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Economic Reform Newsletter: Ellen Brown for Council of Economic Advisers

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Headlined to None 11/13/12

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Hello Economic Reformers:
(names withheld by request)

It's been a while since I provided an update through this ad hoc newsletter. 
In that time, we've seen deeper fiscal crises, especially in Europe, where riots are occurring on a nearly daily basis, and the police seem as beleaguered as the unemployed masses are desperate.  I recently had this exchange with Warren Mosler, one of the co-founders of the Modern Monetary Theory Movement:
SB:  Is it possible for Euroland NOT to implode if they don't set up domestic, sovereign, currencies that are under each country's political and economic control, or at least some sort of "dual currency" where the domestic currency is legal tender injected directly into the economy (not the banks) for public works and other stimulative purposes, and suitable for paying taxes?
WM: no default as long as the ECB keeps writing the check. 
SB: Today there were yet more riots in Greece, and Spain is becoming Greece too.  How long can a "bad economy" persist until there's a revolution, or the police just give up protecting their masters?
WM:  We are in the process of finding out. Could turn into Egypt.

"Could turn into Egypt."  Indeed.  The process by which the police stop defending the elites is never given enough consideration in social reform analysis, but it is absolutely essential, or at least the threat of it is, in any whole-scale reform or even, revolution.  This was true in Russia, East Germany, as well as in Egypt.  Fortunately, all of these were, for the most part, bloodless revolutions, albeit as yet very much unfinished.  Toppling a regime is not the same as ending a political-economic system; it may even reinforce it.

In America, we've seen yet another most-important-election-of-our-lives pass, with a slightly smaller mandate for Obama (more than 3:2 in electoral college votes, and, by the time the counting is finally done - nearly a 4 million vote advantage for the president (Washington State is only 88% complete, and major blue urban areas, including storm-ravaged New York City, have not been proportionately counted, compared to red Romney areas.  Live updates can be seen here).

Speaking of Hurricane Sandy, this put several of our Common Ground-NYC members at risk, cold, and in the dark.  I narrowly missed the Downtown Blackout myself, as everything below 39th street went dark for several days.  It is an eerie sight to see dense Manhattan dark, that just never happens usually, but under the new stormy normal, this may become familiar.  Many New Yorkers are being temporarily housed in the city's few vacant apartments, as Cuomo calls for $30 billion in disaster relief.  Infrastructure, anyone?   Perversely, my internet & phone went down 2 days after power came back to most of lower Manhattan, as Verizon headquarters itself got zapped off the grid in a lingering example of malfunction.  There are still places in NYC that have no power, or where buildings are too damaged by wind, water (including salt water), to restore power to.  Occupy Wall Street has spawned Occupy Sandy, as our friends for social change aim to do something for New Yorkers' immediate peril.  The effects of Sandy will last for months, maybe into the next Hurricane season.  We need fundamental change, in dealing with infrastructure, and with increasingly inhospitable "climate change," says Governor Cuomo".  We also have to admit we brought much of this upon ourselves through over-building in vulnerable areas

Here in the Economic Reform Movement, we aim at big, fundamental change.

If we had Land Value Taxation throughout the city, up to 22 square square miles could be lowered in price (as taxes go up, prices go down), and developed or sold to those who could develop it. 
I and our Common Ground-NYC Treasurer, Rita Rowan, met with our Manhattan Borough President's staff today and discussed the long-dormant city council and state Assembly bills to inventory and register vacant land, for the ultimate purpose of applying a higher tax on it, as an inducement for development.  Unfortunately, the current Council Speaker, and leading Mayoral candidate for 2013, Christine Quinn, strongly backed by Real Estate interests, is opposed to both - no surprise there! 
However, we did remind Stringer's staff that Hurricane Sandy, as devastating as it is, represents a new opportunity to rethink how and where New Yorkers should choose to build.  As a recent Huffington Post article points out:
Back in 2003, Jordan Rappaport, a senior economist at the Federal Reserve Bank of Kansas City, and Jeffrey D. Sachs, director of Columbia University's Earth Institute, published a now-highly cited paper in the Journal of Economic Growth noting that, despite the country's folkloric affinity for the open frontier, America is an aggressively coastal nation.

While accounting for just 13 percent of the nation's total land mass, coastal counties, including those along the two oceans and the Great Lakes, are home to roughly half the U.S. population, the authors noted, and 60 percent of civilian income.

That's not just a matter of chance, the two economists argued, nor is it simply a function of historical forces (access to ports and so forth) that no longer necessarily obtain. Rather, coastal communities are just highly productive places, and people, driven to seek a certain quality of life, want to live in them.

That's understandable, but probably not sustainable, at least not as coastal development is currently conceived.

The article goes on to discuss the pros and cons of staying put and adapting - through seawalls, dikes, and other mitigation strategies - or moving inland to higher ground.  One thing is clear though.  To remain in the nation's coastal cities is going to require increasing amounts of money.  Where will that money come from?  Well, a Land Value Tax, with the cost of coastal flooding protection factored in, would be the ideal way.  It would charge people the true cost of living in vulnerable areas - costs that are now often borne by the general U.S. taxpayer in FEMA flood insurance subsidies instead - which in turn would encourage moving to less flood-prone areas, or at least mitigating against flooding.

Guess Who is NOT paying their fair share of Land Taxes
A recent article in the NY Times
As Prices Soar to Buy a Luxury Address, the Tax Bills Don't
says:

"The shimmering limestone tower at 15 Central Park West, where apartments routinely trade for upward of $20 million, has become symbolic of the most luxurious upper reaches of New York's real estate market. Its architect, Robert A. M. Stern, is the dean of the Yale School of Architecture. The views stretch out over the expanse of Central Park. And earlier this year, a single penthouse sold for $88 million.

Yet despite its sublime finishes, refined pedigree and nosebleed prices, the residential portion of that Manhattan building is officially valued by the city, for tax purposes, at only $332 per square foot. In reality, the average price per square foot for apartments sold there over the past 18 months has been $7,813, according to the Miller Samuel appraisal firm.

That kind of disparity is true for many of the stratospherically expensive apartments in the city. As a result, their owners pay far less in property taxes, relative to the value of the apartments, than most New York apartment owners pay. So despite a boom in the upper echelons of the real estate market -- 125 apartments have sold for at least $20 million in the last five years, and developers are churning out more every year -- the city is unable to truly cash in."


I posted the following comment on this scandalous story:
The ultra-low tax rates encourage ultra-expensive apartments. As the tax rate goes up, the price MUST go down. The total capitalization remains the same, and even the uber-rich will pay less in price if they have to pay more in taxes .  This would be a good thing all-around: it would generate much more revenue for the city, while lifting the burden off middle class and other unsubsidized (that's what a tax break like this results in, after all) owners. It would work towards encouraging building for ALL New Yorkers, not just a few luxury apartments for the .01%. It would even provide more building jobs since there would be more apartments to build.
The city's arcane 4-class property tax system is hated by everyone.  A much better system would be to tax the full rental value - or comparable sales value, where rental value, as here, does not exist - for highest and best use, within zoning restrictions.  Then, with the large amount of revenue this would bring in, untax wages, sales and true capital - like buildings themselves.  When you tax wages, sales, and capital you get less of those.  When you tax land, you get more efficient use of land, so, in essence, more land becomes available to use.
The NYC Finance Dept estimates over 22 square miles of vacant, buildable land is available in NYC's 5 boroughs. More than enough to provide affordable housing for everyone. But, with low taxes on vacant land, there is no incentive to develop it.
- president of Common Ground-NYC

Unfair land Monopoly like this has been going on even longer then the game by the same name.  See the Georgist origins of the game here.

Clearly, we need some new Economic Thinking on both local and National levels! ...

Ellen Brown For Economic Advisory Council
Ellen Brown, the head of the Public Banking Institute, has done more to bring the idea of Public Banking to the public's attention than anyone else.
She has written several books, hundreds of articles, and made dozens of speeches and testimonies.
And flood relief? Yeah, the public Bank of North Dakota has that covered too. See the section on Fargo's 1997 flood here:
http://www.publicbankinginstitute.org/background.htm.
Public Banking to the Rescue
How BND Help Save Grand Forks, ND in 1997
Folks in Grand Forks, North Dakota will never forget April 1997, when record flooding of the Red River and major fires devastated the city. They also won't forget that it was Bank of North Dakota--the nation's only bank owned by a state--that put people above profits. The BND rushed to the rescue with financial flexibility and generosity of spirit in the public interest that no privately owned bank could match.

With Obama's cabinet being shaken up, post-election, I worked with the PBI to finally bring this People's Economist to presidential attention.
Here is the result:

"Dear friends,
I wanted to let you know about a new petition I created on We the People, a new feature on WhiteHouse.gov, and ask for your support. Will you add your name to mine? If this petition gets 25,000 signatures by December 11, 2012, the White House will review it and respond!
We the People allows anyone to create and sign petitions asking the Obama Administration to take action on a range of issues. If a petition gets enough support, the Obama Administration will issue an official response.
You can view and sign the petition here:
Here's some more information about this petition:
Put the nation's only Main Street Economist on the Council of Economic Advisers. President Obama, nominate Ellen Brown.
Ellen Brown is an attorney, Chair of the Public Banking Institute, and author of the book "Web of Debt." Precisely because she is not an economist by training, she is able to provide a fresh look at what Main Street businesses and local governments need in order to create jobs and lower financing costs. In well over 100 articles she has made a strong case for local and state governments to take a public banking approach while providing evidence-based testimony about the highly successful Bank of North Dakota and on other public banks throughout the world. Ellen Brown has earned the right to give voice to this reform as a part of this Council. Please also sign the SignOn version of this: http://signon.org/sign/president-obama-nominate?source=c.url&r_by=4247761
Now, keep in mind that if we get 25,000 signatures on the White House site in 30 days, they have promised to respond officially (e.g. a petition for Texas to secede from the U.S. already has 60,000 signatures.  Ours is much less extreme, and more practical too!) "

Action Step:  Please sign BOTH petitions to support Ellen Brown for the President's Council of Economic Advisers.

We know there are economic solutions.  A short refresher on some of them can be found in my republished article on the Occupy.com site here:
http://www.occupy.com/article/america-not-broke

I also wrote a new article on Money from a Georgist perspective, posted on Op Ed News, showing, among other things, that we can produce money, debt-free, and have done so in the past (1862-1972).  This would obviously change the relationship between government and the banking sector enormously and make money available to the real economy , and not just to the banks.  I was happy to present a shortened version of these possibilities to the new Money and Crdit course at the Henry George School last week.  It was well-received and I think opened a few dozen minds to this timely and essential option.  The article here:
and my Fantasy Fed Speech in which Bernanke advocates re-issuing debt-free money is here.

Edging into Georgism
Our friends at Free Range Studios, who created "The Story of Stuff" and other "Story of" videos, came out with a neo-Georgist message in their latest video ( http://www.storyofstuff.org/movies-all/story-of-broke/) .  Pay particular attention to the part about not subsidizing roads to Wal-Mart, taxing pollution, repealing the 1872 mining Act and some other ideas Georgists should recognize.
I've been writing to them for over 2 years, since seeing the Story of Stuff, hoping they will do a Story of Land, and received a few encouraging replies, but they have their own plans too, and like to get paid for their work.  In lieu of that, I am still hoping to sponsor a student video contest some day, to pump some young life into our rapidly aging movement.

All that glitters is not Gold
The always voluble and usually right, Max Keiser, interviewed film-maker and former Libertarian presidential candidate, Bill Still.  See about halfway through, here.
Still talks about why the gold standard is unconstitutional (despite what Ron Paul acolytes say), bad policy, and favors the rich... again .  Oh, and all that gold in Fort Knox?  It's probably diluted with Tungsten .  Still also talks about his new film, "Jekyll Island" covering the period 1907-1915 when the Federal Reserve was created.  It should be a great watch, maybe as good as The Money Masters or The Secret of OZ.

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Scott Baker is a Senior Editor/Economics Editor and Writer at Opednews, and a blogger for Huffington Post.
Scott Baker is President of Common Ground-NYC (http://commongroundnyc.org/), a Geoist/Georgist group. He has written dozens of (more...)
 
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