Not the Washington DC streetcar project, which at a cost of $1.5 billion is expected to raise land values by $5 to $7 billion. (This is the increase in value of “existing properties.” Double it to include the value of new construction.) So collecting just 30% of the increase should be sufficient to pay the cost.
A lot of details are missing from the source article, and so far I don’t know how to get the study which it describes.
Thanks for Alanna Hartzok for the tip.
Economic Ebola is “the virus that infects scientists and engineers and causes them to go to Wall Street rather than create something of societal value,” says Paul Kedrosky. Graduates with quantitative skills are offered salaries up to five times what they could make in productive work, so of course many of them spend their time finding ways to scrape a few million from high-velocity financial markets, rather than designing products or processes that would actually increase society’s satisfaction.
“Let’s save the world by keeping our engineers out of finance,” says Vivek Wadhwa. [Well, they’re not really our engineers, they belong to themselves, but we’ll skip that for now.] A fine idea, but how to do it? One answer might be a financial transaction tax, a tiny levy on each financial trade which could remove the profit from “financial engineering.” It would have no real effect on “long-term” investors who hold a position for more than a day. Seems like a good idea, but of course there will need to be a definition of what is a “financial transaction” for tax purposes, and clever people will find a way to design a transaction which doesn’t meet the criteria.
Maybe a better approach is to eliminate or scale back some of the things that make financial engineering lucrative. For instance, if a land value tax prevented private collection of land rent, the mortage/financial crisis we’re still in would have been much smaller, or perhaps not possible at all. We might want to go back to the classical concept of usury, forbidding all transactions where interest is charged for the use of money. (People can still get compensation for lending money, but it would be as some agreed share of the profits which the investment generates, keeping the lender conceptually closer to the borrower.)
Of course we could start with something simple, like having the government take over insolvent banks, prosecuting and imprisoning criminal executives, letting stockholders, bondholders, and others who have unwisely trusted the bank to absorb the financial loss. That alone would make financial engineering a lot less appealing.
Georgists often like to point to Hong Kong as a successful example of funding a community’s needs from economic rent. The result is a prosperous and (relatively) free city, a magnet for immigrants. But our information is old, and numerous changes have happened since the transfer of power, from UK to PRC in 1997.
So I was pleased to spend a bit of time this afternoon with a Hong Kong native, who now lives and works in Chicago. Not familiar at all with Henry George, not even interested in political philosophy as far as I could tell, but able to speak with me about current economic conditions. If I have any errors below, I trust that someone will correct me. Continue reading Collecting the Rent in Hong Kong
Not from the Federal Reserve; surely none of my readers are “too big to succeed” and therefore qualified for direct quantitative easing. But an arm of the U S Government actually will sell you cash, in $250 increments, accepting credit cards without surcharge (you get any usual rebates or bonuses that your card provides) and with free shipping. The only catch: Your cash is in the form of dollar coins.
Stated purpose of the program is “to make $1 coins readily available to the public, at no additional cost, so they can be easily introduced into circulation—particularly by using them for retail transactions, vending, and mass transit.” (Your government does not want you to just deposit them in the bank, but CTA farecard machines accept them.) Altho coins cost more to produce than dollar bills, they save your government money because they last a lot longer.
For those of us who do not love the Federal Reserve, there is also the consideration that the coins are issued directly by your government, the closest thing we have to greenbacks (more about the advantages of greenbacks).
This program apparently has been going on for a couple of years; I learned about it recently from this old post. It really works; I placed an order January 17, it arrived (by ordinary U S mail!) about a week later, and I will pay for it next week. Presumably you could roll it over by placing another order.
Of course, what with credit cards, checks, direct bank transfers, etc., I don’t spend $250 cash in any month. But maybe we’d all be better off if there was more use of the anonymous cash economy, which this seems to encourage.
Podcasts can be a way to learn while doing something else. I’ve encountered some interesting ones in recent weeks.
Grow rice in Vermont? Why not? Continue reading Podcasts: appropriate agriculture, inappropriate singularity, Argentina
Haven’t posted much lately; busy with other things, including trying to clear off my desk. In the process of which I found some notes of interest
How do you fund transit in the “most liveable city in the world?” Vancouver uses the real estate tax to cover about 35% of its operating shortfall (net of fares). Fuel tax covers an almost equal amount (See this pdf). One can imagine how well Chicago’s transit system could run if funded this way, assuming also that it was competently planned and managed.
Unfortunately, Vancouver fails to fund capital costs in this way, relying instead on what Canadians call “senior governments,” meaning provincial and federal funds. Probably that has something to do with the continuing real estate bubble in the area.
I also found notes I took at a conference in July concerning Japanese high speed rail services. Japan is said to be the only country with privately-owned high speed passenger rail. How is it funded? Hint: JR-East, one of the big operators of high speed trains, gets 32% of its gross revenue (see this pdf) from real estate it owns, and intends to grow this to 40 by collecting more of the value that good transport gives to real estate.
There is a meme floating around the Internet (for example, here):
Do you know what our biggest export is today? Waste paper.
and
The United States has lost a total of about 5.5 million manufacturing jobs since October 2000.
The former assertion seems based on 2007 data reported here, which indicates (without giving a specific figure) that waste paper fills more shipping containers leaving the U S than any other product. A big volume, surely, but is it our largest export, either by dollar value or physical volume?
Take a look at the U S Statistical Abstract, 2010 edition, table 1272 (download the pdf for the international trade section here). Latest data shown is for 2008. Total value of “pulp and waste paper” exported: $7.744 billion. This is less than 1% of total exports ($1287.442 trillion). A few larger figures are Coal ($8.196 billion), Vehicles ($98.871 billion), “Television, VCR, etc” ($24.379 billion). There are eight different categories of chemicals, five of which each exceed $7.744 billion. And $115.248 billion of “agricultural commodities,” including Corn ($13.931 billion) and “Vegetables and fruits” ($14.040 billion).
I don’t have data on physical volume, but many of the products I mentioned above typically do not travel in shipping containers. In fact, one reason for export of waste paper might be that many containers would otherwise have to return empty to Asian ports.
As for the loss of manufacturing jobs, certainly there has been a decline, largely because manufacturing workers have become more productive. The Statistical Abstract only shows manufacturing data back to 2000, but during the period 2000-2008 the constant-dollar manufacturing GDP increased by over 10%, just slightly more than population growth.
I won’t deny that there are serious problems with the U S economy, and I won’t deny that the net outflow of dollars (largely due to petroleum consumption and “defense” expenditures) is unsustainable. It would be a good thing to remove obstacles which hinder American labor from producing in America, such as taxes on production and encouragement of nonproductive speculation. A more balanced flow of trade would likely be a byproduct. The more important result would be higher incomes and a better standard of living for working people.
It’s been over three years since I blogged about free land available to anyone who wants to use it, and now CNBC has an article (more conveniently accessible via Yahoo, but with fewer pictures) about 7 Towns Where Land is Free. Each place has some requirements, basically that you must build something and you must conform to local codes. In most places you need not pay for the land but of course you’ll be liable for future taxes. Even if we go back to the Homestead Act, you had to eventually pay ($1.25/acre) for and use the land you claimed.
Of course, there are probably thousands of towns in America where $1,000 will get you a decent lot, and if you can’t afford $1,000 you may not be able to build anything anyway.
Thinking in terms of Progress & Poverty, such free or cheap lands are, for practical purposes, approximately at the margin of production. As the towns grow, one could expect the land value to increase; however it is unlikely that any of these towns will grow substantially any time soon.
The headline on the Rasmussen report is 41% Now Say “Buying American” Is Top Factor When Purchasing a Car. If this means that a very large proportion of auto buyers prefer to buy US-built even if it might not be the best deal, it would indicate that many people are patriotic and willing to sacrifice for their country. That would be significant for any reformer, showing that many people are seriously committed to national welfare, and we need only find a way to connect with them.
But when we look at the details of how the survey was done, we find that:
Imho the most patriotic thing Americans can do regarding new car purchases is to forego them, buy a bicycle and/or transit pass, and avoid going into debt. (Only 27% of new car buyers pay cash.) The benefits in terms of reduced petroleum dependence outweigh anything from purchasing domestic brands.
Unfortunately, many employers choose locations which are accessible only by automobile, so not everyone has this option. If fewer of us chose to have cars, this problem might be less common.
The draft report from the Fiscal Responsibility Commission, subject of my previous post, has some proposals for reform of how Congress makes (or doesn’t make) expenditure decisions. Frankly, I do not understand them. Perhaps this is because the draft report is simply a series of slides, not really a report. Or maybe these things are too complex for a simpleton like me to understand.
Separately, there is apparently a proposal to cut Congresspersons’ pay, and even one to reduce their pay every year that the government runs a deficit.
But these won’t work, for a very simple reason: Continue reading Real Congressional Reform– The Art Auble Plan