Hello Economic Reformers:
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: 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?
"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.
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:
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.
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.
As Prices Soar to Buy a Luxury Address, the Tax Bills Don't
"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 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! ...
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:
With Obama's cabinet being shaken up, post-election, I worked with the PBI to finally bring this People's Economist to presidential attention.
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:
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.
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.