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LVTFan’s Blog

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August 08, 2014

Some thoughts about Piketty’s “Capital in the 21st Century”

I posted this comment elsewhere, and thought it worth sharing here:

I’ve not read far into the book yet — and it is available online as a PDF file — but by the time I was into the first chapter, it was clear that Dr. Piketty’s economic education, extensive as it might be, entirely omitted the ideas of the classical economists who described a 3-factor economy: land, labor and capital. Piketty, like nearly everyone educated in economics in the past 40 to 80 years, writes as if there were only two factors — labor and capital — treating land as if it were a mere subset of capital, with no reason to recognize it as differentiated.

Land — not only urban sites, but also the other things the classical economists would recognize as Land, such as water rights, oil, electromagnetic spectrum (our airwaves which we all say belong to the American people, but which are in reality owned by corporations), landing rights at busy landlocked airports, geosynchronous orbits, urban street parking, the value of dozens of other non-renewable natural resources — is completely different in character from that which is created by labor. To fail to recognize that difference lies at the bottom of our inequality problem.

That which individuals and corporations produce is rightly individual property. That which the community and nature produce is rightly common property, belonging to all of us. Conflating Capital and Land leads us to permit the privatization of that which is rightly our common treasure.

You might be interested to know that the Landlord Game, invented by 1902, was intended to teach this concept. You have probably played Monopoly, which was based on this game, played with very different rules.

Explore the ideas of Henry George. Between 1885 and 1900 or so, everyone knew the name and many well understood his ideas. You might start with “Social Problems” or the more analytical “Progress and Poverty,” or his speeches, “The Crime of Poverty,” “Thou Shalt Not Steal,” among others, online at http://www.wealthandwant.com. See also http://lvtfan.typepad.com.

Dr. Piketty and others whose education in economics has omitted George’s ideas should not be treated as experts; they’ve mixed apples and oranges and not noticed that what they’ve created impoverishes the vast majority of us — and enriches a few. (Parenthetically, consider who donates heavily to our universities.)

Posted on August 08, 2014 at 10:31 PM in a wedge driven through society, capital gains are land gains, classical economists, Earth for All, ecosystem services, fixing the economy, Henry George, income concentration, inherited wealth,land different from capital, land value created by community, land, labor and capital, location, location, location, make land common property, Monopoly and The Landlord’s Game, Monopoly and The Landlord’s Game , one solution for many problems, Piketty, privatization, Progress and Poverty, reaping what others sow, rich people’s useful idiots, socializing risk and privatizing profit, special interests, trickle-down economics, urban land value, wealth distribution or concentration | | Comments (1)

April 14, 2014

Better Insurance Against Inequality – NYTimes.com

Better Insurance Against Inequality – NYTimes.com

Better Insurance Against Inequality

APRIL 12, 2014

Economic View By ROBERT J. SHILLER

Paying taxes is rarely pleasant, but as April 15 approaches it’s worth remembering that our tax system is a progressive one and serves a little-noticed but crucial purpose: It mitigates some of the worst consequences of income inequality.

If any of us, as individuals, are unfortunate enough to have income drop significantly, the tax on that income will plummet as well — and a direct payment, or negative tax, might even be received from the government, thanks to the earned-income tax credit. In this way, the tax system can be viewed as a colossal insurance system, guarding against extreme income inequality. There are similar provisions in other countries.

But it’s also clear that while income inequality would be much worse without our current tax system, what we have isn’t nearly enough. It’s time — past time, actually — to tweak the system so that it can respond effectively if income inequality becomes more extreme.

“Respond effectively if”???

How about policies that would prevent a large portion of our current income inequality by either pre-collecting, for public purposes, the economic rent which rent-seekers love to capture as long as we let it hang out there, or putting a market price on privileges of various kinds — the right to collect tolls, the right to use the airwaves, the right to string wires of various kinds along public rights-of-way, to occupy other parts of the commons and charge others to use what one puts on it.  One could call it “natural public revenue.”
Bob Schiller knows some of the ways people grow wealthy in their sleep, without lifting a finger.  He knows aboutboom-bust cycles, and the economic agony they cause to ordinary human beings in our society.  He chronicles, he measures, he profits from the selling of those measurements.
Probably once or twice it has passed through his mind that by some simple alterations to public policy, we could make our economy more stable, our society more just.
Perhaps he has played the game Monopoly, and maybe he knows that it was not created in the 1930s, but has its roots in The Landlord’s Game, created by late 1902, to teach the ideas of Henry George, who, it is likely, was at least mentioned in his Eco 101 textbooks, though perhaps glossed over by a busy and unaware instructor.
Does he seek to reduce the income inequality by preventing it, or only collecting some piece of the privilege-payments after the fact without tweaking the system that permits them even a tiny bit?
Milton Friedman, another economic eminence, maintained that land value tax was the “least bad” tax, but never lifted his voice to promote it further than that acknowledgment (in 1968 and 2006 and perhaps in between).  He likely had other kinds of interests top of mind.
Let’s not just “mitigate the worst effects.”  Let’s acquaint ourselves with the structures that create those worst effects, and destroy them!  Go to the root!  Be radical!  Eradicate those structures!
It was Henry David Thoreau who said,

“There are a thousand hacking at the branches of evil to one who is striking at the root.”

Dare Professor Schiller strike at the root?  Dare he point to the root?  Has he sought the root?  Or is he content with hacking — nibbling — at branches, which doesn’t help the victims a tenth as much as striking at the root?
Ironically, Professor Schiller is the “Sterling Professor of Economics” at Yale. That seat was endowed by Jack Sterling (1844-1915), co-founder of the law firm Shearman & Sterling with Thomas G. Shearman (1834-1900)*, upon his death in 1918.  Shearman knew where the root was, and devoted himself to seeking its eradication. (Explore the NYT archives for references.)  It is ironic that nearly 100 years later, the occupant of that seat (and many other things at Yale) is content with nibbling.  But maybe it isn’t surprising.  Lots of alumni would not be happy to have those roots identified, and even a tenured professor could be uncomfortable being the one to call attention.   They might be the ones who endow the next set of professorships, from the gains they’ve made based on the unjust and unwise structures their respected — and aspiring — professors have failed to publicly question.
*See:
Let’s not “insure against inequality.” (Who gets to collect that insurance, and how does it compare to theirlosses?)  Let’s find ways to create a level playing field on which all can prosper.   Sustainable and just to all.
And let’s see about making it okay for tenured professors to share those ideas with their readers and students.  And more profitable than promoting structures that need to be “insured against.”

Posted on April 14, 2014 at 09:03 PM in boom-bust cycles, economic rent, Henry George, Monopoly and The Landlord’s Game, Monopoly and The Landlord’s Game , Natural Public Revenue, radical, rent-seeking, Thomas G. Shearman ||Comments (0)

http://www.wealthandwant.com/George_P&P.html

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Published by auntyuta

Auntie, Sister. Grandmother, Great-Grandmother, Mother and Wife of German Descent I've lived in Australia since 1959 together with my husband Peter. We have four children, eight grandchildren and two great-grandchildren. I started blogging because I wanted to publish some of my childhood memories. I am blogging now also some of my other memories. I like to publish some photos too as well as a little bit of a diary from the present time. Occasionally I publish a story with a bit of fiction in it. Peter, my husband, is publishing some of his stories under berlioz1935.wordpress.com

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  1. I have the same problem with Piketty’s book. Not only does he fail to mention LVT, but he fails to mention the role private banks have played in the current crisis by creating new debt-based money out of thin air. Finally he doesn’t mention the fallacy of unlimited economic growth in a planet with limited resources and impending ecological collapse.

    In this way he shares the blindness of other “Wall Street” economists. The only solution to our current economic mess is to transition towards a steady state economic, which can only happen if governments adopt sovereign money and an LVT.

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