Turns out that back in February, Kevin Carson wrote the article that needs to be written, analyzing how government regulation and protection makes medical services far more expensive (and less effective) than they could be. With a link to another article that more broadly exemplifies how government makes it impossible for the poor to support themselves.
Economic Recovery Prevention Commission
I must not have been paying attention, but apparently on June 24 Governor Quinn’s Economic Recovery Commission issued its report. If we’re lucky, this will be one of those that just sits on the shelf.
The whole report is at the link above, or get the pdf from the direct link here, provided by the Executive Service Corps. It seems that a summary would be: “Raise taxes and make them more complicated, then give more subsidies to favored interests.” Among the tax increases are higher individual and corporate income taxes, and a broadening of the sales tax to include more services.
Those of us with a sound understanding of economics will be shocked discouraged to find that there is no mention of increasing the taxes on land value as a way of encouraging development and easing taxes on productive activity.
I’m not likely to review the whole report in detail, and doubtless it contains a few sound recommendations. I’ll just mention two other things that struck me.
First, we all know about TIF’s which divert real estate taxes to private pockets, and there are quite a few TIF’s that divert sales taxes, but this is the first I’ve heard of a TIF that diverts state income tax:
The CenterPoint Intermodal Center in Joliet, a 3,900-acre state-of-the-art, integrated intermodal center, represents a $2 billion private investment. The center also will receive State investment under theIntermodal Facilities Promotion Act, signed last year. Designed to encourage business development along the freight rail systems of Illinois, the Act authorizes income taxes from jobs created at the facility to be placed in an Intermodal Facilities Promotion Fund. DCEO will administer the fund to reimburse CenterPoint for infrastructure improvements. DCEO will award an annual grant of up to $3 million in fiscal years 2010 to 2016.
Second, among the recommendations is an increase in the public employee retirement age to 72. I am no expert in retirement ages, and probably it’s appropriate to push the age up from 60 (which I believe it is now, and younger in many cases), but 72? No basis is given for choosing this age (other than the obvious fiscal benefits of more workers and fewer retirees. My guess is that nobody takes this recommendation seriously; had they recommended 65 or 67, there’d be a danger that the change might actually happen, but there are probably enough stories of senile 72-year-olds to prevent anything from being done.
Steve Keen on the financial crisis
Aussie economist Steve Keen, whom I have mentioned before in an investing context, has interesting recommendations for dealing with our economic meltdown. His analysis distinguishes between capitalists and financiers, recognizing the former as labor’s allies in the production of wealth, and the latter as parasites who crashed the economy. His immediate solution for rebooting the economy now is that about 2/3 of the debt needs to be written off, tho he recognizes that legitimate savers must be protected in this process.
But long term, how to prevent something like this from happening again? It seems that his key proposal is to restrict stock trading. Corporations could still issue stock, with voting and dividends as today. And the stock could be traded. However, as soon as a share of stock is traded, its “perpetual” life would be shortened to 30 years. He says that would prevent people from leveraging the purchase of stock, which represents a big part of the debt that got us in this mess. Certainly it would require investors to look more closely at what their money is actually being used for, and would tend to make corporate ownership more focused on the long-term future.
His second proposal seems to be a restriction on the amount of debt that can be secured by real estate, limiting it to 10 times the rental value. (However, the video is truncated before he can discuss this point.)
How Georgist is this?
In a geoist world, privilege would be eliminated or taxed, including public collection of essentially all economic rent. As a result, the value of stock could only represent real capital, which generally lasts less than 30 years. And of course, with rent publicly collected, investors would (we expect) realize that real estate leverage cannot be profitable. So I think Keen is proposing an alternative, more complicated way of achieving something similar to a Georgist reform.
There’s much more in the video, about his modeling work and the details of the mess we’re in. Probably the most interesting part is near the end, where he makes his 30-year-limit-on-stock proposal. The (New York) audience, probably people in the securities business, cannot accept this. “Who would trade stock if doing so reduced its value?” “If people didn’t trade stock, how would traders know what it was worth?” “If I didn’t buy Microsoft stock when it was first issued, how could I buy it?”
Just as with land, everybody assumes that they will get rich off the stock market. And that they should.
note: This link (repeated from above) takes you to Keen’s blog article, which includes links to an MP4 video of the presentation as well as a pptx file (pretty much readable by Impress) of his slides. There is also a paper (which I did not read).
Good news about people
MSM aren’t giving us all that garbage because we want it.
Eighty-seven percent (87%) of Americans feel the media pays too much attention to celebrities, according to a new Rasmussen Reports national telephone survey…Just one percent (1%) do not think media outlets cover celebs enough…
Probably that’s good news. Or perhaps folks just don’t want the interviewers to know how shallow we really are.
Martin Wolf wants to socialize land rent
As do pretty much all of us who understand economics from a geoist perspective. Wolf happens to be a columnist for the influential Financial Times, and in this column he endorses Fred Harrison‘s analysis of the fundamental cause of periodic economic meltdowns. (Since FT probably won’t leave this accessible for very long, here is the citation:
Financial Times:
Why we must halt the land cycle
By Martin Wolf
Published: July 8 2010 22:28)
But Wolf goes on
Socialising the full rental value of land would destroy the financial system and the wealth of a large part of the public.
As if the recent financial collapses did not very nearly do the same.
That is obviously impossible. But socialising any gain from here on would be far less so.
I believe this was proposed by John Stuart Mill, and evaluated by Henry George as “better than nothing.” Which it is, and had it been seriously and honestly enforced since George’s day we wouldn’t worry much about financial crashes now.
UK-based Wolf also infers that, with land price gains impossible, there might be less need for direct controls on what Americans call “sprawl.”
via Dave Wetzel
Gov’t screwing up medical care
Mostly by subsidizing it heavily while failing to enforce anti-trust. This one isn’t about insurance, patents, or even unions; it concerns hospitals, suppliers, sole-source contracts and kick-backs. Like most medical stuff, there’s too much money and power involved to expect a good result.
via Naked Capitalism
China collecting some rent
Bloomberg reports that China has imposed what appears to be a 5% severance fee for coal, oil, and gas in one western province, and will extend it to others. Revenue will be used to fund development projects in the area.
In principle, this is collecting the rent for the benefit of the community. How it will actually work out cannot be known.
How misgovernment discourages economic growth
Small business sidelined in slow recovery from recession reports the L A Times (via Chicago Tribune). The article clearly states some of the reasons that independent businesses are reluctant to expand. Of course, one is the uncertainty of the economic outlook, which is largely a result of mismanagement of the economy. Another concern is the increasing regulatory thicket, particularly difficult for those too small to make significant lobbying or campaign funding efforts. Impending increases in tax rates are also a problem.
One thing that isn’t a problem is the availability of loans, altho “”In olden days, many of the start-ups got financing by refinancing their homes. That’s gone.”
Beyond that, here’s a classic land speculator as “businessman”
…a small auto dealer in Los Angeles who made most of his money not by selling cars but by frequently refinancing the mortgage on his lot, which until recently kept rising in value.
The article doesn’t say whether this guy’s business was ever viable, or merely helped support the speculation.
Of course, had the land bubble been minimized by public collection of land rent, financing would have had to come from some other source, but less financing would be needed.
None of the businessfolks interviewed in this article are accountants nor attorneys. Probably their revenue is doing pretty well.
Lawyer tax
Many years ago, I encountered a prosperous attorney who was (and probably still is) pushing for a national sales tax covering all goods and services. This was before Bush’s tax panel outlined in some detail the exhorbitant rates that would need to be applied if such a tax was intended to replace the federal income tax, but I had a general sense that it wasn’t a workable replacement. So I asked this lawyer whether he intended that such a tax would cover legal services. He said that he really hadn’t made up his mind about that.
There are good arguments why legal services oughta be exempt, but the same can be said about all other services and all goods, too. So I was kind of pleased to note that the Province of Ontario will now apply the 13% “harmonized sales tax” to legal services, while continuing to exempt newspapers and shoe repairs. (British Columbia will do the opposite.)
America Speaks “National Town Meeting”
Anyone who’s been paying attention is aware that the Federal budget is out of control, unsustainable, and politicians dare not display any consensus on what to do about it. So several wealthy foundations are funding the “America Speaks” project, which seems to have focused on a fleet of 19 “town meetings” (plus a few dozen less-connected gatherings) held today. I attended Chicago’s, at Navy Pier.
The concept is at least a little bit promising. I guess we had about 600 people, assigned to tables of a dozen or so each, and we talked about how the Federal financial situation might be improved. But first we had a very loud presentation from Philadelphia. (Philadelphia is apparently standing in for Washington and New York, so we won’t suspect that political professionals and Wall Street are involved in the effort.) We were told that, yes, the deficit is a big deal(as described in this pdf). And before talking about the options for reform, we were directed to determine our values. The “values” are listed below (and on worksheet #3 of this document), along with the reasons that they make no sense at all. Continue reading America Speaks “National Town Meeting”