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The Four Vampires of Capital —The Menace That Is Invisible to Economists

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The Four Vampires of Capital —The Menace That Is Invisible to Economists putting people at the heart of economics since 1894 the four vampires of capital —the menace that is invisible to economists High Glasgow Why Speed presents Europe’s One: land tax farmers Kent initiative should homes to to Scots get off win £30k Parl’m’nt the dole vol 116vol SUMMER 2009 1224 contents letter from the editor cover story features having started ‘financial’, then turned ‘economic’, the global cri- 12 the vampires go unnoticed sis has now gone ‘social’. Ordinary people everywhere are coming to Meet the Vampires of Capital—One, Two, 8 Farming off the dole feel what that means. National governments are floundering in their responses. At the global level, Joseph Stiglitz’s un Commission of Three & Four. (see feature p.12) What’s special about eu farmers that demands Experts brings no breakthrough wisdom. For the moment perhaps they enjoy standing state subsidy? 212 Piccadilly, London, W1J 9HG ph +44 (0) 20 7917 1899 the best we have from that fount is its observation that “most of e [email protected] the burden of the economic policy response to the crisis must now 10 Zimbabwe: new fall on the shoulders of fiscal policy”—and that “the international Editor Peter Gibb financial institutions have to strengthen their capacity to implement policies for a new century Executive Editor Lars Rindsig 1979’s good intentions are history: years of so- Publisher Henry George Foundation counter-cyclical instruments.” Well so far so good. called ‘land reform’ an unhealing social wound: Contributors Eddie Cross, Ed Dodson, Karl Focus, so far, has been on reform of the banking and global fi- now a new generation demands a new policy Fitzgerald, Prof. Mason Gaffney, Geoffrey Lee, nance system. This is dismaying, for the root of the crisis seems to be Dr. Duncan Pickard, Robin Smith, David Triggs elsewhere. Might it be not endemic to the banking system per se—but regulars 12 The four vampires Editorial support John Triggs, David rather lie in the operational ‘environment’ in which banks do their Chester business? Might the cause of the present crisis lie in the real asset Distribution Michael Learoyd news 1-7 of capital landscape that are brought into being by our legal institutions, and The life blood of the economy is drained by upon which our financial institutions rely for debt security? Could editorial 3 four parasites—invisible to most economists, reliance on cyclical market land values for the securitisation of credit David Triggs’ long view 11 blinded by their faulty neoclassical training (and supplementing individual income) be the root of the crisis? To receive Land&Liberty or support the work Securitisation of another sort has been linked to things—though Edward J Dodson’s of the Henry George Foundation contact us fallaciously: but the secondary packaging-up of original mortgage cooperative individualist view 17 18 Piggybacking the crisis at the address above. It is not enough for ‘we told you so’-reformers securities into novel wholesale financial products such as ‘collateral diary 21 to sit back and weather the storm: in the crisis Land&Liberty has chronicled world events debt obligations’—for on-trading around the world to further profit letters 21 the greatest opportunities lie for over 100 years. It has offered a unique and off-load risk—is a problem only of secondary concern. perspective with its reports, analysis and However if the banks were to open up these cdo packages to reviews 22-23 comment on the core issues of political public view (which they seem unwilling to do, presumably fear- 20 Community land trusts economy. And that uniqueness remains. Lars Rindsig’s ing exposure might fatally threaten balance sheets), we would be There’s more than one way to skin a cat: Land&Liberty aims to explore how our common view from the right 23 able to see better in what ways this strange new class of asset has reflecting on local rent collection by extra- wealth should be used—and to demonstrate been contributing to the banking crisis. We could better assess the fiscal means that this is the key to building the bridge of sustainability between private life, the public degree to which lending to ninja defaulters (No Income, No Jobs or sector and our resources—between the Assets—the original media scapegoat) really is to blame: and the de- columnists 24 Illicit encounters individual, the community and the environment. gree to which market confidence in cdos has been hit because of the Does our love affair with house prices lead to Land&Liberty—putting people at the heart of asset bottom line—the original physical property values on which economics. Edward J Dodson is Director of the us-based other affairs more literal? the derived financial assets are ultimately secured. School of Cooperative Individualism and author Copyright in this and other Land&Liberty If the latter rather than the former turned out to be at the root of of Discovery of First Principles. publications belongs to the Henry George the financial crisis—if burst land value was the real subject of the im- Foundation which welcomes approaches for the Lars Rindsig is Executive Editor of L&L. perilling human greed now exposed—then no amount of ‘banking reproduction of articles. However reproduction reform’ will provide the solution to the current or any future crisis. is prohibited without prior written permission of David Triggs is Executive Chairman of the It is clear to L&L that the solution to the crisis lies in the conjoined L&L the copyright holders. No responsibility will be Henry George Foundation, publisher of . spheres of property law and taxation. It lies in removing from private Photo: © iStockPhoto/Jorge Farres Sanchez. Cover photos: © Dreamstime/Ksenia Kozlovskaya (main photo); lewishamdreamer, Bob Shand and Nicholas Babaian (flickr/CC). accepted for any errors or omissions or com- ments made by contributors or interviewees. asset value, available for credit security, that ‘unearned increment’ Views expressed are not necessarily those of attributable to land and resources. This can be achieved through the publishers. Goods and services advertised taxation policy. In this issue of L&L Mason Gaffney identifies a news in brief ... are not necessarily endorsed by the publishers. sixteen-point action plan for achieving the aim. Each item would im- Land&Liberty is produced on a pro bono basis pact positively on the environment within which banking operates— SOLD—the morning Value capture for trans- Olympics that won’t Kenya The Kenya Cabinet has by the Henry George Foundation and printed stabilising and securing the industry and the future global economy. chorus Amid global crisis, portation finance The go to the wire Ofcom is approved the country’s new draft by A Local Printer Ltd on Revive 100% post- We must immediately start work on that list and hope that we’ve got “land investment in Iceland University of Minnesota has responsible for spectrum planning National Land Policy (see L&L consumer recycled paper. down it far enough before the next crisis hits in 2027—or that one represents unprecedented value”. published a major new study for and licencing the London 2012 winter 2008/9). Minister of Lands, ISSN 0023-7574 will be a shocker, the likes of which we even yet cannot imagine. At Tjarnabyggð farm village the state legislature. “Large public Olympics. The bbc says: “Demands Hon James Orengo said the “his- Liberty.net ‘investors’ are asked to pay money investments in state transporta- on the airwaves will be huge as toric document is the culmination to developers Búgarðabyggð Ltd tion infrastructure—such as new thousands of wireless devices will of protracted negotiations with for “all services—for instance freeway interchanges, highways or be used during the games to serve key stakeholders”. As L&L goes to and maintenance of roads, snow transit stations—can increase the athletes, officials and broadcasters.” press it remains unclear to what The Henry George Foundation is an independent removal, school-buses, refuse value of surrounding private land, Spectrum fees are being waived degree the radical thinking and economic and social justice think tank and public collection and distribution of sometimes substantially”, says and current users will be required provisions in earlier drafts have education group with offices in London and members throughout the UK. The Foundation deals in cutting-edge hot and cold water…provided the University: “Capturing the to ‘lend’ spectrum to “members of survived those negotiations. A ideas, exploring and promoting principles for a just and by Árborg commune”—and for value of this benefit through vari- the Olympic Family”. This will add Land Reform Transformation Unit prosperous society and a healthy environment. “the birdsong and floral scented ous tools is gaining interest as a a further hidden cost to the public has been established to “oversee The Henry George Foundation of Great Britain Limited is a Peter Gibb air” provided by wild, clean finance mechanism for infrastruc- purse for holding the Olympics. A the transformation process and company limited by guarantee, registered in England, no. [email protected] th 00956714, and a charity registered in England under the Icelandic nature. So shamelessly is ture investments.” www.cts.umn. public consultation ends 5 August. the establishment of organs that Charities Act 1960, no. 259194. economic immorality flaunted. edu/research/valuecapture (see p.6 for more spectrum news) will drive the land reform”. www.HenryGeorgeFoundation.org www.Land 2 No 1224
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