Last fall I mentioned a deal between Korean conglomerate Daewoo and the gov’t of Madascar, for the former to get half a Belgium’s worth of farmland at basically no charge. Turns out it was more controversial than I thought, caused a revolution, and the new government has revoked the deal. But, as the linked article explains, similar deals are proceeding in several other countries.
Archive for the ‘corporate privilege’ Category
…to be a Georgist. Michael Hudson’s analysis and forecast of bailout developments is helpful in understanding who benefits, and how it will be packaged to appear as homeowner aid. One of his recommendations is clearly Georgist:
It is easy enough for fiscal policy to prevent a new real estate bubble. Simply shift the tax system back to where it originally was, on the land’s site-rental value. The “free lunch” (what John Stuart Mill called the “unearned increment” of rising land prices, a gain that landlords made “in their sleep”) would serve as the tax base instead of burdening labor and industry with income taxes and sales taxes. This would achieve the kind of free market that Adam Smith, John Stuart Mill and Alfred Marshall described, and which the Progressive Era aimed to achieve with America’s first income tax in 1913.
Hudson, like Kinsley and a few others, disdains the modern Georgist movement tho he seems to accept the validity and applicability of George’s (and modern Georgists’) analysis.
Thanks to Alanna Hartzok for the tip.
This isn’t from some radical leftwing, libertarian, or Georgist journal.
One reason things didn’t fall apart when Congress didn’t immediately act as Paulson and Bernanke demanded [in September '08], may be that there wasn’t any danger of a meltdown in the first place. So say three senior economists working at the Federal Reserve Bank of Minneapolis, who in October examined the Fed’s own data, and concluded in an article titled Facts and Myths About the Financial Crisis of 2008 that the claims that interbank lending and commercial lending had seized up were simply not true. “Bank lending to consumers and to non-financial companies had not ceased, and banks were lending to each other at record levels,” says V.V. Charri, an economist at the Minneapolis Fed.
Thanks to Econospeak.
Bob Matter’s thoughtful comments need a response, and I can’t figure out how to properly format one without doing a new post, so here it is.
1. Not enough to time to implement a plan of such scope.
There’s enough time to price and purchase opaque derivative securities but not to open 700 straightforward banks? There are so many out-of-work bank staff– and more to come. I agree that this is a considerable task, but there are lots of people who know how to do it, and would have started their own banks already if they could raise the capital.
2. Too much added expense. 700 more buildings to rent, heat, light, and maintain, 700 sets of phone lines to pay for, computers, personnel, etc. etc.
We have a banking infrastructure in place now. There is plenty of vacant commercial space pretty much throughout the country. Of course there will be a cost, but each bank is a billion-dollar institution before they even take a deposit; they could spend 1/10th of 1% for physical facilities and startup staff.
3. Even this plan would ultimately lead to failure. The core problem of allowing private ownership of real property needs to be addressed. Until that time we will just keep repeating the boom-bust cycle. Interested parties can read the solution to today’s financial “crisis” in _Progress and Poverty_ by Henry George.
Henry George explains the root cause of economic meltdowns, and they will not be avoided until something like his proposal is put into effect. If he were here today, what would he propose as a way out of this depression?
I claim only that my proposal is far better than what the authorities propose. I don’t claim that it is better than doing nothing, which would result in considerable inconvenience but probably a quicker recovery than what we’ll get.
Georgists know why the economic meltdown was unavoidable. It could be postponed and, to some extent, redirected, but it was inevitable as long as big profits could be anticipated from speculation in privilege including landownership.
And furthermore, we know what needs to be done to avoid the next meltdown.
But what do Georgists say should be done to facilitate the recovery from the present economic distress? I will offer my suggestion, a pragmatic approach to what’s already underway. Read the rest of this entry ?
Associated Press reports that the state of Florida will give U. S. Sugar $1.75 billion to take 187,000 acres out of sugar production and give it to the State for Everglades restoration. An “environmentalist” is ecstatic:
“In the old days, you didn’t just beat your opponent, you also ate them,” he said. “Today, we’re eating U.S. Sugar.”
This works out to about $9,000 per acre, considerably more than the price of good rural midwest farmland. According to the article, it’s become increasingly difficult to make a profit in the sugar industry– leading one to imagine that a similar result might have been achieved had the State spent nothing.
The article states that the 1,700 employees will lose their jobs– but the companies web site says that it is an employee-owned company– with 1700 owners. Looking at it that way, it’s about a million dollars per displaced worker. Tho I doubt that each gets an equal share of what amounts to a gift from the taxpayers. The San Diego Union Tribune says employees own only 30% of the company. That source also says that the company’s 30,000 acres of orange groves are included in the deal.
And according to the New York Times, insiders have been squeezing the employee-owners out. So there may be even more sleaze here than at first appears.
Comcast packed an FCC hearing to prevent the public from participating. Apparently this is routine practice in Washington, and the only news is that Comcast did it at Harvard. (It is, of course, also routine in Chicago)
Ever heard of the “Support Anti-Terrorism by Fostering Effective Technologies Act of 2002?” Known as the “SAFETY Act” (Can’t they even keep their acronyms clean?) it limits liability for “almost every conceivable technology” related to homeland security. According to Washington Lawyer Brian E. Finch, even transit [August '07 Metro Magazine, page 24] and amusement park security guards can be protected from liability under this act.
Feel safer now?
Today’s Tribune carries an article that appeared a week earlier in the LA Times, wherein billionaire Charlie Munger discusses the problem of overpaid CEO’s. He traces it to corporate directors, who want to keep their CEO’s happy and retain their well-compensated seats. The solution: “‘If I were running the world, I would not allow directors to be paid at all.’” New laws and regulations won’t solve the problem. “‘I think you can assume that any law will be promptly evaded.’”
Why would a director serve without pay? Well, the directors are supposed to represent the shareholders. Wouldn’t a large shareholder want to supervise the management of his investment? In fact, many of today’s board members own no shares whatsoever, or only as much as they’re required to own to hold their lucrative positions.