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My Interview with Green Party of Ontario Politicians: Erich Jacoby Hawkins & John Fisher

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SB: Could you explain the difference between earned and unearned income with respect to your proposed tax shifting resolution? Can you explain how the land-owning minority benefits from improvements in a way that the non-land-owning majority does not?

EJH: Earned income reflects the product of a person's efforts. Wages, salary, and commissions and bonuses would be standard forms of earned income. Unearned income represents the product of holding some kind of monopoly, money gained through economic rent. Capital gains (beyond inflation), land rent, and any price increase due to economic rent would be unearned income. Interest income could fall into either (or both) category, depending on what kind of investment or lending was involved. Investment in a venture would return earned income, while returns from land holdings or speculation would be unearned. Rental of man-made property (buildings, equipment) would be earned income. Interest that banks gain by lending bank-created money is unearned income.

If you own land, you benefit from the increase in value of that land over time, which essentially arises from publicly-funded improvements or societal growth. If you rent land, not only do you not benefit at all from that value increase, you end up having to pay higher rent as land values rise. This is a main driver behind the growing wealth gap.

SB: How would the amount of these resource fees be determined? What is meant by the term "economic rent"?

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EJH: Resource fees could be set through a cap/trade process, which sets the total amount that can be extracted, letting the market then set the price, or could be pegged directly to the unimproved value of the raw resource. [classic definition of economic rent]

SB: Your resolution "proposes that those who contribute back to the commons could be financially compensated by government. Companies and individuals who forgo income to conserve, protect or restore ecosystems could be partially reimbursed for expenses." Could you describe who would determine if companies or individuals "contribute(d) back to the commons" and how that would be done? How would you prevent these entities from gaming the system by, say, claiming that they didn't do something that would have harmed the environment that they really had no intention of doing anyway, and therefore claiming compensation?

EJH: This is something you'd have to ask Frank de Jong about.

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SB: Why would this not depress productivity, or is that what you actually intend the measure to do, or to do at least in some aspects?

EJH: Raising the royalty (fee) on resources and pollution while lowering the taxes (to zero) on labor and value-added would increase material productivity, but perhaps reduce labor productivity. Right now productivity usually refers to labor productivity because labor is a significant cost while materials are relatively cheap. If that situation were reversed, then the more important productivity factor would be material productivity. In an economy with chronic unemployment and downward pressure on wages, switching from labor to material productivity through a tax shift would mean an increase in jobs and real (take-home) wages alongside a decrease in resource consumption and pollution.

SB: Where would this compensation revenue be obtained from?

The concept of a tax shift is that revenue remains the same. Some sectors of the economy would shrink but others would grow and the overall effect should be to reduce many draws upon the public purse, known collectively as the "cost of poverty".

SB: Most of the resolution concerns environmental or economic issues, but there is also a call to "shorten the work-week." Could you explain the implications of this and how it would affect the unemployment picture in Canada, currently at 7.9%? How would it affect income? What role do you believe government has in determining the length of the work-week?

EJH: Government doesn't directly set the work-week, but can influence it through rules that establish the point at which an employer must pay overtime, and various other benefit rates. It can also set the work-week for public servants, which creates a trend that private employers often follow. For many decades, improvements in labor productivity were shared between employers and employees, with employers seeing more profit per worker and employees earning their salary over a shorter time. However, in recent decades, productivity gains have been captured entirely by employers/investors, with the length of the work-week staying the same or even lengthening, while chronic unemployment/underemployment slowly grows. This means that while employers/investors benefit, not only do workers not receive a share but they lose out through longer hours, lost jobs, or having to pay (via taxes) to support the unemployed. We believe that employers and employees should share in the benefits of productivity gains with shorter work-weeks, which would also reduce unemployment by spreading work among more workers. By reducing the cost of unemployment, taxes on workers could be relaxed, helping to maintain salaries over shorter hours. Workers with more free time would also be able to give back more to their community through volunteering, and have healthier family lives. (An alternative view is that shorter work weeks means more leisure time, which will drive growth in the tourism and entertainment industries).

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SB: Canada has been seen in the United States as a resource-rich country, but also one that is significantly exploiting those resources in often environmentally unfriendly ways - e.g. clear-cutting forest, producing oil from tar-sands, which is both energy-intensive and dirty. How will the Green party address these issues? Does your proposal mean that America should expect less oil/forest products and more expensive oil/forest products from Canada? What are the negative and positive implications of that?

JF: My yearly visits to resource-rich and location-important parts of B.C. have brought home how many Canadians look at the resource issue.

In the Bulkley (River) Valley the division between those who want development/export and sustainable lifestyles is tempered by the common dependence/appreciation of the outdoors. Really most in both camps, both being rural, recognize the long-term importance of wise use of resources.

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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 "America is Not Broke" was published by Tayen Lane Publishing (March, 2015) and may be found here:

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

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