Category: Georgist/geoist

Progressive revenue move in Zimbabwe

Harare is now taxing residential parcels based exclusively on the value of the land, with all houses free of tax.  The net result is that most homeowners will pay the same or less, but owners of vacant plots will pay “a lot more,” with total revenue expected to increase from US$8 million/month to US$12 million/month. Authorities will not literally value every individual parcel, but assign values based on zones and size categories, providing a pretty good approximation of value at relatively little cost.

In addition to the 50% increase in revenue,

[T]he migration from land and improvements valuations to land only with the rates set by zoning was designed to encourage people to develop land fully or sell it to those who will.

According to the source article, houses in some parts of Harare had already been exempt before the change. Thanks to Gil Herman for the link.

Our local authorities, if they were serious about the need for more revenue without burdening residents, would seek a similar system.

And some Chicagoans might want to try Harare activists’ approach to the privatization of parking and towing.

 

Collecting the Rent in Hong Kong

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

Is waste paper our major export?

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.

Free land still available

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.

Does poverty cause conservatism?

A University of Tennessee study, reported at phys.org among other places, finds that, when incomes are more concentrated, people are more likely to say they oppose governmental redistribution of income.  This decidedly includes low-income people.  Why would low-income people oppose redistribution of income?

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.

Why Why the German Republic Fell is Hard to Find

Bruno Heilig’s 1938 essay Why the German Republic Fell is posted and freely available on the Internet. Unfortunately, the Scholars at the School of Cooperative Individualism are not the world’s greatest proofreaders, so google has some trouble finding it, but it is here.  There is also a nice abridgement here.  Hardcopy, of course, is for sale cheap at Schalkenbach.

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.

Georgists at the Barber Shop

Thanks to Abu Bakr Nurruddin for contriving to get us invited to The Barber Shop Show on the strange enterprise that is vocalo.org.  The audio can be streamed from here; I don’t see any way to download it tho.  Very nice folks run this show.  It’s difficult to get much economic wisdom into 20 minutes, but we expect to be invited back.

Corporate income tax is evil

We know that because “Don’t be evil” Google pays almost no corporate income tax.   This Bloomberg/Business Week article outlines how they do it.  It involves Dutch, Irish, and Bermudan subsidiaries, and is apparently quite legal.  In addition to playing international transfer-pricing games, of course, corporations can take advantage of various incentives and loopholes built into or discovered in the tax code.

Naturally, I am mentioning this to point out that a land value tax cannot be avoided, as long as land transaction, description, and payment records are public. (And, I might add, as long as there are some reasonably free news media, and some members of the public who pay at least a little bit of attention.) There is never any question as to which jursidiction land is in, and there is no need for incentives to attact land.

We Institutionalize Kleptocracy

That’s how Yves Smith describes the probable outcome of the latest bunch of mortgage finance scandals.  We already know that lenders lied, brokers lied, consumers were instructed to lie, and the whole house of cards was built on perpetually-rising land prices. In recent weeks, and especially the past couple of days, we are learning that the back office lied too, nobody bothered to process much of the paperwork, it was easier to just forge documents as needed, and for many parcels it will be difficult or impossible for tell who really owns the mortgage (which likely will never be repaid anyway as it far exceeds what the property could be sold for).

The solution? Smith (and others) expect the federal authorities to move in, Continue reading We Institutionalize Kleptocracy