Sinai Summit (credit: Wikimedia)

Peoria Georgist John L. Kelly has produced a three-titled book making the theological case for economic justice:

The Other Law of Moses:
God’s Remarkable Plan for Prosperity:
What 21st-Century Nations Can Learn from Ancient Israel’s Economics

I am the second-least-qualified person to review this book.  That’s because it takes for granted that the reader is a believing Christian, and that the reader has an Amazon Kindle or other proprietary software (or hardware) with which to read it. I claim neither qualification; what I review here is a text which I was told is the text of this book.

An earlier version of this book is the basis for the course Economics as if God Cared, offered by John Kuchta once or twice each year at the Henry George School of Chicago.

As a believer in economic justice, with an understanding of how that can be achieved, I can deal with the issue of how well this book presents the case.  As to whether it is persuasive, well, you’ll just have to ask the 78% of Americans who claim to be Christian, or the 40% who claim to attend church regularly, or  the 20% or so who actually do so, or the ones– and I have no idea how many there are– who take their theology seriously.  I was already persuaded, and seeing the Biblical support that Mr. Kelly has compiled did nothing to unpersuade me.

Kelly’s basic point is that God gave the Jews His Law at Mt. Sinai.  If they would just respect and behave according to the Law, no further intervention by God would be necessary. The Law, if properly observed, brings peace, freedom, and prosperity to the people.  When kept, it worked well, making Israel in 1200-1000 B C the first “middle-class country” ever.

And what is “the Law?” The main elements are:

• Equal Rights, no special privilege for royalty or anyone else, everyone gets land of equal productive potential.
• Sabbath and Sabbatical Year.  During the latter (every seventh year), all debts cancelled and all slaves freed.
• Jubilee every 50th year. All land returned to living descendants of its original holder.
• Tithe, equivalent to land rent, given to “God”, used for religious purposes but also (apparently) community needs.  No taxes on production.
• Special rules for widows, orphans, etc. who couldn’t support themselves

Sounds pretty geoist to me.  Whereas Henry George’s proposal was for the community to collect land rent from those holding formal title, Kelly’s God keeps ownership of the land (after all, He made it) and sets up rules for allocating its use. George’s system strikes me as more flexible, because folks have different numbers of descendants and different abilities and interests, but God at least takes a big step in the right direction. George didn’t treat jubilees specifically, but clearly his proposal would limit debt (and therefore debt-slavery) and make underwater mortgages extremely unlikely.

(Unfortunately the book doesn’t deal with the post-Sinai concept of usury, whereby lending money at interest is permissible only if the lender bears some of the risk. )

Kelly describes the “tithe” as being 10% of the land’s “productivity” (productive potential?)., and goes on to assert that “ten percent of a parcel’s productivity is still, today, a reasonable and customary rent.”  In today’s world, productivity of land isn’t always straightforward to estimate, but Illinois farmland data here (pdf) gives the impression that the actual land rent is more like 20% to 35% of what the land produces.  If the value of labor were excluded, counting only the natural productivity of the land, of course this percentage would be much higher, theoretically up to 100%.

Starting with arrival in the promised land, Kelly takes us thru the various Biblical periods, including Judges, Kings, the two kingdoms, Babylonian captivity and return to the Promised Land, Hellenism, Roman dominance, and the time of Jesus. He sees Jesus as seeking to restore the Law, which was still well-known if little-observed during this era.

One significant portion concerns the meaning of “Give Caesar what
belongs to Caesar.”  When Jesus said this in the context of taxes, according to Kelly, he really was saying “Don’t give Caesar anything because he has no right to collect taxes from you,” but had to avoid this straightforward statement because it would have got him in trouble with the rulers.

The final section of the book reviews some subsequent developments, particularly the origins of the United States as a place where the essential elements of the Law were still practiced until relatively recent times.  This part includes useful information about some other modern countries where aspects of the Law have been implemented, much of it taken from Land Value Taxation Around the World.

The Other Law of Moses could be quite useful to thinking Christians who are actually concerned about the poverty and totalitarian trends seen today. Provided of course that they have the necessary proprietary software and/or hardware to read it. I hope someday soon to read a review written by one of them.

For the rest of us, it’s reassuring to see the Bible interpreted as an endorsement of geoism (of course, many clergy, including Edward McGlynn and  Preston Bradley, have done this over the years.).

UPDATE 2012 February 8: Yesterday I was informed that a hardcopy version of this book is now available at: https://www.createspace.com/3779298

[Taiwan President Ma Ying-jeou] noted that Sun, when he drafted his political philosophy, was deeply inspired by Henry George, a renowned American political writer of the 19th Century, as well as Abraham Lincoln’s Gettysburg address of 1863.

When chief blogger Yves Smith published Econned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism, I was anxious to read it. Which I finally did over the last couple of weeks.

There are, of course, lots of books purporting to explain what brought on the global financial crisis, few of which I have or intend to read. So I can’t compare Econned to other books on the subject.  I can say that it is clearly written, extensively and helpfully footnoted, and draws on insider knowledge of the financial trade. It takes on the pretense of economics to being a “science,” the limitations of “free markets,” and the details of how traders are incentivized to bankrupt their employers.  It documents clearly how the government is controlled by financial interests and will be unable to regulate them properly unless voters develop some understanding of what is going on.

Much detail of mortgage securitization is included, and I actually, for at least a few minutes, understood how Magnetar and other hedge funds could create a demand for subprime debt, then profit from the inevitable defaults while bankrupting everyone else involved in the transaction.

In a brief concluding chapter, Smith provides some sensible recommendations, unlikely to be implemented by the current controlling classes, for reducing the scope of future crashes.

What we have here is a good explanation of why this crash may have been worse than any previous crashes, and why there’s little reason to expect the next crash not to be more severe yet. What we don’t have is any sense of why we have crashes at all.

By all means, if you want to understand the global financial crisis you should read Econned.  If you don’t have time to read this book, then watch Inside Job, which covers the main points tho necessarily missing a lot of detail.

But among the words entirely missing from the index (and I don’t recall even seeing in the book) are “land,” “real estate,” and even “speculation.” As long as we have a rentier economy, where it’s harder to gain wealth by production than by speculation and influence peddling, we will have crashes. If you want to understand why crashes occur, and how they could be prevented in the future, read Progress & Poverty and The Secret Life of Real Estate & Banking (the latter, renamed, is not free but you can buy it here.)

As a documentary with a point of view, this film says “The guys who drove us off this cliff and unpunished and still in charge,” which might lead one to suppose that, if only they could be caught and punished, perhaps our long-term future would become brighter.  These guys own the government, of course, so exactly how a prosecution would work isn’t clear.  Elliott Spitzer’s experience, reported in the movie, does not make one optimistic.

The problem, as I see it, is that Inside Job doesn’t tell the story from the beginning.  I would represent the principal causes of the global financial crisis as the five connected items below

5  Regulatory capture and control of the government

↑

4  Concentration of financial power

↑

3  Securitization

↑

2 Loans against capitalized rent

↑

1  Private collection of economic rent

IJ describes 5 quite well, addresses 3 and 4, but doesn’t get into the fundamentals.  As long as, and to the extent that, we have private collection of economic rent, we will continue to suffer from economic crashes.  Inside Job needs a prequel explaining the root cause of the problem.

It might be because they’re too busy with survival to pay much attention to the question.  Or, having been screwed by the powers-that-be, they assume any redistribution will be away from them, toward those already in control.  Might even be that they are “free-market” types who expect to make a better living in the absence of government interference. I really have no idea.

I’ve only seen the news report, the actual paper seems to be behind a paywall, so there’s a lot of detail left unspecified. Such as whether “redistribution” is defined to include the current pattern of redistribution from those who work to  those who manipulate, what specific surveys were analyzed, and how the matter of sequence (Does public support for redistribution cause redistributive programs to be expanded?) was handled.

I read this booklet about 25 years ago, didn’t remember a thing about it, but hoped it would give me some insight into how the Weimar inflation was dealt with. No such luck, it really begins after inflation had been tamed and prosperity commenced, but it’s all the more worthwhile for that.   Heilig asserts that the rise of Hitler was caused by land speculation. I am no expert in German history, but he does seem to make a good case.

Not by land speculation exclusively, of course, but land speculation as an ingredient along with:

• public aid to large landlords, encouraging them to withhold land from use
• privatization, on especially favorable terms to connected individuals and groups
• failure to fully utilize farmland, resulting in unemployment as well as high food prices
• tariffs, raising prices of consumer and industrial goods
• public subsidies to favored enterprises
• control of the major news media by the landed class

Land prices soared, wages fell, eventually the economy slowed, and:

Although it was obvious that the, “invariable costs” — i.e. the tribute land monopoly exacts from the working people — were eating into all production, the responsible men and the leading exponents of what was taught as economics kept their eyes, as if under some hypnotic influence, fixed upon the worker’s pay-packet.

Reformers advocated unworkable or ineffective solutions: If progress brings poverty, they urged that we retard progress.

The newspapers, of course, served the interests of their owners:

I need not explain what that propaganda organization meant in operation. Its effect was to sway public opinion into believing that the interests of the landowners were the interests of the nation. Subsidizing the landlords was the accepted policy for preserving and even saving the sources of subsistence of the people: the higher tariff walls were for the benefit of the wage-earning population: increase in land values meant increase in the national wealth: and so on…

[A]s unemployment grew, and with it poverty and the fear of poverty, so grew the influence of the Nazi Party, which was making its lavish promises to the frustrated and its violent appeal to the revenges of a populace aware of its wrongs but condemned to hear only a malignant and distorted explanation of them.

Much in this essay is similar to today, tho Heilig never uses words like “TIF” or “terrorism.”  Some things are decidely different, for example I don’t think Germany at the time had anything like a well-paid public employee class, nor a large class of small-scale investors, such as workers with 401k’s.  But it’s easy to see how today’s conditions could lead to similar results.

The above is suggested by a somewhat related post at Falkenblog.

Most people think facts are easy, and theory is hard, but actually I think it is the reverse. Theory, once you understand it, is trivial, yet important facts are very elusive, often at the bottom of most major disagreements.

And, from one of the comments:

Economics is not Physics. Economists do not collect data then develop theories like physicists. Economics is closer to Ethics in form and methodology…