Archive for the ‘poverty’ Category

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700-bank solution isn’t better than nothing

September 25, 2008

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.

What’s really encouraging now is how much opposition is appearing to the whole idea of any bailout.  I wish that meant it was unlikely to happen.

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The 700-bank solution

September 24, 2008

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 ?

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RSF’s Poverty Film emerges; will it be useful?

May 24, 2008

“The End of Poverty?,” a film funded largely by the Robert Schalkenbach Foundation, seems to have been shown at an auxiliary part of the Cannes film event, implying that it is complete. What little publicity I have found (more here) implies that it simply makes the point that poverty exists, it is large and serious worldwide, and is somehow the fault of more affluent countries. This may be news to many folks, but I wonder how many of the ignorant will see the film. One article quotes the director Philippe Diaz: “They are poor because we are rich.” Certainly seems to be an oversimplification, not literally true, but then what do I know about reaching the politically influential masses?

Originally some of us had hoped the film would teach a bit of Georgist economics. If that’s not possible in a mass market product, we hoped at least it would draw some links between control of resources and lack of access thereto. Perhaps it does, tho that doesn’t come out in what I’ve read thus far.  We shall see.

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Racism and land value taxation

April 5, 2008

Prosper Australia exec Gavin Putland has written an insightful analysis (“Still on the Mountaintop”) of how a policy of taxing productive activity almost guarantees, under American conditions, that blacks will suffer economic discrimination and be overrepresented among the poor and unemployed. The link is thru NAIRU, which requires a substantial level of unemployment in order to prevent ruinous inflation.

“full employment” means enough unemployment to cause enough wage restraint to give stable inflation. So we’re living in a system of enforced failure. A percentage of people have to be unemployed, and therefore, at the boundaries of unemployment, another percentage of people have to be underemployed or intermittently employed or precariously employed. In other words, the economy is being run in such a way that a certain percentage of people have to be losers.

He explains what seem logical reasons why Africian Americans, rather than other minorities or the entire labour force, bear this burden. The solution is to tax “land-like assets” instead of “house-like assets” and the work that goes to produce them, resulting in increased employment opportunities with less inflation, among other benefits. The piece includes detailed explanation of why even landowners will be better off under this reform.

Even experienced Georgists will benefit from reading Putland’s accessible explanation.

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Illusion of profit drives wages down?

February 20, 2008

Very good presentation last night at APA by Margaret Garb, historian at Washington U who has researched post-Fire working class housing arrangements and their financing in Chicago. Evidently she did a lot of detailed research, focusing on a single block of the old Harrison/Halsted district (obliterated in the 1960s by the UIC campus), examining who bought and sold property, how they financed, who rented, who boarded, their occupations and incomes, etc.

One striking similarity to more recent times is that workers used the equity Read the rest of this entry ?

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Cost of living index vs. consumer price index

January 15, 2008

I should have known about this, but I just discovered that BLS has been publishing a C-CPI-U index. I had seen the term “chained index” around but didn’t realize what it means. This index has a direct month-to-month link to what consumers report that they’re actually buying, rather than using a fixed marketbasket as the conventional CPI’s do. Thus the chained index measures the cost of living– what people actually spend to live– rather than consumer prices. BLS says the chained index is expected to generally be lower than the conventional index, and that has been the experience since it was introduced. However, it seems to me that when the chained index is lower than the conventional index, that means people are finding ways to live cheaper (presumably because their real incomes are declining). If people’s incomes were increasing, relative to the cost of living, wouldn’t the chained index rise faster than the conventional one, as they choose more luxuries?

If I am correct, and the indexes are correct, then real incomes are declining.

BLS explains their chained index here. Actual data seem to appear only in the detailed reports, which are here.

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How the sinking rich brought prosperity

August 8, 2007

According to economic historian Gregory Clark, the industrial revolution occurred because people developed “the middle-class values of nonviolence, literacy, long working hours and a willingness to save…” And this happened because the poor lived in such wretched conditions that the rich out-reproduced them.  Not enough of the working class children survived to do the work, so  many children of the rich, carrying these “middle-class” values, ended up in the working class.  They carried the values with them: “Thrift, prudence, negotiation and hard work were becoming values for communities that previously had been spendthrift, impulsive, violent and leisure loving.” This made the industrial revolution possible.

That’s my summary of Nicholas Wade’s review in yesterday’s New York Times of Clark’s forthcoming “A Farewell to Alms” (to be published by Princeton University Press).  Apparently it’s based on a huge amount of detailed research.

It seems to contradict Georgist theory in a couple of ways.  First, Clark assumes that to some extent values are genetic, whereas George emphasized that people are pretty much identical everywhere, with social institutions explaining the main differences.  Second, it implies that the formula for prosperity is to let the children of the poor die, and make the rich kids work.  Well, maybe making the rich kids work wouldn’t be so bad.

Thanks to NewsTrust for bringing this to my attention.