Over the Cliff

Conversation with Jaelle from Wendell Fitzgerald on Vimeo.

Here is Wendell holding forth on an economic strategy designed to achieve the goal of having the world work for the benefit of everyone with no one left out.  The only reason to spend your time here is that it is virtually imposible hear this stuff anywhere else.  The ideas have been around in their American incarnation for 130 years and in earlier forms far longer than that.  How did we get in the economic mess we are in and what do we do about it?

After graduating from the ordeal of university

and midway through the ordeal of law school,

I came across a course of study in metaphysics.  

I had the experience for the first time then of finding something that I actually wanted to study and know about.  Some years later I took a  class that introduced me to economics in a way that I wanted to study and know about.  Metaphysics and economics were forks in the road that have led me to where I am today.  

In both cases the message is that we are one and everything is connected.  In both cases I learned about the ground of being, the one internal and the other external.  The external ground of being is usually called land and which includes all natural resources.  It is nature or the entire physical universe.  I learned that in the realm of spirit and in the realm of our third dimensional physical being everything comes from the ground of being each in its own way but esentially in the same way.  I learned that we are all equal in spirit and that because we do not share the physical ground of being with each other that we are not equal. Some of our kind have the right to charge the rest of us for access to our own planet, to our own home in the universe to the literal ground of being under our feet.  

I find that policies and practices around “ownership’ and control of the external ground of being are out of alignment with my inner sense of connectedness with other of my own kind and with nature herself.  My strong sense is that this contradiction will have to be resolved in favor of connectedness and sharing of the external ground of being so that it harmonizes with my own internal sense of connectedness.  This is happening in my world and since it is not my call to determine how you experience these things I merely offer my experience as one of the choices we humans can make.  

In my studies of economics I have not only come to understand what divides us externally but what could heal that division.  It seems impossible to resolve the apparent paradox of the necessity for individual and exclusive use of land and the necessity of access to land on the basis of equality for the community of all people.  How do we harmonize the competing interests of individuals and the community as a whole?  I have seen how it can be done.

There is a way to share the earth equitably among us while honoring private and individual use of particular pieces of land and resources.  The possibility of this excites me no end because it has the potential for solving most of humanity’s problems or at least all of those problems which stem from failure to share the physical ground of being. I am being somewhat coy here since as far as I can tell the fundamental cause of all problems is the failure of humanity to share the earth.  Of course the even more fundamental cause in the chain of causation of humanity’s problems beyond erroneous public policy in regard to land is that of consciousness.  Since we share the internal ground of being and we are in a time of expanding awareness of the unity of consciousness, how is it possible for us not to finally come to sharing the external ground of being, the land, our mother earth. It can be no other way for me.  It’s your choice.  Come let us be, do and play together.

Fork in the road story:

After graduating from the ordeal of university

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and midway through the ordeal of law school, I came across a course of study in metaphysics.  I had the experience for the first time then of finding something that I actually wanted to study and know about.  Some years later I took a  class that introduced me to economics in a way that I wanted to study and know about.  Metaphysics and economics were forks in the road that have led me to where I am today.  

In both cases the message is that we are one and everything is connected.  In both cases I learned about the ground of being, the one internal and the other external.  The external ground of being is usually called land and which includes all natural resources.  It is nature or the entire physical universe.  I learned that in the realm of spirit and in the realm of our third dimensional physical being everything comes from the ground of being each in its own way but esentially in the same way.  I learned that we are all equal in spirit and that because we do not share the physical ground of being with each other that we are not equal. Some of our kind have the right to charge the rest of us for access to our own planet, to our own home in the universe to the literal ground of being under our feet.  

I find that policies and practices around “ownership’ and control of the external ground of being are out of alignment with my inner sense of connectedness with other of my own kind and with nature herself.  My strong sense is that this contradiction will have to be resolved in favor of connectedness and sharing of the external ground of being so that it harmonizes with my own internal sense of connectedness.  This is happening in my world and since it is not my call to determine how you experience these things I merely offer my experience as one of the choices we humans can make.  

In my studies of economics I have not only come to understand what divides us externally but what could heal that division.  It seems impossible to resolve the apparent paradox of the necessity for individual and exclusive use of land and the necessity of access to land on the basis of equality for the community of all people.  How do we harmonize the competing interests of individuals and the community as a whole?  I have seen how it can be done.

There is a way to share the earth equitably among us while honoring private and individual use of particular pieces of land and resources.  The possibility of this excites me no end because it has the potential for solving most of humanity’s problems or at least all of those problems which stem from failure to share the physical ground of being. I am being somewhat coy here since as far as I can tell the fundamental cause of all problems is the failure of humanity to share the earth.  Of course the even more fundamental cause in the chain of causation of humanity’s problems beyond erroneous public policy in regard to land is that of consciousness.  Since we share the internal ground of being and we are in a time of expanding awareness of the unity of consciousness, how is it possible for us not to finally come to sharing the external ground of being, the land, our mother earth. It can be no other way for me.  It’s your choice.  

Come let us be, do and play together.

I've been watching a PBS production called The Green Apple from March 3, 2009 about the environmental efficiency of cities and it turns out that New York City is one of the most environmentally efficient cities in the world. From the stand point of per capita environmental impact this is so because New York was originally designed before automobiles and was not built to accommodate them unlike other cities like Atlanta, Houston and Los Angeles where people drive to work in the city and then drive home again.  New York has efficient and ubiquitous public transportation and people ride bikes and walk.

Overall there is no better model for energy conservation than putting people close together and it will become ever more important to build such cities that people will want to live in.  

The question the program does not discuss is what is the best way to encourage energy efficient cities and green building technology that is emerging.  The economics have to work to  create the incentive for this and bar none the most effective way to encourage cities to back fill, rebuild and build green is shifting property taxes of of the buildings and make up for the loss of revenue by increasing the tax on land values.  This has been demonstrated in cities like Pittsburg and in many others around the world.  

The potential for environmental efficiency of cities has been recognized, the technology of how to build more energy efficient buildings is in hand and the public policy that guarantees that the economic incentive is there to build up, more compact and green has been in hand for over a century.  It is called land value taxation.

Below is my friend and associate, Alanna Hartzok's, take on the aspect of the Occupy Movement that clearly makes it a movement for a retaking of the commons for the good of all.  We can talk all we want about political and financial reform but underlying it all still unspoken and little appreciated is the fact that the most valuable land and natural resources, the earth herself, is monopolized in the hands of a relative few.   No one actually has a right to be here without paying the 1% and other micro "landlords" for that right.  We might have the right to "be" but we do not in fact have the right to be "here"

Alanna and I share the belief that the land question which brieflhy stated is: "whose Earth is this and for whose benefit?" is what the dysfunction of the world and the current dissatisfaction with the status quo is about at its deepest root cause level.

Alanna Hartzok

The Occupations, Fear, The Commons and Turangawaewae   

By Alanna Hartzok, co-director, Earth Rights Institute

www.course.earthrights.net

Police attacks on the Occupations are the current manifestation of the violent suppression of the peoples rights to the planet’s land and natural resources. This harshly exploitative power relationship stems directly from the amalgam of church/state that was the Holy Roman Empire. The fundamentals have never shifted towards justice. The basic person/planet ethic of HRE is "dominium" - legalization of land acquired by conquest and plunder. As long as the few rather than the many “own” the planet, there will be brutality and unending war.

I perceive that a not yet fully conscious reason why the Occupations are so fundamental is that this action takes and holds land as a commons. Pitching a tent and sleeping on land is a direct threat to the powers that be, because in our system the ONLY way to acquire land is Purchase (with mortgage debt) or Rent (to a landlord who has inherited land or purchased land via mortgage debt.)  In our system there is NO INHERENT RIGHT to land as a birthright.

By the simple act of direct land occupation, the Occupation movement is first and foremost a land rights movement. The painful awareness of the abnegation of our fundamental rights to land is deep in the subconscious mind of the many. For millennia, reigning powers have leashed violence and death upon myriads of assertions of land rights by the landless. These psychic scars in the collective mindfield are laden with fear and trepidation.

The Occupations broke the fear barrier. But if people are “permitted” to stake claim to little city parks here and there, their next step might be to stake claim and hold more and more urban and rural land. The call of the Russian Revolution was Land and Liberty and the French Revolution was triggered by the revolt of the landless serfs. Yet the land problem has not been solved but rather festers and erupts, showing itself to be an unhealed world wound, the source of our weltschmerz, the pain of the world we all are feeling right now.

If the powers that be were to permit the people to stake a direct land rights claim, freely and indefinitely, and land rights movements expanded, soon people would be building their own "free" villages and communities. They would discover that they do not need "jobs" to survive. This is the greatest threat to the powers that be. For without sufficient numbers in a “labor pool" competing with each other to drive down wages, the “job creators” would have to pay the highest wages possible or else people would self-employ on land, cutting deeply into their unearned profits.

The very first environmental party, precursor to the German Greens, was the New Zealand Values Party. Their platform contained a key policy based on the Maori land ethic of turangawaewae . Tūrangawaewae is one of the most well-known and powerful Māori concepts. Literally tūranga (standing place), waewae (feet), it is often translated as ‘a place to stand’. Tūrangawaewae are places where we feel especially empowered and connected. They are our foundation, our place in the world, our home.

The Occupations are standing on turangawaewae. And as you read this, the Occupiers are once again being thrown off the Commons.

Explanation of the housing market collapse

Introduction the economics of Henry George

Michael Laitman, founder of Bnei Baruch Kabbalah Education and Research Institute

In his recent blog posting entitled On the Intricies of Taxes Michael Laitman articulates what strikes me as the only logical and sound criterion by which to judge public policy in these times of political and economic turmoil.

In responding to a question about the appropriateness of raising taxes on capital and generally on the wealthy he said: "The only action that can be beneficial is one leading to unity."

He says in effect that we have to take a whole systems approach or else nothing will work out.  His conclusion is that taxing the rich and giving it to the poor might be materially effective but asks if that really is strengthening unity.  He concludes that it would most likely not even if the rich agree and if in fact spiritual unity is not achieved the policy will fail because the world only needs unity.  

I take Laitman to mean the the world not only needs but will only accept unity and humanity is being and will continue to pushed toward unity one way or the other.  It can be easy or it can be hard but unity is what will emerge.  Unity will emerge with us or it will emerge without us.  I think it prefers to emerge with us but that is up to us.  We will always have a choice even until the bitter end of that is what we choose.

So we might as well get out of our own way and start seriously judging the validity of public policy changes on whether or not they strengthen unity.  

From my point of view the taxation of capital, i.e. the wealthy, is a bad idea for purely economic reasons.  When I read Laitman's article I realized that I think this way because in my own mind (so this is only my opinion) my ideas are based on my sense of unity having to do with justice and fairness.

In order to properly understand the issue it is necessary to appreciate the definition of capital.  Capital is properly defined as the man made tools of production.  Land and natural resources which are not man made but provided free by the Creator are not capital.  Laitman may not have had this definition in mind but most people and all economists understand the distinction.  The importance of this for me in the context of Laitman's theseis is that capital as defined has to do with individuals and land has to do with community.  Sharing land by taxing it strengthens unity.  Sharing capital via taxation does not strengthen unity because it imposes on what rightfully belongs to individuals.  Taxing what rightfully belongs to individuals and not taxing what rightfully belongs to all of us together have been and are incredibly distrupive of unity.  That is why our tax systems are failing us.  The world wants unity and this means among many other things that the old tax regimes are done for.  This means that the recent wrangling over the budget and push back on taxing the wealthy are sympotms of the failure of the old regime.

I wrote the following to the friend who had turned me on to the Laitman article.

Taxing capital disrupts unity because it taxes earned incomes and/or takes from individuals that which rightfully belongs to them.  Earned incomes and rightful ownership of things is what makes individual life and efficient production possible on earth.  Ownership of stuff may change or disappear in the future but we are not done with these practices by any stretch of imagination and will not be until we learn the lesson they bring. That capital as defined here earns its reward is a true principle despite what the socialists said.  Their confusion regarding this has been incredibly disruptive of unity.  On the other hand it is also disruptive of unity when capital is monopolized.  Monopoly of capital allows its monopolizers to rake in unearned incomes more than they would otherwise at the expense of everyone.  Nothing could be more disruptive of unity.  Regulating monopoly of capital (and many other things that can be owned) is a correct public policy because and when it promotes fairness, justice and therefore unity.    

I say that the distinction between earned versus unearned income is central to the issue of just taxation and therefore central to the issue of unity.  Unearned income is inherently disruptive of unity.  Unearned income is properly defined as income from assets that one does not create. (Yes it's a bit more complicated than that.)  Land and natural resources are the epitome of such assets.  Everyone now uses capital (tools) in virtually every aspect of their productive work and this means that in the hands of most people capital is not monopolized and the incomes from its ownership and use are completely earned.  

Further evidence of why the world does not view taxation of capital as strengthening unity are the unintended negative economic results that flow from it. Most taxation of capital is passed on in the price of goods and services thus consumers and not capitalists pay, the cost of capital is increased, less capital is invested especially where it can be taxed, capital investment tends to remove itself from the taxing jurisdiction as we have seen in the flight of capital out of this country, decisions about where and when to invest capital tend to be made on the basis of where and how to avoid taxation rather than on where is the most efficient and profitable (in terms of the real economy) place to invest it.  Because investment of capital in the real economy is so heavily taxed, investors have been driven to invest in speculative ventures that are not taxed as much such as real estate speculation or stocks that are taxed at capital gains levels only.  Then there is the whole new world of investment in unregulated derivatives the profits from which are not easily traced.  It also gives rise to huge efforts to avoid taxation legally or evade it illegally and it gives huge incentive for businesses that own and use capital to corrupt the political system.  All of these effects disrupt unity.

It is possible to completely untax capital and thereby elimiante all these unity destroying unintended consequences.  That is not to say that we should give up the idea of regulating capital to prevent monopoly for the purposes of stregthening justice, fairness and unity as well as the leimination of the opportunity of grabbing uneanred income at the unity destroying expense of everyone.

It is possible to untax capital and all other earned incomes such as the wages of labor because there is an alternative that only taxes unearned incomes from ownership of land, natural resources and other assets such as patents granted for things that should not be patentable such as the DNA of humans, animals and plants and for inordinately long periods of time to name just two examples.

What promotes and strenghtens unity as far as tax policy is concerned?  Taxation of unearned incomes instead of earned incomes fits that bill.  The current discussion of taxing the wealthy without making the disticntion between what they have that is earned and what is unearned is in line with what the world wants and will have.  Bashing corporations and capital is no longer adequate to the job and never was because of the failure to make these distintions.

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Everyone's going local.

There is lots of talk about going local these days.  Part of the motivation for this is the uncertainly of State and Federal tax money continuing to flow downward to local communities.  I submit that local communities including cities, school districts, counties and other local government agencies needing funding will have to stop depending on revenue from elsewhere.  It means that we will have to generate needed government revenue from our own local sources and not from elsewhere.

To receive revenue to run local governments from elsewhere means we are being subsidized and/or we are subsidizing somwhere else.  It means we are parasites or being parasited on and since State and Federal funds are going to dry up there is a very stonrg likliehood that local communities are going to end up being parasited on.  Any community that aspires to integrity will not stand for either one.  No community can afford to be the exploiter or the exploited any more.

This source must not only be adequate, it must not penalize local economic activity of individuals and companies and the tax involved must be of a kind that cannot be passed on to others in the price of goods and services. 

It turns out that the tax on land values is the only tax that meets all these requirements.  The tax on land values does this because land values are created 100% by the community as a whole and not by anything any individual land owners does by way of labor or capital improvement.  This means that a tax on land values does not penalize local economic activity.  The amount of revenue to be raised in this manner would be completely adequate for local needs.  And one of the best kept secrets of economics is that the tax on land values cannot be passed on to final consumers in the price either in the price of goods and services produced or in higher land rents. 

The other best kept secret in economics is that all government services have the economic effect of increasing land values and locallly provided gvoernment services absolutely increase local land values.  Thus taxing local land values to pay for local services merely takes back to the communnity the value community gives to land.  That is why uncreasing the tax on land values while at the same time decreasing them on the individually created value of improvements is not only just it takes the penalty out of local taxation.

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All these pictured local government services as well as all State and Federal services  increase local land value somewhere but not the value of improvements on land.  That is why taxing land value to pay for them and untaxing what people do starting with their houses is the most just and most economically friendly form of taxation.

And one more thing.  Taxing land values keeps locally created land values in the community for local use and prevents absentee land owners from exporting locally created ground rents to enrich them unjustly somewhere else in some other community.  Let absentee landowners support localitities and let other localities fund themselves out of their own locally created land values.  The only downsiude is that land speculation is discouraged or ended althogther.  This is not really a downside except to land and real estate speculators.  Is anyone going to cry a tear for them after they just got through taking us all to the cleaners recently? 

The great irony of all time is that the conservatives are absolutely right about the destructive and intrusive nature of government and taxation and that liberals could have agreed with them all along while suggesting a solution based on the conservative principle of the moral necessity of earning one’s own living.   It is second only to the tragic irony that labor and capital were natural allies and not the enemies they have been made out to be.

Instead the strongest argument to achieve both conservative and liberal objectives as well as to have labor and capital make common cause was left on the table. 

Joseph Stiglitz, a Nobel prize winning economist, recently suggested this solution as clearly stated in Hun Henion’s  article Fire the kings and reclaim our sovereign rights – Part 3 to be found here.

Nobel Prizewinner, Joseph E. Stiglitz

Simply stated the idea is to eliminate taxes on labor and capital and shift them to land values.  Isn’t the elimination of taxes on earned incomes from labor and capital what conservatives have been demanding all along?  On the other hand doesn’t it make sense to tax land values since they are created 100% by the community of all people and taxing them merely returns the value imparted by community to land back to the community to be used to pay for publicly provided services all of which make land more valuable?

Conservatives conveniently forget to say that taxing community created land and natural resource values is a good idea, is just and does not penalize anything productive any individual does.  Conservatives also conveniently forget to say that incomes from assets like land and natural resources the value of which are created by the community are wholly unearned and thus fair game in a world where the highest moral value is earning what one receives.  Unearned incomes are at least 30-40% of GNP mostly owned by the small percentage of people at the top who own more than the bottom 90% of us so it is not too difficult why they would keep this to themselves. 

Liberals and leftists on the other hand conveniently forget to make the distinction between land/natural resources the value of which is created by the community the pocketing of which is unearned and capital the creation of which is the result of individual effort and the income from which is earned.  Marx made the mistake of not making this distinction until Das Capital volume 3 but by then capital bashing was in fashion despite the fact that it was misguided. 

Liberals could insist that conservatives honor their moral principles in practice by only pocketing what they earn and conservatives could insist that earned incomes not be taxed including the wages of labor.  But no. Liberals never demand that conservatives stop getting something for nothing in the same way that welfare recipients conservatives so despise do.  Conservatives never push the end of taxation of earned incomes which would make them very popular with the ordinary working person because they would have to give up getting something for nothing from the privilege of owning the creation and charging the rest of us for access to our own planet.

I ask you, what problem would remain the same or unimproved as we shifted taxation to land values? 

I ask you, what is the reason to fail to make the distinction between earned and unearned incomes in our tax systems?

What argument is there to continue most of our taxation on earned incomes from labor and capital while taxation of community created land/natural resource values could provide more than enough revenue for all levels of government?

What is the reason to continue to fail to make the economic distinction between land and capital in our public policies?

Conversation can be pursued in the comments area.

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George Lakoff

A friend handed me a copy of George Lakoff's Moral Politics originally published in 1996.  His thesis is that conservatives come from a strict father mind set while liberals come from a nurturing parent mindset.  The strict father conservative mind set he says includes the idea that no one should be given anything and that they must earn it or else be morally corrupted.  Of course the liberals out of a generous heart are for supporting people and thus we have the so-called social safety net provided by big government.  Both sides find the other's logic incomprehensible and immoral.  Not a bad analytic tool as far as it goes.

I support both personal responsibility and open hearted giving and support both personal and from the community.  I find no conflict between these position either in the family or in society. 

What amuses me is that 30-40% of GNP is a form of unearned income and by this I mean that any income that comes from pocketing economc values created by other than the person or corporation pocketing that value is unearned. Unearned means that those pocketing the income or value in what ever form that takes is getting something for nothing at the expense of someone or everyone else.  Some how conservatives do not seem to notice, acknowledge let alone speak of this and, not surprisingly, many conservatives are the ones pocketing this largesse,  This is not a flaw in their argument but it is a case of saying one thing and doing the opposite in practice big time.  Big time in the U.S means $trillions. At least 3-4 $trillions.  Not a bad moral loop hole for our conservative and wealthy brethern.  Since the assets this unearned income comes from are highly monopolized in ownership one can begin to understand how a tiny percentage at the top own more than all the rest of us.  they and their forebears have been this game for cenuries and they have won.  They are not stupid you see. Morally confused (most of them) but not stupid. 

On the other hand and with perfect moral clarity they are correct in condemning taxation of earned incomes from labor and real capital investment in the real economy because such taxation does in fact create the kind of disincentives and economic dysfuntion they are so fond of pointing out. Well, half right is not all bad.

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Unearned income is not questionable in every instance but a full explanation of that is for another time.  The kind of unearned income that is fully and obviously questionable is the kind of income that comes from ownership of assets like land and natural resources the value of which is created 100% by the community of all people.  Private ownership of land for USE makes good sense.  Private ownership of land and natural resources for the purpose of collecting the value community gives to these things is not only a free lunch, a blatent hand out from society to which its recipient have become addicted generation after generation and is a form of theft which has corrupted those receiving it.  It is the exact mirror image of the picture painted of welfare recipients by the conservative right.  Sorry guys you are caught with your pants down.  It is a wonder that liberals have not called you on it but since many of them are recipients of the same largesse it is no surpirse that they keep their mouths shut.  Condemning the wealthy merely for being wealthy does not let Liberals and the left off the moral hook.  Failure to make the distinction between earned and unearned income has played into the hands of the big unearned income pocketers and has muddied the waters of economic and political discourse that a child could have made clear just by talking about it consistently.  The Liberal left has never spoken of these simple concepts and thus has left the most poerful argument for legitimately taxing the wealthy on the table unused.

Libeals and leftists seem to have no qualms promoting the theory and practice of taxing earned incomes from labor and profits from real capital investment in the real economy.  All econoimists agree and everyone knows that taxation of this kind is another form of getting something for nothing and of theft by the community since community and governments that represent them do not create these values.  Conservatives often call Liberals on this form of theft while obscuring the unearned incomes they themselves steal but Liberals do not call Conservatives on their own form of theft.

Thus both Conservatives and Liberals, right and left, promote the taking of what does not rightfully belong to either of them.  Theft of earned income by government taxation and theft of community created values by individuals who as individuals do not create these values by anything they do is like a plague of parasites eating at the bowels the economic body.  It creates myriad dysfunctional results such as poverty, decaying cities, urban sprawl, most if not all of environmental desturction, drives capital investment and employment out fo the country and a whole host of other symptoms.  Theft of values not created by governments and individuals pocketing them is at the root of these things.  They could be addressed by getting at the root cause but instead we like to ineffectually deal with symptoms.  It is a little convoluted but not all that hard to understand.

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The simple solution of couse as anyone who peruses these posts may have seen is to shift taxation from earned income from labor and real capital investment in the real economy onto community created value and incomes from land and natural resource.  There are other categories of unearned income such as the interest charged by banks on money they create out of thin air accoring to the theory and practice of fractional reserve banking but the unearned income from ownerhsip of our Mother earth is the largest percentage of this many $trillion yearly slush fund expropriated by our betters over the centuries.

We have the intelligence. wealth, power and well thought out solutions in hand to solve all our problems anytime we want to. 

Happy day!