Post #800: Powerful Ideas For Economic Transformation.

by Jerry Alatalo

“So long as all the increased wealth which modern progress brings goes but to build up great fortunes, to increase luxury and make sharper the contrast between the House of Have and the House of Want, progress is not real and cannot be permanent.”

– HENRY GEORGE (1839-1897) American economist, single tax proponent

aaa-42The worldwide economic crash of 2008 which humanity deals with up to today generated a massive conversation about economics and banking, in particular sparking great interest in alternatives offering better outcomes.

What has happened is that people have researched, studied, developed and articulated good alternative systems in the roughly seven years since 2008. The small group of people who control the global financial system have noticed the extraordinary interest in new alternative theory, and, for fear the alternatives will actually gain traction and become implemented, years ago began planning the trade deals called Trans-Pacific Partnership (TPP) and Trans-Atlantic Trade and Investment Partnership (TTIP) to effectively kill any alternatives.

The Occupy movement made the phrase “We are the 99%” part of the global culture, for the first time unveiling/introducing the 1% to all people around the Earth, and essentially lit the fire of an ideas-for-the-future war between the 99% and 1%.  One has only to consider that both the TPP and TTIP – the largest multi-nation trade deals in history – have and are being written in secret to understand the immense importance of what is going on here, and why the deals’ details must become made available for examination by every person in nations potentially signing on – before the deals become voted on and/or made the law of the land.

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Given the more urgent task of fighting for total transparency with regard to TPP and TTIP because of the enormity of consequences a very large percentage of the world’s people will experience if passed, it becomes easily understandable that focus on alternative solutions has been placed “on the back burner” so to say.  If one’s house is on fire, it becomes necessary to put out the fire as opposed to spending time in the vegetable garden. Reports suggest that men and women in potential TPP / TTIP signatory countries are doing commendable work in opposition to the way the trade deals haven’t been presented in full for their consideration, along with strongly expressing legitimate concerns to elected representatives.

Economist Scott Baker gave an excellent presentation recently on highly practical, beneficial economic/financial alternatives for people living in the United States. With hopes of reinforcing efforts around the world for promotion of new and implementable ideas that offer citizens real options for improving living conditions, a video of his presentation is being shared here.

While his talk is directed to Americans the ideas presented are ones that apply in any nation. The four foundational concepts Mr. Baker builds upon and explains in the talk he calls “Super-macro economic solutions”, each when implemented capable of saving governments – the people – trillions of dollars:

  • Sovereign money, aka debt-free money
  • Land value taxation, aka Georgism
  • Public Banking
  • Ending government financial asset hoarding

Other steps for positively transforming  economic conditions include application of proper regulation to minimize criminal behavior in financial sectors, which would result in re-directing trillions of dollars into government revenue accounts.

Mr. Baker explains why citizens should have no problems in accepting the changes he proposes:

  • Because with good, clearly beneficial incentives people can change
  • People are inherently reasonable and open-minded to good ideas
  • People genuinely want better economic conditions

Sovereign Money – U.S. government can issue the nation’s money without the Federal Reserve

What can fiat money do for the economy?

  • Pay for infrastructure
  • Pay for social security
  • Pay for R+D in science, education, foreign aid, new energy systems, etc.
  • Plus any expenditure which has a positive money multiplier effect

The $29 trillion spent on banks after 2008 resulted only in asset bubble inflation.

An example of a positive multiplier is $1 spent on social security that translates into $2 of economic activity. Negative multipliers include tax cuts for the rich and military spending, which most likely result in a net loss in economic activity.

The next question Mr. Baker answers about sovereign money is “what about inflation?” The nation’s money quantity should be kept as close as possible to the amount needed to meet the nation’s productive capacity. In his view, private banks are not producing/creating enough money through lending, while the Congressional Budget Office in its reports asserts that another $trillion in circulation wouldn’t result in inflation.

Next, he asks “why borrow/rent our money when government could create it?” Since 1913 and the Federal Reserve Act that established the Fed, the Federal government has paid the Federal Reserve Bank for money with interest-bearing Treasury bonds whose interest rate is determined by the Federal Reserve Bank itself. The interest is an expense for the American people which becomes eliminated once the conversion to sovereign money occurs.

Federal Reserve notes or United States notes?

The Federal Reserve Bank owns 18% of U.S. Treasury bonds. Japan, China and other nations own significant portions, and by holding those Treasury bonds China has gained a competitive advantage through devaluation of their Yuan, making Chinese exports more attractive to international buyers and American products more expensive.

A very wealthy rentier class makes a lot of money off of interest on Treasury bonds, a situation which would disappear when Treasury bonds become obsolete and unnecessary through establishment of a sovereign money system. Other reasons for converting to sovereign money include:

  • The independent Federal Reserve Bank can neutralize government spending by increasing interest rates, especially when spending becomes necessary – during an economic recession
  • Even during good economic times interest-bearing debt adds up to 50% to the cost of public projects like schools, roads, infrastructure improvements, public safety enhancements, and so on
  • Sovereign money would result in much less corruption
  • Sovereign money wouldn’t result in the government printing money “willy-nilly” as some warn, but an appropriately staffed organization would keep to targeted levels of money for the nation’s productive capacity

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Land value taxation – Georgism

“There is enough, and to spare.” – Henry George (1839-1897)

Georgists believe monopoly in land is the cause of unjust inequality, and therefore advocate for land value taxation, sometimes called “single tax”. Currently, both homes/commercial buildings and land are subject to taxation, but Georgists propose that only land should become taxed. This view derives from the view that public revenues would best be:

  • Light on production
  • Easy and inexpensive to collect
  • Certain
  • Fair

“The Georgist proposal achieves the goal of ‘left-wingers’ for security and social action, but without restricting liberty. It achieves the goal of ‘right-wingers’ to attain freedom, but without privilege and monopoly”.

Scott Baker describes New York City’s taxation policies, where ‘special deals’ allow luxury condominium complex owners to pay 1/100th the property tax of condominiums costing 1/100th as much; parking lots paying 1/10th the property tax of neighboring properties which are built-upon and efficiently used; and the situation where 60,000 people in New York City are homeless while vacant and under-utilized land are both under-taxed and warehoused.

It is estimated that the average American family would see an annual increase of income of $6,300 if land value taxation became implemented. A single, land value tax would end:

  • Taxes on wages, sales and fixed capital
  • Land speculation – the main cause of boom-bust economic cycles
  • Most rent-seeking activities
  • Causes of most political and other forms of corruption
  • Unjust inequality based on monopoly of resources
  • Urban sprawl
  • Blighted, warehoused neighborhoods
  • Enormous tax breaks for developers, who would then build to sell at more reasonable prices

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Public Banking

America’s only State-owned public bank is the Bank of North Dakota (BND), chartered in 1919 and now more profitable than all the “too-big-to-fail” Wall Street banks. The main advantage of BND for the people of North Dakota and neighboring states is effective empowerment of economic growth through banking practices that keep financial resources inside North Dakota and the region.

Many monetary reform advocates believe the creators of the TPP and TTIP have as one of their main goals making public banking illegal. Their premise is that nation-states shouldn’t compete against commercial interests in an unfair way or “unfair competition”.  It is self-evident that public banking, while good for the 99%, represents the greatest threat for the 1% in the banking industry, as related to loss of profits – from greatly reduced numbers of high-dollar financial transactions.

Some experts on monetary reform have estimated that 40% of the cost of public projects goes toward payment of interest. State, county and city-owned public banks could eliminate most interest expenses that those governments incur when signing loans made to them by Wall Street mega-banks.  Among the many other reasons for establishing public banks are:

  • New financial rules/laws could cause bond rates to soar
  • Minimal operating costs (no bonuses, fees, commissions / no highly paid CEOs / no need for buildings, branches, tellers / no advertising expenses)
  • Banks have unlimited low-interest credit
  • Counter-cyclical lending allows sustainable growth during economic recession
  • Less corruption, more efficiency, more profitability, less expenses (Bank of North Dakota is scandal-free since 1919)

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Ending government financial asset hoarding

Scott Baker admittedly kept this last of the four solutions for the end because of the complex nature of the subject. This section of his presentation could be described as more “esoteric” and perhaps requiring further research to reach a firmer understanding, although accountants and finance experts will likely easily grasp his points.

Basically, the point he’s making is that government entities of all sizes from town to city to county to state levels, from fire departments to public pension funds, are required to produce an annual report of their total assets in a “Comprehensive Annual Financial Report (CAFR)”, which includes:

  • Governmental funds
  • Proprietary funds
  • Fiduciary funds
  • Component units

Proprietary funds, fiduciary funds, and component units included in CAFRs are not included in governments’ yearly budgets, and are where most surpluses are located.

Mr. Baker describes a “proper” budget as made up of: 1) Balance forward of the previous year’s unspent revenues, 2) The current year’s projected revenues, and 3) The current year’s projected expenditures.

Apparently government budget processes omit the previous year’s unspent revenues; in other words, certain actual assets are not included in government yearly budgets. Without resorting to a conjecture-based analysis of CAFRs, we will leave it to the reader to read between the lines of Mr. Baker’s words:

“If a process can be made complex and obscure in order to benefit the elite, it will be”.

There are over 200,000 CAFRs in America adding up to trillions of dollars. Scott Baker is asserting that those trillions of dollars, or portions of those assets, could become utilized in ways which result in better consequences for citizens. CAFRs represent a somewhat obscure, unknown governmental finance subject researched by only a small number of citizens.

That said, where trillions of dollars are involved one could safely bet that, like on Wall Street, extensive levels of corruption and “rigging the system” are present.

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Scott Baker presents four real and solid solutions for building a better economy and financial system in America – solutions of which there is every good reason to believe are achievable.

99% of men and women see that as a “win-win” proposition.

(Thank you to Henry George School of Social Science at YouTube)

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Land Value Taxation: True Economic Salvation For Nations?

by Jerry Alatalo

“Let no man imagine that he has no influence. Whoever he may be, and wherever he may be placed, the man who thinks becomes a light and a power.”

– HENRY GEORGE (1839-1897) American economist, single tax proponent

aaa-18Alphabet The concept of land value taxation (LVT) is largely sourced from Henry George’s 1879 book “Progress and Poverty”. American educator Henry Steele Commager said the following about George’s most famous book: “Few other American books and certainly no other economic treatise exercised a comparable influence in the world at large”.

It’s somewhat embarrassing to admit not having read “Progress and Poverty”, but Mr. Commager’s statement and very positive quotes about Henry George from historic figures Leo Tolstoy and Albert Einstein have certainly increased interest in doing so. Equally embarrassing is having to admit less-than-average awareness of perhaps the most relevant economic strategy for today that Mr. George proposed some 130 years ago: land value taxation.

Given that decades of extensive tax evasion by corporations and wealthy people, facilitated by the world’s largest accounting, legal and banking firms, has led to a worldwide combined loss of tax revenue by governments estimated at $1 trillion annually, it was exciting to learn that, since land is immovable and can’t be hidden in offshore accounts, any nation which establishes land value taxation completely eliminates tax evasion. For that one reason alone, politicians from nations around the Earth need to very seriously consider studying and implementing LVT.

Workers in any nation which begins a LVT system can expect to pay a much lower amount in taxes, perhaps eventually paying zero income taxes at all. Such a transition would clearly benefit economic conditions when most people have a significantly greater amount of money for purchases or savings. Implemented LVT systems replacing most nations’ complicated, time-consuming tax laws would be fairer, more efficient, and simplify everyone’s life to a great extent.

Having an embarrassingly low, less-than-average awareness of LVT we’ll let the rest of this post, consisting of information re-posted from websites run by men and women with much higher-than-average knowledge on land value taxation, get into more detail. Let us just say that the concept of LVT seems to have a profound potential for truly creating beneficial societal results, is a “win-win” proposition, and, even after only getting one’s toes wet, has resulted in becoming a big fan.

Let’s put it this way. If the man responsible for the idea of land value taxation – Henry George – received great respect and admiration from the giants Tolstoy and Einstein, well, isn’t that about all one needs to know? 

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Cross-posted from www.taxingqofland.org – producers of the 30-minute documentary “The Taxing Question of Land” (video below).

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Today’s blog focuses on a variety of journalists from all sides of the political spectrum who have written in favour of Land Value Tax and also considers the barriers inherent in party politics.

Simon Wilson highlights the case for LVT in Money Week

There are Left wing notions that LVT is fair and just. This is important, but what about the economic arguments?

Free-market capitalists and mainstream economists, such as the FT’s Martin Wolf and Samuel Brittan, have both argued the case in favour. Whereas left-liberals argue for land/wealth taxes on grounds of fairness and equality, free-marketeers tend to argue that the rapid accumulation of unearned property wealth over the last 15 years has made us all fat, lazy and unproductive. Tax wealth, so this theory goes, and we will be spurred into competing with fast-growing emerging markets. Right-wing libertarians also argue that wealth taxes are the least bad option because – paradoxically – they do the least to distort or depress wealth-creating economic activity.

We have here a policy that highlights the valuable elements of our political landscape. Left wingers highlight equality and fairness, while Right wingers value wealth creation and economic activity. If Land Value Tax achieves this then why is there a lack of political will to bring this forward?

Sam Brittain, of the Financial Times and an advocate of LVT, explains that party politics stands in the way of genuine reform that betters society:

Many chancellors have said that they would jump at a tax that had no disincentive effects on work or enterprise but had a strong redistributive element. The problem was that the amount of preliminary work required would take more than one parliament and any credit for the measure would redound to their successors.

If politicians really want to think about the unthinkable, as they sometimes claim, here is a place to start.

Surely it is time politics grew up or is the UK really being held hostage to the inability of our parties to be able to congratulate and thank each other for what they agree on?

It is worth highlighting exactly what we are discussing and I’ll turn to Martin Wolf, also of the Financial Times, who explains Land Value Tax in terms of infrastructure. Martin Wolf explains we should finance infrastructure costs by raising revenue from the people who benefit, the beneficiaries. In the case of infrastructure this will be landowners:

Consider a simple example. In a busy town the average house price is £300,000, of which half is the cost of building (or replacing) the house and the rest the value of the land. Some way away is an isolated village. Here the identical house costs £200,000, of which just £50,000 is the land value.

Consider what would happen if a road were built, for the first time, between the town and the village. Residents of the town would want to move to the village to take advantage of the cheap houses and the amenities. Assume, for simplicity’s sake, that the benefit of the village’s amenities to the marginal movers offsets the cost of the extra time they would spend travelling. The price of village houses must jump by £100,000.

Owners of the village housing will capture the benefit of taxpayer-funded road-building. To them this will be a massive windfall gain. In general, the rise in the price of land will account for most, if not all, of the capitalised value of the surplus of benefits over costs to users of the infrastructure.

Thus, increases in land values give not only a good indication of the benefits of infrastructure investments, but also provide an efficient and just way of financing their costs. It is efficient to tax these values because the tax would reduce the size of a windfall, while other taxes used to pay for infrastructure reduce effort, penalise the division of labour or discourage capital accumulation. It is also just, because the chief beneficiaries would bear the cost.

He goes on to discuss the benefit to local authorities:

A simple way of financing local infrastructure would then be via a tax on site values. The revenue could go, in whole or in part, to the relevant local authorities. If the latter were also deprived of the right to vary the rate, they would have an incentive to make investments that raise land values and increase their revenue.

At present, however, the lack of any easy means of raising finance is proving a huge obstacle to desirable investments. Then, when investment does take place, as with the Jubilee line, it merely pours vast windfall gains on landowners at the expense of taxpayers. The result has been a long history of inadequate investment and undue reliance on inherently damaging and unjust taxation. The UK is choking on the inadequacy of its own infrastructure. The time to make a change is now.

With thanks to Martin Wolf, this highlights another important argument of our times. How do we give power to our local authorities and give them the tools necessary to create and raise their own revenues to deliver and develop public services? The localism agenda is at the forefront of politics today, well known for the reforms in social housing over the last few years but also is at the heart of Conservative politics. Heseltine himself writes in ‘No Stone Unturned’ October 2012:

2.14 For the UK to face up to the challenge of increasing international competition, we must reverse the long trend to centralism. Every place is unique. Local leaders are best placed to understand the opportunities and obstacles to growth in their own communities. Policies that are devised holistically and locally, and which are tailored to local circumstances, are much more likely to increase the economy’s capacity for growth.

Another current discussion about land and property taxes is the mansion tax. As there has been no discussion about revaluing our properties, the Mansion tax will still be based on the outdated Council Tax valuations made in 1991. As such, money raised will be small and will still be regressive. Regressive taxes means that poor tax payers subsidies rich tax payers. While Progressive taxes mean that neither the rich nor the poor subsidise each other.

Will Hutton writing for the Guardian in March 2012 suggests that Osbourne bring in a land value tax at 0.6% on every property which would result in homeowners with homes of up to £250,000 paying less than they do now– which will create something truly progressive. He also argues the case for business rates:

The British pay council tax on property values unrevised since 1991 – with New Labour typically never finding the political courage to launch a revaluation and thus higher, unpopular council tax bills. A mansion tax is all very well, but if it is based on 1991 valuations it will hardly bring in any revenue. Instead, Mr Osborne should announce a revaluation of the country’s entire housing stock and levy a tax paid in proportion to the new valuations; council tax should be renamed as the housing services tax. To raise sufficient revenue, it would be pitched as an annual 0.6% tax on every property; as a result, homes below £250,000 would pay less tax than now, taking the political sting out of the revaluation.

He should also introduce a land value tax on business and agricultural property; the principle is that as land becomes more valuable because of its business use, so it should attract more taxation. As a partial quid pro quo, suggests Mirrlees, the chancellor should abolish both stamp duty on property transactions and business rates. Business would thus pay tax on the genuine increase in the value of the property and land it is using; home owners on the real value of the housing services they consume – and the Treasury would still be ahead.

The Institute of Fiscal Studies published the Mirrlees Review – Reforming the tax system for the 21st Century. It is well worth a read. In the conclusion we are told to consider what a good tax system should entail:

  1. We should consider the overall system – elements can be more or less green, progressive etc but The overall system should encompass all of these.
  2. Neutrality, treat similar economic activities in similar ways to make the tax system simple and transparent.
  3. Achieve progressivity as efficiently as possible

The report also highlighted 7 major flaws in the current UK tax system, number 6 is:

Taxation of land and property is inefficient and inequitable. There is a tax on business property – a produced input – but not on land, which is a source of rents. Taxation of housing involves both a transaction tax and a tax based on 20 year old valuations.

The report goes on in section 20.2.5 to talk about how to deal with business taxation. They propose replacing the current system of business rates with a land value tax.

“Business rates are not a good tax – they discriminate between different sorts of business and disincentivise development of business property.”

To read more about the benefits of the tax please turn to Chapter 16 – The Taxation of Land and Property

To summarise,

We have the words of a variety of columnists who support Land Value Tax. We can see that this issue fulfils the Left wing value of being progressive, the Right wing value of incentivising wealth creation and also the Economists value of efficiency. Surely the best tax reform policy for our nation is the one that is supported by both Right and the Left, and also by the greatest Economic minds in the country? If this is true, then what will provide the political courage?

Will we be stuck behind the immaturity of being unable to credit our political opponents with the courage to do what is best for us all? Or perhaps we are at the dawn of a new age, a mature age where we can work together to achieve what we already agree on?

I say, let us focus on what we have in common; together we can educate ourselves and raise awareness. Let us stand together and say proudly, “this is our time and together we will bring about fundamental change that will benefit us all.”

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Cross-posted from: –  ‘about’ page at www.henrygeorgefoundation.org

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The Henry George Foundation of Great Britain

Dedicated to promoting principles expounded by Henry George in the conviction that they offer the only true basis of Economic Freedom and Social Justice, and that their application will remove involuntary poverty, promote industrial and international peace, and make all other reforms easier of accomplishment, and generally contribute to the welfare of humanity.

People do not argue with the teachings of Henry George; they simply do not know it . He who becomes acquainted with it cannot but agree.
Count Leo Tolstoy

Men like Henry George are rare, unfortunately. One cannot imagine a more beautiful combination of intellectual keenness, artistic form and fervent love of justice. Every line is written as if for our generation.
Albert Einstein

The Foundation was established in January 1929, to administer a Trust Fund for spreading a wider knowledge of the social and economic teaching of Henry George as set forth in his books – Progress and Poverty, Social Problems, Protection or Free Trade, The Condition of Labour, A Perplexed Philosopher, The Science of Political Economy and other writings.

The motive for establishing and maintaining the Foundation is the conviction that the principles expounded by Henry George offer the only true basis of Economic Freedom and Social Justice, and that their application will remove involuntary poverty, promote industrial and international peace, and make all other reforms easier of accomplishment, and generally contribute to the welfare of humanity.

The Foundation supports educational courses, meetings, research, and publications directed at promoting a better understanding of George’s ideas and developing them to address the economic issues of the day. Details of our current programme may be found on the web site and by leaflets available at 11 Mandeville Place, WIJ 3AJ or by telephone: 0800 048 8537.

Our main publication is the journal Land & Liberty which has chronicled world events for over 100 years and aims to explore how our common wealth should be used – and to demonstrate that this is the key to building the bridge of sustainability between private life, the public sector and our resources – between the individual, the community and the environment. It aims to put the laws of nature and people at the heart of economics. Land & Liberty is made available free of charge to anybody who registers interest with us on this web site where you can also read recent articles and the latest edition of Land & Liberty.

The Foundation depends upon the voluntary efforts of members, supporters and friends to provide the publications and services we offer and active participation is always welcome.

For more context, perceptions on Land Value Taxation, see the following in-depth article by LVT advocate Fred Harrison:

http://www.sharetherents.org/thesis/mortal-taxes-life-liberty/

(Thank you to TaxingQofLand at YouTube)

Tax Reform Economic Science 301.

Posted April 4, 2014

by Jerry Alatalo

“Nature is the art of God.”

– Dante Alighieri (1265-1321)

cumberland 7Treason 3: The Temple of Doom is part 3 of a three-part documentary “Treason”. It covers various aspects of environmental issues surrounding climate change, including critical looks at “cap-and-trade” (CAT) measures meant to reduce emissions of greenhouse gases. Treason 3 begins by declaring that the Green Agenda has been hijacked; climate change has turned into a movement to make private corporations the land barons of the 21st century.

Bankers have found a way to get in on the act of carbon trading, gambling on the price of permits.

Scientist James Hansen believes that “the dirtiest trick governments play on their citizens is the pretense that they are working on clean coal“. The world’s largest coal-burners are the United Kingdom, United States, and Germany. CAT legislation was guided through the U.S. Congress by Senator Tim Wirth, legalizing a money-making scheme which became the model for European CAT – it basically takes the public air, water, and land and turns it into private property. Unfortunately it is the universal pattern. Mr. Hansen believes “CAT is a cop-out, driving the world to a dead-end, to a social and ecological disaster”.

A letter sent by the British Economic Association’s president to all member economists told them that the climate change issue is going to become very important, we have to understand it, and then we have to suggest policies that will enable us to capture this issue for our profession. Economists talked about CAT being a market-based approach, but it’s not a market at all – it’s created by legislation. CAT will create a gigantic bureaucracy. A real market approach would be a carbon tax which is very simple.

There is something worrisome coming down the highway, and that’s carbon trading. CAT is based on neoclassical economics and likely shaping up as the mainstream solution to the climate problem. Europe spent $50 billion on trading the pollution permits, the largest permit went to a German coal-burning facility, then their carbon dioxide emissions actually increased.

The global carbon market was worth US $126 billion in 2008

The second part of CAT is offsets, a supplement to CAT. Offsets allow corporations to use cleverly thought up equivalents to emissions like tree plantations in the global south, or iron filings in the ocean to absorb carbon, etc. to avoid and/or delay improvements to equipment and other measures to reduce emissions.

The global carbon trading market has become very large, the number of permits are expected to decrease, so the price of permits is expected to increase a lot. Permits now trading for 50 euros per ton of greenhouse gases are forecast to be selling for over 100 euros in 5-10 years. The income stream should be quite large – a trillion-dollar market by 2020. It will become the world’s largest commodity market and is looked upon by Wall Street and the City of London as the replacement for the giant derivatives market which resulted in the 2007-8 economic crash the world is still suffering with today.

Carbon trading is predicted to become worth $3 trillion by 2020

According to one man in the film, many people have concerns about the carbon market actually leading to a bubble similar to the property/housing bubble which had a huge effect on the crash. He finds that the problem is how people will value the assets – the commodities that are getting traded. Under the United Nations agreement known as the Kyoto Protocol, most of the offset credits, most of the carbon credits produced by offset projects under the clean development feature of Kyoto, are actually being bought every day. Not by polluters to offset their pollution, but by Wall Street firms like Goldman Sachs, Morgan Stanley, Deutsche Bank and others.

They are buying up the credits, not to deal with their own pollution problems, which aren’t nearly as serious as mining and manufacturers – they’re buying permits to gamble with them. To speculate. If they increase in value you can make money off that. If they crash or go down in value you can short them and make money from that. You can make money from volatility, when they go up and down in price, like hedge funds do.

Climate policy is being passed into the hands of Wall Street and the City of London. One of the dangers is that this will drive a bubble in carbon credits, and nobody knows about these new commodities. They have been packaged, sliced-and-diced; credits from a windmill project get combined with a plantation project with an efficiency project, securitized and so on…

It’s an extremely complex market of assets, nobody will know what they are, nobody will understand them, the price goes up and up and up until someone asks, “what are we trading in?” People lose trust and the bubble market crashes. A lot of money gets traded on Wall Street and City of London where they trade those carbon derivatives between each other, but very little carbon gets taken out of the air.

An alternative to massive bureaucracy, financially dangerous CAT/carbon trading is then illustrated. A carbon tax on gasoline of $1 per gallon would raise an estimated $670 billion per year. It would be inaccurate to call it a carbon “tax” because the $670 billion would be returned directly to citizens – around $3,000 per person. Scientist James Hansen agrees with such a “tax” to incentivize both reduction in gas usage and innovation in auto technology. Other benefits include people moving into higher miles-per-gallon vehicles, automakers’ understanding their products need higher mileage per gallon plus new hybrid/electric product development, and a more intense renewable energy consciousness, accelerating creativity for solar, wind, biomass and other green energy options.

Treason 3 then touches on Iceland and its fishing industry. International Monetary Fund established a conservation fund which apparently was a cover for speculating in the money markets. Corporations with factory-sized fishing vessels had the financial muscle to buy the fishing permits. Iceland didn’t charge enough for the full rental value of the fish. Fish quotas became a major instrument of funds for the banking industry speculators to make money. After Iceland’s banks collapsed, Icelanders realized they had to charge substantial rent to fish their coastal waters.

Narrator Fred Harrison then points out that many wars will be fought in the future over drinking water. Rivers are running dry, droughts are turning once fertile farmland into semi-deserts. Viewers learn that in California the super-rich are at the head of the pack for getting scarce water supplies.

Finally, the film asserts that those who have benefited from natural resource extraction had gotten off the hook with regard to damage done to the environment, including human beings, animals, and plants. Incentives are necessary to counteract the culture of greed and the harmful pollution that has happened, and is happening. John Perkins gives the example of Ecuador, whose new constitution just ratified gives land, forests, rivers, animals and plants inalienable rights. He sees this as a subtle, yet very important statement for Ecuadorans in their respect for the nation’s natural resources.

The woman closing the film goes one step further than Ecuador, calling for a Universal Declaration of Planetary Rights. She believes such an agreement is necessary to deal with the crisis, and has the added benefit of creating a seismic shift in consciousness.

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(Thank you to theIUorg at YouTube)

Tax Reform Economic Science 201.

Posted April 3, 2014

by Jerry Alatalo

“It is wrong to say that God made rich and poor; he made only male and female; and he gave them the Earth for their inheritance… The Earth, in its natural uncultivated state was, and ever would have continued to be, the common property of the human race.”

– Thomas Paine (1737-1809)

blogger7-1By separating people from their land, the foundations of whole communities were destroyed, setting the stage for suicide bombings in London and Madrid. Perhaps suicide bombers and desperate, unemployed young people who turn to violence are not fully understood in regard to their motivations. Exclusion of historical events where outside nations killed their ancestors to confiscate land and natural resource wealth results in an incomplete analysis of reasons “terrorists” do what they do.

This is by no means meant to present an apology for people who commit violent acts, but concern that a full look at the real reasons behind certain violent acts is necessary to find solutions that end such violence.

In this post the second of a three-part documentary – “Treason” – delves into the economic history of nations where young people have come to extents of hopelessness and disillusionment leading to outbursts of violent behavior. “Treason 2: The Crucible of Terror” gives viewers the circumstances in Pakistan, a country at the frontier of the fight against terrorism and fanatics. Until independence, Pakistan had been a colony of the British Empire. The British colonial government would grant those Pakistanis who sided with them large tracts of land or its tax-free occupation and use.

Pakistan today has one of the most highly concentrated land ownership situations on Earth. The vast amount of land there is either owned or controlled by very few people. It came as a surprise to learn that Pakistan’s army controls a large fraction of the nation’s agricultural industry and farmland. Mr. Mason Gaffney of the University of California talks about recent decisions by the Obama administration to send $7.5 billion to Pakistan to “improve living standards” for poor Pakistanis. Mr. Gaffney viewed the multi-billion dollar aid as an action that “will do nothing, and could be worse than nothing”.

He describes the aid as “taking money from poor people in rich places to subsidize rich people in poor places”. The Pakistani government, instead of reforming the nation’s tax system to raise revenue through land value taxation, has taken aid from America which will result in higher rents for most Pakistanis who hold no land of their own. This degradation of the financial well-being of Pakistan’s citizens increases the possibility that dissatisfaction will lead to violence in pushback to government decisions.

Fred Harrison, who wrote, narrated, and directed “Treason”, relays a Taliban movement which took large amounts of land from landlords that was eventually taken back when Pakistan’s military drove three million people off the land. Mr. Harrison notes that many of those people ended up in Karachi in conditions that he calls “hornets nests” of drugs, money-laundering, kidnapping, and other criminal behaviors.

Another economist is heard suggesting that debt relief and land reform are necessary to improve the lives of Pakistanis, pointing to the obvious negative consequences of highly concentrated land ownership.

The film goes back in history to look at England’s Henry the VIII, who is described as the person responsible for launching predatory capitalism some 500 years ago, and which has since infected the rest of the world. Henry the VIII grew fat off the land he took and sold to fellow aristocrats, eventually owning 50 stately homes in England. Other nations followed the model provided by him to begin their marches to other regions to take land, natural resources, etc. Portugal, Spain, France, Italy, and other countries joined the colonialism game, killing original residents along the way.

Africa is then discussed in the context of British-Dutch warring over land where diamonds were buried in the 1890’s. Britain gained the upper hand in the war by pushing over 100,000 Europeans into 47 concentration camps, where 250 people per week were dying – an estimated 20,000 people, including women and children died in the camps. Nobody knows, according to Mr. Harrison, how many Africans died in their concentration camps.

At any rate, DeBeers mining company owners paid 1/3 of the price of extracted diamonds for labor and capital, and pocketed the remaining 2/3.

Given the world’s history since Henry the VIII five centuries ago, including wealth inequality where 85 people have as much wealth as the world’s 3.5 billion lower half, it should come as no surprise that violence breaks out. Land value taxation, along with other beneficial reforms, offer humanity real options that can reduce violence and war while enhancing the lives of men, women, and children across the Earth.

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(Thank you to theIUorg at YouTube)