Debt Rattle Apr 9 2014: The Great Unwashed American Energy Independence
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Ben Shahn Farmer’s daughter near Mechanicsburg, Ohio Summer 1938 The eurocrisis is over, the US Navy makes fuel from seawater, and America will be ene
[See the full post at: Debt Rattle Apr 9 2014: The Great Unwashed American Energy Independence]The world really is an appalling mess, and the sad part is that you don’t have to look far to find evidence of this. It’s everywhere, a mad grabbing at air, or at anything that isn’t nailed down, like a self-strangulation. Sucking, stripping, extracting, over-populating, corrupting…..on and on. I don’t know where we think we’re going. Where is everybody going? Nowhere.
Just my happy thoughts on the day. Thanks, Ilargi.
The Ukraine is boiling over. Most likely the split that was always there is just surfacing now, in bad economic times. When members of parliament behave like this, it’s no wonder it’s spilling out onto the streets.
https://www.theguardian.com/world/video/2012/may/25/ukraine-parliament-brawl-language-bill-video
Raleigh, with respect to the Ukraine parliament brawl, I’d sure like to see that happening daily in the Senate, House, Supreme Court, Oval Office, DOJ, etc. Unfortunately, everybody in our government seems to be playing for the same team, and that team sure isn’t the productive class.
https://www.washingtonsblog.com/2014/04/fed-sharks-part-2-housing-death-middle-class.html
Since January 2011 when I discovered this website, I’ve archived twenty-seven of Ilargi’s superb articles that i wanted never to lose. Today’s was number 28. I can’t begin to express how lucky I feel to have discovered this website back then.
Shale oil well decline is well known. As is currently increasing production of gas/oil from shale wells. But obviously this will tail off as well declines catch up. Has anyone seen any calculations/estimations as to when we can expect american shale gas/oil begin its decline curve?
What says ae ref the new technologies being developed by the frackers?
I heard that new ceramic proppants are going to double the lifetime of many wells. That means something.Whilst I find the AE meta analysis undismissable, it doesn’t factor in innovation – perhaps one of the reasons why previous doomside predictions proved to be hasty.
The AE doesn’t factor in reform either – if we could see a repeat of the sudden and spectacular rise to prominence of Henry George’s ideas, if we saw a mass movement demanding the Single Tax, I’d say there would be reasons to be cheerful.
I’m kinda asking the AE to change tack a little and push the Single Tax. The single Tax appears to fall into a very unusual category of ideas – capable of extreme enantiodromia. We all accept the notion of viral memes – well, The Single Tax, sitting in inexplicable anonymity even in the alt-econosphere (I don’t accept that this is my filter bubble’s fault) comes well equipped. It has a back story that includes Churchill and Tolstoy, and the idea itself – once fully understood – is such a brilliant one… but the fact is very few people do appear to understand it. I’ve heard several politicians speak about it and they don’t get (r avoid) the depth of the change it can make. Michael Hudson, I now grasp, has been banging on about this issue all along – but he talks too fast for people to understand. I didn’t get it until recently.
“Ultimately, Georgist policy saves the cost of civil disturbances and insurrections, and/or the cost of putting them down. ” – Mason Gaffney
More from Mason Gaffney:
“Henry George as reconciler and problem-solver”
Let us itemize the several constructive reconciliations in George’s reform proposal. This will explain its wide potential appeal, hence its ongoing threat to embedded rent-takers with a stake in unearned wealth. It will explain why they had neo-classical economists working so hard to put this genie back in the bottle.1. George reconciled common land rights with private tenure, free markets, and modern capitalism. He would compensate those dispossessed and made landless by the spread and strengthening of what is now called “European” land tenure, whose benefits he took as given and obvious. He would also compensate those driven out of business by the triumph of economies of scale, whose power he acknowledged and even overestimated. He proposed doing so through the tax system, by focusing taxes on the economic rent of land. This would compensate the dispossessed in three ways.
a. Those who got the upper hand by securing land tenures would support public services, so wages and commerce and capital formation could go untaxed.
b. To pay the taxes, landowners would have to use the land by hiring workers (or selling to owner-operators and owner-residents). This would raise demand for labor; labor spending would raise demand for final products.
c. To pay the workers, landowners would have to produce and sell goods, raising supply and precluding inflation. Needed capital would come to their aid by virtue of its being untaxed.
Thus, George would cut the Gordian knot of modern dilemma-bound economics by raising demand, raising supply, raising incentives, improving equity, freeing up the market, supporting government, fostering capital formation, and paying public debts, all in one simple stroke. It’s quite a stroke, enough to leave one breathless.
In practice, landowners faced with high land taxes often choose another, even better, course than hiring more workers: they sell the land to the workers, creating an economy and society of small entrepreneurs. This writer has documented a strong relationship between high property tax rates, deconcentration of farmland, and intensity of land use (Gaffney, 1992).
2. George’s proposal lets us lower taxes on labor without raising taxes on capital. Indeed, it lets us lower taxes on both labor and capital at once, and without lowering public revenues.
3. Georgist tax policy reconciles equity and efficiency. Taxing land is progressive because the ownership of land is so highly concentrated among the most wealthy, and because the tax may not be shifted. It is efficient because it is neutral among rival land-use options: the tax is fixed, regardless of land use. This is one favorable point on which many modern economists actually agree, although they keep struggling against it.
George showed that a tax can be progressive and pro-incentive at the same time. Think of it! An army of neo-classicalists preach dourly we must sacrifice equity and social justice on the altar of “efficiency.” They need that thought to stifle the demand for social justice that runs like a thread through The Bible, The Koran, and other great religious works. George cut that Gordian knot, and so he had to be put down.
The only shifting of a land tax is negative. By negative shifting I mean that the supply-side effects of taxing land will raise supplies of goods and services, and raise the demand for labor, thus raising the bargaining power of median people in the marketplace, both as consumers and workers. This effect makes the tax doubly progressive: it undercuts the holdout power and bargaining power of landowners vis-a-vis workers, and also vis-a-vis new investors in real capital. This effect also makes the land tax doubly efficient.
4. A state, provincial, or local government can finance generous public services without driving away business or population. The formula is simple: tax land, which cannot migrate, instead of capital and people, which can. By eliminating the destructive “Wedge Effect,” the land tax lets us support schools and parks and libraries and water purification and police and fire protection, etc., as generously as you please, without suppressing or distorting useful work, and without taxing investors in real capital.
5. Georgist tax policy contains urban sprawl, and its heavy associated costs, without overriding market decisions or consumer preferences, simply by making the market work better. Land values are the product of demand for location; they are marked by continuity in space. That shows quite simply that people demand compact settlement and centrality. A well-oiled land market will give it to them.
6. Georgist tax policy makes jobs without inflation, and without deficits. “Fiscal stimulus,” in the shallow modern usage, is a euphemism for running deficits. George’s proposed land tax might be called, rather, “true fiscal stimulus.” It stimulates demand for labor by promoting hiring; it precludes inflation as the labor produces goods to match the new demand. It precludes deficits because it raises revenue. That is its peculiar reconciliatory genius: it stimulates private work and investing in the very process of raising revenue. It is the only tax of any serious revenue potential that does not bear down on and suppress production and exchange. As I said, George takes two problems and composes them into one solution.
7. George’s land tax lets a polity attract people and capital en masse, without diluting its resource base. This is by virtue of synergy, the ultimate rationale for Chamber-of-Commerce boosterism. Urban economists like William Alonso have illustrated the power of such synergy by showing that bigger cities have more land value per head than smaller ones. (Land value is the resource base of a city.) Urbanists like Jane Jacobs and Holly Whyte have written on the intimate details of how this works on the streets. Julian Simon (The Ultimate Resource) philosophizes on the power of creative thought generated when people associate freely and closely in large numbers. Henry George made the same points in 1879.
8. Georgist policies let us conserve ecology and environment while also making jobs, by abating sprawl. It is a matter of focusing human activity on the good lands, thus meeting demands there and relieving pressure to invade lands now wild that are marginal for human needs. Urban sprawl is the kind of sprawl most publicized, but there is analogous sprawl in agriculture, forestry, mining, recreation, and other land uses and industries.
9. Georgist policies let us strengthen public revenues while in the same process promoting economy in government.
Anti-governmentalists often identify any tax policy with public extravagance. Georgist tax policy, on the contrary, saves public funds in many ways. By making jobs it lowers welfare costs, unemployment compensation, doles, aid to families with dependent children, and all that. It lowers jail and police costs, and all the enormous private expenditures, precautions, and deprivations now taken to guard against theft and other crime. Idle hands are not just wasted, they steal and destroy.
Ultimately, Georgist policy saves the cost of civil disturbances and insurrections, and/or the cost of putting them down. In 1992 large parts of Los Angeles were torched, for the second time in a generation, pretty much as foreboded by Henry George in Progress and Poverty. Forestalling such colossal waste and barbarism is much more than merely a “free lunch.”
George’s program would abort other, less obvious wastes in government. It obviates much of the huge public cost now incurred to reach, develop, and safeguard lands that should be left in their natural submarginal condition. Today, people occupy flood plains and require levees, flood control dams, and periodic rescue and recovery spending. Others scatter their homes through highly flammable steep brushlands calling for expensive fire-fighting equipment and personnel, and raising everyone’s fire insurance premiums. Others build on fault lines; still others in the deserts, calling for expensive water imports. Generically, people now scatter their homes and industries over hundreds of square miles in the “exurbs,” or urban sprawl areas, imposing huge public costs for linking the scattered pieces with the center, and with each other.
This wasteful, extravagant territorial overexpansion results from two pressures working together. One force is that of land speculators manipulating politics seeking public funds to upgrade their low-grade lands so they may peddle them at higher prices. The other force is that of landless people seeking land for homes, and jobs, and public funds for “make-work” projects.
Both these forces wither away when we tax land value and downtax wages and capital. This moves good land into full use, meeting the demand for land by using land that is good by Nature, without high development costs. It also makes legitimate jobs, abating the pressure for “make-work” spending. Above all, it takes the private gain out of upvaluing marginal land at public cost. Such lands, if upvalued by public spending, will then have to pay for their own development through higher taxes.
Those nine compelling features of George’s program should be enough to persuade one that it had the potentiality of becoming very popular. Its premise, however, was socializing land rents through taxation. Its very strengths were its undoing, then, by evoking a powerful, intransigent, wealthy counterforce.
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