8 Extracts fromThe Georgist News, Volume Nine, Number Ten, April 1, 2007
1e. Movement forward: Canadian Greens again urge shift to taxing land value – GPO press release, March 23, 2007, via Caspar Davis
The Green Party of Ontario proposes a tax shift from property taxes to a land value tax. Annual reassessments can come at the cost of predictability and stability, unfairly punishing homeowners who make improvements to their principal residence and become vulnerable to volatile market conditions. Taxes based on the value of the land, rather than the building on the land, is in itself more predictable and stable. An empty lot or one-storey building in a downtown core would be taxed at the same rate as a high-rise apartment building. This would encourage higher density accommodations and increase development in urban areas, while preserving green space and farms, taxed at a lower rate because of the reduced infrastructure costs to support them.
1g. Movement forward: From Nicaragua, school update – By Paul Martin, Director, Instituto Henry George, nssmga at ibw.com.ni
The IHG Nicaragua's first two Comprehending Economics courses so far this year had so many students register for the first course in February (86) that we had to turn away about twenty because of space limitations: the room we rent only holds 60. The current course is not so large (61) but we have the added element of the registration of two European students after putting up a flyer in an hostel.
We have had recent meetings with the National Consumer Network and the National Communal Movement in Nicaragua, both of which are influential in all of Nicaragua at a grassroots level, and interested in workshops for their leaders. At the Graduates' Meeting, thirteen participants – old-timers and newcomers – asked for an advanced teacher training course. With respect to the building permit for the construction of the smaller building for the IHG, the authorities have taken some money from us: and now we have the privilege of finally paying the actual fee. Please note the change in the website address of the IHG: www5.ibw.com.ni/~ihg: (they changed www to www5 for some reason).
2. Good Press: Speculators in Land Grab Go Bust – By Bob Ivry, Bloomberg.com, Feb 7, 2007, via Edward Dodson
When prices reached a point where speculators quit buying, homebuilders were forced to abandon so much property that they helped create a glut that drove land prices down more than 9% last year. In Florida, where they helped inflate land values as much as ten-fold from 2000 to 2005, prices have dropped by as much as 50%. Lots of people will lose money and a lot of paper wealth will be disappearing. At one point in the 1920s, a third of Miami residents were real estate agents.
Japan's land prices skyrocketed in the late 1980s, fueled by low interest rates and easy credit. The peak came in 1991, when some Japanese boasted that the land under the Imperial Palace in Tokyo, home of the Japanese emperor, was worth more than the gross domestic product of Canada. Henry George wrote in his 1879 book, Progress and Poverty, that land's boom-and-bust cycle is natural because land isn't produced by human labor and prices can be manipulated by owners who are able to delay selling to get higher prices.
3a. News: Road Subsidies Promote Global Warming – The Ecologist, February 26, 2007, via Stewart Goldwater
Paying for Pollution: Road Subsidies Promote Global Warming. Road transport subsidies of up to 140 billion euros (184 billion US dollars) a year are countering attempts to reduce Europe's greenhouse gas emissions:http://www.theecologist.org/archive_detail.asp?content_id=767.
3b. News: Whose Oil Is It, Anyway? – By Antonia Juhasz, NY Times March 13, 2007, via H. Remoff
Today, more than three quarters of the world's oil is owned and controlled by governments. It wasn't always this way. Until about 35 years ago, the world's oil was largely in the hands of seven corporations based in the United States and Europe. Those seven have since merged into four: Exxon Mobil, Chevron, Shell and BP. They are among the world's largest and most powerful financial empires. But ever since they lost their exclusive control of oil to governments, the companies have been trying to get it back. Iraq's oil reserves — thought to be the second largest in the world — have always been high on the corporate wish list. A new oil law set to go before the Iraqi Parliament this month would, if passed, go a long way toward helping the oil companies achieve their goal. The Bush administration has highlighted the law's revenue sharing plan, under which the central government would distribute oil revenues throughout the nation on a per capita basis. But the benefits of this excellent proposal are radically undercut by the law's many other provisions which allow much, if not most, of Iraq's oil revenues to flow out of the country and into the pockets of international oil companies.
3c. News: The fix behind billionaires – Los Angeles Times Editorial, March 17, 2007
The global distribution of billionaires is also quite interesting. Turkey is home to 25 billionaires; Hong Kong accounts for 21; but France has only 15. The oil-rich, former Soviet Union, including those in Russia, Ukraine and Kazakhstan, would rank second to the United States as home to 65 billionaires. Quite a few of these billionaires in emerging markets, such as Mexico and Russia, were helped along the way by cronyism and weak antitrust laws.
Ass't editor's note: I always regarded gross wealth inequality as a hallmark of third world countries. The neo-con revolution of 1970-2006 made it a feature of other places, especially the US and USSR as well. Hopefully the pendulum is – finally – starting to swing the other way again.
James Petras at stwr.net, "Share the World's Resources", excerpted at The Progress Report.
The total wealth of this global ruling class grew 35% year to year, topping $3.5 trillion USD, while income levels for the lower 55% of the world's 6-billion-strong population declined or stagnated. Put another way, one hundred millionth of the world's population (1/100,000,000) owns more than over 3 billion people. Over half of the current billionaires (523) come from just 3 countries: the US (415), Germany (55) and Russia (53). The 35% increase in wealth mostly came from speculation on equity markets, real estate and commodity trading, rather than from technical innovations, investments in job-creating industries or social services.
Among the newest, youngest and fastest growing group of billionaires are the Russian oligarchs. The transfers of property were achieved through assassinations, massive theft, and seizure of state resources, illicit stock manipulation, and buyouts. The future billionaires stripped the Russian state of over a trillion dollars worth of factories, transport, oil, gas, iron, coal and other formerly state-owned resources. Of the top eight Russian billionaire oligarchs, all got their start from strong-arming their rivals, setting up "paper banks," and taking over aluminum, oil, gas, nickel, and steel production and the export of bauxite, iron, and other minerals. The key "policy" measures, which facilitated the initial pillage and takeovers by the future billionaires, were the massive and immediate privatizations of almost all public enterprises. Over a hundred billion dollars a year was laundered by the mafia oligarchs in the principal banks of New York, London, Switzerland, Israe l and elsewhere – funds which would later be recycled in the purchase of expensive real estate in the US, England, Spain, and France as well as investments in British football teams, Israeli banks and joint ventures in minerals. From young, swaggering thugs and local swindlers, they became the "respectable" partners of American and European multinational corporations. The new Russian oligarchs had "arrived" on the world financial scene.
Of the total $157.2 billion USD owned by the 38 Latin American billionaires, 30 are Brazilians or Mexicans with $120.3 billion USD. The wealth of 38 families and individuals exceeds that of 250 million Latin Americans; 0.000001% of the population exceeds that of the lowest 50%. In Mexico, the income of 0.000001% of the population exceeds the combined income of 40 million Mexicans. Half of Mexican billionaires inherited their original multi-million dollar fortunes on their way up to the top. The other half benefited from political ties and the subsequent big payola from buying public enterprises cheap and then selling them off to US multi-nationals at great profit. The great bulk of the 12 million Mexican immigrants who crossed the border into the US have fled from the onerous conditions which allowed Mexico's traditional and nouveaux riche millionaires to join the global billionaires' club.
Ass't editor's note: Many have also been driven off the land because unable to compete with subsidized crops imported from the US.
In most cases there were three stages: first, the current billionaires successfully "lobbied" and bribed officials for government contracts, tax exemptions, subsidies and protection from foreign competitors. State handouts were the beachhead. Second was state privatization by which current billionaires seized lucrative public assets far below their market value and earning capacity. The privatization, although described as "market transactions," were in reality political sales in four senses: in price, in selection of buyers, in kickbacks to the sellers and in furthering an ideological agenda. Third, current billionaires accumulated wealth from the sell-off of banks, minerals, energy resources, telecommunications, power plants and transport, and the assumption by the state of private debt. This was consummated in Latin America via corruption and in Russia via assassination and gang warfare. The billionaires have consolidated and expanded their empires through mergers, acquis itions, further privatizations, and overseas expansion. Private monopolies of mobile phones, telecoms and other "public" utilities, plus high commodity prices have added billions to the initial concentrations. Some millionaires became billionaires by selling their recently acquired, lucrative, privatized enterprises to foreign capital.
3d. News: Insider admits to insider-like trading in internet interview – By Matt Krantz, USA Today, March 23, 2007
CNBC TV host, Jim Cramer, of the popular show Mad Money: "A lot of times when I was short (stocks) at my hedge fund … meaning I needed it (the stock) down … I would create a level of activity beforehand that would drive the futures. It's a fun game, and it's a lucrative game." Cramer described how he would make bets that gave the impression knowledgeable investors were predicting a stock's future. Cramer said everything he did was legal but added that illegal activity is common in the hedge fund industry, where regulation is lax. Cramer said some hedge fund managers spread false rumors about a company to large trading desks and the media to drive a stock price lower. He said this practice is illegal, but easy to do "because the SEC doesn't understand it." He says, "The way that the market really works is to have that nexus of hit the brokerage houses with a series of orders that push it down, then leak it to the press and then get it on CNBC."
4c. Numbers for Winter: Some sub prime lenders bankrupt – New York Times, Gretchen Morgenson, March 11, 2007, via H. Remoff
More than two dozen mortgage lenders have failed or closed their doors, and shares of big companies in the mortgage industry have declined significantly. Delinquencies on loans made to less creditworthy borrowers, known as sub prime mortgages, recently reached 12.6 percent. Some banks have reported rising problems among borrowers that were deemed more creditworthy as well.
4e. Numbers for Winter: Inflation jumps up – Mark Trumbull, The Christian Science Monitor March 19, 2007
Some prices, namely for housing, food, and medical care, jumped at a 6 percent annual rate during the three month period from December through February. Retail gasoline prices rose 7 percent in just two weeks. The core rate of inflation (prices of all goods and services minus volatile food and energy) for the past three months rose at a 2.6 percent annual rate — at 2.7%, that would double prices in 27 years. In the past two months, average weekly earnings, adjusted for inflation, have fallen in real terms.
6. Likable link: Economics as Science now online – By Dr. Fred Foldvary, Santa Clara University
Fred Foldvary's manuscript, The Science of Economics, has been set in pdf format and is at:http://www.foldvary.net/sciecs/Science-of-Economics.pdf. This economics textbook is currently being used by Professor Julius Krause at the Dardania University in Kosovo. Fred Foldvary originally wrote it for Fred Harrison, and uploaded the text by chapters to his web site in 1999. Dr. Krause formatted it in pdf form.
7c. What You Can Do? Attend London conference,:
"Smart Taxes Replacing Bad Taxes: If Not Now, Then When?"
The School of Economic Science, The Henry George Foundation, and the Labor Land Campaign are running a seminar, organized by Waterfront, to discuss how smart taxes can replace bad taxes. This seminar aims to demonstrate that moving the structure of taxation away from highly distortionary taxes on productive activity towards taxes on the use of scarce natural resources, including land, would have major economic, environmental and social advantages. There is a tendency to avoid fundamental reform because of a perception that such reform is really intended to increase the burden of taxation. This seminar will take the tax-take as a given (fiscal neutrality), and discuss ways of replacing bad taxes with smart (green, economically non-distortionary, socially equitable) taxes. At the School of Economic Science, 11 Mandeville Place, London. W1U 3AJ, 15th May 2007. Email: conference at thewaterfront.co.uk.
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