

On the other hand, their WTA presumes their Treaty Rights are valid and they are in control. In their culture, traditional land rights rank very high relative to money. They have seen people squander money and be ruined by it land is not squanderable, by nature. Land has more than marginal value to them because they have just one way of life, based on fishing. Substitution of other lands is not part of their ethic. Religion is also involved. It is entirely believable they mean it when they say they will not sell 'at any price.' They may be unreasonable, but that's the point: ownership lets you be as unreasonable as you please. We only notice when someone else has the entitlement. Politics and institutions are involved: Treaty Rights are the most valuable mode of holding property there can be. They enjoy legal supremacy as high as the Constitution itself (Article VI, Section 2), preempting contracts and ordinary legislation.

Jeff Smith: Share Rent, Transform Society

If someone buys a ticket to Super Bowl and decides not to go and sells it for more than its face value, he could face the wrath of the law. If he bought a super location and sold it for more than he paid for it, he could become a pillar of society. Temporary ownership for profiteering is illegal; but if permanent ownership, it is legal. If only we had a single standard, I think society would change for better. 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. Ralph Borsodi came up with an alternative, a trust that would claim publicly and occupy privately and use sparingly and compensate neighborly. Share the rent with neighbors. 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. 

The amount of rent has to total some amount. If you ask how much taxes are, you get a figure, or how much wages or interest are, you could get a figure. No one does a good job of keeping track of how much we spend or how much nature we use. In some of the best estimates, Ronald Banks in England estimates that the flow of rent is as great if not more than any of those other flows. Assuming that is true, if not allowed to collect in the wrong pockets, but redirected to everybody's pockets, we can expect a solution. How would you do it?

• You could collect it via service tax, extractive tax, user fees; there are many different ways to collect.
  
• You can return it to the residents of the region, through subsidies or dividends. Alaska has an oil dividend to citizens, and different kinds of taxes exist everywhere. It is a matter of disbursement.

If you were to choose the Libertarian version, and rely on fees and dividends, you get a geobonus, an added benefit. You would quit distorting prices, you could pull government back in a sense. Now taxes and subsidies at the margin can make housing unaffordable to maintain, so the apartment owner lets his apartment building become dilapidated and causes nearby owners to do the same. He can breed a slum.
 
We subsidize water and make water cheap for farmers in Arizona to irrigate their land, and we then have taxes to pay for environmental absurdities. Shift to fees and dividends and have prices precise and use the weight of the market to guide our choices toward sustainability. If we had this price leveling, we could get the market to work right.
 
There are four reasons this could be fair. In history three times when land tax was applied on increased value, it also increased land ownership, and tenure was extended.

• Last century in Denmark, land taxes were increased.
• In the 1890s in California irrigation districts, they went from a few ranches to many small farms.
• In the 1950s a land tax in Taiwan broke up huge plantations and resulted in many family farms.

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. It would make mass transit more efficient. We could collect some rent in a greater amount as ecological security deposits for gas stations with gas pump brownfields. We could actually put a surcharge on gasoline and put the playing field back to level between cars and other transportation. If we collected ground rent around transit stops and dedicated that income stream to the transit system, we could run a free system. 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.
 
On a level field, recycling would roll over extraction of virgin material. We could spare forests and salmon and have a healthier eco system. Look at restoration. Money has to come from the public treasury but we could look at it as public investment. Pay for restoration and land values increase, so land dividends would increase. Direct investment benefits the entire public. ... read the whole article

Frank Stilwell and Kirrily Jordan: The Political Economy of Land: Putting Henry George in His Place

Land is the most basic of all economic resources, fundamental to the form that economic development takes. Its use for agricultural purposes is integral to the production of the means of our subsistence. Its use in an urban context is crucial in shaping how effectively cities function and who gets the principal benefits from urban economic growth. Its ownership is a major determinant of the degree of economic inequality: surges of land prices, such as have occurred in Australian cities during the last decade, cause major redistributions of wealth. In both an urban and rural context the use of land – and nature more generally – is central to the possibility of ecological sustainability. Contemporary social concerns about problems of housing affordability and environmental quality necessarily focus our attention on ‘the land question.’ ...

While still ignored by the economic orthodoxy, interest in George’s work has been stimulated by modern concerns about housing affordability and environmental decay. Such revival of interest recognises that these problems stem, in part, from inadequate policies relating to land. Some members of Green parties, in particular, have embraced Georgist ideas. ...

Environmental Concerns

What about the relevance of Georgist ideas to current concerns with environmental quality and ecological sustainability? Here too there is a strong claim to consider. Interest in Georgism has been reinvigorated in recent years by the need to develop public policies that reflect the nature of land as a finite natural resource. From a ‘green’ perspective, land tax is a useful tool in discouraging the excessive and wasteful use of land. That is, the prospect of paying a high rate of land tax can be expected to discourage people from purchasing more land than they need directly for their own purposes. It accords with the principle that people should be taxed according to their use of scarce environmental assets.

This ‘ecological take’ on Georgism is particularly powerful at a time of intensifying global environmental problems and recognition of the need for remedial policy responses. It requires creative extension of Georgist principles because the limitation of George’s own analysis in this context is its primary focus on land. A range of other natural resources needs to be considered, linking up with the broader concerns of modern environmentalists such as Herman Daly (see, for example, Daly and Cobb, 1990). Hence, land tax should be seen as an adjunct to taxes on the use of other scarce environmental assets, including mineral, forestry and fishing stocks, and also bandwidth for radio and telecommunications, for example (Stilwell, 2002: 316-317). It should also be seen as a corollary to other taxes that discourage environmental damage, including resource rental taxes, carbon taxes and fuel excises.

The case for these environmental taxes need not necessarily rest on Georgist principles, of course, but Georgism can claim to provide a unifying analytical framework. A common feature of ‘environmental taxes’ is that they are all targeted, like land tax, at reducing the scope for profiting from the private appropriation of natural resources, and thereby restricting the profligate use of those resources.

A tension remains, reflecting the Georgist orientation towards taxes rather than more directly regulatory interventions. Whether the use of the price mechanism in this ‘environmental fine tuning’ is sufficient for dealing with pervasive environment threats is a moot point. The nature and severity of environmental stresses is such that more directly proscriptive environmental policies are commonly needed to protect natural resources. The creation and maintenance of national parks, for example, constitutes a necessary direct regulation of land-use: the market, even when modified by taxes, cannot absolutely guarantee the conservation of such crucial assets. In other words, protection of ‘natural capital’ may commonly require regulation as well as taxation. ... read the whole article

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

Natural Assets
In 2002, economists Robert Costanza and Paul Sutton estimated the contribution of ecosystem services to the U.S. economy at $2 trillion. Ecosystem services represent the benefits humans derive from natural ecosystems, including food from wild plants and animals, climate regulation, waste assimilation, fresh water replenishment, soil formation, nutrient cycling, flood control, pollination, raw materials, and more. Using data from many previous studies, as well as satellite photography, Costanza and Sutton estimated values for ecosystems per unit of biome (an acre of rain forest, or grasslands, or desert, for example). They then multiplied by the total area of each biome and summed over all services and biomes.

If $2 trillion represents the yearly contribution of nature to the U.S. economy, what’s the underlying value of America’s natural assets? One way to answer this is to treat yearly ecosystem services as “earnings” produced by “stocks”of natural assets.These earnings can then be multiplied by the average price/earnings ratio of publicly traded stocks over the last fifty years (16.5/1) to arrive at an estimated natural asset value of $33 trillion.

This figure is, if anything, an underestimate, because it ignores a singular aspect of nature: its irreplaceability. If Corporation X were to go out of business, its useful contributions to society would quickly be supplied by another corporation.

If a natural ecosystem were to disappear, however, it could not so easily be replaced. Thus, an irreplaceability premium of indeterminate magnitude should be added to the $33 trillion. ... read the whole chapter