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Economic Reform Newsletter: Derivatives; A Call to Professors!; New Videos; pres. cand. Bill Still; Bombs away in USA

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Hello Fellow Economic Reformers!


Many of you are new to this Newsletter, some by way of the Occupy Movement.  In honor of that, and to bring those of you who haven't experienced what we* support at your particular Occupy encampment, here are some recent Occupy site presentations that support what we are aiming for:
-- Ellen Brown speaks about Public Banking at Occupy L.A.  http://www.youtube.com/watch?v=-Sp8oREsvW0&feature=uploademail
-- Ralph Nader @ Freedom Plaza Speaking on "Occupy Movement" (especially the part about value capturing the "commons" - note his figure of 30-50% "rent" agrees with most economic scholars http://www.youtube.com/watch?feature=player_embedded&v=pRZmF7dzvh8)
-- Me on Livestream, at the 55:50 mark, summarizing the 4 major reforms below

* By 'We' I mean those who support broad and comprehensive Economic Reform, including, but not limited to:
- State, or Public, Banking
- Georgism/Geoism replacement of taxes with a Single Tax on Location and resource use/abuse
- CAFR Reform to discover how much assets the governments own - NOT the same as current revenues - and whether that should be distributed back to the People.
- Monetary Reform, inc luding re-issuance of United States Notes
For more, see here http://groups.yahoo.com/group/EconomicReform/

A Great Georgist Introductory Video!
Here's one of the best little videos I've seen in a long time on what Land Value Taxation is and why we need it.  It's well worth spending 10 minutes - I can't wait for the promised part 2!  http://www.youtube.com/watch?v=itO7OoKtNUc&feature=youtube_gdata_player
I met some of the student creators at last summer's class at the Henry George School in New York City when this was just a bare-bones 10 second animation.  Great job, guys!  Let's publicize this. 

A Call for Better Course Curricula
( Attention All Professors! This is your chance to change how Economics is taught! )
The Institute for New Economic Thinking (INET) is now the world's largest economic forum.  They are calling for a new kind of course curriculum, saying:
Yesterday, Harvard students of Ec 10 staged a walkout to draw attention to the bias they detect in the course. Here is their open letter to the professor, Greg Mankiw.
Curriculum reform has been central to INET's own project from the beginning. Here is the work  of the Economics Curriculum Committee to date.
The problem of the typical economics class lies in an excessively narrow conception of the scope of economics, and of the research methods appropriate to the subject. This n arrowness is pervasive but, as the reaction of the students demonstrates, especially jarring at the introductory level.
It doesn't have to be that way. Perry Mehrling, for example, has experimented with the intro course, and so have many others. As a constructive response, today INET launches its syllabus project 30 Ways to Teach Economics. Professors, send us the syllabi of your experiments, and let us know how it worked. Students, send us syllabi that you found particularly inspiring and provoking, and tell us why.

Continuing on in their open letter to the instructor of the introductory course on Economics, the students complain that nothing was being offered besides Adam Smith models - and even those, as many readers of this newsletter know, are open to wide interpretation; Adam Smith called for a tax on Land too, for example.  They then say
A legitimate academic study of economics must include a critical discussion of both the benefits and flaws of different economic simplifying models.... There is no justification for presenting Adam Smith's economic theories as more fundamental or basic than, for example, Keynesian theory.
Well, there are even more fundamental economic theories than either Smith or Keynes!  What about Ricardo?  What about Marx?  What about George?  As Michael Hudson has noted, the history of Economics simply isn't taught any more.  This is not just an oversight, it is a deliberate effort to suppress classical economics, with its emphasis on the 3 forces of production, now conflated incorrectly down to 2, and to reduce Political Economy (which predates Economics) to Econometrics, leaving out humanity as an "externality." 

Professors especially , should click on the link above and see if we can re-broaden the soul-deadening, quantitative, instruction of economics, and also provide something that will provide:
A legitimate academic study of economics (that) must include a critical discussion of both the benefits and flaws of different economic simplifying models...Care in presenting an unbiased perspective on economics is particularly important for an introductory course of 700 students that nominally provides a sound foundation for further study in economics.

Indeed so!   The 2 suggested working papers on new syllabi do seem more complete and expand the issues somewhat, but here is the breakdown of Professor Mehrling's proposed plans for new courses:


Students who complete this course will learn how to:
1) Read, understand, and evaluate diverse concrete examples of economic reasoning
2) Interpret quantitative data as presented in diverse formats
3) Use basic accounting concepts to analyze concrete economic problems
4) Distinguish between microeconomic and macroeconomic problems, and the appropriate tools of analysis for each
5) Understand the basic institutional structure of the American economy, and the outlines of its 20th century historical development

No study of economics before the 20th century!  No study of what economics is actually for .  No mention of the relative roles of the factors of production.  Well, maybe they are just not mentioned...

This is what I suggested in INET's comments section:
Economics has become corrupted.  I mean that literally.  There is even a book by long-time economics professor Dr. Mason Gaffney, called "The Corruption of Economics." In the book, Gaffney makes the case that neo-classical economics displaced classical economics over decades during the early part of the last century.  Economics was a science before that, it hasn't been one since then.
Going back to first principles, J.B. Clark and others took the classical 3 factors of production: Land, Labor and Capital, and combined them into 2: Labor and Capital (Gaffney points out elsewhere that there is even a move to reduce the factors to just 1: Capital, as in "Human Capital" for Labor!).
Land (classically defined as ALL the natural elements of the universe) is nearly the opposite of Capital:
- Land is finite. Capital (goods) are only limited by Labor and Land availability.
- Land typically appreciates over time and from population pressure. Capital depreciates over time and can be replaced.
- Land was created by nature. Capital is created by humans.
- Land is indispensable to life: without Land, you die...instantly.  Capital is important, but not vital. You CAN, if pressed, get water and food with your bare hands, and live in the wild like our cave-dwelling ancestors did. It's hard, but we did it throughout most of human history.

Unless we understand First Principles, nothing else matters. It's like trying to practice physics without accounting for gravity, or heat.
I'll leave this to the more learned professors in the audience now.  Frankly, I am embarrassed to feel the need to expound upon such a basic need.

Update on the Highline Park: a Generous Offer or just Looking Out for Themselves?
Billionaire Barry Diller and his multi-millionaire wife, Dianne Von Furstenburg, have just made a $20 million donation to finish the Highline Park in Manhattan's west side:
click here=1
But this is hardly altruistic.  Both live and have offices in the neighborhood; Diller's Interactive Corp. Headquarters is just a few blocks away.  Says the NY Times:
The return on those (previous) investments has been substantial; the first two sections of the High Line have generated more than $2 billion in planned or new development, city officials said. The park has also become a major tourist attraction, drawing a quarter of its visitors from outside the United States.
While it's fine and appropriate that the philanthropist couple is giving back to the city that gave them so much, they will benefit directly in both Real Estate Value and in Ms. Fustenburg's case, in foot traffic to her store here: http://www.bing.com/maps/?rtp=~pos.40.741228_-74.00727_874%20Washington%20St%2c%20New%20York%2c%20NY%2010014_Diane%20von%20Furstenberg_%28646%29%20486-4800_e_YN6 18x40082425&mkt=en-us&FORM=LLDP, and in husband Dillar's case, by the increased resale value of his headquarters.  $20 million?  It is not enough to offset the vast increase in value brought about by mostly taxpayer financed park improvements.  
New York Politicians Rebel Against Newly Passed Property Tax Cap
New York Politicians have had enough...of their Chief Executive.  In a slap in the face against newly elected Governor Cuomo's recently passed 2% property tax cap, loacal and state Electeds are finding it impossible to meet state mandates on spending without commensurate revenues:
Communities Rebel Against Cuomo's Cap on Local Taxes
This tax-spender rebellion should be recognized by the voters for what it is, not as an attempt to avoid hard spending decisions, but a recognition that cuts have already been made to the bone, and now would go to the very heart of what it means to live in a society, with public education and civil services.  The answer is not to cap property taxes, but to redefine them as a tax on land only: click here


Bank on America
Bank of America, one of the Big Four money center banks, is offloading $75 Trillion (yes, that's Trillion, with a "T"; the world annual GDP is only about $56 Trillion) onto the taxpayer, via the FDIC, and with a complicit Co ngress that is too busy squabbling over how much to cut Social Security and Medicare.
click here
and former bank regulator Bill Black weighs in as well, calling the Federal Reserve regulators who approved this deal either complicit in fraud or "brain-dead" as to its consequences.  (I go with the former opinion myself):
http://www.commondreams.org/view/2011/10/19-5
This is an unbackable debt, even if some of the notional value cancels itself out (if it's that safe, why is BofA trying to insure it with the FDIC?).  Even half of this debt would bankrupt or fatally inflate every country in the First World.  Years ago, at the depths of the financial crisis, I wrote a short article advocating canceling out all derivative debts made with counter-parties where one or both cannot be realistically expected to pay, on the theory that a party should do due diligence to know if a counter-party can pay its obligations (no more AIGs).  It's still a good idea: click here

Did Paul Krugman just become a Greenbacker?

Take a look at Stephen Zarlenga's work on George:
http://www.monetary.org/henry-georges-concept-of-money-ful/2010/12
and search for "Greenback"


GEORGE W AS A GREENBACKER
However by age 44, in Social Problems (1884), George demonstrated a fully developed concept for how an advanced monetary system ought to operate:
"It is not the business of government to direct the employment of labor and capital, and to foster certain industries at the expense of other industries; and the attempt to do so leads to all the waste, loss and corruption due to protective tariffs.
"On the other hand it is the business of government to issue money. This is perceived as soon as the great labor saving invention of money supplants barter. To leave it to every one who chose to do so to issue money would be to entail general inconvenience and loss, to offer many temptations to roguery, and to put the poorer classes of society at a great disadvantage. These obvious considerations have everywhere, as society became well organized, led to the recognition of the coinage of money as an exclusive function of government. When in the progress of society, a further labor-saving improvement becomes possible by the substitution of paper for the precious metals as the material for money, the reasons why the issuance of this money should be made a government function become still stronger. The evils entailed by wildcat banking in the United States are too well remembered to need reference. The loss and inconvenience, the swindling and corruption that flowed from the assumption by each State of the Union of the power to license banks of issue ended with the war, and no -one would now go back to them. Yet instead of doing what every public consideration impels us to, and assuming wholly and fully as the exclusive function of the General Government the power to issue money, the private interests of bankers have, up to this, compelled us to the use of a hybrid currency, of which a large part, though guaranteed by the General Government, is issued and made profitable to corporations. The legitimate business of banking -- the safekeeping and loaning of money, and the making and exchange of credits, is properly left to individuals and associations; but by leaving to them, even in part and under restrictions and guarantees, the issuance of money, the people of the United States suffer an annual loss of millions of dollars, and sensible increase the influences which exert a corrupting effect upon their government." (Soc Pr, 178-9)

Then see what Krugman has to say here: click here=un&feedurl=http%3A%2F%2Fjson8.nytimes.com%2Fpages%2Fopinion%2Findex.jsonp

Think about countries like Britain, Japan and the United States, which have large debts and deficits yet remain able to borrow at low interest rates. What's their secret? The answer, in large part, is that they retain their own currencies, and investors know that in a pinch they could finance their deficits by printing more of those currencies. If the European Central Bank were to similarly stand behind European debts, the crisis would ease dramatically.

Wouldn't that cause inflation? Probably not: whatever the likes of Ron Paul may believe, money creation isn't inflationary in a depressed economy. Furthermore, Europe actually needs modestly higher overall inflation: too low an overall inflation rate would condemn southern Europe to years of grinding deflation, virtually guaranteeing both continued high unemployment and a string of defaults.

and today: click here

But why play around?  Why not vote for an outright Greenbacker...
 
Bill Still Declares Candidacy for President, under the Libertarian Party

At a time when public mistrust of both government and corporations are at an all-time low - just 9% approve of Congress (click here=politics) - that is an awfully big wall to climb, even if you are an Occupier on Wall Street, pushing for more government regulation over the bankers who have heisted our economy.  Is there another way?  A way that gets "government off our backs" while Still dis-enabling theft by corporate overseers?  Is the corporate theft necessarily the result of lax government oversight, or is there a way to fundamentally reform the political economy so that rights and opportunities are naturally preserved, with the constant, and constantly failing, march of regulation "packages" like the S&L bailout, the rescue from the Long Term Capital Management crisis (by the Time Magazine-anointed Committee to Save the World), Sarbanes-Oxley, Frank-Dodd, etc. ad nuseum?

Maybe.

Promising to end Federal Government borrowing by returning the power to create money to Congress, where Article 1, Section 8 of the Constitution puts it, financial historian and documentary producer Bill Still declares his candidacy for President, under the Libertarian Party:
http://www.youtube.com/watch?v=PY7EuihFWzQ&feature=player_embedded
Hmmm, he also promises to end the income tax, arguing it too is unconstitutional.  He wants to return to tax systems of the first 100 years or so of the Republic.  Might this include a Land Value tax?  I did ask him, but he wrote back that he is too involved in organizational issues to consider it right now.  He also asked if I'd like to work on his behalf in New York.  Any volunteers?
Still says he will also abolish the IRS and return taxes to what they were before the 16th Amendment (which he would try to have repealed). 
I don't agree with all of the Libertarian platform since I think Government does have a role to play in big national projects and just as a safety net (not to mention a dumbness-barrier, since some states would probably start teaching the world is 6,000 years old if they were allowed to), but if Still supports Greenbacking (yes) and the Single Tax (maybe), we're a good bit to where I and a number of Geo-libertarians want to go.
 
This is what happens when We Lose Our Equal Right to Land
Op Ed News, where I blog and edit, had this story recently:
A 51St State For Armed Robotic Drones
Apparently, the military's special forces unit needs a place to practice with their new de facto fifth branch of the armed services - the Robotics Division, specifically, the Drone Squad.  In fact, they want 70 million acres, including 60 million of air space!   This is an area straddling New Mexico and Colorado about as big as either state themselves!  The courts have ruled against them.  The Congress has refused to fund them.  An unusual coalition of ranchers, environmentalists, and just plain citizens is vehemently opposed.  So, what will happen?  Says the site, Not One More Acre :
Following defeat in Federal Court of its plans to expand training at the Piñon Canyon Maneuver Site (PCMS), Colorado, the Pentagon and its contractors, have ignored court orders, maintained plans for land expansion on the most threatened ecosystem on Earth, conducted unprecedented destructive maneuvers at the site, and joined with the Air Force to propose a massive expansion of military activity throughout the entire region of southern Colorado and northern New Mexico.
Does anyone still need proof that Equal Rights to Land is one of the top issues of our time, even more than in Henry George's time? 
"We cannot allow the sacrifice of our democracy to politicians who are bought by military contractors," says (site founder) Aguerre. "If they are able to get this 51st state for robotic warfare, I think the economy will be irretrievably lost. These are unbelievably beautiful and pristine lands. Our rural areas are where the genetically modified seeds are being planted, where the lands and mountains are being mined, and where the military is going to destroy an area the size of a state, because the rural people are so few."
This is Occupy movement we need to worry about, not some disenfranchised students in Zuccotti Park trying to regain their basic American rights.

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http://newthinking.blogspot.com/

Scott Baker is a Managing Editor & The Economics Editor at Opednews, and a blogger for Huffington Post, Daily Kos, and Global Economic Intersection.

His anthology of updated Opednews articles was published by Tayen Lane Publishing (December, 2014) and may be found here:
https://tayen-lane.squarespace.com/america-is-not-broke/

Scott is President of Common Ground-NYC (http://commongroundnyc.org/), a Geoist/Georgist activist group. He has written (more...)
 

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