Putting God on the side of the geoists

Chapel atop Mt. Sinai — 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.

Continue reading Putting God on the side of the geoists

North America’s only full service railroad collects land rent

It’s not just in Japan (and Vancouver, sort of) that land rent is used to fund railroads.

Photo Credit: Gator Chris via Flickr (cc)

Originally built by the Federal government and now owned by the State, the Alaska Railroad is “North America’s last full service railroad” because it operates, on its own tracks, with its own rolling stock, freight and passenger service. Revenue is just a bit more than enough to cover operating costs, but how to pay for the capital expenditures– equipment, track, facilities– which must be constantly renewed and improved to run the railroad smoothly? Part of the answer is collecting the land rent. The Railroad owns some 18,000 acres of real estate (see source below), for which it last year received just under $13 million in land rent (see page 34 of this pdf). This compares to total capital expenditures last year of $73.1 million, with the balance covered from various kinds of grants, as well as operating profit.

ARR provides more information about their leased and leasable land here.

Of course, this is collecting only a tiny part of the economic rent the railroad generates, but at least it’s a source that will grow as the railroad improves.

Thanks to Trains magazine for the original tip.

The Wealth Defense Industry

Wonderful phrase; wish I had thought of it. It’s Jeffrey Winters’ term for the pile of lawyers and others who contrive technically-legal ways for wealthy people to avoid paying most of the tax for which they would otherwise be liable. His recent book, Oligarchy, seems to have a lot of other details we haven’t seen elsewhere.

All I actually know about Winters and his work comes from this interview, broadcast this afternoon on WBEZ. I did note one error: The U S federal income tax imposed in 1894 was the second, not the first, which was in 1861. He seems to have compiled a lot of data that we don’t usually see (some of it presented in this pdf article). Naturally, altho his work is descriptive, he is asked about the potential for the Occupants or other movements to alleviate the oligarchs’ control. One wishes that he had mentioned the importance of taxing privilege, instead of production. Perhaps he is unfamiliar with the concept.

Avoiding the drag of safety nets

Perry Willis’ recent post distinguishes two alternative ways in which the state might transfer wealth to ordinary citizens:

Dragnets, in which everyone receives the wealth, regardless of need
Safety nets, in which only those who are in difficulty receive the wealth.

He characterizes Social Security and Medicare as dragnets, since virtually everyone is covered regardless of need. Costing 15% of wage and salary for typical workers, these are very expensive programs which might be cheaper if the affluent were excluded from receiving benefits. He also claims that “Dragnet programs usually have one other feature — fraud.”

He does not cite any example of a government-funded safety net, tho it seems that Medicaid, which is offered only to those who can meet some need-related criteria, would be a good example. Like any “need-based” government program, it presupposes an apparatus for monitoring everyone’s income from all sources. And does it have fraud? Take a look.

Perhaps the safety net isn’t much superior than the drag net. Is there a better approach? Of course. The citizens dividend does not take anything from wages and salaries, does not require an income-monitoring apparatus (altho it might require some kind of citizenship certification), and gives each of us a fair share of what belongs to all of us.

Sun Yat-sen “deeply inspired” by George

Georgists claim Sun Yat-sen, founder of the Chinese republic, as one of us. But I could never find anything in English-language books to support this assertion. So it’s good to see this article from Focus Taiwan News Channel, about an exhibition on “Sun Yat-sen and the United States.”

[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.

The limits of Econned

Over the years, Naked Capitalism has provided a fine, if discouraging, play-by-play of the worsening corruption of our financial and governmental powers. Dense daily posts, plus links to relevant news stories, supported by thoughtful and knowledgable commenters, makes it one of the few sites I really ought to read daily. (Cute animal pictures are a bonus.)

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. Continue reading The limits of Econned

Reality and the Real World Economics Review Blog

Somehow the “mainstream” didn’t anticipate the 2008 global financial crisis until it actually happened, yet a few analysts did issue warnings. So it seemed like a good idea for the Real World Economics Review Blog to organize a contest and award a prize to “the economist who first and most cogently warned the world of the coming Global Financial Collapse.” Yet somehow they couldn’t allow even the nomination of the guy who predicted it first and most accurately (pdf). We are fortunate that Mason Gaffney has reviewed the record and documented what happened.

Hong Kong’s “citizens dividend”

I have previously discussed Hong Kong’s land tenure system, under which the land is publicly owned, but improvement owners have security of tenure in exchange for paying significant land rent. One result is that most working people don’t have to pay any sales or income taxes. Another is that land is efficiently used.

But there are a couple of concerns:

Since Hong Kong doesn’t collect all the economic rent, speculation can still drive up the cost of housing as well as any activity which uses land (and they all do).
Wealthy mainland residents are moving to Hong Kong to take advantage of the increased liberties which HK residents get, further driving up costs for local people.

Now we read that every HK has declared a sort of citizens’ dividend, every permanent resident will get HK$6,000 (US$773, currently). Bloomberg calls it a “handout,” but I think “share of economic rent” might be more appropriate. Opponents of the move say it will be inflationary, and certainly it could lead to higher economic rent, with speculation driving land costs even higher. Of course, if people expected the government to collect all the economic rent, speculation would not occur. While the cost of living might still increase, giving an equal dividend to every resident would tend to flatten the income distribution, helping the poor much more than the wealthy.

Inside Job gets outside

Prize-winning documentary Inside Job was posted for free download at archive.org a few days ago. It was withdrawn late yesterday or this morning, but in the interim I had a chance to watch it. It was pretty much as I expected: A very well-documented expose of the forces which brought down the world economy, emphasizing that they have been rewarded, not punished, for doing so, and essentially escaped prosecution (some paid fines amounting to a small part of their takings.) It’s well put together, director Charles Ferguson seems to be a skilled and persistent interviewer, getting on-camera answers even from some of the guilty parties. Ominous music reflects our ominous economic future, lots of shots showing the Manhattan skyline, other centers of wealth, as well as foreclosed houses and abandoned developments.

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.

Paradox of geoist publicity

Innovative geoist group Prosper Australia are promoting a homebuyers’ strike against that country’s still-high housing prices. It’s getting them worldwide publicity and certainly seems to be in the interest of non-homeowning Aussies, encouraging them to avoid leveraging themselves in a soon-to-burst land bubble.

But what is the message? The message is, “don’t get yourself deeply in debt to buy a house that may put you underwater in a few months.” I hope the message also is “We at Prosper Australia understand the economy and know how to fix it. Pay attention to us.”

Whether that’s getting thru, I don’t know. But the campaign can’t hurt.