Why Not Tax Monopoly Rents?

Some interesting material coming out of Prosper Australia is a Melbourne-based organization and its partners, Earthsharing Australia and the Land Values Research Group.  A new report entitled “Total Resource Rents:  Harnessing the Power of Monopoly” (pdf file) finds that nearly one-quarter of Australia’s GDP comes from unearned income, not the 2% that neoclassical economists claim. 

This means that ten times greater revenue could be raised through taxing unearned income from monopolies than previously thought.  It also means that nearly half of Australia’s government revenues could be raised through channeling revenues from the real estate boom to more productive purposes.  In the process, income, company and sales taxes – along with 122 other current taxes – could be eliminated.

Report author Karl Fitzgerald, “the Renegade Economist,” describes the implications of the findings of the report:

“Unearned incomes equate to 23.6% of GDP and could be taxed without pushing up pricing structures. Most economists dismiss economic rents at just 2% of GDP. This report finds the free lunch driving the wealth gap is ten times greater than mainstream economists acknowledge. 

“Prices could fall by some 20% by reducing the number of taxes from 126 to 24” stated Fitzgerald. “The compliance and deadweight losses are a huge cost that fall disproportionately on small business.”  This reform offers a more efficient and equitable economic system, valuing productive over speculative activities.

Australia taxes productive work while averting its eyes from the incredible windfall gains handed to those who own monopoly rights. Victorian abalone licenses were sold outright for just $6 in the late 1960′s. Each license can now be leased out yearly for a reported $100,000. This unearned income can be taxed without affecting productive outcomes.

Five years ago I wrote about the concept of “sousveillance,” which was then a budding counterpoint to surveillance. Surveillance, of course, is the practice of the powerful monitoring people under their dominion, especially people who are suspects or prisoners – or today, simply citizens.  Sousveillance -- “to watch from below” – has now taken off, fueled by an explosion of miniaturized digital technologies and the far-reaching abuses of the surveillance market/state. 

Following my earlier post on corporate espionage of activists, I figured it was an appropriate moment to revisit this topic.  As it happens, the fellow who coined the term “sousveillance,” in 1998 -- Steve Mann, a pioneer in “wearable computing” who teaches at the University of Toronto – has recently written two terrific essays on the subject.  Both were released at the IEEE [Institute of Electrical and Electronic Engineers] International Symposium on Technology and Society (ISTAS) in June 2013. 

Mann argues that sousveillance is an inevitable trend in technological societies and that, on balance, it “has positive survival characteristics.”  Sousveillance occurs when citizens record their encounters with police, for example. This practice exposed the outrageous police brutality against Occupy protesters (blasts of pepper spray in their faces at point-blank range) and helped transform small citizen protests against Wall Street into a global movement.

In the first of his paired essays, Mann writes:

We now live in a society in which we have both “the few watching the many” (surveillance), AND “the many watching the few” (sousveillance).  Widespread sousveillance will cause a transition from our one-sided surveillance society back to a situation akin to olden times when the sheriff could see what everyone was doing AND everyone could see what the sheriff was doing.  We name this neutral form of watching “veillance” – from the French word “veiller,” which means“to watch.”  Veillance is a broad concept that includes both surveillance (oversight) and sousveillance (undersight), as well as databeillance, uberveillance, etc.

It follows that: (1) sousveillance (undersight) is necessary to a healthy, fair and balanced society whenever surveillance (oversight) is already being used; and (2) sousveillance has numerous moral, ethical, socioeconomic, humanistic/humanitarian and practical justifications that will guarantee its widespread adoption, despite opposing sociopolitical forces.

(This passage is from “Veillance and Reciprocal Transparency:  Surveillance versus Sousveillance, AR Glass, Lifeglogging and Wearable Computing,” available as a pdf download here. A companion essay, “The Inevitability of the Transition from a Surveillance-Society to a Veillance-Society:  Moral and Economic Grounding for Sousveillance,” can be found here.

There are the official stories that we tell ourselves about constitutional democracy and citizen rights -- and then there are the ugly political realities of the struggle against unaccountable power.  Gary Ruskin, a veteran activist (most recently in the California voter initiative for GMO labeling), shines a bright light on the latter in a new report, Spooky Business:  Corporate Espionage Against Nonprofit Organizations (pdf file), just published by Essential Information

Ruskin’s report exposes a world about which we have only fragmentary, accidental knowledge.  But enough IS known to confirm that large corporations carry out a broad range of corporate espionage activities against citizen activists for exercising their constitutional rights (to petition their government for change and to publicly speak out on public policies).  

“The corporate capacity for espionage has skyrocketed in recent years,” writes Ruskin.  “Most major companies now have a chief corporate security officer tasked with assessing and mitigating ‘threats’ of all sorts – including from nonprofit organizations.  And there is now a surfeit of private investigations firms willing and able to conduct sophisticated spying operations against nonprofits.”  Many of these “security” personnel are former intelligence, military and law enforcement officers who once worked for the Central Intelligence Agency (CIA), National Security Agency (NSA), US military, Federal Bureau of Investigation (FBI), Secret Service and local police departments. 

None of this should be entirely surprising.  The early labor movement in the US was often illegally attacked and infiltrated by Pinkerton thugs.  In 1965, General Motors notoriously hired private detectives to investigate Ralph Nader’s private life and try to dig up incriminating information about him.  Nader, then a 31-year-old unknown, had just published a book, Unsafe at Any Speed, which exposed the designed-in dangers of automobiles.  The revelation of GM’s tactics and its awareness of its cars’ defects unleashed a ferocious backlash, enough to make Nader a famous crusader and to spur enactment of a new federal agency to regulate auto safety.  More recently, police and corporate infiltration of the Occupy movement has occurred.  (David Graeber’s recent book, The Democracy Project, has some good accounts of this.  See also The Progressive magazine.)

While Ruskin concedes that his accounts represent only “a few snapshots, taken mostly at random arising from brilliant strokes of luck,” his report documents an alarming range of acts of corporate espionage or planned espionage.  Among the highly unethical and/or illegal acts committed:  surveillance, infiltration, manipulation and dirty tricks.

How to Build a “Shareable City”

Shareable and the Sustainable Economies Law Center have released a fantastic new report surveying the ways in which cities can adopt policies to promote “sharing” in a range of areas -- food, housing, transportation and jobs.  The landmark report, “Policies for Shareable Cities:  A Sharing Economy Policy Primer for Urban Leaders,” pulls together “scores of innovative, high impact policies that US city governments have put in place to help citizens share resources, co-produce, and create their own jobs.” 

What exactly is a “sharing city”?  It’s one that encourages carsharing and bikesharing programs through specific policies, such as designating “pick-up spots” for ridesharing and altering local taxes to make carsharing more attractive.  A sharing city is one that encourages urban agriculture on vacant lots and allows homegrown vegetables to be sold in the neighborhood.  A shareable city supports innovations like shared workspaces, shared commercial kitchens, community-financed start-ups, community-owned commercial centers, and spaces for “pop-up” businesses.  It also encourages home-based micro-enterprises by lowering permitting barriers.

What’s impressive about this 40-page report is that it provides a practical action plan that any city could pick up and implement immediately.  Yes, there are larger federal and state policies that could help make cities more shareable and liveable, but it is a misconception that only such big, bold policy reforms will work.  Municipalities can take a wide number of modest steps right now that, by supporting the "micro-dynamics" of social life, can have enormous macro-impacts on the affordability, social fabric and quality of life of a city.  As a report focused on American cities, it’s unclear to me how far the policy recommendations may apply to non-American cities....but I suspect that many of the ideas could work abroad.  

The report’s introduction explains the rationale behind the shareable city:

The sharing economy challenges core assumptions made in the 20th century planning and regulatory frameworks – namely, that residential, commercial, industrial and agricultural activities should be physically separated from one another, and that each single family household operates as an independent economic unit.  The sharing economy brings people and their work back together through sharing, gifting, bartering, and peer-to-peer buying and selling.  City governments can increasingly step into the role of facilitators of the sharing economy by designing infrastructure, services, incentives and regulations that factor in the social exchanges of this game-changing movement. 

In a crazy twist of Italian politics – in a nation known for its zany political life – the Roman lawyer, scholar and commoner Stefano Rodotà unexpectedly became the presidential candidate of the Five Star Movement in Italy, the rising political force there.  The amazing thing is, he nearly won!         

Rodotà is a kindly, clever, fiercely intelligent and straight-shooting left-wing legal scholar and politician.  Now nearly 80 years old, Rodotà is a something of a grey eminence in Italian politics.  He has served four times in the Italian Parliament and once in the Parliamentary Assembly of the Council of Europe.  He helped write the Charter of Fundamental Rights of the European Union.  He has taught at universities in Europe, Latin America, the US and India.

The recent success of the Five Star Movement (M5S) in the February 2013 elections abruptly opened up this opportunity for Rodotà and the commons.  M5S was launched in 2009 by a comedian and activist, Beppe Grillo, to focus on five key issues – public water, sustainable transportation, development, connectivity and environmentalism.  The movement is less of a real party than a cultural vehicle for voters to express resentment, frustration and hostility toward the political class in Italy.  M5S is generally populist and libertarian in orientation, sometimes with a right-wing flavor (anti-immigrant policies). But Grillo is a showy amateur as a politician and not exactly a small-d democrat (he gives no press interviews and doesn’t welcome debate within M5S).

Still, the movement's issues and profile are compelling enough that M5S won more than 25 percent of the vote in the February 2013 elections – second only to the Democratic Party, which won only a fraction more votes.  Forming a government in a country with dozens of political parties can be a difficult proposition, however, especially when personalities, political history, ideology and various odd circumstances are thrown in.    

Stealing from the Future

Borrowing from the future without understanding the actual risks, and then spending the money carelessly?  Sounds like Wall Street all over again. But this time, it's a little-known tax mechanism known as tax-increment financing, or TIF.

TIF is an ingenious local economic development tool that lets city governments borrow against future tax revenues for a given area of town in order to invest in new projects today. While TIFs can work as intended and spur development, they are also highly vulnerable to abuse because their details and implementation are shrouded in complexity: a convenient temptation for expedient politicians.

TIF lets politicians borrow money from the city's future tax base, and then spend it on development projects with minimal public or legislative oversight. The scheme is sustained by the the supposition that the TIF bond money, if well-spent today, will pay for itself with future tax revenues generated by new development.

Next, the Market Consumes the State

Always on the prowl for new assets to exploit, investors are trying to push some of the crown jewels of American government – land, highways, civic infrastructure – onto the auction block.  From the perspective of the owners of these assets, we the American people, it’s a terrible time to strike a deal.  Why sell off prime equity assets in a down market for a fraction of their actual value?  Ah, but that’s the point, from the point of view of investors:  Let’s snatch these assets for a song while governments are so desperate for cash! 

The latest example is a 387-acre tract of land in West Los Angeles that has long been prized as a precious bit of open space in an over-built city.  The land is owned by the Veterans Administration, and is estimated to be worth $5 billion in today’s market.

As the Wall Street Journal (July 16) reports, “For 25 years, wealthy locals and veterans groups—backed by California's congressional delegation—have successfully resisted efforts to sell or develop the land, delighting in the open space and fearing the consequences of development.”  But now the GOP – with scant resistance from Democrats – is pushing to sell off the land in order to raise money.

I’ve always been uncomfortable using the words “developing” and “developed” when talking about countries.  At a certain intuitive level I felt that that very axis of valuation was wrong.  Should the United States be considered the apotheosis of “development” – an obvious ideal of human progress and satisfaction that the rest of the world should emulate? 

In light of the many unsustainable ecological and social pathologies that the neoliberal market order has spawned, that seems presumptuous, if not ridiculous.  Similarly, to call India or Brazil or Costa Rica a “developing” country is to imply that they are lagging behind the “developed” nations even though their cultures may be far healthier and happier than ours. 

So how did the whole discourse of “development” and its theory of value get going in the first place, and evolve into the international ideal of human aspiration?  I just had a crash course on that topic by reading a fantastic book, The History of Development:  From Western Origins to Global Faith, by Gilbert Rist, a Swiss scholar of development.  The book first appeared in French in 1996, and was translated into English only in 2008; the latest edition, the third, by Zed Books, came out in 2010.

A federal judge has ruled that Google’s ambitious attempt to digitize all books, including those for which the copyright holders cannot be found, cannot go forward as planned.  That’s great news.  It will prevent Google from claiming a de facto monopoly over millions of “orphan works” whose copyright holders cannot be found.  The company will not be able to charge exorbitant prices for access to books that ought to be free or at-cost. 

Even better, the rejection of Google’s plan means that the nation’s libraries and research institutions can now entertain the idea of building their own repository of digitized books.  It can be a real commons, and not a “free” proprietary platform that would come with all sorts of strings attached. 

Robert Darnton, the director of the Harvard University Library, makes these points in a terrific oped piece in the NYT today.  After detailing why Google’s book project deserved to be rejected, Darnton asks:  Why not build a digital library better  than Google’s?  Let’s build “a vast collection of resources that can be tapped, free of charge, by anyone, anywhere, at any time,” he writes.

A memorable Dilbert cartoon strip features Dogbert as a “creativity consultant” who is directed by his boss to come up with some hard quantitative data.  The boss barks:  “The only way to make decisions is to pull numbers of the air, call them ‘assumptions,’ and calculate the net present value.”  The punchline:  “Of course, you have to use the right discount rate, otherwise it’s meaningless.”

That encapsulates the faux-rigor of regulatory decisions for protecting health, safety and the environment.  Ascertaining the dollar value of human life using the most rigorous science possible is a politically useful charade. 

As the New York Times recently reported, the scientifically determined value of a life at the Environmental Protection Agency has gone up from $6.8 million in the Bush II years to $9.1 million at present.  Across town, the FDA decides whether to ban an unsafe drug based on a valuation of $7.9 million per life.  In deciding whether automakers will install new safety features, the Transportation Department figures $6 million.

Syndicate content