HoltesThoughts

Monday, September 21, 2015

Why Social Programs are Investment and Not a Burden

The Grand Old Party (GOP) put out a shill article in their no longer integral rag "The Wall Street Journal" on Bernie's Sander's economic proposals that make it sound like we can't afford any improvements. And given the other propaganda they put out, if they had their way they'd be cutting current programs even more. But there are many reasons why their arguments are bogus on their face. They claim that the price Tag of Bernie Sanders’s Proposals is $18 Trillion. Other pundits weighed in with all sorts of excuses to agree with the Wall Street Journal. For example the now corrupt Washington Post piled on with this gem:

"Sanders identifies significant challenges, and we support higher taxes to meet some of them. But the political barriers even to modest new spending are formidable. A true progressive agenda would seek to dismantle those barriers, not create new entitlements for the upper middle class." [Wa-Po]

Investment Pays for Itself!

However, Robert Reich explains why the Wall Street's math is not only bogus but Bull Hockey. It ought to be common sense that we need to invest in public programs to generate common-wealth so that we can all be more productive and pursue happiness.

As Reich notes:

“Bernie’s proposals would cost less than what we’d spend without them.” [Reich]

“Most of the “cost” the Journal comes up with—$15 trillion—would pay for opening Medicare to everyone.” [Reich]

And he notes that the cost of doing this is more than offset by the savings:

“This would be cheaper than relying on our current system of for-profit private health insurers that charge you and me huge administrative costs, advertising, marketing, bloated executive salaries, and high pharmaceutical prices.” [Reich]

In fact going to a medicare for all would probably save billions of dollars. And Reich next notes this as he quotes Gerald Friedman:

“(Gerald Friedman, an economist at the University of Massachusetts at Amherst, whom the Journal relies on for some of its data, actually estimates a Medicare-for-all system would actually save all of us $10 trillion over 10 years).” [Reich]

Our current system depends on privateering for profit providers, private banks, private hospitals, private clinics, Health Care Organizations, Drug companies and Insurance Companies. So, lo and behold:

“The savings from Medicare-for-all would more than cover the costs of the rest of Bernie’s agenda—tuition-free education at public colleges, expanded Social Security benefits, improved infrastructure, and a fund to help cover paid family leave – and still leave us $2 trillion to cut federal deficits for the next ten years.” [Reich]

This is funny, and if we can explain this to our fellow citizens we can defeat these privateers. The only people Bernie's proposals threaten at all are folks who don't work for their living and who draw unearned income and have unearned privilege. We are suffering deficits because The Government doesn't bear those costs. They are passed on to the suffering and to those who can't afford them -- and then the public pays the jacked up costs of people who are more ill than necessary and a burden on the taxpayer. Robert Reich's next point thus points to the moral argument for doing this:

“Many of these other “costs" would also otherwise be paid by individuals and families – for example, in college tuition and private insurance. So they shouldn’t be considered added costs for the country as a whole, and may well save us money.” [Reich]

Investment is where Capital comes from!

The trouble with conservative economic arguments is that the financial health of the country is the balance of payments and debts of the entire population of the country.

“Finally, Bernie’s proposed spending on education and infrastructure aren’t really “spending” at all, but investments in the nation’s future productivity. If we don’t make them, we’re all poorer.” [Reich]

When we take care of our own we are doing investment. Henry George's definition of capital is wealth that is reinvested in the economy to further production. Investing in people is a sort of capital. We people are wealth, and wealth has no meaning without sentient beings to enjoy it.

So yes Bernie isn't as radical as those with unearned wealth and privilege would paint him. Indeed his proposals are OUR proposals. They've been on the progressive wish list since FDR was President. The only ones who might be impacted by his proposals are people who leach of the rest of us. And it turns out that they've been leaching on us using bogus economic theories all this time.

It gets even better

But it gets even better. A case can be made that not only can we afford all our social programs but we do not need to be listening to the "nattering nabobs of negativity" who are treating our country the way their predecessor Nabobs treated India as heads of the East India Company. If we end unearned privilege and take control of our money supply we need not worry about the carrying costs of carrying these people forever because we can make our own money!

For more either read my next post or read the writer/economist John T. Harvey, article, "Can America Afford Bernie Sanders' Agenda?"

Continued....

Sources and Further Reading

The Bogus Wall Street Article "Price Tag of Bernie Sanders’s Proposals: $18 Trillion":: http://www.wsj.com/articles/price-tag-of-bernie-sanders-proposals-18-trillion-1442271511
Derivative Business Insider Article:: http://www.businessinsider.com/bernie-sanders-isnt-as-progressive-as-you-think-2015-9
Robert Reich's Article:: http://robertreich.org/post/129306966350
Forbes: Can America Afford Sanders' Agenda? by John T. Harvey:: http://www.forbes.com/sites/johntharvey/2015/09/21/can-america-afford-sanders/
Quantum of Power by Arslan Ibrahim: https://www.linkedin.com/pulse/quantum-power-arslan-ibrahim

Sunday, September 20, 2015

Basic Principles of Taxation and Law

Restoring Progressivity to the Tax System

We must restore progressivity to our tax system. But before we can do that without getting conned and distracted by the faux libertarian and other Con arguments we have to understand what the word "progressivity" in taxation means and what the issues are and are not.

What is and what is not fairness

To some wealthy, "fairness" means preserving (conserving) wealth and passing wealth and power to their progeny. Which happens to be the definition of hereditary aristocracy. Such people call themselves conservatives because they are trying to conserve their wealth and power. Because such people are often in positions of trust, we tend to trust them. But their idea of "fairness" is not always very fair.

To the rest of us, unless we've been conned by such people, fairness means preserving one's wage income from excessive rents and taxes and saving enough surplus (individually or collectively) to be able to survive illness, disaster and live a dignified old age. To the young it means eating, having shelter and affording a decent education, clothes and transportation so they can pursue happiness through productive employment. A person is poor if these abilities are burdened through excessive charges by those with power and privilege -- or by folks locking the gates to productive opportunity. Our concerns emerge from the "pursuit of happiness" which is a basic right. Theirs emerge from power and privilege and the need to justify it. It's not a natural state, a "common-wealth" system is win/win for everyone.

Origins of the East India Company -- Pirates

The British created a corporation called the "East India Company" as an extension of their privateering against the rest of Europe and their piracy across the globe. The East India company was according to Paul Rittman's sanitized history:

"The British East India Company was formed to share in the East Indian spice trade. This trade had been a near monopoly of Spain and Portugal until the Dutch moved into the region in the 1600s; after which they maintained the same control by trying to keep out other nations. The British were relative latecomers to the East Indies trade; the first British pilot to sail to India via the Cape of Good Hope (near the southern tip of South Africa), did so in 1582—almost a century after Vasco da Gama made the journey for Portugal." [Paul Rittman: R&F]

Rittman's narrative strips out context. There is always a motive for doing that. So let's resupply it. The context of the creation of the East India Company was the Protestant Reformation, the internal struggle between authoritarian absolutism and commonwealth and Piracy.

The Search for Loot

The East India Company was the outgrowth of not just any kind of commerce but of Privateering. Privateering is legal piracy. The British wars with France, Spain and other countries gave license to british Merchants such as the Hawkins family, to loot and steal on the high seas. The protestant reformation gave them license to directly challenge Spain and Portugal, who had been granted a monopoly over most of the world by the Pope. So when Rittman notes:

"One thing that motivated the British to trade in the East, was seeing the immense wealth of the ships that made the trip there, and back. In 1593, a captured Portuguese ship was hauled into a British port —1,500 tons burden, 700 men and 36 brass canon. This was the largest vessel that had ever been seen in Britain, her hull full of eastern cargo: gold, spices, calicos, silks, pearls, porcelain, and ivory." [Paul Rittman: R&F]

He is leaving out that the British were already up to their hips in a worldwide struggle against the Spanish and Portuguese. By 1600, Intrepid Pirates like Sir Francis Drake and is mentor the Hawkins family had been challenging the Spanish and Portuguese, and before them the French, for years. For example Sir Francis Drake cut his teeth privateering against the French:

"Francis was apprenticed to a merchant who sailed coastal waters trading goods between England and France. He took to navigation well and was soon enlisted by his relatives, the Hawkinses." [Drake]

A Privateer was an armed Merchant who saw a merchant ship from an enemy country and had a license to attack it. Privateering and piracy were alternative ways for "Sea Dogs" or ocean going merchants to make money. As illustrated by the Portuguese example a captured ship could be sold at auction for an immense fortune, and everyone from Captain on down would usually share in the prize money. Privateering, smuggling and legitimate enterprise were seen as a single profession by such merchants. A pirate was an outlaw who didn't have a license to steal.

Piracy and Slaving

That was really the only difference other than the virtual slavery of sailors aboard privateers and their "outlaw freedom" on pirate ships. So for example the slave trade involved (illegal) British sailors pretty much from it's inception. This biography of Sir Francis Drake notes that one of his earliest expeditions was to Africa and "New Spain" as a slaver. It also notes that Drake was employed by the Hawkins family and that they were slavers. It was a hazardous occupation. Especially during wartime.

"By the 1560s, Francis Drake was given command of his own ship, the Judith. With a small fleet, Drake and his cousin, John Hawkins, sailed to Africa to engage in the slave trade. They then sailed to New Spain to sell their captives to settlers, an action that was against Spanish law. In 1568, Drake and Hawkins were trapped in the Mexican port of San Juan de Ulua. The two escaped, but many of their men were killed. The incident instilled in Drake a deep hatred of the Spanish crown." [Drake]

King James and East India company Entrepreneurship

The only real difference between the earlier privateers and the East India Company was that this private warfare had been successful enough so that the British could dare to challenge that monopoly. By 1600 the British were secure enough to constitute companies to manage that trade:

"The East India Company (EIC) was incorporated by royal charter in 1600. The charter granted a monopoly of all English trade in all lands washed by the Indian Ocean (from the southern tip of Africa, to Indonesia in the South Pacific). Unauthorized (British) interlopers were liable to forfeiture of ships and cargo. The company was managed by a governor and 24 directors chosen from its stockholders." [Paul Rittman: R&F]

Initially the East India company was focused on the lucrative Spice Trade, centered on what is now Indonesia. But in 1608 East India company Ships:

"first arrived in India, at the port of Surat, in 1608. In 1615, Thomas Roe reached the court of the Mughal Emperor, as the emissary of King James I, and gained for the British the right to establish a factory at Surat. Gradually the British eclipsed the Portuguese and over the years they saw a massive expansion of their trading operations in India. Numerous trading posts were established along the east and west coasts of India, and considerable English communities developed around the three main towns of Calcutta, Bombay, and Madras, with each of these three roughly equidistant from each other, along the coast of the Indian Ocean." [Paul Rittman: R&F]

Not equally of course. The Merchants who invested in these ships made the lions share of the loot. Even so for ordinary people and gentry (the little brothers of the nobility) becoming a Sea Dog could be a path to riches. But it could also be a path to death for ordinary seamen and their officers alike.

"Although the Spanish and Portuguese controlled the East Indies trade in the 1500s, the Dutch took it over from them in the 1600s. The Dutch were every bit as jealous about preserving these trade goods for themselves as the Spaniards and Portuguese were. The British were virtually excluded from the Dutch East Indies (Indonesia) after the Amboina Massacre in 1623. That year, the Dutch Governor beheaded ten Englishmen, another ten Japanese mercenaries and a Portuguese merchant, at Amboyna on a charge of conspiring to seize the fort. Not able to defend itself against the Dutch, the company conceded that region to them, and focused instead on what must have been considered a consolation prize, India." [Paul Rittman: R&F]

Again the context is missing. James the 1st was already the King of Scotland. But he came to power during a Tory Resurgence. The English and their frenemies and new friends the Scots were joining together:

"In the early hours of 24 March 1603, Elizabeth I died at Richmond. The 'Virgin Queen' made no explicit provision for an heir, fearing that she might encourage faction within her kingdom. Yet James VI of Scotland was smoothly proclaimed as the new king. There was no opposition, but equally no immediate celebration. The London diarist John Manningham slyly noted that the proclamation was met with 'silent joye, noe great shouting', although there were bonfires and bell-ringing that evening as the announcement sank in. Three days later in Edinburgh, the king himself received the news with exultation." [http://www.history.ac.uk/ihr/Focus/Elizabeth/]

Queen Elizabeth fought the Spanish and Portuguese because she had to. King James was not afraid of a Spanish invasion. When the now united Scots and English "Brits" fought; it was for "God, King, Country and loot.

To be Continued with "A History of Loot" - Next Chapter

Rise and Fall of the British East India Company: http://www.paulrittman.com/EastIndiaCompany.pdf
Francis Drake Biography Explorer (c. 1540–1596): http://www.biography.com/people/francis-drake-9278809
Or:: http://www.history.com/topics/exploration/francis-drake; https://en.wikipedia.org/wiki/John_Hawkins_(naval_commander)
James and Elizabeth: http://www.history.ac.uk/ihr/Focus/Elizabeth/
Privateering and Piracy: Many Kinds of Privateering; An Ideology of Privateering; Many forms of Freebooting; Pirates and Privateers/Privatizing History; Origins of the East India Company; Bretton Woods, NeoColonialism and the "Money Men."; Origins of the East India Company; Corrupt Court and Undue Influence; East India Company and Islamic Jihad; Utility Versus the Pirates; Tribunals Admiralty Courts & Privateers

Thursday, September 10, 2015

The only thing we need to fear is fear itself

FDR Said it, not so long ago:

The only thing we need to fear is fear itself!

Fear isn't good for anyone's health.

Fear is like a cancer,

it can be acute, or spread with stealth.

Scientists have shown that fear and anger

Are evil twins that shut down the brain.

The fearful respond with anger

They circle wagons,

or march the door to war.

But there is one enemy the dark twins can't handle

One enemy that releases their victims

That enemy is the power of laughter

To join with former enemies, and let go of fear.

The Fearful and Angry can't deal with laughter

They don't know how to take a good old Joke.

They may know all about stoking hate and fear

But they can't deal with a sympathetic joke.

So to defeat the fearful

All we need to do is to see the joke

to see through the oppressing illusion

And throw off the miserable yoke!

Then we need not even fear, fear

For seeing the absurdity of it all

When our bellies are full of laughter

We don't even notice it if we fall

So all we can do is laugh at them

Or even find a way to get them join in the fun

Because if they are too busy laughing

They won't have time to push anyone around.

So share a sympathetic joke

And a belly laugh for all of us who have survived.

And permit yourself a sympathetic tear

At all of the victims of fear

who have suffered on down through the years.

If you do, then fear and anger,

no longer have hold of you.

Christopher H. Holte 9/10/2015

Wednesday, September 9, 2015

Tories and Whigs

Two of the most misused words in English come from English speaking history. These words are "Tory" and "Whig". I refer to them a lot, and so I've spent a long time learning what they mean. Both of them are names for groups of people, to the behaviors and attributes of that group, and are labels for the people engaging in those behaviors. They also historically have been labels adopted to disguise efforts and misdirect people. As George Orwell noted in reviewing his own book, "Newspeak" wasn't a term he invented to cover a fictional future, but is a feature of the english language.

Our Revolution was against Toryism

There are specific attributes that are "tory" and "whig" and although they overlap the traditions associated with each other, the spirit of toryism and whiggery is alive and well. Once you know the attributes you can identify Tory behavior even when the person calls themselves a "Whig" member of the "labor party", a Democrat or a Republican. Our forefathers understood these terms. The people we were fighting during our revolution were Tories.

The Target of progressive taxation and LVT is unearned land rents/income

This blog is a follow on to the Posts; Common Property and the Commons and Locke Talked of the Importance of the Collective. It also is one of a series looking at what Henry George actually had to say about taxation, what modern Georgists say about the subject and what non Georgists have taken from the unsound arguments they've picked up from the Georgists!

I run into libertarians who claim to be followers of Henry George. Some talk about the "single tax" as a special property tax that exempts capital investments and helps developers efficiently use property by kicking "speculators" out and preventing farmers from squatting on land that properly should be redeveloped. But Henry George is one of my heroes. He would never be for taking property from old people or the poor. Yet that is what our current property taxes do. So why would anyone want to merely reform property taxes?

How this leads to distortions of what LVT is all about

Worse this apparent confusion about the meaning and purpose of Land value taxes leads to misappropriation and misunderstandings of what the tax is about in Left and Right circles alike:

For example the writer Peter Orzag writing at Bloomberg shares a garbled version of Land Value Taxation ideas in his article: "To Fight inequality Tax Land" [http://www.bloombergview.com/articles/2015-03-03/to-fight-inequality-tax-land]. In that article he notes that the largest increment of wealth increases [he calls them capital increases] takes the form of Land value increases and then referring to Joseph Stiglitz notes that:

"Stiglitz also argues for imposing a land value tax, to directly address this source of increasing wealth inequality. Economists have long favored such a tax, because it does little or nothing to distort incentives: Since land is roughly fixed in supply, there's little one can do to escape a land tax. Indeed, from the perspective of economic efficiency, a land value tax scores higher than even a value-added tax, which is typically seen as the most efficient form of taxation." "Tax Land Article" [fight-inequality-tax-land]]

Stiglitz is either directly or indirectly echoing Henry George here. And knowing how brilliant he is I suspect he's read Henry George at some time and understood him.

Economic Efficiency versus the Efficiency with which wealth can be looted

But in the hands of Peter Orzag LVT becomes about "Economic efficiency," which is "A broad term that implies an economic state in which every resource is optimally allocated to serve each person in the best way while minimizing waste and inefficiency. When an economy is economically efficient, any changes made to assist one person would harm another." I'm not sure what measures Orzag is using for "economic efficiency" but I have to assume he's fine with the kind of economic efficiency where one person's gain is another's loss. He like some other LVT enthusiasts have seem to have no trouble with this, or it's intended consequences such as illustrated in this Washington Post Article from 2013 about the vicissitudes of ordinary Property Taxes:

Src: http://www.washingtonpost.com/sf/investigative/2013/09/08/left-with-nothing/

LVT as a Direct Tax

If that is economic efficiency we are all in trouble. But the notion of LVT as an "efficient Tax on land" isn't just the interpretation of Peter Orzag or hucksters for whom LVT is both a social panacea and a "Single Tax" yet somehow is primarily a tool for efficient land development. I guess if everyone is a renter then the economy is optimized for the rentiers. Many people translate Henry George's "Single Tax" proposal into something like the way Milton Friedman represents it:

“In my opinion, the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago” (Mark Blaug. Economica, New Series, 47, no. 188 [1980] p. 472). Econ Library Bio:[http://www.econlib.org/library/Enc/bios/George.html]

Because of understandings and statements like these, LVT is actually pretty popular in the developer community and they advertize the benefits. For example this page here explicitly touts the benefits of "Land Value Taxation as follows:

Source: Benefits of Land Value Taxation, taken 3/4/2015 [http://www.taxjustice.net/cms/upload/pdf/gen_ben_f_land_tax.pdf]: "LVT would encourage new capital investment rather than sterile land speculation as it would encourage a shift of private investment from land speculation (which creates no extra land but only higher land prices) to productive enterprises. "; "LVT would encourage the use of empty sites zoned for development, creating more job opportunities and wealth. "; "LVT would help avoid urban sprawl. As brown field sites would be developed within towns and cities it would be unnecessary to permit urban sprawl. Compact towns are also more efficient in their use of resources for transport and other services."; "LVT [cannot] be avoided. (Unlike income tax and business taxes where tax avoidance experts are in great demand and the ‘shadow economy’ flourishes to evade taxes.) Every landowner would be required to register their land and to pay LVT on all their land holdings. With LVT any site with no registered owner would be sold by auction for the benefit of the Government."

But that is not Henry George's Tax!

This sounds good until you realize the ads are targeting the poor, the widow, the laborer, the retiree, all potentially to be dispossessed by LVT when it's used as a tool for development. If they can't avoid the tax, they'll be evicted. Thus too many LVT enthusiasts are offering a bait and switch proposition. They think of LVT as a direct tax. But as my friend;

"All direct taxes on property ownership are abusive and prone to tax tyranny"

And Land Value Taxes are not supposed to be tax tyranny! Indeed all these other BS reasons for LVT are things that Henry George warned about:

"Nothing is to be gained by having the Single Tax advocated for wrong reasons. Men brought over by erroneous arguments can never be relied on in a cause that rests on truth."

Indeed Henry George feared folks advocating LVT for the wrong reasons more than he feared outside enemies:

"The unsound supporter is, in fact, more dangerous than an opponent."

And George was right to fear the consequences of misunderstanding as demonstrated a few short years (1893) after his stroke rendered him weakened:

"Unless he sees that taxes on Land Values or economic rent which is what we mean by the Single Tax must be borne by the owners of the valuable land from which it is collected, and that it cannot fall on users of land as users, and cannot add to the cost of production or increase prices, no one can appreciate the moral side of our argument or the full weight of the fiscal side."

My friend includes wages in the definition of "property", which only makes sense because what makes our 'income tax' so unjust is that it is figured on and taken from Net Incomes that are often far less than the expenses and survival needs of workers -- and is thus equally unfair to what the authorities are doing to property owners in DC, Md & Virginia (and around the country).

Which is why the constitution forbids the Federal Government to levy direct taxes! Moreover, if you are going to levy direct taxes there is no reason to be punishing people for being elderly, poor, or not privileged. As my Friend notes:

"The government could easily have waited till these elderly people passed away, or voluntarily sold their property, before collecting any unearned income gains generated by the parcel, but apparently some vultures wanted the land right away."

Property taxes may be "efficient" but without humanity they are efficiently abusive. The rights we need to enshrine in our law are the rights to "home" and "livelihood" because "efficient taxation" is often a euphemism for ruthless taxation.

Land Value Tax is after unearned rents and gains from speculation

But fortunately for my estimation of Henry George, he didn't actually teach Land Value Taxes as a Direct tax, nor as a property tax. He wanted it to be on "unearned rent." He wanted it to be a tool to protect workers, and producers, the elderly and ordinary families:

As this biography notes that his LVT proposal was found on the reality that:

"rent tends to increase not only with increase of population but with all improvements that increase productive power, Mr. George finds the cause of the well-known tendency to the increase of land values and to the decrease of the proportion of the produce of wealth that goes to labor and capital, while in the speculative holding of land thus engendered he traces the tendency to force wages to a minimum and the primary cause of paroxysms of industrial depression." H. george Bio: [http://www.sfmuseum.net/hist9/hgeorge2.html]

His tax was NOT intended to evict small farmers or householders from farm and livelihood.

"The remedy for these he declares to be the appropriation of rent by the community, thus making land virtually common property, while giving the user secure possession and leaving to the producer the full advantage of his exertion and investment." H. george Bio: [http://www.sfmuseum.net/hist9/hgeorge2.html]

Henry George was after "unearned rents" and was talking about progressive taxation:

"the single tax is NOT a tax on land. It is a tax on what in the terminology of political economy is styled rent---that value, which . . . attaches to SOME land with the growth of population and social development; that premium which the user must pay to the owner as owner in one payment (purchase money) or in annual payments (rent), for permission to use land of superior excellence."

Thus the people that think of LVT as a tool for real estate development or have no regard for labor, or are confused about what Capital is are what Henry George Called "Unsound Followers."

Originally published 3/3/2015

Monday, September 7, 2015

Pandora's Dream

A dream can't be killed

Only turned into a nightmare

She dreamed of a world of gifts and love

Anesidora bringing to fruit seeds grown from the ground.

And she was given an urn as a gift.

She opened that urn in all innocence

And furies flew out and all around.

The spirits of hates and thefts and war

Flew into the world once more.

Denying even the hopes she'd longed to give.

She saw them fly away and closed the lid.

But stubborn hope resurrects

And lurks patient and kind beneath the lid

For when the furies have passed.

Don't fear to open that box again!

When it grows quiet at last.

That dream we mortals have

Of a world that is fair and just.

Call it hope, the "American Dream" or just common sense.

They put it in a funeral urn,

But it won't stay there.