Showing posts with label Georgism. Show all posts
Showing posts with label Georgism. Show all posts

Friday, February 15, 2019

Solutions to Gentrification

To follow up on previous posts about gentrification and rising housing costs (here and here), I've laid out some policy recommendations, most of which have already been articulated by the Obama Admin and the Urban Land Institute.

Much of the narrative around gentrification has been shrouded in confusion. The left-wing activists who have taken up this cause frame the problem in terms of race and class warfare, which might be emotionally appealing but is factually wrong. Rent hikes are not caused by malicious landlords intent on taking every last penny from their working class tenets, or white hipsters and yuppies conspiring to remove minorities from an area, but bad land use policies that drive up rents by restricting the supply of housing; landlords and yuppies, like other suspected bad faith actors, are simply following the incentives created by governing agencies.The negative affects of gentrification (i.e. pricing out low income often minority tenets) cannot be alleviated without eliminating the main contributing factor to astronomical rent hikes: artificial limits on the supply of housing. As I explained in the previous post, the main problem is local zoning and building code restrictions that prevent developers from creating enough housing to accommodate growing populations. One very straight forward solution is to allow more by-right development, especially for rent controlled and low income housing, and waive impact fees (Jakabovic, Ross, Simpson, & Spotts, 2014). This would not only expedite the construction approval process, eliminating the time needed to apply for multiple variances and entitlements, but also reduce the cost of starting projects (Jakabovic et al., 2014). Reducing or eliminating parking space minimums, restrictions on unit size and density requirements will allow developers to build accommodations for more residents (Jakabovic et al., 2014). Inclusive zoning that allows alternatives to single family housing, such as group homes, multi-family complexes, Accessory Dwelling Units, and mirco-units will not only provide more options but also make metro areas more affordable for more people. Additionally, allowing non-profit charities to build tiny houses for the homeless, which could be done as low income housing, would both reduce homelessness and alleviate the burden on city shelters saving local taxpayers money and providing the underclass with an independent living space and an opportunity to get back on their feet. Waiving impact fees would be a necessary first step to allow these types of projects. As the Urban Land Institute noted in their 2014 report on affordable housing, impact fees tend to impose higher costs on smaller projects when they fail to account for factors such as unit type and size. Offering property tax exemptions for affordable and low income housing production would also make it more readily available.

Streamlining permitting and monitoring processes and coordinating housing regulations across multiple jurisdictions would make new rental units, both market rate and rent controlled, more affordable, on the supply side. Urban regions often have multiple jurisdictions with different building and zoning codes (Jakabovic et al., 2014). Having to comply with multiple and sometimes contradictory sets of procedures and regulations burdens developers working in multiple jurisdictions; coordinating zoning and building codes or having a unified code for all land and housing regulations would reduce compliance costs (Jakabovic et al., 2014). Eliminating duplicative paperwork for the underwriting, due diligence, and monitoring processes for each lender and regulatory body would also reduce compliance costs (Jakabovic et al., 2014). Additionally, jurisdictions should provide developers with a clear permitting time frame to reduce delays in construction and holding costs (Jakabovic et al., 2014). Of course, housing markets are not monolithic so cities and states will have to tailor any land reforms to the needs of their residents.

Instead of trying to find a convenient scapegoat to blame for these problems, we could work together to find solutions without the unproductive protests and grievances. Unfortunately that would also require us to change the current narrative about gentrification which many people are politically and emotionally invested in.

References

Jakabovics, A., Ross, L. M., Simpson, M., & Spotts, M. (2014). Bending the cost curve: Solutions to expand the supply of affordable rentals.

Wednesday, February 13, 2019

How Zoning and Building Code Restrictions Increase CO2 Emissions

One of the biggest findings of an Obama Admin white paper on affordable housing is that local land use restrictions, particularly zoning ordinances and construction approval processes, is a major contributing factor to rising housing costs and its associated effects (i.e. urban sprawl and gentrification). The crux of the research draws on the widening gap between real construction costs and housing prices over the decades, particularly in the metropolitan areas of major cities like Los Angeles and New York. In fact, the manufactured housing crisis is almost exclusively a problem in metropolitan areas on the east and west coast. There are generally three types of housing markets: areas in which housing is priced below construction costs, areas in which housing prices are close to construction costs, and areas in which housing prices are significantly higher than construction costs (Glaeser & Gyourko, 2003). For the most of places in the U.S., housing markets fall into the first two categories (Glaeser & Gyourko, 2003). In some places, like California, there are almost no homes below or close to construction costs; in California, there are few homes priced below 1.4x the cost of construction (Glaeser & Gyourko, 2003). Mean housing prices in metropolitan areas haven risen at an average of 1.7% annually since 1950 (Glaeser, Gyourko, & Saks, 2005). Between 1950 and 1970 rising home costs mostly reflected improvements in construction quality; new home prices rose in an almost one to one ratio with physical construction costs (Glaeser et al., 2005). However, after 1970, housing prices continued to rise even as the cost of physical construction leveled off (Glaeser et al., 2005). For instance, construction costs in San Francisco only rose 4.6% and construction costs in Boston only rose 6.6% between 1970 and 2000. Over the same period, average house prices in San Francisco rose 270% while average home prices in Boston rose 120% (Glaeser et al., 2005). Rising land values and artificial restrictions on construction represented 75% of inflation in house prices (Glaeser et al., 2005). This was evident in diminishing rates of new construction. Between the 1950's and 1990's, the median rate of new construction in metropolitan areas fell from 40% to 14% (Glaeser et al., 2005). In Los Angeles, San Francisco and New York the median rate of new construction fell to well under 10% by the 1990s from previous highs of 60%, 30%, and 20%, respectively, in the 1960s (Glaeser et al., 2005). Higher house prices usually spur a surge in new construction, but burdensome land use restrictions prevented the housing market in metropolitan areas from meeting growing population demands.The rapid rise in housing prices and diminishing rates of new construction coincided with the rapid growth of land use regulations in metropolitan areas between 1970 and 1990 (Gyourko & Malloy, 2014). Population density only accounts for a small contribution to the declining rate of new construction and land only accounts for 20% of the value of new homes (Glaeser & Gyourko, 2003).

Metropolitan areas don't have low wage problems or overpopulation problems; they have zoning problems. In housing markets where prices far exceed construction costs, developers have to comply with multiple, and often conflicting, housing standards and regulations and are sometimes required to conduct separate appraisals, reviews and inspections for each source of funding (Jakabovics, Ross, Simpson, & Spotts, 2014). Developments that exceed zoning restrictions on the type and size of development must received approved variances and entitlements, which delays construction and adds to the overall costs (Jakabovics et al., 2014). Jurisdictions can also add density requirements, height maximums, size minimums and parking space minimums, which in aggregate reduce the supply of affordable housing units (Jakabovics et al., 2014). Parking space minimums also add to construction related costs and drive up rents; for instance, in San Francisco, the average parking space adds between $25,00 and $50,000 to construction costs (Jakabovics et al., 2014). In addition to these regulations, jurisdictions can also dictate where affordable housing can be located and can ban certain types of housing such as group homes, micro-units, and ADUs (Jakabovics et al., 2014). Building codes that dictate the type and size of certain amenities, as well as the aesthetic features of buildings, can also add to construction related costs (Jakabovics et al., 2014).

Implications for the Environment

The environmental implications of burdensome zoning ordinances should be obvious to everyone; it doesn't take a brainiac to figure this out. Rising housing costs push residents out of metropolitan areas resulting in longer commute times to work. In aggregate, longer commute times increases traffic resulting in more CO2 emissions. The Obama admin noted this very same conclusion in their white paper 'Housing Development Toolkit.'

The long commutes that result from workers seeking out affordable housing far from job centers place a drain on their families, their physical and mental well-being, and negatively impact the environment through increased gas emissions.

Any liberal effort (or democratic socialist as they are akin to calling themselves nowadays) to reduce greenhouse gas emissions and save the planet will be in vain if they don't address the affordable housing crisis in their own communities and it's manufactured cause of overly restrictive zoning ordinances. Electric cars aren't going to do us any good if people still have to drive 2 hours to work. Public transit isn't going to do us any good if people can't afford to live where it's available. The primary focus of any climate change agenda should be land reform.

References

Glaeser, E., & Gyourko, J. (2003). The impact of zoning on housing affordability.FRBNY Economic Policy Review, 21-37. doi:10.3386/w8835

Glaeser, E. L., Gyourko, J., & Saks, R. E. (2005). Why have housing prices gone up? American Economic Review, 95(2), 329-333. doi:10.1257/000282805774669961

Jakabovics, A., Ross, L. M., Simpson, M., & Spotts, M. (2014). Bending the cost curve: Solutions to expand the supply of affordable rentals.

Friday, February 1, 2019

Gentrification is A Land Use Problem

A growing concern on the left and especially among minority groups is demographic displacement, in certain cities and neighborhoods, caused by rising house costs associated with the influx of middle and upper-class, mostly white, young professionals. Due to economic illiteracy, the white yuppies and hipsters are blamed for rent hikes that make living in an area unaffordable for mainly poor minority tenants when, in fact, there is a third variable called land use policy (e.g. zoning ordinances, urban planning, property taxes) that has a much bigger impact on their rent. However, the left tends to frame this as a racial/cultural issue, which makes it simpler to talk about, but steers the conversation clear of any plausible solutions. Take for instance this gem that was featured on a liberal HBO show.

It’s basically when, for me, it’s a lot of white people come move into the hood and kick everybody out that’s there. I’ve been a witness of it since I was a small jitterbug so I mean now that I’m grown up and I’m seeing it, I understand it a little more,” he said during the interview with Maher, according to the news outlet.

Or how about these bozos, who protested an Austin, TX restaurant for moving into a building that was formerly occupied by a Mexican-American owned tire shop and using Spanish words to advertise their merchandise.

Activists with Defend our Hoodz — Defiende el Barrio on Friday announced via Facebook of their plans to protest outside Lou's Bodega on 1900 E. Cesar Chavez St. Since its recent opening by a pair of high-profile developers, the development has been widely lambasted by East Austin residents already anxiety-raddled over the brisk pace of gentrification that's resulted in soaring property values and residents' displacement.

The growth of commerce and population density will always raise land values; in this sense, gentrification is inevitable wherever new development occurs on relatively cheap land. Like any other market, higher demand raises the cost of housing, but since real property is fixed in supply to certain locations, unlike cars or smartphones, the market can only reach an equilibrium by lowering demand, which in the current case means raising rents. But the housing market does not have to be a sum-zero game. Removing artificial restrictions on the supply of housing can make it more affordable for low income minority renters. Zoning ordinances, such as those which restrict new development to single family housing, excluding group homes and multifamily complexes, require a minimum number of off street parking spaces, reducing space for potential residential units, restrict residential conversion, prohibiting the conversion of former office space into residential property, combined with lengthy permitting processes for new construction artificially inflate property values and rents in dense urban areas. Ordinances that dictate the minimum size of units, such as those in Oakland also drive up the cost of housing. In a white paper on housing development, the Obama admin noted that gentrification and other problems associated with surging housing costs are, for the most part, caused by local land use restrictions.

When new housing development is limited region-wide, and particularly precluded in neighborhoods with political capital to implement even stricter local barriers, the new housing that does get built tends to be disproportionally concentrated in low-income communities of color, causing displacement and concerns of gentrification in those neighborhoods. Rising rents region-wide can exacerbate that displacement.

The Obama Admin's Housing Development Toolkit drew from previous research on housing development, land use restrictions, and the widening gap between construction costs and new home prices. Previous research has concluded that for most U.S. regions, the price of new homes is only marginally greater than the construction costs. The exceptions are major cities, particularly in coastal regions, such as Los Angeles San Francisco, New York and Boston.

Researchers have also documented a sharp increase in the gap between home prices and construction costs, with stringent housing regulations now driving cost increases previously shaped by construction costs and quality improvements. Localized studies have supported these national conclusions – documenting sharp increases in zoning and other land use restrictions in metropolitan Boston, New York City, Los Angeles, and San Francisco.

The effect that increased zoning restrictions place on housing costs is best illustrated by these examples. For instance, in 1960 Los Angeles was zoned to accommodate 10 million residents when it only had a population of 2.5 million people. Today, the city is only zoned to only accommodate 4.3 million people with a much larger population of about 4 million people. Of course, the same problem has transpired accross the California coast.

Emerging research has shown that in areas with high-cost housing such as California, zoning and other land-use controls contribute significantly to recent sharp cost increases, reflecting the increasing difficulty of obtaining regulatory approval for building new homes.

Most importantly, cities and states experiencing 'gentrification' should, along with reducing zoning restrictions, shift property taxes from building values onto location values. This would further incent new construction and improvements to existing residential properties, while simultaneously discouraging real-estate speculation and recapturing the value that new amenities and businesses add to rental and selling prices. This would ultimately generate more tax revenue that could be wisely spent improving public transit, reducing traffic congestion and the demand for more parking spaces, which is a win/win for the environment.

The left can either choose to whine about gentrification and stay in a state of perpetual victim-hood or take meaningful action by reforming their obtuse zoning regulations and property taxes instead of protesting people for following the incentives their own governments create or asking for more rent control and subsidized housing, which only creates a housing shortage by forcing prospective tenants into a queque for affordable units. Gentrification could, and should, become a bipartisan issue, but the left would have to abandon their race baiting tactics and stick to hard economic analysis for that to occur.

Sunday, January 27, 2019

A License To Speak (part 1)


Source: Institute for Justice

In some states it is illegal to offer dietary advice without the government's permission. Florida resident, military spouse and health coach Heather Kokesch Del Castillo learned first hand how far state's will go to protect their cartelized industries. In this instance, she ran up against the Dietetics industry and the state was willing to censor her. Heather moved from California to Florida in the summer of 2015 after her husband, who is in the Air Force, was transferred to a base in Fort Walton Beach. Heather earned a private health-coaching certification in 2013 from the Institute for Integrative Nutrition. The state of California did not require Heather to become a licensed dietetician to give diet advice to willing clients, but Florida's Dietetics and Nutrition Practice Act defines 'dietetics' so broadly that it inlcudes offering any dietary advice for compensation. The Florida Department of Health first contacted Heather when they conducted a sting operation against her. One of their agents emailed heather pretending to be a man named Pat Smith who was looking for information that could help him personalize a weight loss program. In response, Heather offered him a free consultation and asked for his health history. The agent was not charged for any of the information provided to him and he was not solicited to buy anything from her. Heather does not sell supplements, perform diagnostic procedures, or claim to be a licensed dietetician. Her health coaching practice only involves talking to clients, on an individualized basis, about their food choices for compensation. She helps them sift through information that is already available to the public online. The Florida Department of Health subsquently issued a cease and desist and fined Heather $750 for giving dietary advice without a license. In order to continue her Health coaching service, Heather would have to spend 4 years getting a bachelors in Nutrition Science, complete 900 hours of internships, and pay $200 to take a board certified exam, but Heather has neither the time nor the money it would take to meet the state's requirements and neither does the vast majority of the population.

Similar cases have arisen in other states. Perhaps the worst example occured in North Carolina back in 2011 when the Board of Dietetics threatened a paleo blogger with imprisonment if he didn't stop offering dietary advice on his website or even through emails and phone calls. The blogger in question did not even demand compensation for his writing, he was simply offering his experience with different foods and supplements. If talking about food is restricted speech it is not hard to conceive that the government could place more contentious subjects behind licensing barriers. The recent fake news and Russian meddling hysteria, originally orchestrated by the Democratic establishment against the alternative media, offers ample opportunity for state governments to find fertile ground for the censorship of critics via licensing requirements.

Tuesday, December 25, 2018

Real Life Examples of Land Value Taxes (Part 2)

Source: Vancouver expects to collect $38M from vacancy tax in first year, Vancouver Homeless Count

The city of Vancouver recently implement a vacancy tax on all unoccupied residential properties that could curb foreign land speculation and generate $38 million in annual revenue for affordable housing and other public services. The city currently has 2,538 vacant homes and 2,181 homeless residents, 659 of whom are unsheltered; this marks a 2% increase from the previous year. The $38 million could go a long way to reducing and eventually eliminating homelessness. The vacancy tax could also be an incentive to rent or lease property lowering the overall cost of housing and allowing more people to live in the city instead of commuting; however, the tax is only assessed on 1% of property values so its impact may be minimal. A much higher vacancy tax rate coupled with a reduction or elimination of the property tax assessed on buildings and improvements would go much further in making housing more affordable for everyone.

Campaign Finance Reform is a Game of Whack-a-mole

Sources: The Hidden Money Funding the Midterms, Super PAC or Super Fraud, Richest Billionaires are also top political spenders, Former Hawaii Gov. Cayetano Settles Libel Lawsuit Against Super PAC, Top Organizational Contributors

When one loophole is closed another is opened

Super PACs have figured out how to run ads without disclosing their donors until after elections. Under the Citizens United v. FEC ruling, Super PACs can spend an unlimited amount of money on political ads, but they must disclose their donors. However, a growing number of Super PACs have begun to circumvent this rule by forming the day after the deadline for reporting donors and not reporting donors until after election day. Others go into debt to buy political ads and pay it off with donations after the election. During the 2018 congressional races, 63 super PACs adopted one of these two tactics and spent a total of $21.9 million on campaign ads and mailers without revealing the source of their funding.

A major advantage of super PACs is that they allow politicians and their supporters to defame their opponents without being liable. The anonymity they provide allows the supporters of certain politicians to make false and malicious claims about their opponents without the risk of being sued for defamation. Recent examples include Roy Moore, a Republican senate candidate for a special election in Alabama who was smeared by a rival candidate’s Super PAC as a sexual predator on the basis of mere hearsay. During a 2012 mayoral race for Honolulu, Hawaii, the former governor of Hawaii, Ben Cayetano was falsely accused of taking kickbacks and illegal campaign contributions by a rival super PAC. Unfortunately, Super PACs can also be a disadvantage for the candidates they are supposed to represent. Such was the case for 2013 Virginia Gubernatorial candidate Ken Cuccinelli, who sued a Super PAC that used his name and likeness under a false advertising statute. Super PACs make what could otherwise be intelligent debate about policy into smear campaigns and scare tactics that appeal to the lowest common denominator. But perhaps the best selling point of super PACs and the whole charade of private campaign finance laws is that they further entrench the political duopoly by making political discourse a function of the amount of money you can raise. Inevitably, this process tends to favor billionaires like Jeff Bezos and corporate interests like Amazon or, for instance, the entire defense industry, who have the most money to throw around and are heavily invested in a two party system that’s much easier to control than a political plurality. 36 of the the world’s 100 richest people are U.S. citizens and 30 of them regularly donate to political action committees. Out of the $184 million that billionaires contributed to the 2016 election cycle, 92% of it was donated to PACs and Super PACs.

The Solution

A political plurality, wherein more than two parties and independent candidates share power, can only be achieved through mandatory publicly funded elections. Every means of private campaign financing, especially Super PACs, should be made illegal and every candidate for any office who receives support from at least 5% of the electorate should be given an equal lump sum to spend directly on campaign activities. Candidates could qualify for government funds either through a petition or a preliminary poll. The details could be hashed once the country decides to abandon the inane belief that corporate propaganda and character assassinations is somehow the height of free speech. Such a plan would also require a constitutional convention, so it would be much easier to implement at the state and municipal level where constitutions are more readily amended.


Wednesday, December 19, 2018

The Myth of Original Appropriation

The actual origin of property in land, which here is not restricted in meaning to the earth’s surface, but includes all natural resources, is not the begin mixture of labor with raw material, but in conquest and bloodshed. Landed property, as distinguishable from property in capital and consumer goods that are man made, is a creation of central governments not self-reliant homesteading. This is very obvious if we examine the historical record instead of quote mining John Locke. Much of the territory that makes up the U.S. was purchased by the federal government from other national governments. The territory of thirteen states was purchased from France in the Louisiana purchase, Florida was purchased from Spain, and Alaska was purchased from the Czar of Russia. Territory that was not purchased from other national governments was either purchased from the tribal nations inhabiting them or taken as the loot of war (e.g. treaty of guadalupe hidalgo). And of course, the original thirteen states were established by the British crown as colonies for the purpose of building the wealth of the British empire according to mercantilist theories. Furthermore, land ownership in America is based on the doctrine of discovery not homesteading. The closest thing to homesteading was when some early settlers purchased land directly from Indian tribes. However, their land rights were later deemed void by the ruling in Johnson v. M’Intosh which made it illegal for tribes to sell their land to private citizens and gave the federal government the exclusive right to negotiate land transfers with the tribes. This encoded the doctrine of discovery, the old colonial era belief that only European Christians have a right to own land in the new world while non-christian natives just have a right to occupancy, into U.S. law. Under the doctrine of discovery, or the principle of discovery as Justice Marshall called it, the U.S. inherited ownership of North America from Britain after the revolutionary war and the various European nations it purchased territory from (i.e. Spain, France, Russia). The European nations who the U.S. inherited the land from acquired the land by “discovery” i.e. by having their christian explorers set foot there and claim it for them. In many cases this was as simple as planting the flag of their monarch on the newly "discovered" land, which I guess could be construed as mixing one’s labor with the land. Historical revisionism aside, the homesteading principle may prove useful in the future when people discover newly formed islands around the pacific rim or when we colonize mars, but for now it is a tired relic of liberal mythology.

Friday, May 18, 2018

Seattle Penalizes Employers to Help The Homeless

If you’ve been keeping up with the national news lately, you might have heard that the Seattle city council unanimously passed an employee head tax for businesses that gross at least $20 million per year. The first proposal was annual head tax of $500 per employee, but outrage from the Seattle business community caused them to nearly halve it and settle for $275 per employee. Of course, $275 is a low-ball figure that doesn’t account for the cost of complying with the new head tax. Although the magnitude of the effect was minimized the incentive remains the same: hire less people. Low skilled, temporary, and part time workers will especially be vulnerable to the disincentive to hire because the tax doesn’t account for differences in contribution and wages. The homeless, the people who stand in most need of gainful employment aren’t helped in the least bit by this new disincentive to hire. Sure they’ll get better funded government services, but what good are these services if you can’t get back up on your own feet? A more intelligent city council would have considered the true cause of rising homelessness instead of arbitrarily deciding to punish employers for employing people, something which actually contributes to the decline of homelessness and extreme poverty.

Alternative Solutions to Homelessness


Given the precarious position homeless people hold in society, I don’t think much can be done to elevate their status through government services. The stigma attached to this “lifestyle” is perhaps the greatest obstacle to digging themselves out and receiving free services only tends to raise people's’ ire against them. Add to this the fact that their dependence on government services can only ever be tenuous because it’s always susceptible to budget shortfalls and you have a recipe for social immobility. However, there is one government service that I’m in favor of, but one which remains unexamined due to current statutes against vagrancy and loitering. Repeal laws against vagrancy and loitering and allow the homeless to homestead on public land. There are numerous recent examples of the homeless, with the aid of private charity, coming together to build communities of small houses, but because of state laws that criminalize homelessness and force them into government dependence they were destroyed.

Oakland Dismantles Tiny Houses at Homeless Village

Los Angeles is Seizing Tiny Homes from the Homeless

Tiny Houses Project At Sustainability Park raided by Cops

However, despite government imposed setbacks there have been some success stories in this regard.

Tiny Home Village for Homeless People to be 100% Solar Powered

Denver tore down their tiny-home village. They built it again, this time with permission

Fighting Homelessness in Austin, One Tiny House at a Time

The lack of affordable housing in big cities like Seattle is a major contributing factor to homelessness. Developing communities of tiny homes provides the homeless with, independence, a sense of dignity and personal space, things they can’t be obtain by being herded into publicly funded shelters and treated like children. In addition to allowing them to live on public land, perhaps cities could also provide them with water and garbage collection. This would in effect make them like any other community, and go a long way in eliminating the stigma associated with their circumstances.

Tuesday, March 27, 2018

Occupational Licensing Hurts Minorities and the Poor


Sources: Tennessee Has Fined Residents Nearly $100,000, Just For Braiding Hair
Occupational Licensing and the Poor and Disadvantaged

Something as innocuous as hair braiding, an art that has been practiced for thousands of years and is deeply rooted in many African cultures, is illegal in twenty-five state’s if it’s done for pay without the government’s permission. Fatou Diouf, an immigrant from Senegal who braids hair for a living, a skill she learned as a child, found out the hard way when the state of Tennessee imposed $16,000 in fines against her for hiring employees who did not have the government’s permission to braid hair. And she’s not alone. The Tennessee board of cosmetology and barber examiners has levied $100,000 in fines against braiders in more than 30 different salons simply for practicing their art without paying the board for a license to do so.

After examining meeting minutes and disciplinary actions for the Tennessee Board of Cosmetology and Barber Examiners, the Institute for Justice has identified nearly $100,000 in fines levied against dozens of braiders and more than 30 different natural hair shops and salons since 2009. All of those violations were for unlicensed braiding; none were triggered by any health or sanitation violation.

Obtaining a license to braid hair in Tennessee is no easy feat. In fact, it’s unaffordable to some. To become a licensed “natural hair stylist” in Tennessee, braiders have to complete 300 hours of coursework in one of three Cosmetology schools within the state, which costs them $1,500 to $5,000 in tuition, just to learn a skill they already know and several other skills that aren’t relevant to their jobs.

Occupational licensing does not make hair braiding safer or improve the quality of the service. All it does is kill employment opportunities for black women and force some to work in the grey market. To demonstrate what’s possible without these needless market barriers, Mississippi was pressured to abandon a license requirement for hair braiding in 2016 after the Institute for Justice filed suit against the state. As of February, Tennessee only has 156 licensed braiders and natural hair stylists, though many more probably work without a license at home or in an established salon. In comparison, Mississippi has 2,600 legal braiders and only requires them to register with the department of health and pay a $25 administrative fee. The sheer absurdity of licensing hair braiders and the spotlight that has been shined on it has embarrassed state legislatures across the country into liberalizing the trade, but occupational licensing as a whole still maintains a firm stranglehold on economic growth in local economies, affecting one in three professions and more often than not keeping poor people and minorities out of decent paying jobs. The disparate effects of these market barriers can be seen in entry level occupations that provide some upward mobility. For instance, black or Hispanic non-white interior designers are 30% less likely to earn a college degree compared to white interior designers. Thus, states that require interior designers to have a college degree disproportionately exclude black and Hispanic designers. Similarly, licensing laws that require English proficiency and a minimum number of years of residency disproportionately exclude immigrants from legally working in their chosen career.

Wednesday, November 22, 2017

Abolish Occupational Licensing

Source: The Atlantic, License To Work

EMTs hold lives in their hands, yet 73 other occupations have greater average licensure burdens: barbers and cosmetologists, home entertainment installers, interior designers, log scalers, manicurists and numerous contractor designations … while the average cosmetologist must complete 386 days of training, the average EMT must complete a mere 34. Even the average tree trimmer must complete more than 16 times the amount of education and experience.

In the USSA, there doesn't seem to be any gig that you can do without needing a team of bureaucrats to sign off on it, however trivial it may be in the grand scheme of 'public safety.' For instance, to install home entertainment systems in Connecticut you have to earn a high school diploma, pay a $185 application fee, pass a test, and work as an apprentice for one year. To legally sell flowers in Louisiana, one has to pay a $189 application fee and pass a florist exam. All 50 states require a license to become a barber. On average, a prospective barber must pay $154 in fees, sit out a year for education, and pass two exams just to legally cut other peoples' hair. Even something as mundane as cutting grass for pay, something teenagers often do for recreational spending, requires a business license in a growing number of cities. The absurdity of occupational licensing laws knows no bounds. As I have reported in previous Red Tape Times posts, people have been threatened with fines and sometimes prison for offering dietary advice without the government's permission, teaching makeup without the government's permission, critiquing traffic lights without the government's permission, playing music in a bar without the government's permission, selling teeth whitening products without the government's permission, and selling home cooked meals to neighbors without the government's permission (also here). At this point, a list of jobs you're allowed to do without the government's permission would be much shorter than a list of jobs you need their permission to do. State and local governments, in conjuction with industry licensing boards, are making an ever growing number of services illegal without a government shakedown. This creates barriers for innovation, growth, and self-employment opportunities for the working class Americans. A radical measure is needed to end this insanity: abolish occupational licensing, along with the state licensing boards that implement them and the industry lobbyists that control them. It won't be pretty, initially, but over time we will see how consumers can join together to regulate the quality of the services they're provide. The first conception may be rating systems specific to certain kinds of services, and this may evolve into private credentialing over time. Eliminating the rigid top down structure of licensing boards would open up multiple avenues for keeping proprietors honest and competent without creating burdensome hurdles for honest and competent people trying to become proprietors.

Friday, November 17, 2017

The Rent Motive of Campaign Funding

A little over a year ago, 60 minutes, reported that members of congress spend an average of 30 hours a week in a call center soliciting donors. The prospect of it seemed completely absurd to me. Our elected officials basically have a part time job as telemarketers on top of their neglected constitutional duties. Part of the problem is due to the fact that the 540 people that congregate on Capitol Hill are pulled from the upper echelons of society and don't reflect the SES composition of our nation. According to the Census Bureau, the median household income, as of 2015, is $55,775. Millionaires make up about 4% of the general population. In comparison, the majority of congressmen are millionaires who make a cushy 6 figure salary. People tend to sympathize more with those who are more like them than those who are less like them; that's basic human nature. So it's not hard to understand why a group of people who are well off and financially secure might have trouble sympathesizing with the average person who lives pay check to pay check with less than $1,000 in savings. The other part of the problem is that major donors, non-profits and for profits alike, aren't contributing to campaigns out of the kindness of their hearts; they expect a return on their contributions when their candidate wins. The norm of reciprocity - the universal social instinct to repay benefits with benefits and injuries with injuries governs interactions between people who aren't genetically related. The same instinct that allows us to form non-kin social organizations allows informal quid pro quo arrangements between politicians and their donors to flourish without necessarily becoming outright bribery. This unspoken and unwritten rule does not necessarily need to be acted on consciously. Behaviors that we are continually habituated to become second nature over time. Institutions that we have been familiar with since birth sink into the background and become entrenched in our thinking. For the same reason, we've come to accept some of the corruption in Washington; we've come to accept the party duopoly and along with it a government that plays favorites in the businesses world, enforces its laws selectively, and ignores its constitutional restraints. Breaking this vicious cycle requires altering the perverse incentives involved in running for office in the first place.

The first step toward changing the incentives for running for public office should be to change the source of funding for candidates. Ultimately, the myriad of PACs, SuperPACs, and other private fund raising organizations should be banned and replaced with one donor - the state or federal government- for each individual candidate running for any elected office, at each level. To keep every Tom, Dick, and Harry from running, we would apply the already existing 5% rule for federal funding. Each candidate that meets or exceeds this requirement, aside from the requirements enumerated in the constitution, would receive the same funding. A poll tax could be instated at either the state or federal level to generate the revenue necessary for elections at the state or federal level respectively. There are several perks to publicly funded elections. First, we would put the lower and middle class on even footing with billionaires like Tom Steyer, Jeff Bezos, George Soros, the Rockefellers, the Kochs etc. It doesn't take a genius to figure out that these people have more sway on Capitol Hill than your average Joe calling his senator's office every now and then. Second, if candidates don't have to worry about fundraising, they would have more time to work out their policy positions and instead of the constant barrage of attack ads, we might get more substantial policy orientated ads. Third, if officials didn't have to worry about raising money for re-election, they would have more time to do their jobs (term limits on members of congress would also reduce this incentive). Imagine if congressmen spent those 30 hours a week conducting the business of the U.S. instead of soliciting donors in party call centers. Fourth, putting all candidates on an even playing field would allow us to break the duopoly. Most people are not satisfied with having only two viable choices when they go to the polls. Having elections that are only publicly funded would allow third parties to gain a foothold in the electorate and eventually result in coalition governments in congress like what many European parliaments have. Imagine if the Republicans had to compromise with the Libertarians on defense spending in order to pass tax reform? Having third parties present in congress would go a long way to reducing the typical group think and would create resistance to the gradual erosion of our civil liberties (the Libertarian and Green Party are pretty solid on these issue). Fifth, without having SuperPACs that can spend an indefinite amount on ads, elections would be far cheaper. Public funding for individual campaigns would allow us to set expenditure limits on candidates.

Given the Supreme court ruling in Buckley v. Valeo and Citizen's United v FEC, a constitutional amendment would be needed for exclusive public funding of elections for both state and federal offices.

Tuesday, October 3, 2017

Real World Examples Of Land Value Taxes

Keep in mind that the economic term ‘land’ refers to any scarce resource that isn’t a product of human industry.

Generally, there are three categories of land Value Taxes

  1. Ground rent in real-estate
  2. Resource extraction
  3. Externalities caused by pollution

Australia


Mineral Resources Rent Tax

The mineral resource rent tax is assessed on the value of extracted minerals, such as coal, before value is added through downstream activities minus mining expenditure. The value is based on the sale proceeds attributable to the raw material before it undergoes any processing. For coal and iron, the valuation point is the run-of-mine stockpile or when it leaves the point of extraction. Thus the mining profit in this case is actually a rent since it is obtained through exclusive use and disposal over a non-renewable resource that isn't a product of human industry. The effective rate is 22.5% so even here only a fraction of the rent is collected into the public coffers.

Western Australia


Land Tax

The land tax is assessed on the aggregated unimproved value of land held by the same owner. The value is based on 150% of the previous year's unimproved value of land. The tax is only levied on land that exceeds an aggregate value of $300,000 and even after that amount the government only recaptures a small percentage of the land value.

New South Wales, Australia


Land Tax

http://www.legislation.nsw.gov.au/#/view/act/1956/27/sec3

Like the Land Tax for Western Australia, only a small percentage of the land value (between 1.6% and 2%) is taxed.

Estonia


Land Tax

The land tax is levied on the taxable value of all land (other than that which is specifically exempt) based on an official valuation. The owners of the land are liable to land tax. The annual land tax rate varies between 0.1% and 2.5% of the assessed value of the land. The council of the local authority is authorized to establish the rate of land tax.
British Columbia

Royalties on resource extraction

http://www2.gov.bc.ca/gov/content/taxes/natural-resource-taxes/mining/mineral-tax

The taxes on resource extraction in British Columbia are applied to mining, oil and natural gas, and logging. This includes a mineral land tax levied on the freehold owners of mineral rights, a tax levied on the sale of standing timber or the right to cut standing timber, as well as royalties on oil and natural gas production. The mineral land tax is assessed by the size of the owner’s land and whether or not the land is used to produce minerals. The freehold owner is taxed at a fixed rate of 4.94 per hectare, up to 404,686 hectares, if they employ their land in mining, but are taxed on a sliding scale adjusted by the size of their land if they hold it out of use. A mineral tax is levied on coal, gemstones, industrial minerals, precious metals, and rare earth elements. The logging tax allows a deduction for logs processed into secondary forestry products between 35 and 65% of total processing income.

Norway


Petroleum tax

The tax is assessed on a company's net profit with deductions for the cost of exploration, R&D, financing, operations, and decommissioning. Additionally there is an extra deduction for normal returns on investment called uplift. The Petroleum tax is thus not a tax on any profits but on a subsoil rent at a rate of 54%. This special tax generated $49 billion in revenue for the Norwegian public in the last fiscal year. Like all land value taxes, the Petro tax is fiscally neutral and does not discourage profitable ventures. Furthermore, companies can write off profit losses that they accrue anywhere on the Norwegian shelf against their income.

Alaska


The Permanent fund dividend is funded by a 25% royalty on oil sale proceeds. It pays out an annual citizen’s dividend to all eligible residents of Alaska. The dividend for the last fiscal year was $1,022. The Alaska Permanent Dividend, like all of the other implementations listed above, is only a partial model because it only includes oil revenue.

Land value taxes, unlike income taxes, cannot be loopholed to death or dodged by setting up offshore shell companies or bank accounts in the Cayman Islands. Compared to income taxes, the land value tax requires much less in overhead costs to administrate. There is no need to hire a tax preparer to file a return or have a top heavy bureaucracy like the IRS; the government or a delegated property appraiser will tell you your liability. The land value tax cannot be passed off to consumers like the VAT or sales tax. The land value tax is not only more efficient, it is also congruous with moral law, especially when used to fund a citizen’s dividend. Since all people have an equal normative claim to use the earth, any deprivation of this claim, through extraction or enclosure, should be compensated with the equivalent value of the natural opportunities lost. On the contrary, personal income taxes, payroll taxes, property taxes, VATs and sales taxes deprive an individual of a portion of the product of his or her labor and thus constitute a breach of self-ownership.

Monday, June 5, 2017

Allow Homesteading on Public Land

If you are homeless your options for a place to stay are legally two-fold: a prison cell or a homeless shelter. Both options involve subjecting oneself to the capricious power and authority of another person. You are forced to live at the mercy of others. If the shelter doesn't accept you for whatever reason, even if it's not for any wrong doing on your own part, you are legally left with one option for vagrancy, loitering, trespassing (on Public property) or any number of trumped up charges. A third option is in order to secure equal freedom to the homeless. Allowing them to build shelter on public land would do this much and diminish their burden on taxpayers.

It is clear from repeated experience that municipal and state governments are not able to provide for all homeless people. For example, homelessness peaked during the 2008 recession and so did local and state government debt the next year. Thus, municipals and states are least able to shelter and provide for the homeless when homelessness is at its worst (due in large part to a drop in property values and consumer spending). Of course there are federal homeless assistance programs under HUD, such as those contained in the McKinney Vento act, but like all federal programs they propose a one size fits all solution to a complex problem and being appropriated as discretionary spending, are subject to cuts. There is no guarantee of shelter, even in a welfare state.

The National Alliance to End Homelessness estimates that 31% of homeless people are unsheltered, and the population of unsheltered homeless is growing in 32 states. About 37 percent of homeless people are families, but the vast majority of them live in emergency shelters or transitional housing. The majority of the unsheltered population, and homeless people in general, are single individuals with nothing to lose but their dignity (through panhandling) and are responsible for no one except themselves. If they are not allowed to live on public land, such as in the woods, their only other option would be living on the streets, presenting a nuisance to businesses and pedestrians. If they are not allowed to build make shift shelters on public land they are subject to the elements; they are prone to die of hypothermia, pneumonia or suffer heat stroke. They would also be left without a place to store enough belongings to survive. Shelter, much like food and water, is a necessity. Unless you live in a very mild climate, going without shelter will be fatal. If holding a person captive without food and water is murder it would also be immoral to prevent someone from finding or building shelter. Prohibiting someone from preserving their own life is clearly a violation of moral law; therefore, municipals violate moral law whenever they prohibit the homeless from building shelters on public land. Of course there are reasonable exceptions such as public parks that are readily accessible, but secluded woodlands should be fair game for homesteading.

Since all people move and have their being on land and cannot preserve their own lives without it, the right to use the earth logically follows from the law of equal liberty. A just society would afford everyone an equitable share of its natural opportunities, compensating those who are denied these privileges and ensuring that the value generated from them are put towards the public good. Furthermore, that this privilege could not exist without the support of a society seems obvious enough. Thus, they should be contingent upon both their utility to society as a whole and their direct beneficiaries. The homeless, being denied an equitable share of society's natural opportunities, should either be compensated for the value of the natural opportunities they have been excluded from or permitted to use enough of them to gratify their desires. The former resolution would take the form of a supplementary income called a citizen's dividend. The latter would permit homesteading of public land.

Friday, May 5, 2017

Political Superstitions (part 5): Taxation Is Theft

I don't usually contend with libertarians. The first reason is that I agree with them on perhaps 80% of the issues maybe more. The second reason is that they are a marginal and somewhat irrelevant faction in both American and world politics. Most of their criticisms of government are robust, accurate and need to be brought to the attention of the public, but a few others verge on the inane by oversimplifying ethical quandaries that aren't black and white in every instance. Taxation is one of them. But before we can tackle this issue we have to have a consensus on what constitutes property. Your property, in everyday life, is the product of your labor. There are exceptions such as parents bequeathing their property to their children or people receiving gifts on special occasions. When a person transfers the product of their labor to another without monetary gain we must still acknowledge the recipient as the rightful owner to respect the will of the benefactor, but in everyday life your property is what you earn. However, you do not own your money. What you call your money is simply promissory notes backed by the faith that they will continue to be accepted in exchange for tangible goods and services. When you make a bank deposit you don't own the amount on your bank statement, you only have a claim to demand that much money if you wish to withdraw. The relationship between a depositor and a bank is that between a creditor and a debtor. If the money were actually your property it would be more of a beneficiary/trustee relationship, but the bank can invest and lend this money in whatever manner it sees fit without your consent, so its not your property in any real sense of the term. Furthermore, your promissory notes wouldn't have any value without taxation. It is by forcing individuals to invest in public services with these promissory notes that makes them desirable to businesses in the first place. Otherwise its just scratch paper. Actual property cannot be used or transferred without the owners consent; It has value even if it isn't taxed, and its more than a claim to be redeemed in the future. This is not an endorsement of fractional reserve banking, only an explanation of why simple tautologies cannot capture the whole truth of the matter. Taxation is more akin to economic coercion than theft, since an individual is subject to deprivation if he doesn't have any dollars.

There are some taxes that aren't simply the arbitrary taking of property but function as public user fees and are paid voluntarily. Land value taxes return rent created by commerce, infrastructure projects, public services, and population growth back to the community that created it, and thus functions as a user fee for having a monopoly over certain land. Taxing the royalty income of patentees would follow the same principle. A severance tax functions in the same manner as a land value tax; it is a user fee of a nation's natural resources. The excise tax you pay at the pump is a sort of user fee for the interstate highway system, and like the aforementioned taxes its paid voluntarily. If you don't want to pay it, you can choose some other mode of transportation. The same could be said of fishing and hunting licenses, which are used to restock lakes and preserve species for hunters in the future. Even in an anarchistic society you would still have to pay for monopolistic services. For instance, homeowners in a gated subdivision don't each have their own security company. It is far cheaper for them to share one security company than for each of them to hire a separate security company. The same would be true of services such as sewage treatment, roads, and water.

Saying taxation is theft is akin to saying killing is always murder. It's not necessarily true. Libertarians that spout this as a tautology remind me of the SJWs that say all white people are racists or the feminists that say all drunk intercourse is rape. It's just another moral absolutist ideology that's incapable of accounting the for intricacies and variations of life.

Friday, April 28, 2017

The Red Tape Times (article 34)

Wisconsin Bans Ungraded Butter Despite Lack of Health Risk



Source: Pacific Legal Foundation

Minerva Dairy, a family owned cheese and butter dairy that produces handcrafted artisanal butter can sell its products in all 49 other states. Wisconsin has recently begun enforcing a 40 year old statute that requires all butter sold within the state to be either USDA graded or graded by the state of Wisconsin, but not all diaries can afford the process. In order to be graded, Minerva would have to store up a week's worth of butter and pay for a USDA grader to be flown in every week. Minerva already has all of the business licenses required to make dairy products and operates in a USDA approved facility. The dubious grading process ensures every batch meets the USDA's standards for commodity butter, but Minerva doesn't make a commodity butter and most butters sold in the U.S. are not USDA graded. More than likely the Dairy lobby is behind the enforcement of this statute, just as they pushed to ban the 'Milk' label for non-dairy milks, to legislate away out of state competition. Regardless, interstate protectionism is illegal under the dormant commerce clause which prohibits states from discriminating against or impeding interstate commerce. More importantly, moral law grants every person the right to engage in voluntary transactions provided they do not impose a cost of their transaction on an uninvolved third party. It is plain that buying and selling artisanal cheese in no way exceeds the mutual limits of equal freedom while restricting such activity does.

Tuesday, April 25, 2017

Political Polarity

Originally posted on experience project on February 22, 2016
“Cannot you conceive that another man may wish well to the world and struggle for its good on some other plan than precisely that which you have laid down?”

― Nathaniel Hawthorne
Polarism is the false dilemma ideologues invoke when they want to shame another person into supporting their cause. It's the ancient 'you are either for us or against us' mentality. Do you support this candidate or that candidate? Are you pro-choice or pro-life? Are you for or against a minimum wage hike? In each case the assumptions are the same: there are only two choices and you have to pick one of them (i.e. you cannot be indifferent to the issue at hand or have an unconventional proposal). Your choice between the two false alternatives is further used to make judgments about your character. Do you support this candidate? Well, you must be a racist, sexist, homophobe, and bigot. Do you call yourself a feminist and take the time to talk about 'social justice.' If not you are a sexist, misogynist, rape apologist, transphobe, and shitlord.

A major component of Polarism is entitlement: the ideologue feels entitled to your time and labor. This is particularly true of leftists. They believe that you must stop whatever you are doing and attend to their every demand or else you are a/an (insert epithet). They believe the world revolves around them; there aren't any issues that people might be concerned with outside of their own narrative. The people who fall for this tactic further succumb to the dogmatism inherent to the ideology. It is not good enough that you support their cause and attend to their demands; you must also believe everything they tell you, without question, or else you are an (insert epithet).

Explaining indifference


Ideologues usually don't understand why some people are indifferent to their cause. Their overly simplistic views don't account for people who don't fall into their preconceived binary categories. Instead of accepting this problem as a failure of their worldview, they pretend the problem doesn't exist and assume that the people who aren't in their camp are against them.

So why might someone be indifferent to a particular issue?


No one can concern himself/herself with every issue under the sun because time is a scarce resource. We prioritize the things we care about and omit the issues that are least important to us because it's not physically possible to research every issue and construct an informed opinion on the matter. Every one does this, especially ideologues.

For instance, I do not care about the abortion debate, gay marriage, transgender bathroom laws or really any of the other mainstream social issues. I do however take definitive stances on the drug war, corporal punishment,  police accountability, warrantless surveillance etc. (social issues that usually fall outside the purview of the msm). I do not have time to research every single social issue so I usually prioritize the issues that are the least politicized and most relevant to my own well-being. There are also some economic issues that I don't given much attention to either such as the minimum wage debate. I'd rather focus on occupational licensing, a much bigger job killer that impacts more people than the 4 percent of the labor force that earns minimum wage. The tax debate is another issue where I don't fit into the false liberal/conservative dichotomy. I am not for lower taxes or higher taxes, progressive taxes or flat taxes. I support land value taxes, royalty income taxes and letting people keep what they earn as their rightful property.

Saturday, March 18, 2017

Indigenous Leaders Denounce Ecuadorian Government Over Mining Conflicts

Source: Amazon Watch

Indigenous Leaders Denounce Ecuadorian Government Over Mining Conflicts: We are being persecuted by the military and the police who are invading the territories of the Shuar communities,' Elvia Dagua, a local indigenous member of CONFENIAE told the media Thursday. 'They have destroyed homes. So the Shuar people, women, men, and children have had to flee.

The Ecuadorian government forcibly removed 100 Shuar families from the region of Santiago de Panantza, Ecuador's southern Amazon region, destroyed their homes and handed the land over to Chinese mining company Explorcorbres S.A.. EXSA plans to construct an open pit copper mine on the land. The president of Ecuador claims EXSA legally purchased the land; however, that does not make their actions morally justifiable. Every person has a natural right, deducible from moral law, to use the earth without which he or she could not live. When landed property denies some this right, it becomes an immoral institution and an impediment to human progress in the long run that must be abolished and returned to a state of common property. In a city, this would mean recapturing rents and putting them towards public expenditures. In this case, the Ecuadorian government should have asked for the prior and informed consent of the Shuar communities that inhabited the region, and at least compensated them for the loss of their property. Ecuador is a signatory to ILO Convention 169, which prohibits such unilateral confiscation of land and destruction of indigenous communities. Article 14 Section 1 obliges signatories to recognize indigenous ownership and possession over the lands they have traditionally occupied and cultivated. Section 2 states Governments shall take steps as necessary to identify the lands, which the peoples concerned traditionally occupy, and to guarantee effective protection of their rights of ownership and possession. Furthermore, where governments retain subsoil rights for the purpose of leasing them out to extraction industries, Article 15 Section 2 obliges them to establish and maintain a procedure for consulting indigenous communities effected by any extraction project. By forcing Shuar communities from Santiago de Panatza, the criminal government of Ecuador has violated both moral law and international law. I would think an indigenous tribe would have a better claim to the land than a foreign mining company, but when governments are run by criminals the laws are often perverted to justify lawless ends.

Monday, February 27, 2017

The Red Tape Times (article 23)

Non-Practicing Entities Should Be Wiped Out


Source: Electronic Frontier Foundation

The EFF wrote an interesting piece on personal jurisdiction in cases in which a non-practicing entity, commonly known as a patent troll, sent demand letters to productive companies outside of their jurisdiction and forced said companies, by federal court ruling, to challenge the validity of the patent or their claim in a distant court. The gist is that demand letters do not establish personal jurisdiction over out of state NPEs, but productive companies that provide a product or service nationwide, can be sued for patent infringement anywhere. This gives NPEs a clear legal advantage over productive companies. Overturning the two federal rulings that established this precedent would be a step in the right direction, but the larger problem of NPEs themselves still lies unaddressed. NPEs cost productive companies 29 billion per year, a cost that is ultimately passed on to consumers. Now patents are government granted monopolies, like private property in land, and as such the returns on them are rents. They should be taxed at a high rate so the benefits of them are reciprocated back to the public at large and over proliferation of patenting is discouraged. Optimally, a graduated royalty income tax and patent sales tax would replace the corporate income tax, the capital gains tax, and other taxes on profits. To ensure that patentees actually produce something of value, NPEs should be forced to pay a 100% royalty income tax, which would effectively wipe them out, the same way land speculation would be wiped out if land rent were taxed at 100%. Furthermore, a high tax rate on patent royalties and patent sales would be more of a user fee than an actual tax and would not penalize productivity. 

Tuesday, February 14, 2017

Political Superstitions (part 4): Gentrification and Identity Politics

This is a somewhat obscure topic that is of exclusive concern to the left, since the right dismisses it entirely, that despite being controversial is shrouded in superstition. Merriam Webster defines gentrification as the process of renewal and rebuilding accompanying the influx of middle-class or affluent people into deteriorating areas that often displaces poorer residents. It is most often viewed through the lens of identity politics as wealthy young whites displacing minorities from traditionally minority neighborhoods because they can no longer afford the rent. The solutions prescribed range from rent control to subsidized housing all of which merely address the symptoms.

The difficulty arises when rent is spoken of as a single unit instead of a composite. Rent in its common usage refers to both interest payments for the use of a building and rent for the use of a specific site or location. The latter is economic rent. Property values are a combination of the value of the building or any improvements to the land (e.g. drainage, pavement, water supply) and the rental value of the land that arises from demand for a fixed supply of it (e.g. amenities and proximity to business district). The law of rent stipulates that increases in population density, growth in commerce, improvements in education, improvements in infrastructure and basic government services like policing all add to the rental value of land and drive up the cost of living, especially housing. The unintended consequence of urban renewal is that wages are consumed by incrementally growing rent, as their purchasing power decreases in proportion to rent. A lower margin of production, the floor of wages, would inevitably hit the lowest income earners the hardest.

A single tax on land rent would raise the the margin of production, providing higher wages, and recapture the value added by public services and private businesses for public expenditure. Unlike property taxes and sales taxes, a land value tax would not be passed onto tenants and consumers because they are not paying for a good or service, but a government granted monopoly that is fixed in supply. This concept is not new. Cities that charge parking rates on busy streets already levy a form of land value tax. Similarly, states that require hunting and fishing licenses are levying a form of land value tax and countries such as Australia, New Zealand, Estonia, Canada, and Norway already have them at either the local or national level, though none recapture all rents.

Side Note: To ensure each person’s natural right to use the earth, a citizen’s dividend could be funded from the surplus revenue providing low income tenants with a non-paternalistic dole instead making them dependent on a plethora of social services.

Tuesday, January 10, 2017

Political Superstitions (part 3): Policing for Profit and Other Misnomers on The Left

Policing for Profit, For Profit Prisons, and War Profiteering are all misnomers based on misconceptions about what profits are and what the profit-seeking motive entails. Like all other social ills that leftists blame on the profit motive in particular and capitalism in general, this is a particularly fatal misconception that leads to false conclusions. The fallacy that arises when people talk about the evils of policing for profit, the prison-industrial complex, or the military-industrial complex, is that they conflate profit with rent and thus the profit-seeking motive with the rent-seeking motive. Policing for profit, prison profits, and war profiteering would be more accurately described as policing for rent, prison rents, and war racketeering. What one earns, either in wages, interest or profits, is distinct and polar opposite to what one could appropriate from the earnings of other's in rent. The profit-motive drives economic growth, and wealth grows exponentially providing a larger share to everyone even if their proportion of aggregate wealth shrinks. Rent is sum zero; it is set by a monopoly in a fixed supply of some factor of production or asset or by having any power to attain wealth without reciprocating wealth e.g. private property in land for instance.

'Policing for Profit'

When the police seize a person's earnings through tickets for petty traffic violations or civil asset forfeiture, they are not generating a profit from the seizure of another person's earnings but imposing a rent. The revenue generated by 'policing for profit' is not added wealth, but maintenance costs imposed on the victims to supply the modern highwaymen with a fund for equipment and luxuries. It is the cost of maintaining a police state apparatus.

The same holds true for the private prison industry, though this is less obvious than in the first case because they have all the formalities of any other private business along with shareholders and employees. But private prisons are monopolies since their only customers are governments; prisoners don't get to chose among competing prisons. Private prisons do not generate profits to their shareholders, but rents because they do not create any new wealth; their supposed 'profits' actually represent the maintenance costs of incarceration. The revenues of private prisons, just the same as government owned prisons, are appropriated from the earnings of taxpayers and other industries that do not rely on taxation to survive.

The Military Industrial Complex

The same principle that holds true for the private prison industry is no less applicable to the defense industry. The revenue that defense contractors generate are no less rents because they produce tangible goods unlike private prisons. The sole customer being the federal government, the revenue generated by producing military weapons and equipment is drawn from taxation on the profits of other industries and individuals' earnings. Furthermore, war not only doesn't create any additional wealth, only additional maintenance costs, it also destroys wealth. Defense spending diverts wealth from other industries to defense contractors. Any technological gains made by the defense industry are inevitably offset by both the monetary and opportunity costs incurred by other industries and the invaluable cost of human life. The return on defense industry production is thus a rent, and the revenue represents the maintenance cost of maintaining the empire.