Read this innovative Helo Magazine interview. As a crisis journalism magazine, we were interviewed via a skype roundtable chat session:

Part of the intro states:

Can Pacific peoples bridge the world’s chasm between understanding cause and effect of climate change as well as coconut colonialism? Paradise, blue water, blue skies, abundant marine life, smiling faces, bible harmonies, simple lives, and resorts for cashed-up suburbanites. Or abject poverty, menacing kava stares, razor wire, machete-wielding youth, laplap dictatorships, tribal violence and raskol gangs running amok.

We jump into the interview:

Karl: My answer is to use the language of the corridors of power to fight back:  Use economic lingo to protect the earth, the community. Also, foreign aid has to be carefully looked at. Throughout Melanesia, aid has built ring roads around islands and new wharfs so the Multi-National Corporation’s (MNC’s) can rip out the resources quickly. Thirteen such projects by the Millennium Development Corp in Vanuatu. [For example] the ring road is almost finished on the main island of Efate.

Daniel J Gerstle, HELO Editor:  Forgive me, but given that foreign aid development may need to be done with more fairness, particularly in terms of MNC, does it really follow that you consider those ring roads and development unhelpful to the indigenous people in other ways, in terms of infrastructure, healthcare logistics, and markets?

Karl: More resource-based greed is showing through in the carbon cowboys scouring Papua New Guinea (PNG), and I bet other Pacifica islands. Check the comments re: Kirk Roberts.

The roads do improve life in the short run—less dust for local communities, quicker travel times – are dwarfed by the motivations these improved services provide to land sharks. Land becomes hugely valuable when you can fly into an airstrip in the north of Efate, one of the 13 infrastructure projects being built in Vanuatu, and zip off to the coastal mansion you have. All with little interaction with the locals, missing the urban drift in Vila. When this happens the local fisheries are fenced off by these essentially gated communities and the locals can no longer live off the land.

They have to head into town to work for the man. This form of dispossession has racked all developing countries where land scarcity delivers more workers to the smokestack MNC’s, and thus cheap labour. Check out the land speculators paradise: They have the cheek to call it barrier beach! To turn it into a marketing ploy when the locals can’t fish there no more!!! This site is in Santo, the 2nd biggest island in Vanuatu. 

Elite property investors are attracted to this slick site. Check it out and invest with a click of a button, with no thought of the impact on the local community. The Washington consensus has been aiming for this, for the flexibility of capital to swoop into a country and buy up a prime location, sell it a year later to make a killing. This is happening to all of the world’s most beautiful areas, particularly those like in the pacific where private land title is barely thirty years old.

Read more at HELO

photo credit: NomadicLass

Renegade Economists Podcast 131

As broadcast on Wed March 10th, 2010 on 3CR
Subscribe to the podcast

Show Notes:
The Communication in Commons: Natalie Pang, Visiting Research Fellow, Nanyang Technology Co Uni (Singapore) discusses the evolution of the digital commons and what access issues we must be aware of.

Read more of her excellent work:
Wiki on the Knowledge Commons
On Bounded Rationality
Thesis

On Nauru (re DJ Spooky interview last week):
6 Principles for Resource Wealthy countries:

1. Transparency – all royalty revenues must be documented either on a public website, and/ or on a Council noticeboard in the city square etc.
2. A Permanent Trust Fund must be set up, following the same rules of transparency. The Alaska Permanent Trust Fund is the benchmark, where only the interest earnt is paid out as a Citizen’s Dividend.
3. Participatory Democracy – all citizens vote on their priorities for proposed budgetary expenditures
4. An environmental bond of $1million must be placed in a holding trust on condition that certain environmental standards are met throughout the operation and at the closure of the mine.
5. Royalties – charged at a minimum of 30% at the ‘farm gate’ price (30% of the market value as it leaves the mine/ farm). No fixed price to be agreed upon in contractual negotiations.
6. Beware of the resource wealth cascading into higher land prices (and thus mortgaged costs AKA bank profits). This brings into play the bigger issue of genuine land reform.

Music

Suzanne Kraft – Lovely
Entertainment for the Braindead – Pirates
Misanthrop – Commercialism

photo credit: waferboard

Land in Short Supply in Perth

The Urban Development Institute says there are currently fewer than 1400 blocks of land for sale in Perth.
..
But, the Real Estate Institute believes there are a lot of speculators sitting on land waiting for prices to improve before releasing them for sale.

The UDIA is concerned that with 1200 migrants visiting Perth each week, the 1400 blocks of land for sale is insufficient to address affordability.

With only 7 auctions last weekend and 20 on Feb 21, for example, it seems that the property downturn in Perth is still in effect. How many other blocks are being withheld and aren’t up for ransom at present?

With higher populations, the demand for land will rise. The REI rightly states that many speculators are sitting on idle blocks waiting for money to grow on trees.

Higher populations should encourage development upwards, not outward. Prime locations become more valuable, ensuring that owners have to make their land more productive to warrant the investment.

The issue is that with more and more builders turning to land banking as a means to an ends – free skiing in Aspen funded by you the taxpayer, you the worker – there is less motivation to build upwards.

This trend will hit the Rudd Government this election year. The rush to remove democratic rights of appeal for local communities in a bid to counter the private sector’s preference for land banking, may well cost some Victorian ALP members their seats.

When will government’s of all persuasions look lobbyists in the eyes and tell them to disappear? Land banking is not only forcing our mortgage costs through the roof, but it is robbing communities of our best and brightest people. How many GP’s have given up their practice for such speculative activity?

Renegade Economists Podcast 130

As broadcast on the mighty 3CR – Wed March 03, 2010
Subscribe to the podcast

Show Notes – ‘All Puns Intended’
Internationally acclaimed multimedia artist Paul Millar (DJ Spooky) discusses his Nauru Elegies project. Hear with interest how Nauru, the modern day equivalent of Easter Island, has overexploited its resource base.

Neo-colonial resource stripping amidst poor economic policy have much to answer for.

The multimedia show touring the globe highlights: “Polyphonic issues including matters of ecology and raw material (phosphate), geo-political history, virtual-banking and economic corruption, global climate issues and information networks.

The interview, recorded on the Yarra River, features music from DJ Spooky’s new album, the Secret Song.

Download the interview (30mins)

photo credit: dbgg1979

Today’s Crikey had this corker:
The housing market:

Ben Loiterton writes: I am hoping you are alert to a gigantic sleeper issue building up steam in the community, although I haven’t seen any commentary from you at all.

The issue is the alienation of the entire younger half of the population from the housing market as the bubble keeps inflating due to deliberate Government policies and the relaxation of laws allowing foreign home-buyers to bid up prices.

Even though we have the most expensive (and over-geared) houses in the world, it seems all the baby boomers really don’t want a house price correction — which is not surprising give they own 95% of the equity in Australian residential assets. Also seems the banks are not too keen either now that they have given up on being commercial banks (lending to businesses) and have, in effect, become giant mortgage funds … (that in itself could be a big problem for the country if the bubble deflates!).

Most folk under the age of about 40 in this country are simmering with anger — either they cannot get into the market and are paying record rents, or they are in the market in tiny units and semis but can’t afford to upgrade to family homes when they have kids.

The resentment is starting to really boil — just see the reaction/comments to articles like this yesterday.

The Ruddites relaxation of restrictions on foreigners buying residential property to put a floor under property prices at the exclusion of Australian homebuyers is simply outrageous. More and more young people are becoming outraged by the bubble and the government’s direct support for it as all in the name of protecting boomer’s housing equity and bank balance sheets – but having the effect of financially ruining the next generation or excluding them from the Australian Dream.

This could be a big vote swinger in Gen Y, most of whom voted for Kev07. Climate change and health might seem to be the electoral issues of the day, but this generational wealth injustice is fast emerging as the main issue facing young Australians trying to establish themselves in the world.

Taking our lead from a superb weekend of discussions amongst a gamut of switched on thinkers at the Sustainable Living Festival, Karl Fitzgerald and Andy Moore presented the Renegade Economists live from the event.

During the show we ran through a dream list of predictions for a Transition Decade to sustainability

Listen to the show (right click to download) as we make our way through:

2010
• Speculators Savaged by GFC

2011
• Vested Interests Exposed
• Lobbyocracy Outlawed

2012
• The People Awaken

2013
• Election based on Geonomics Tax Reform
• Income Tax Halved
• Stamp Duty abolished
• Land Rent system imposed (5% on yearly land valuations)
• Carbon Tax system starts with great fanfare
• Profits soar in green industries
• Affordability improves

2014
• Geonomics system expands
• Payroll Tax removed
• Company tax abolished
• Resource Rents capture 80% of mining profits
• Natural Monopolies pay annual license on value of privilege (ie banks, phone, water companies)
• Wage levels shoot up as less paid in rent
• Tax incentives for localised bio-char projects
• Council rates change to Site Value only (improvements no longer taxed)

2015
• Scare campaign by vested interests shot down by Chris Judd
• Urban Density, walkability jump
• Citizens paid for Eco System Services management
• Community Land Trusts surge in popularity
• Lord Mockton admits he was wrong

2016
• 7th new (magnetic) train line built in Melb
• 60% of houses have govt funded solar/ micro power generation

2017
• Carbon Taxes increased, air pressured cars outsell petrol

2018
• Extra government finance piled into saving plankton (possible as
  tax havens now rendered obsolete)

2019
• Govt encourages people to work from home
• People work less hours as less needed for mortgage

2020
• Greens around the world are thanked for saving the planet

photo credit: mescon

The merchant banker’s millionaire formula has been exposed yet again, this time in Greece. A country whose public finance mechanism has been undone over decades of lobbyocracy was left with little choice but to sell off its crown jewels.

It has been widely reported that Goldman Sachs helped create off sheet balance accounts where finance was provided in return for swaps to the rights to highways, airports and even the national LOTTO.

This is the merchant banker’s dream. The ticket to an ever lasting free lunch, bankers get to ramp up the fees for airport parking and highway tollbooths according to the projected desires of their next round of bonuses.

Taking ownership of LOTTO defines a new paradigm of monopolistic dominance over a society. One wonders why Macquarie Bank hasn’t thought of this earlier?

Now the vested interests have wound down our wages so much through land price appreciation/ aka asset bubbles that our employers have little to pay us.

For many people, gambling on a LOTTO ticket is our last remaining hope. And guess who now benefits from that in Greece? The people who have manipulated the people’s opportunity into their billionaire bonuses.

Will the home of democracy be the 2010 ‘tip of the iceberg’ that brings a sense of futility to democracy without economic justice?

photo credit: JPD Photos

AN EXPERIMENT IN INDIA

The much travelled and well known author, Karl Eskelund, whose many books on foreign countries and their people have countless readers, describes the effort which a band of young American and English Quakers made in the way of assisting some of the Indian population, millions of whom live at starvation level.

The young idealists took up their task in 1946 at the village district of Pifa, which lies in the Ganges delta, 45 miles east of Calcutta and four miles by bus from Basirhat railway station. They were fully aware that their work would test their patience, for in India you can get no results “at five minutes past twelve.” But after having outlined their plans to the peasants, the fishermen and the landowners, which met with general approval, they organised a co-operative enterprise in cultivating the land and in marketing the produce. They set up day schools for the children, evening schools for adults, clinics, etc.

After overcoming the initial difficulties, they saw signs of progress; inspiration grew. Health conditions improved. All took greater interest in their work and their earnings increased. New ideas took shape – there was advance along the whole line – an advance, slow but sure.

Five years after the experiment began Karl Eskelund visited Pifa and with one of the Quakers as his guide, he went through the village to see how it was faring. The Quaker had lost more than two stones in weight and was as thin and spare as the natives. But what was worse, he had lost heart because the experiment had proved a total failure. The day school still existed, but only one-fourth of the children attended it. The evening school was closed.

The clinic was hardly used. Agriculture, fishing and trade were back again to old methods. The author asked for an explanation of this fiasco. The young Quaker offered quite a number of reasons, none of which he could accept.

Finally he got to the root of the matter. This is what he says:- “In the first year after beginning the experiment, both peasants and fishermen earned more than ever before. What was the result?”

“The large landowners at once raised their rents and the smaller landowners followed suit. The peasants had to pay more for permission to cultivate the land. The fishermen had to find more money to buy permission to cast their nets on the flooded fields. In that way practically the whole of the increased earnings passed into landowners’ pockets.”

“The people of Pifa were unhappy at this. Nevertheless, in the next year they worked hard. Crops were plentiful; there was a rich catch of fish; good prices were paid for the produce. At once the landowners raised their rents still higher.”

“The people then began to lose courage. What was the use if for all their efforts they got no benefit? The land-owners waxed fatter. The peasants and fishermen did not become any thinner – that they could not, for otherwise they would die.”

“lndians are ignorant but they are not stupid. They can put two and two together. They had found themselves momentarily enriched by the new methods but in the end all the extra money went to the landowners. If one of the new ideas would not work, what faith could they put in any other novelties? Perhaps after all, the old methods were the best . . . ”
- “Land and Liberty.”

Like old typeface? Check the original document (PDF 756KB)

This depressing story illustrates the futility of dealing with superficial remedies when a radical reform is necessary. It is like applying skin ointment to a sick person when what is really needed is a surgical operation. All well-meaning efforts to help poverty in India or elsewhere will not get to the basic cause unless the social cancer of land monopoly is dealt with.

Where people can get access to natural resources they will be able to earn a living for themselves without resorting to aid and hand-outs from others, and their dignity will be restored as responsible human beings.

A RESOURCE RENT SYSTEM WILL PROVIDE THAT ACCESS.

photo credit: sigmaman

In Revenue Sharing – A Piece of the Pie John Cutfeet says:

I recently heard an Elder say that we, as the First Peoples, were given resources by the Creator from which we can make a living. He said, “God gave us resources to use from our lands. Our people did commercial fishing where we sold fish to make a living. We have the land and resources we can use instead of not doing anything with it.”

This message by the Elders has been consistent throughout the years and has been voiced repeatedly. When our forefathers engaged in the treaty-making process, they understood that they were agreeing to share the land and the benefits it provides with the newcomers.
Unfortunately, the text of the treaty does not reflect the discussions as remembered by the elders. They recall agreeing to share the lands and its resources for mutual benefit and not mass land surrender.

The shadows of the Copenhagen climate conference provide an opportune time to review our operating system and it’s pursuit of creating carbon permits for carbon speculators AKA carbon cowboys acting out as financial middlemen.

The short term mentality of quarterly dividend payments curtails the western CEO from thinking of future generations. Easy profits are delivered by the economic rents inherent in mining, land speculation or the ownership of any resource that is scarce. This gives modern economics a one-eyed view of the importance of scarce resources.

What justification do mainstream religious leaders give themselves late at night with the disjoint between the sentiment of their teachings and the outcomes of society as dictated by the economic system?

If nature’s wealth is shared amongst all, and not just the shareholders and privateers, then equality of opportunity is encouraged. Read this report on Valuing Common Assets and read more here for background.

Indigenous practice for thousands of years saw this work effectively and sustainably.

We believe that speculation on the licensed monopolies of scarce resources (also our DNA, copyright, fishing licenses) drives the rest of the economic juggernaut to cut corners. A coffee shop is forced to do this to keep up with the average 15.5% return over the last decade for land speculators here in Australia (where our land bubble still hasn’t popped).

Once speculators are signaled to stop their destructive practices of price inflation, then the cost of living returns to a more sustainable level. The implementation of a true cost economics system does this by penalising speculation and penalises pollution. Urban density, walkable communities and $1 train rides on an expanded network are all possible.

So too is more affordable housing, a decentralised push back out of our mega-cities and into the bush (where land values are lower and thus so are taxes) and even increased small business. The access to cheaper land with a simpler tax framework encourages the everyday person to follow their dreams into a start-up. The competition for labour heats up and because less is being paid for in rent, there is more to pay wages.

This all assists in undoing the forces that are driving the wealth gap. The chasm between private interests and the public good finds harmony when public works benefit all citizens equally, rather than delivering windfall gains for the lucky few who ‘own’ land.

A strong link with indigenous leaders will one day be made upon the common ground that the earth’s worth is for all and not just the privileged few. Can trust in market forces ever be rekindled? We like to think so.

photo credit: nettopp

Andy Moore

Attracting the Green Vote

Sustainability is about preserving the Earth for future generations by living in balance with the natural capital provided to us for free by nature. Ecological economists are working hard to design direct policies – like resource taxes and cap and trade systems to address this issue. The trouble is they don’t work. You only need to look at the current shambles of the ETS to know that the paper it was written on would have been more effective at reducing pollution if left as a tree.

Henry George on the other hand didn’t conceive his economic theories in response to environmental concerns. However, it should come as no surprise that encouraging the efficient use of land promotes ecologically sound principles. It is highly likely that taxation of site values will indirectly conserve resources much more effectively than policies designed with that direct intention. I agree with Clifford Cobb who says “the best way to solve problems is by indirect means”.

But Georgist economics alone will not save our natural capital from depletion – Henry himself had no reason to see this as a problem in 19th century America, believing instead that the Earth could sustain a population of 100 billion. Therefore the issue of resource depletion must be considered. If Georgists can learn about limits from ecological economists and environmentalists can learn about achieving goals through indirect means – our policies could be implemented quietly, efficiently and very effectively by harnessing the power of the modern green vote.

History is littered with disastrous effects from the law of unintended consequences, but positive results can be achieved by exploiting the same force. Social and economic equity are indisputably the direct results of Georgism. The positive environmental effects are second and third tier consequences; further proof of the power in its application.