Author: mopress

It’s a monetarist bubble that is popping under the global economy argues Asia Times economist Henry CK Liu, and throwing future debt into past debt is only going to result in a decade of hard times.

From Liu’s point of view, 2008 was a year mis-spent. First there was complacency and denial. Then, future debts were applied directly to past debts in a colossal waste of wealth and opportunity.

In the end, says Liu, the average taxpayer is being forced to assume “risks” made by financial elites. In return, the same elites will demand leaner capital budgets. The result? Average workers will soon be financing their own unemployment.

At some point, says Liu, emergency attention needs to turn to average worker wages. This is where the battle for economic health will be lost or won.

On the supply side of the argument, as we hear daily from CNBC, the “bailout” funds are being tossed onto assets that will some day recover their worth, keeping the tax burden low.

Since banks are now asking for even more billions, it seems sensible that taxpayers should demand assets in return for any money spent upon a banking institution. If worse comes to worst, banking functions should be nationalized.

Trillion dollar priorities are being reordered at a rapid rate these days, and workers are feeling the pain of being left outside. Yet as Henry George very sensibly observed, there is no good reason why busy people cannot be merged into an economy where each busy person helps to meet some other busy person’s needs.

Henry CK Liu puts it this way:

When unemployment of 6% of willing workers is accepted as structural in an economic system, the fault is with the system, just as if a hospital accepts an annual mortality rate of 6% of its curable patients as structural, the hospital’s operation needs to be reexamined. The fundamental flaw in market capitalism is its inherent failure to deliver full employment as a social goal.

The hard times are already hitting our Texas neighborhoods, and everyone who knows anything about it only promises that times will soon get harder.

Against the hard times we have voices that can demand: keep us working together for the things that all of us need. The average worker can afford to pay for a program like that.–gm

In the January 14 release of the Beige Book, the Federal Reserve Bank of Dallas reports downturns in all major areas of the regional economy, along with widespread expectations that conditions will continue to worsen.

“Most respondents don’t expect conditions to improve until the second half of 2009 with a growing number of respondents now looking at early 2010,” says the report from the Dallas Fed.

By Greg Moses

As folks debate ways to pump the economy, November employment statistics remind us that

83 percent of nonfarm workers in Texas earn paychecks in the private sector.

Of the 10.7 million workers (nonfarm, not seasonally adjusted), 8.9 million are private

sector compared to 1.8 million government workers.

While it may be possible for government to pick up masses of workers to labor on roads,

bridges, and parks, or in emergency rooms, health clinics, and schools, there seems to be

obvious truth in the worry that this plan of action would raise taxes.

Still we should note that of the 32,700 net new jobs (actual, not seasonally adjusted)

added to Texas payrolls in November of 2008, at least 12,000 (or 37 percent) were added by

government, overwhelmingly at the local level.

Since there is no income tax in Texas, these jobs were funded by sales taxes and property

taxes. And while it does seem obvious that every new government job is to be counted as an

absolute increase in public tax burden, we’d like to remember some old sayings about ounces

of prevention.

After all, what sort of private sector employer is going to stick around very long in a

territory where taxpayers have pulled down their liabilities to zero by de-funding every

conceivable public service. Even the famous Laffer curve assumes that taxation has some

optimal rate.

From the point of view of civil rights development, it would be a cruel and unusual

economy that sets no public standards whatsoever to live by.

Nevertheless, let’s remember that 83 percent of the existing workforce in Texas does not

go to work for a government paycheck.

Now we’re going to leave aside the question of how many private workers depend upon a

government contract. So our KBR readers should not go around thinking that we ignore all

the public butter that gets spread on private bread.

But let’s go where the majority of workers live and try to prosper — in the private

sector.

It’s interesting in Texas that there are about as many workers in the “Goods Producing”

sector of the economy as there are in “Government” — about 1.8 million. But whereas the

government sector grew in November, the goods producing sector shrank (by about 6,000

jobs).

Not all parts of the goods producing sector lost jobs. In mining and oil and gas, about

a 1,000 new jobs were added.

Texas construction lost only a couple of hundred jobs, but the story would have been

worse if not for “Utility System Construction” which added 1,000 jobs. How much of that

private employment on utility systems depended upon public financing we’ll leave open to

further questioning.

Manufacturing, as you might guess, is still losing jobs in Texas. About 2,000 jobs were

lost in this sector during November, with losses in the wood, computer, and electronics

areas. We now have 924,800 manufacturing jobs left here.

It’s interesting to see that some sectors of manufacturing actually grew: “Fabricated

Metal Product Manufacturing” picked up 300 jobs; “Machinery Manufacturing” picked up 200

jobs; “Agriculture, Construction, and Mining Machinery Manufacturing” picked up 500 jobs;

“Transportation Equipment Manufacturing” picked up 500 jobs; and “Aerospace Product and

Parts Manufacturing” picked up 400 jobs.

No doubt there is some “public sector” contracting in these sophisticated heavy metal

operations in Texas, although I’m guessing we could wish for a healthier mix of “peace” to

“war” priorities.

When it comes to non-durable goods, Texas employed some 308,200 workers in November,

which is 700 fewer workers than October. It was a bad month for food (-400), plastics (-

200), and paper (-200). But a better month for animal slaughtering (+100) and products made

from petroleum and coal (+700) and chemicals (+200).

In the private sector, “Service” is the mammoth sector of the Texas economy. That’s

where 7.1 million workers were employed in November, an increase of 26,700 workers over

October. About 20,000 of those new jobs were split between clotting stores and department

stores. Another 5,000 jobs were added by “Other General Merchandise Stores.”

Information services fell by another 400 jobs, which is why you see more people like me

doing this grunt work for free (actually, the newspaper people are holding the line; nothing

lost, nothing gained).

In the “Finance and Insurance” sector, jobs are down slightly overall (-200), but there

is a growth niche in “Credit Intermediation,” which added 1,100 jobs.

In the professional services sector, lawyers, accountants, architects, and computer

experts are all finding fewer cubicles available.

Education and health care, on the other hand, are growing modestly; while “Leisure and

Hospitality” continue their slow decline.

In Texas, we are pleased to report, “Food Services and Drinking Places” are still “help

wanted” areas, with 2,500 new jobs added in November, 2008.

So if you want to help grow jobs in the Texas economy, especially if you’re a government

worker, go out and buy some new clothes, steer a shopping cart through your neighborhood

department store, and take the family out for dinner and drinks. And don’t forget to tip as

if it was your own salary you were figuring up.

Beyond these sorts of stopgap subsidies that we can share with each other, there do seem

to be some healthy fundamentals in the current economic profile in Texas, considering that

heavy machinery is growing jobs along with education and health services.

And when you think about all the experience that Texans accrue getting from one end of

the state to the other, why shouldn’t Texas step up to global leadership in the design,

management, and manufacture of transportation systems and services? Couldn’t we teach

ourselves to travel in ways that would prepare us to teach the world?

Oh, and remember not to shoplift. However, if you can look like you might be shoplifting could it create more jobs for security guards? Check out Grits for Breakfast on the shoplifting rate.

It started out as a desk-cleaning exercise on Christmas Day. We opened a catalog of Henry George materials.

Half a day later (from a still messy desk) we were sending an email to Neale Upstone at the Cambridge (UK) City Council, advising him of our newfound interest in Henry George.

Councillor Upstone replied with links to a movement. A new coalition based upon Georgist principles of Land Value economics has just released news (as of midnight GMT) that a dozen “think-tanks, charities and political pressure groups” will be advocating a Georgist resolution to the latest economic meltdown.

“History shows that economic bailouts will not provide a long-term solution,” says Robin Smith of the Systemic Fiscal Reform Group think-tank, “because Land, which is at the heart of the matter, has been obscured from political, media and academic scrutiny.”

Following the Land Value analysis of 19th-Century American populist economist Henry George, the new coalition wants “to shift tax off enterprise and labour onto a form of annual Land Value Taxation,” says the chairman of the coalition, John Lipetz.

The new Coalition for Economic Justice (CEJ) will try to get a national debate going in the UK. But the issues they are raising sound relevant to anyone seeking critical tools of analysis for the early contours of Obamanomics.

Councillor Upstone puts the case plainly. Against the emerging outlines of a Keynsian Green New Deal (GND) he argues in favor of a Georgist Systemic Fiscal Reform (SFR).

The Georgist approach is appealing as a quick study, because it connects with our common-sense insight that real-estate speculation is the giant culprit of our global economic meltdown. What the SFR movement adds to this insight is the Georgist claim that land speculation is the foundational cause of many bad effects besides the cycles of land value crashes.

Henry George learned his economics by watching San Francisco. He seems to be calling out from beyond the grave: California did it again!

So if you like the idea of change and want to think a little harder about what it could look like, here’s the press release from the Georgist SFR movement:

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EMBARGO 00:01 27th December 2008

In an unprecedented move to advocate an original solution to the current economic crisis, twelve think-tanks, charities and political pressure groups have joined forces. The new cross-party group, called the Coalition for Economic Justice (CEJ), has argued for the reduction of existing taxes to be replaced by an annual Land Value Tax in order to prevent future crises and alleviate the current one.

The Coalition issued in a statement: “The current economic crisis highlights, yet again, the inadequacies of the current economic system which is unstable and deeply flawed. Events are clearly demonstrating that the speculative rise in land prices is a common feature of the repeated economic booms and busts. In order to address this problem we call for a new approach that delivers both economic justice and prosperity for all. This solution must be based upon the annual collection of land value for public purposes”.
Matthew Elliott, Chief Executive of the TaxPayers’ Alliance commented: “I look forward to learning more about the campaign as it develops in the New Year. I very much hope that the coalition manages to generate a national debate on taxation, particularly now we are in recession.”

The Chair of the CEJ, John Lipetz explains that “in response to the financial crisis, a group of charities, think-tanks, political factions and pressure groups from right across the political spectrum have for the first time sat down together to agree the best way to cure the current crisis, and prevent future ones. This is to shift tax off enterprise and labour onto a form of annual Land Value Taxation. We invite others sharing our concern to join us.”

Robin Smith of the think-tank Systemic Fiscal Reform Group says “It is clear that enterprise is once again taking the hit, particularly hard working small businesses, from this latest debt-fuelled land boom. History shows that economic bailouts will not provide a long-term solution because Land, which is at the heart of the matter, has been obscured from political, media and academic scrutiny. The founders of the CEJ are calling for new thinking around economic reform and it represents a real movement towards progress and prosperity for all.”

Heather Wetzel of the Professional Land Reform Group adds: “If we are to establish economic stability, encourage sustainable growth and end poverty it is necessary to look for new solutions. An annual Land Value Tax on all land will prevent future land price speculation, enable modest interest rates on business investment and provide income for both essential infrastructure investment and for the reduction of taxes on individuals and trade.”

Organisations involved in the CEJ are:

Labour Land Campaign (LLC)
Liberal Democrat Action for Land Taxation and Economic Reform (ALTER)
Social Liberalist Party (SLP)
Systemic Fiscal Reform Group (SFRG)
School of Economic Science (SES)
Land is Free (LF)
Henry George Foundation (HGF)
Land Value Taxation Campaign (LVTC)
Professional Land Reform Group (PLRG)
Christian Council for Monetary Justice (CCMJ)
Global Justice Movement (GJM)
The 1909 Group

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END

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INFO:

Information about Land Value Tax
http://en.wikipedia.org/wiki/Land_value_tax

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CONTACT:

Chairman – John Lipetz
robinsmith3.googlepages.com/coalitionforeconomicjustice

Labour Land Campaign (LLP) – Dave Wetzel
www.labourland.org/

Liberal Democrat Action for Land Taxation and Economic Reform (ALTER) – Tony Vickers & Chris Glover
libdemsalter.org.uk/

Social Liberalist Party (SLP) – Anton Howes
www.voteliberalist.org

Systemic Fiscal Reform Group (SFRG) – Robin Smith
www.systemicfiscalreform.org

School of Economic Science (SES) – Peter Bowman
www.schooleconomicscience.org

Henry George Foundation (HGF) – David Triggs
www.henrygeorgefoundation.org/home/

Land Value Taxation Campaign (LVTC) – Henry Law
www.landvaluetax.org

Professional Land Reform Group (PLRG) – Heather Wetzel

Land is Free (LF) – Tommas Graves
www.landisfree.co.uk

Christian Council for Monetary Justice (CCMJ) – Peter Challen
www.ccmj.org

Global Justice Movement (GJM) – Peter Challen
www.binaryeconomics.net

The 1909 Group – Jock Coats
www.1909.org.uk

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Excerpt from article on local taxation by Dr Roy Douglas from the Land is Free website:

Such a tax, when designed for the special needs of local government, is known as Site Value Rating, or SVR. To apply SVR, the value of all sites in the local authority area would first be assessed. Professional va
luer
s assure us that this would be a simple and cheap operation. A tax, or rate, would then be levied on the basis of that valuation, just as the old rating system used to levy a tax, or rate, on the basis of the total value of a property (i.e., site plus “improvements”). As site values vary over time, periodic (perhaps annual) reassessment would be necessary.

The principle behind SVR is that each occupier will pay for the benefit he receives from what he has not created, but will not be penalised for what he has done to make the property he owns more valuable. One of the arguments in favour of Local Income Tax (which, as we have seen. is really flawed) is that it will fall most heavily on the people most able to bear it. As wealthy people usually live on valuable sites, while poor people live on less valuable sites, SVR will do exactly that.

But will there be hard cases, such as elderly people on small incomes, whose site values are high? Yes, indeed, SVR, like any other kind of taxation, may involve hard cases, unless Parliament makes careful provision to avoid those hardcases. But the possibility of such hard cases arising provides a challenge to the legislators to avoid them. It does not provide an excuse for failing to deal with the general problem.

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From the left side of the Atlantic, check out the work of Renegade Economist Fred Harrison, a Yank of the Georgist persuasion.