Did You Know?

15cpwby Polly Cleveland

One of New York City’s priciest and poshest addresses is 15 Central Park West, home of elegant twin limestone towers, and many celebrities. The 36-story, 202-unit building was was completed in 2008, at a cost of $950 million. Before that, this lot, on the Central Park side, had been vacant for many decades. It had been owned by a Greek shipping family, but was finally pried loose for $401 million in 2004.

On the Broadway side of the lot stood the old Mayflower Hotel. Its last resident, a 73-year old rent-controlled tenant, was paid $17 million to give up his lease.

Condos in this building have been owned by the likes of Robert DeNiro, Alex Rodriguez and various cash-loaded Russian oligarchs. Sales to date stand at $2.5 billion. Units in this building are notably good investments; apartments purchased for $5-7 million are now flipping for $30 million and up.

niceviewNew York City’s property tax system offers a sweet deal to condominium owners. Units are assessed as though they were rental apartments; their often gigantic asset value does not enter into the property tax picture at all. This has created a gigantic speculative market in luxury condos, which has spurred the recent trend toward “supertall” luxury buildings.


Confusions Concerning Money and Land

by Shirley-Anne Hardy

It is not generally understood that the vexed role of money in our society is due entirely to its underpinning by the great vexed, unresolved and ultimately all-underlying land question.

The best key to understanding this is undoubtedly the pictorial presentation of a great natural law: the Law of Rent. But it can perhaps also be quite well understood if I quote from the introductory passages to its classic version: The Iron Law of Wages — The return to labor, however great the potential of the land that is worked, and however great the individual effort put into the work, will never be greater than the return available from the most marginal land in use.

qorkitFrom the foregoing it is clear that money’s power to exploit, in our society, is bedded in its power to grant to such a society’s “landowners” the power to possess stolen goods.

Where, under the natural Law of Rent, stolen goods are ruled out, when phony landownership is abolished, there money reverts to its original, and solely beneficial, role: as a measuring device which simplifies fair exchange, in people’s desire to trade goods with one another. I place the word “landowners” in quotes, in view of Thomas Paine’s famous words that so brilliantly pinpoint our all-underlying trouble: “I never heard that the Creator opened an estate-office to issue title-deeds to land.” The human-devised deed of land-entitlement is the institutor of robbery in our society — and the creator and originator of today’s entire “money problem.”

For these entitlement-to-land deeds then proceed falsely to co-opt land into the role of capital (land may be God’s capital; it’s not ours) and thus land comes falsely to assume a monetary value, fixed according to its exchangeability with true items of capital value: things brought into being by human labor.

The total madness of co-opting land into a capital role is that land, gifted to us by a mysterious Creator, cannot be made by man. Therefore the buying and selling of land in the market, as if it were a form of capital, invites its hoarding and monopolizing. This allows the ultimate horror to operate in our society: that of an all-underlying monopoly, for nothing can be produced, no labor can be exerted, without access to land.

Advocates of political decentralization such as Kathleen Janaway are entirely lost in advocating that money should be used to buy land. In this urging such folk are “doing the Devil’s work for him!” As we have seen, it is precisely the marketing of land that the false face of money, in our society, arises out of!

Let it be repeated: the original and true role of money in our society is entirely friendly, facilitating the exchange of goods among people by a simple device of measurement. Money’s role in accumulating an unjust quantity of goods in the hands of some depends on those goods being stolen goods!

Let it further be noted that, even were money in today’s society to be done away with, we would rapidly discover who still “held all the chips” — those who hold our society’s false deeds of entitlement to land! And let us note in passing that those deeds permeate equally the entire global stock market, and all those phony mortgages (roughly 80% of which are based on the land component) which have cruelly dispossessed people from their homes and caused the banking crash.

In welcome contrast to these confusions (the Law of Rent having been strictly excluded from our educational systems, from bottom to top!) let me acknowledge Kathleen Janaway’s profound insight (In New Leaves, the journal of the Movement for Compassionate Living):

There is overwhelming evidence that true democracy cannot function on this scale of the large modern state with central government. In the so-called democracies of today, the good of all the people is certainly not achieved. On the contrary the gap between the rich and poor grows ever greater.

Society’s acute need for radical political decentralization is, in fact, responded to by the Natural Law of Rent itself, which in sorting out economic problems carries with it the radical decentralization of political power!

Fortunately, as more and more people are coming today to see, radical political decentralization is not just the only sane way for society to operate, but is also the only happy way — as is so excellently expressed in the Irish Celtic saying, “It is in the shelter of each other that people live.”

Beware the “Not So” Georgists

by Jonathan Hall

A major thing that confuses people about Georgism is that it transcends the confused mind sets of “evil state” or “good state.” Either side of that great false dichotomy is fascinated with its own spurious assumptions — and thus they both do great damage to the simple concept of peace, but in different ways.

The right thinks that private property in land is the bastion of freedom which can only be threatened by the monstrous state. But they cannot face the hypocrisy that both the landlord and the state seize, exclude, legislate and confiscate. The only standing answer to this is the poor one supplied by the left. The right seeks to destroy the left, as an ugly man might try and destroy his ugly shadow. The left then rests its case, not on any principle at all, but merely a recognition that something is wrong — which can be fixed with some good old fashioned seizing, or “virtuous taxation.”

The left say they are “here to help” — which means they are here to take control of allocation decisions: a finger in every pie, a piece of every action.

When people from the right come into Georgism, they are immediately confronted with the landlord/state hypocrisy and if they think things through, they fold on their faulty assumptions about the state being the only evil — which brings them pretty close to the Georgist truth.

One of the great successes of the Koch family assault on libertarianism is the cultivation of paranoid cranks, helping them pretend that they are the guardians of liberty. The most powerful supremacist conversion is the one that takes the energy of alienation and self-loathing and turns it into dogmatic hate. The mob thus formed is impervious to influence or reason — ready to obey political monsters.

People from the left have no core belief to give up, so no great conversion can happen there. They tend to incorporate or adapt Georgism into the mishmash of beliefs they already hold. But Georgism doesn’t really adapt; it’s just a set of associated tautologies on the meaning of freedom, and an optional but effective solution to the act of forced exclusion. Tautologies don’t bend, don’t adapt. And so, while the adapting lefty might give a wave and toss a kiss at the concept of individual freedom, they just aren’t into that. Its not their motivating assumption. And what’s worse, the right has been throwing “individual freedom” at them for years. Having never bothered to unearth the base hypocrisy of the right, the left has instead learned to ignore or even revile the concept of individual liberty.

This creates a cottage industry of ways to assail the individual via the false gods. Priorities that abandon sense: “Social contract,” “Democracy,” “Christian Charity,” “decent society,” “human dignity,” blah blah blah. These are just dressings put on the fallacious appeal to authority, to cover their particular version of utilitarianism.

The ultimate goal of the left is not to cure social problems, but to hold force. In that way the right and the left are identical. Full circle back to thieves of different colors. The right are the thieves of pre-production (land), and the left are the thieves of post-production (wealth).

This means that left versions of Georgism can’t quite give up on the sticky fingers. All this land rent becomes the manna from heaven for the CD or the BIG. (Basic Income Guarantee, a slogan worthy of Madison Ave.) Then LVT becomes a means for redistribution instead of the direct and limited reaction to the exclusion. That’s not Georgism: it’s just a raid on the recovered externality.

People, in our search for better ways to use the earth, have recognized that some decisions on the use of the commons of freedom are best not made in common. And so exclusive use is granted in that end. But this simple pragmatic act has been conflated with property in created goods, and used to excuse and perpetrate all kinds of attacks on freedom. Georgism denies that the left and right are opposites, exposing their separate hypocrisies to reveal how they are the same.

In its purest form Georgism is used to undo aggression. This sets it fundamentally apart from the agendas of the right or the left. It sets a different course that contradicts both by making only appeals to peace and the justice of freedom and equality. Instead of aggression and counter-aggression, Georgism is the way of peace.

Let’s Get Real about Money

by Lindy Davies

There has been a persistent chorus in Georgist circles about the vital importance of money in political economy and social reform. This concern isn’t new, of course — many traditions condemn usury and seek to reign in financial excess in various forms. Lately, also, it makes sense that these issues would be on our minds: we’ve just had a global economic crisis, during which a number of “too big to fail” banks had to be bailed out in order to avoid another great depression! Continue reading

“Pop Quiz” Results and Analysis

popquizby Lindy Davies

The following quiz was handed out to participants at the Detroit conference We received 29 completed quizzes — not a bad turnout for such a heady exercise. The number of respondents who chose each answer is shown at left. Of course, reasonable people can — and do! — disagree, but I announced at the time that in my mind, at least, each question had a correct answer. I attempt to explain my thinking on that, below. Continue reading

Land Is More Important than Money

by Lindy Davies

The contention that “debt money” can only be paid back with money which has itself been loaned into existence, therefore creating an ever-expanding debt that can never be fully paid, is — despite its increasing popularity — fallacious. As Fred Foldvary explained (in GJ #122), the credit-worthiness of borrowers is carefully evaluated by lenders. Borrowers can pay back their loans either by producing more wealth than they have borrowed, or consuming less (or some combination of the two) — thus having enough left over to pay back the loan with interest. If every single borrower is capable of repaying his or her loan with interest, how then can the whole society be unable to repay its debts? Continue reading

Piketty’s Model of Inequality and Growth in Historical Context

by Polly Cleveland

In Thomas Piketty’s doomsday model, slowing of growth in the twenty-first century will cause an inexorable increase in inequality. Piketty is not the first to propose a grand model of inequality and growth. To get some perspective on his model, let’s take a brief look at what the “classical” economists had to say, and how the “neoclassical” economists responded. Continue reading