SPECIAL NOTE - The two leading candidates for Mayor of Philadelphia differ sharply on the subject of land value taxation. If you want to help a campaign in favor of LVT, contact the Henry George Foundation of America for further information. Although the Foundation cannot endorse political candidates, it can explain the candidates' different views on LVT and can give you information to help you decide what to do. Send an email message to the Henry George Foundation of America at manager@urbantools.net
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GN Comments: Nicholas Rosen attended the Council of Georgist Organizations conference in Bridgeport, Connecticut. In response to our plea in last month's issue, inviting people to send in their reactions to the conference, Nicholas sent this full report. The text is a slightly edited version of a speech Rosen presented to his Toastmasters club. Incidentally, every Georgist can improve his or her public speaking and communication skills by joining a Toastmasters club.
I just got back from Montana Monday night, where I met my newest nephew - he turns two weeks old today - renewed my acquaintance with my older nephews, and feasted my eyes on the scenery, notably the Bitterroot Range.
But that's not what I'm here to talk about. For the first half of my summer vacation, back in July, I went to the Georgist convention in Bridgeport, Connecticut.
They don't have mountains there - they have boarded-up old factories and housing, they have $700,000 mansions near the beach, and they have a mayor who's interested in revitalizing the town. They also have Ted Gwartney, until recently Chief Assessor of Bridgeport, and still a resident, although now he's Chief Assessor of another town. But he updated Bridgeport's real estate assessments, and made them far more accurate, before he moved on.
For the benefit of those of you who didn't hear a couple of my earlier speeches, Henry George was a nineteenth century economist who proposed taxing only land values, not buildings, wages, sales, profits, imports, or whatever. Georgists have not had very much success putting that idea into practice, but we've had some, enough that we can point to results and tell the world that various cities and towns in Pennsylvania, Australia and elsewhere have enjoyed more construction, less blight, lower housing costs, and less homelessness after switching to taxing land more than buildings.
And that's part of what we did at the convention - telling the world, or at least a part of it. At one panel discussion, we had the mayor of Bridgeport and various other Connecticut politicians and civic activists in attendance. You've probably heard statistics about how the standard of living hasn't risen much since 1973, at least by some measures, and the distribution of wealth has become more unequal. You hear it blamed on globalization, or the Reagan tax cuts, or not enough labor unions, or something. Well, Georgists have some interesting figures connecting it to land. It's hard to afford a house on a blue collar wage because land prices have gone way up. People who already own lots of valuable land tend to be sitting pretty. As Will Rogers put it, they aren't making any more of it.
There were other sessions, more of interest to hard-core Georgists than practical politicians. Like money - who should issue it and what should it consist of? And more money - can we find more foundations and whatnot to contribute to Georgist organizations? And history - why the Georgist movement - and it was a mass movement for a while - didn't win in the late 19th century, and eventually faded into obscurity. "Great Economics and Terrible Politics," as one Georgist expresses it.
There was more, like Indian sovereignty and casinos. And Paul Martin, reporting from Nicaragua - no, not the Canadian politician Paul Martin, but a Yankee of the same name who's been teaching at his Instituto Henry George, and drawing considerable interest. He had some pictures of people in dire poverty, wealth for a few, and vacant land in the new center of Managua, along with lots of For Sale signs. There are people who own valuable land - coffee plantations, urban land and so forth - that they aren't using and aren't selling now at prices the poor can afford. They're hoping to sell it some day, at much higher prices, to Gringos, or something, and meanwhile, people aren't allowed to make a living on it.
But some of the best education took place outside the hotel where we met. We toured Bridgeport; we saw the urban blight and the McMansions. Ted Gwartney said that General Electric, which owned one huge vacant factory, was likely to sell it now that he had raised the land assessment. The 90 year old building was nearly worthless; maybe it could be rebuilt as apartments or new industry.
Paul Martin said he wanted slides of Bridgeport to show his Nicaraguan students that we have basically the same problems up here; we just have more wealth to ease the pain. I traveled to Bridgeport and back by Amtrak, and he could use pictures of Baltimore or Philadelphia, or most other towns en route too.
And I sat next to an old Georgist named Walt Rybeck on the train; he told me about serving in WW II, and his career as a newspaperman, and his Georgist activism in West Virginia, and how he had been in South America after the war - that was before he became a Georgist - and found that a lot of small businessmen in Quito, Ecuador were communists. Small businessmen? Communists?
It was like this. Here was the market, here was the cathedral, and here was the palace of the Jijon family. The businessmen living and working here paid half their income as rent to the Jijon family. They misdiagnosed the problem, which was private appropriation of rent, not free enterprise, but they were right that there was a problem.
And here's something I couldn't make up. Right after I emerged from the hotel, on my way to the train station, I was approached by a woman in late middle age, asking who I was, and so on. She was homeless, she told me. I told her we were trying to fix the homelessness problem. I gave her ten dollars and a book by Wylie Young, Antidote for Madness, explaining land value taxation. I hope the money did her some good, and if she reads the book, it may do us all some good.
GN Comments: Housing expert Ed Dodson sends in this item, with his comments.
I just finished reading the following story from the NY Times (9/21/03) about billionaire Warren Buffett's efforts to acquire a very profitable business that produces manufactured housing units. That part of the story was actually less interesting than the reporter's analysis of the market dynamics. Here is a somewhat condensed version. At the end are some comments that strike me as appropriate.
Despite the economic advantages of factory construction, the sector's linchpin is money for loans to homebuyers. Historically, it has been a difficult area for lending because many of the buyers have weak credit histories and, at least in the past, the houses tended to depreciate as cars do, in part because many were placed on leased lots. Too many bad loans in the mid-1990's resulted in hundreds of thousands of houses being repossessed, which limited the demand for building.
While lending in this sector is hazardous, a conservative approach seems to bear fruit. "Ultimately, if you do good loans, you are going to be able to make money," said Barbara Allen, housing analyst at Natexis Bleichroeder.
Over the years, manufactured housing itself has improved. In the 1950's, boxy units started popping up as companies tried to address housing shortages after World War II.
The majority of new factory-built houses are made of multiple sections and average 1,715 square feet. They tend to be similar to modest houses that are built on site. Over all, the average manufactured house sold for $51,300, according to the Census Bureau. And the median household income for the homeowners is $28,900, according to the Foremost Insurance Group.
To large house builders, factory construction provides a way to drive down material and labor costs, and to prepare for expected shortages of workers who have building trade skills.
"We need to figure out ways to build more units with fewer people," said James P. Zeumer, a spokesman for Pulte Homes Inc., in Bloomfield Hills, Mich., which builds houses under the Del Webb brand.
This fall, a Pulte operation in Manassas, Va., will begin making shells of houses: precast concrete basements and foundations, floors, walls and roofing. A shell can be built in four to five days versus 20 days at a house site, Mr. Zeumer said.
Population trends are likely to bode well for manufactured housing. Immigrants, particularly the growing number of Hispanic immigrants, will drive up demand for low-cost starter houses in the next two decades, said Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard.
Many of those immigrants are in the South and West, where factory-built housing is most established and retail outlets there are adapting to attract them. The growing ranks of baby boomers' children, now moving into early adulthood, are also increasing demand for entry-level houses.
"Manufactured housing could not only rebound, but play a very substantial role in affordable housing," Mr. Retsinas said.
As demand for these entry-level houses rises, some conventional builders will also try to capture the market.
"There is no guarantee that manufactured housing will have it all to themselves," Ms. Allen said.
The moral of the story is that the economic world that has been created is a complex web of activity, driven in contradictory directions by competing externalities. Having land value as collateral is a plus, but an increasingly risky plus as prices are being driven up and up. When financing provided to homebuyers includes almost the entire cost of land, the early years of ownership equate to a leasehold: the purchaser has no equity and could easily end up owing more than the property can be sold for if the regional economy takes a downturn and land prices do likewise.
GN Comments: The magazine, The Economist, calls it "An Innovative Land-Rights Treaty." What do you think? Here are some snips from the Economist article:
The Tlicho treaty is only the second of its kind in Canada - the first, in 1998, involved the Nisga'a of north-west British Columbia - but more may now follow. Indian claims on much of British Columbia have cast doubt on who owns what and in response, mining corporations delayed their investment. The Tlicho accord clears up the doubts by granting full rights to the aboriginals. Eight other first nations may now reach similar agreements, though claims in urban areas, such as Vancouver, will be trickier to settle.
The Tlicho are fortunate that their ancestral land abuts a diamond industry of sparkling promise, which Canada's government wants to expand. Mines at Ekati and Diavik produce diamonds worth C$1 billion ($710m) per year; a third mine is due to start production in 2006. Canada is already the world's fourth-biggest diamond producer, with 12% of the market. The Tlicho will now gain 2% of the royalties from these three mines (most of the rest goes to the federal government). But they will get all the royalties from any new mines. Though most Canadian diamonds are sent abroad for processing, the Tlicho want to make the city of Yellowknife a centre for cutting and polishing, and making jewellery.
The treaty also gives the Tlicho ownership of an area almost as big as Switzerland around Yellowknife, together with its natural resources. They will additionally get C$152m in cash over 15 years and a C$5m training fund.
Companies owned by the Tlicho (which include an ore hauler, an electricity generator and a travel agent) will have preference in the award of contracts. Their local governments will be able to make and enforce laws, collect taxes, levy royalties on mines, and regulate land use, education, family law and traditional medicine. After many years in limbo under federal control, "We're now going to have some say in our lives," said John Zoe, the Tlicho negotiator.
GN Comments: The Brookings Institution is a major think tank but it certainly has stumbled this time. In a new report, "Revitalizing Washington's Neighborhoods: A Vision Takes Shape," the Brookings scholars give a drab, weak analysis of the city's problems and propose nothing innovative.
You can view the report at: www.brook.edu/dybdocroot/es/urban/gwrp/publinks/2003/rivlinrevitalizing.pdf
The report's main point is that Washington needs a growing population to ensure its economic stability. The city's population has been declining for many years.
To get more people into Washington, the report suggests giving more money to landlords, and spending more on corporate welfare handouts to a few privileged recipients. Of course, it does not use those stark terms. Nevertheless, the report favors a "housing strategy" based around subsidies, in other words, giving money to individuals who need housing so that they can pay it into the hands of landlords, many of whom do not even live in the District. To encourage job development in Washington, the report recommends paying bribes - oh, pardon me, that's "tax increment financing" - to get businesses to locate inside the city.
Since the two major policies recommended by the report both involve spending, you would expect some discussion of tax policy and how to raise the extra money. You will be disappointed. And the report does not address the property tax shift at all, despite its proven effectiveness at bringing more affordable housing and more jobs to a city's economy in a revenue-neutral fashion.
Clearly, Washington's own active, involved, caring citizens working with the Washington Regional Network, the D.C. Statehood Green Party and other innovative groups, have simply been ignored and a comfortable, uncontroversial report has been generated. The report calls for 'dialogue' as though that is a separate little project for others to handle. The report will threaten none of the status quo and will stir new hope and excitement in no one.
The Brookings Institution, which employs some of the best minds in America, can do much better, and usually does. Anthony Downs, for instance, is a Brooking fellow who regularly supports the property tax shift.
On October 11, 2003, various cities throughout the world will host "Earth Charter Summits." The Earth Charter movement is several years old and expresses a global vision that is friendly to Georgist principles.
At the summit in Philadelphia, Georgists Alanna Hartzok and Dan Sullivan will be leading workshops. For more details, visit: www.earthchartersummits.org/locations/philadelphiapa/
And for a list of locations of the Earth Charter summits, visit: www.earthchartersummits.org/SummitCities.htm
GN Comments: We recently received this announcement from Jeffery J. Smith, president of the Geonomy Society.
We're in the track of the US Basic Income Group. It'll be US BIG's 3rd Congress. Although the meeting is in conjunction with the EEA, the BIG Congress is entirely autonomous; we welcome submissions from any discipline.
TO PROPOSE A PAPER, send a proposal including the following information:
Send your proposals to me, Jeff Smith,
geonomist@juno.com
The deadline for proposing a presentation is November 7, 2003.
Anyone who submits a paper must also be available to act as discussant. Anyone who wants to participate in a different session as a chair, discussant or presenter should email their name, affiliation and contact information to Karl@Widerquist.com
Also, could you pass this announcement on to others who may be interested?
Thanks.
More info on the EEA conference is at www.iona.edu/eea and more on BIG is at www.usbig.net
SMITH, Jeffery J.
President, Geonomy Society,
Share Earth's worth to prosper and conserve.
Eurodad is a network of European development NGOs (non-governmental organizations) working for national economic and international financing policies that achieve poverty eradication and the empowerment of the poor.
The Eurodad Annual Conference and General Assembly will be held in Prague, Czech Republic, from December 1-3, 2003. This year's theme is practically begging for Georgist input - "How can European NGOs break through the plethora of poverty and debt reduction frameworks and acronyms to fight for change in the fundamentals which perpetuate poverty?"
For full information, visit: www.eurodad.org/
Get information on the issues and regions you care about directly from the organizations working in the field.
Find out about discussion lists, email newsletters and updates, magazines and print newsletters available from environmental, health, human rights and other organizations in the U.S.
Visit the OneWorld U.S. Resource Library us.oneworld.net/section/us/resourcelibrary
GN Comments: Is your favorite Georgist organization listed in that resource library? The Banneker Center for Economic Justice has found OneWorld to be an excellent partner - perhaps you will too.
Small opportunities are often the beginning of great enterprises.
- Demosthenes
Take the first step in faith. You don't have to see the whole staircase,
just take the first step.
- Martin Luther King Jr.
There must be a beginning of any great matter, but the continuing unto the
end until it be thoroughly finished yields the true glory.
- Sir Francis Drake
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