The End of the Oil Age?

Petroleum and Crude Oil – the Future of Oil Production

DW (2019) – only online until April 17th

Film Review

This documentary analyzes the long term economic viability of the petroleum industry, in view of climate change, increasing competition from cheap renewable energy and shifting geopolitical allegiances.

It begins with an examination of the 2014 collapse in oil prices – with the cost of a barrel of oil dropping by over 70% between June 2014 and January 2016. Oil bottomed out at $26 a barrel in February 2016.

The filmmakers explore a number of factors keeping the oil price above $100 a barrel prior to 2014. Speculation in oil futures by big banks such as Goldman Sachs and Morgan Stanley seems to be the main one.

These high oil prices made the fracking boom possible. Fracking technology, whereby trapped oil and gas reserves are released by fracturing bedrock, is an extremely expensive technology. According to industry analysts, fracking is only financially viable with oil prices above $70 a barrel.

The fracking industry was a great boon to the US petroleum industry, enabling it to export oil and liquified natural gas (LNG) for the first time in decades.

The filmmakers point to two main reasons for the 2014 collapse in oil prices. The first was reduced oil demand (due to global economic slowdown) popping the speculative bubble created by the big banks. The second was Saudi Arabia’s attempt to destroy the US fracking industry by flooding the global market with oil.

This scheme seems to have backfired. While numerous small fracking operations went bust, the major oil companies had sufficient financial resources to continue fracking at a loss.

The low oil prices probably hurt Saudi Arabia more than the US, as the Saudis are extremely dependent on oil revenues to finance their national budget.

In 2017, Saudi Arabia and other OPEC* countries reached out to Russia to form OPEC Plus. The latter agreed to limit oil production to stabilize prices. The Saudi oil ministry fully expects Kazakhstan and other former Soviet republics will also join OPEC Plus.

Meanwhile oil producing countries (except for the US under Trump) have learned an important lesson from the 2014 price shock. Both Norway (the world’s largest oil/gas producer) and Saudi Arabia are rapidly diversifying their energy industries to protect themselves from future price volatility. Most industry analysts expect other countries to follow suit. At present China, the world’s largest oil importer, is also the largest investor in renewables. This, in turn, signals a significant reduction in their future oil dependency.

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*Organization of Oil Exporting Countries – current members include Algeria, Angola, Austria, Cameroon, Congo, Ecuador, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia (the de factor leader), Syria, United Arab Emirates, and Venezuela.

 

Co-housing: One Solution to the Housing Crisis

Big Cities Cooperative Housing

KCET (2016)

Big Cities Cooperative Housing is a short documentary about co-housing experiments in Seoul South Korea and Lyons France.

In Seoul, where 70% of the population live in high rise apartment buildings, three families have pooled resources to buy a three story house. In addition to communal cooking and social space, each family has private living space. There is also a communal vegetable garden.

The “vertical village in Lyon was first build in 2005 by a group of families seeking a non-materialistic lifestyle – who found themselves priced out of the property market. The first housing cooperative in France, it’s been the inspiration for many similar co-housing projects in Europe and Quebec, as well as French legal framework to recognize cooperative ownership.

In France, removal of residential property from the speculation-ridden real estate market has been an important benefit of co-housing.

The video can be viewed for free at Big Cities Cooperative Housing

Understanding the Current Economic Crisis

The ABC’s of the Economic Crisis: What Working People Need to Know
Fred Magdoff and Michael Yates

Monthly Review Press (2009)

Book Review

In the ABC’s of the Economic Crisis, Magdoff and Yates use stagnation theory to explain the origins of the current global economic crisis. Karl Marx predicted that overproduction and stagnation would be inevitable under monopoly capitalism once market demand has been saturated. Magdoff and Yates use the auto industry as an example. Immediately after World War II, consumers bought a lot of cars and trucks which were unavailable between 1941 and 1945. By 1970 there was a surplus of cars – all the Americans who wanted cars and trucks had already bought them. Meanwhile the world’s poorer nations didn’t have a mass market large enough to reduce this surplus.

The same was true of other durable goods (refrigerators, washing machines, dishwashers, vaccuum cleaners, etc). And as consumer buying slowed, so did profits and GDP growth.

Why Capitalism Didn’t End With the Great Depression

Many Marxists (including John Strachey in The Coming Struggle for Power) believed the Great Depression signaled end stage stagnation and the imminent death of capitalism. According to Magdoff and Yates, it was only the massive economic boost of World War II military spending that saved capitalism in the thirties and forties.

There was also a brief post war boom in the fifties and sixties, as consumers rushed to buy goods that were unavailable during the war. When the sixties ended, stagnation set in again, accompanied by a marked slowing of profits and growth. However neither declined to 1930s levels, thanks to the “financialization” of the US economy.

The Financialization of the US Economy

The term “financialization” describes the process of creating profits without producing products or services. In the US, finanancialization injected money into the economy in three ways: via massive government spending and indebtedness (to private banks), via massive consumer indebtedness and via an explosion in the trade of derivatives and similar financial products.

Between 1980 and the 2008 crash, the banking, insurance and investment sector became the largest growth sector of the US economy. Beyond financing unprecedented levels of consumer, business and government debt, this sector also engaged massively in speculation (ie gambling).

Financialization: A Giant Ponzi Scheme

As Magdoff and Yates describe, the enormous “wealth” created by the financial sector helps to drive the “real” productive economy. The main problem with financialization is that it’s basically a Ponzi scheme – it can continue only so long as economic growth continues. If it goes on too long, the speculative bubble will burst, resulting in financial collapse, as it did in 1929 and 2008.

The Link Between Declining Profits and Low Wages

Despite the life support provided by “financialization,” economic stagnation continued between 1970 and 2008. As Magdoff and Yates point out, GDP growth dropped from 4.4 to 3.3 percent in the 1970s, to 3.1 percent in the eighties and nineties, and 2.2 percent between 2000 and 2008.

A significant decline in wages and purchasing power accompanied this decline in profits and growth. In order to keep workers consuming, the corporate sector compensated by giving them credit cards – lending them money at 18-20% interest they were no longer paying in wages.

Britain’s Squatters Movement

Give Us Space

Directed by Claudia Tomas (2015)

Film Review

Give us Space is about the grassroots movement which has formed in response to the British housing crisis. It features fascinating interviews with squatters and other housing activists. All are extremely critical of Conservative policies that make it virtually impossible for working people to find affordable housing in London.

In addition to the current recession, which has driven down wages, the mortgage/foreclosure crisis and the government sell-off of subsidized housing, British workers also confront skyrocketing house prices and rents due to speculation by foreign buyers (who purchase homes they don’t intend to live in as assets).

As one activist points out, Asian countries charge foreign buyers a 15% tax to discourage speculation in their property market. In Britain, in contrast, the government actively encourages developers to market their property to foreign buyers.

For me the most interesting part of the film was the history of Britain’s squatters movement, which first began after World War II. At the time, there were insufficient homes to accommodate soldiers returning from the front.

In 1946, squatting in vacant buildings was so widespread that the government permitted local councils to charge squatters rent.

The movement experienced a resurgence in the late sixties with the release of the Ken Loach film Cathy Come Home and again following the 2008 economic downturn.

How European Banks Hijacked the Euro Monetary Union

Buy, Buy Europe

Pieter De Vos (2013)

Film Review

This is a five-part miniseries describing how European banks have hijacked the euro monetary union to vastly increase their wealth. The upcoming Brexit vote in Britain makes this a particularly relevant topic.

Part 1 A Bank Crisis a Week

The series begins by describing the history of the European monetary union. Built at the height of neoliberalism it adopted all the rhetoric of Ronald Reagan, Margaret Thatcher and Alan Greenspan promising that globalized capitalism and free markets would end economic crises, increase prosperity and end inequality.

What really happened is that creating the euro massively increased inequality between northern and southern Europe and between workers and the super rich.

In seeking to make European banks as strong and competitive as US and British banks, Eurozone leaders ceased regulating them. Wall Street is often blamed for the EU’s 2008 meltdown. In actuality, deregulated European banks were equally guilty of risky speculation in derivatives and subprime mortgages.

Following the 2008 economic crash, European banks required massive government bailouts to keep European economies from collapsing. Promised banking reforms to prevent a recurrence of 2008 never happened. And according to the IMF, the global banking system is even more unstable today as it was right before the meltdown.

Part 2 Austerity Till the Grave

The bailouts required to keep their banks (and economies) going virtually bankrupted all Eurozone governments. All borrowed deeply (from the global banking system they had just bailed out) to keep their governments going. As a condition of this borrowing, the banks required them to reduce their deficits via deep austerity cuts. To qualify for further loans, they all cut pensions and benefits and laid off public service workers.

This segment focuses on Spain, where workers are organizing to block evictions, and Greece, where unemployed parents are forced to drop their kids off at orphanages because they can’t get welfare benefits to support them.

Part 3 Tax Haven Europe

This segment begins by profiling the Greek shipping magnates who run the largest merchant fleet in the world and pay virtually no tax. Corporations and the super rich pay far less tax than working people in all the EU countries. This massive tax avoidance forces all European governments to acquire major debt to keep from collapsing.

The documentary offers the example of Belgium, where the average tax rate is 12.5% and the most profitable corporations pay only 5% of their earnings in tax.

The filmmakers maintain that workers create wealth, though I doubt most neoliberals would see it that way. In 1981 Europe, 74% of the wealth workers created was returned to them as wages and government benefits. By 2012 only 49% of this wealth was returned to them and the super rich claimed the rest.

Part 4 Bratwurst, Lederhosen and Minijobs.

This was the most eye-open segment for me. It exposes the punitive conditions imposed on German workers from 2000 with the goal of making German export industries more competitive. Under former chancellor Gerhart Schroeder, massive wage reductions were imposed on all German workers – something IMF chief Christine LaGarde likes to call “labor market reform.”

Among other labor “reforms,” were a massive increase in “minijobs” – low wage part-time temporary positions that pay an average of 400 ($US 448) euros a month. Given Germany’s high cost of living, both parents need to work 2-3 “minijobs” (if they can find them) to cover a family’s basic needs.

The result was truckloads of cheap German imports flooding into southern EU countries (Greece, Spain, Portugal and Italy), shutting down local industries that couldn’t compete.

In this way, Germany’s vicious attack on their own workers forced wages down in other EU countries. This, in turn, forced countries like Greece and Spain to borrow lots of money from German banks to keep their governments going.

Ironically Germany currently has the highest number of working poor (7 million) of all EU countries.

Part 5 What Kind of Europe Do We Want?

It’s vital for people to understand that the mantra EU governments repeat ad nauseum – that saving the euro is essential to strengthening the EU and restoring prosperity – is pure propaganda. Seven years of austerity is massively increasing deficits and debt by putting so many people out of work.

The truth is that the Eurozone has been hijacked by banks and multinational corporations who are determined to use trade agreements to lock member countries into austerity and statutory destruction of Europe’s proud tradition of democratic socialism.

The only solution is a public takeover of too-big-to fail banks. Continuing to bail them out, while allowing them to privatize all the profits, is simply legalized theft of public monies. And a yes vote on Brexit.

 

Speculating with our Food

In 2011, “food derivative” speculation replaced financial derivatives as the hot new investment promoted by major investment banks like Goldman Sachs and JP Morgan. According to numerous studies, food speculation rather than shortages, are the main reason for skyrocketing food costs.

The really scary news is that in addition to speculating heavily on food commodities, these same private equity funds are also buying up huge tracts of land in the third world.

The Great Land Grab

A 2009 research project by the Oakland Institute (The Great Land Grab) reveals startling facts about the corporate land grab in the third world – another major factor in skyrocketing food prices.

According to the International Food Policy Research Institute (IFPRI), foreign investors have secured more than 50 million acres of African farmland to develop factory farms for export crops. In addition to investment banks and private equity funds, multilateral agencies, such as the International Financial Corporation (the private sector branch of the World Bank), are also major players in the “corporatization” of global agriculture.

The IFC plays a dual role in increasing private investment in the third world – via direct investment and by pressuring developing countries to create “business enabling environments.” Another World Bank agency, The Foreign Investment Advisory Service (FIAS ), also plays a role by pressuring third world governments to improve their “investment climate,” by relaxing environmental, tenant rights and food security laws and abolishing tax and duties on foreign investments.

Africa is the major target, both for western investment banks and booming Asian economies, driving tens of thousands of subsistence farmers off land they have farmed for generations.

Corporatizing the Global Food Supply

A UK company started in 1997, called  Emergent Asset Management, claims to be the largest speculative fund investing in African industrial agriculture. It uses private equity to take control of large tracts of African farm land. Their prospectus attracts investors by predicting a armed conflict between the West and China will trigger mass food shortages – accompanied by price spikes that guarantee a handsome return to investors. Emergent’s founders, Susan Payne and David Murrin are former high level traders for Goldman Sachs and JP Morgan – well-known as the architects of food derivative speculation.

Emergent’s direct control of large amounts of agricultural land – combined with its ability to attract investors through its equity fund – puts unprecedented control of the global food supply in private hands. It does so by creating a new type of vertical integration, in which a single company controls vast amounts of land, food production and processing — while simultaneously inflating global food prices due to the speculative nature of the fund. As you can see in the video Emergent uses in their pitch to investors:

The Perp Walk – the 1% Have Names

In 2011, the Oakland Institute fingered other millionaires and billionaires grabbing African land via unscrupulous deals with corrupt village leaders (who sign away communal land rights without community consultation) – and by helping to orchestrate armed attacks on families who refuse to leave their land. At the top of the list are

Bruce Rastetter — CEO of Pharos Ag, which has bought more than 300,000 hectares in Tanzania for large-scale food crop, beef, poultry, and biofuel production. This project will displace tens of thousands of civil war refugees awaiting Tanzanian citizenship.

Leonard Henry Thatcher and David Neiman — runs Nile Trading and Development (NTD), which has bought 600,000 hectares in South Sudan through a secret agreement with influential locals who went behind the backs of other community members.

Kevin Godlington — (close associate of former prime minister Tony Blair) CEO of Crad-l and Director of Sierra Leone Agriculture (SLA) and its parent company, the UK-based CAPARO Renewable Agriculture Developments. SLA has bought 43,000 hectares in Sierra Leone to plant palm oil plantations.

Enter the Bill and Melinda Gates Foundation

The March 31 Guardian reports that the Bill and Melinda Gates Foundation (along with USAID and the Dutch and Danish governments) are backing a new World Bank scheme to further industrial agriculture at the expense of the smallholder farmers who produce 80% of the food consumed in the developing world. The new program is a ranking system called the Benchmarking the Business of Agriculture (BBA).

Here’s what the Our Land is Our Business campaign, organized by the Oakland Institute and like-minded food rights groups, has to say about the BBA:

“Despite a language that claims concerns for small farmers, the goal of this new agriculture-focused ranking system is far too clear: [to] further open up countries’ agriculture sectors to foreign corporations. The doing business [rankings] give points to countries when they act in favor of ‘ease of doing business’. This consists of smoothing the way for corporations’ activity in the country by, for instance, cutting administrative procedures, lowering corporate taxes, removing environmental and social regulations or suppressing trade barriers.”

People can sign on at Our Land is Our Business to send a message to the World Bank about looking after people rather than corporations.

 

Speculators

Guest blog by Steven Miller

(This is the second of 6 guest posts by Steven Miller describing the financialization of capitalism and the takeover of the global economy by bankster speculators)

Speculators – Part II

Today the financial industry makes far more profit than any other sector of capitalist production. In 1973, they made 16% of total US profits; by 2007, financial profits reached 41% of all profits. (2) Since credit and debt control the levers of the economy, the financial industry has become politically dominant. The planning function of government increasingly devolves to their control. Finance – producing money from money – produces no value; it simply moves money around, but it does centralize even more wealth in the hands of speculators.

Once Wall Street speculators realized, after the 2008 Crash, that their new “financial instruments” were actually weapons of economic mass destruction, they understood that these tools could be employed to attack national and public wealth. Speculators get richer by seizing your wealth.

They do this today with hedge funds, among other things, which are completely private, completely unregulated and completely hidden from the public. But you can make wild speculative bets with their expert staff. Because they are “private”, we are supposed to accept whatever negative effects they have on society. Though the results are highly destructive to society, this is not up for debate.

Today the financial industry in the US is sitting on the largest mountain of cash in human history, over $2 trillion. Why? This is perceived as strange behavior, since they received over $16 trillion in the 2008/9 Bailout. In addition, the US government for at least two years has been dutifully sending them $85 billion a month, over a trillion dollars a year, in free money. (3)

So why don’t they spend it?

Every modern industry, especially finance, is based on extending credit; the debt is then “leveraged” to takeover companies and engage in various forms of speculation. As financial companies began to collapse in 2008, every one that was “solvent” lied and minimized how much of their holdings were based on toxic assets. Since each one knew that the others were also lying, they began to curtail how much credit they would extend. Without credit, modern capitalist commerce was on the verge of collapse. This is why the form of the Bailout was for the government to buy up toxic assets. This situation still prevails today.

Michel Chussodovsky, professor of economics at the University of Ottawa, and organizer of the Center for Global Research describes how this was rigged:

“In a bitter irony, while the Wall Street institutions were the recipients of the bailouts, they are also the creditors of the federal government, which has been precipitated into a structure of debt financing controlled by Wall Street. This deficit financing… is controlled by the creditors. It does not create employment. It is not expansionary.” (4)

This reality illuminates the dangerous instability of the times. In essence, the public is financing its own indebtedness and funding its own privatization. The banks collapsed the economy in 2008 because they had been counting their various toxic assets as part of their wealth. Money is now generated, loaned and invested by clicking a computer keyboard. The monthly $85 billion gift, of course, is not put into gold bars and moved into the bank vaults by elves. The financial industry uses public money to offer increasingly shady loans, essentially organized criminal activity against the public.

Every day the value of one-year’s GDP in the US – about $14 trillion  – passes through Wall Street and other financial institutions! This is the Casino Economy. Most of this vast wealth is put into play as speculative bets, driven by computer-driven programs, on anything from water to debt to fracking. Just like mortgages, anything that can be financialized – entire electrical grids, school districts, pensions, and medical credit – almost anything at all – can also be securitized and bundled as fodder for speculation.

It is important to recognize that none of these vast transactions are taxed at all. Real people pay a large sales tax on almost everything in the US; corporate people pay ZERO on their schemes to increase their great wealth. A simple tax of 2 cents on the dollar would generate $28 billion a day, enough revenue to solve every financial issue that America faces.

Numerous people have proposed this idea, since it would end Austerity and usher in an era where governments could provide incredible resources to real people for free. The fact that this “reform” will never be permitted is a telling sign of a system that is approaching its demise.

The immediate result of the Crash was that the banks, hedge funds, insurance companies, private equity firms, real estate interests, etc. simply reprogrammed their computers to speculate on food and petroleum. Hence the mega-jump in food prices in the Fall of 2008. But money that doesn’t circulate produces no profit, so the financial industry has begun to invest in solid, material assets, tangible properties that cannot be wiped out with a click of a keyboard. Meta-money is the cousin of the NSA’s meta-data. Its use by corporations is equally malign.

Thus today we are in the midst of a tsunami of privatization, as the banksters are seizing and privatizing everything they can get their hands on. They are seizing public assets and a rate never before seen. Everything is financialized – given a monetary rating; then it is securitized – turned into speculative assets, which are quickly privatized; then your access to it without money is eliminated and thus criminalized. (5)

This trend has been noted by a number of observers:

Michael Hudson, professor of economics, University of Missouri Kansas City,:

“This financial engineering is not your typical bubble. The key to the post-2000 bubble was real estate. It is true that the past year and a half has seen some recovery in property prices for residential and commercial property. But something remarkable has occurred. This new debt-strapped low-interest environment has seen Hedge funds and buyout funds doing something that has not been seen in nearly a century: They are buying up property with cash, starting with the inventory of foreclosed properties that banks are selling off at distress prices.” (6)

Ellen Brown, Web of Debt Blog:

“Giant bank holding companies now own airports, toll roads, and ports; control power plants; and store and hoard vast quantities of commodities of all sorts. They are systematically buying up or gaining control of the essential lifelines of the economy.”  (7)

Michel Chussodovsky again:

“The privatization of public monuments, museums, national parks, the post office, etc., has been raised in recent media reports as a possible ‘solution’ to the debt crisis. But let us not be misled: the process of acquisition of federal public property including the infrastructure and State institutions is likely to go much further. The public sector is up for grabs. Wall Street will eventually go on a buying spree picking up State owned assets at rock bottom prices.” (8)

References and Resources

 2)  Dave McNally, Global Slump, 2011. P 86

 3)  Harding. “Bernanke takes plunge with QE3.” www.ft.com

4)      Chussodovsky. “The Shutdown of the US Government  and ‘Debt Default’. A dress Rehearsal for the Federal State System?”. Center for Global Research

5)       5)  “Debt As a Class Weapon”. Rally Comrades, October 2011

 6)  Michael Hudson. “The Bubble Economy as a 2 Part Play for Privatisation”. July 4, 2013

 7) Ellen Brown. “The Leveraged Buy-out of America.” Center for Global Research, August 26, 2011

 8)  Chussodovsky. Op sit

photo credit: nromagna via photopin cc

To be continued.

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Steven Miller has taught science for 25 years in Oakland’s Flatland high schools. He has been actively engaged in public school reform since the early 1990s. When the state seized control of Oakland public schools in 2003, they immediately implemented policies of corporatization and privatization that are advocated by the Broad Institute. Since that time Steve has written extensively against the privatization of public education, water and other public resources. You can email him at nanodog2@hotmail.com

Originally posted at Daily Censored

A Novel Bipartisan Solution to the Economic Crisis

Re-Solving the Economic Puzzle

Walter Rybeck 2011

Book Review

What if there were a single, simple solution to the current credit/debt crisis? What if mere tax reform could end the recession, repay public debt, and reverse growing income inequality? What if this tax could also end real estate bubbles and speculation and reverse urban decay and sprawl? What if it could also make cities and states more financially self-reliant, thus reducing their reliance on federal subsidies and the size of federal government?

It all sounds highly improbable, doesn’t it? But Walter Rybeck, a former urban affairs official in the Johnson, Nixon and Carter administration, claims that widespread adoption of a  Land Value Tax (LVT) would accomplish all these objectives. What’s more, political thinkers across the political spectrum (e.g. Patrick Buchanan, Milton Friedman, Michael Hudson, Martin Luther King, Paul Krugman and Joseph Stigliz) have all spoken in favor of this type of tax reform.The LVT, which taxes unimproved land, dates from pre-revolutionary times. Prior to the enactment of the Federal Income tax in 1913, most public services were financed locally via an LVT. Progressives like it because it shifts the tax burden from small business and low and moderate income families to real estate developers and speculators. Conservatives like it because it shrinks the size and role of federal government, as well as leading to a reduction in company and income tax.

Here is what conservative free market economist Milton Friedman had to say about Land Value Tax (The Times Herald, Norristown, Pennsylvania; Friday, 1 December, 1978): “We need taxes. So the question is, which are the least bad taxes? In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago.”

Ending the Monopoly on Land Ownership

Like Henry George, author of the 1879 Progress and Poverty, Rybeck proposes to end the ruling elite’s monopoly on land and natural resources through tax reform – by gradually replacing income, company, sales, and property taxes with a tax on unimproved land and resources. As he explains in Re-Solving the Economic Puzzle, land is the ultimate source of all wealth. In the US 3% of the population own 95% of private land. Ted Turner alone owns two million acres, equivalent to nearly two Rhode Islands. In many cities, a few wealthy families own all the prime downtown sites.

Rybeck’s definition of land includes all the natural resources accompanying it – soil, forests, game, grazing rights, water, oil, gas, minerals and the electromagnetic waves (broadcast, cellphone, and wi-fi spectrum) above it. Like Henry George and modern Georgists, he argues that land and resources should be public property. Because no one produced any of this stuff, no one has a right to claim an exclusive monopoly over it.

According to Rybeck, our current system of taxing labor and productivity is grossly unfair to all but the top 1% of Americans. Besides being more equitable, the LVT also ends curbs the real estate speculation that leaves vast areas of American cities vacant. Setting land taxes too low inadvertently rewards landowners for keeping land vacant or turning it into parking lots.

High land vacancy rates were already a major problem during the Nixon administration. In 1970, cities with a population of 100,000 had a 22% vacancy rate, and those over 250,000 a 13% vacancy rate. Thanks to the 2008 economic crisis, an epidemic of vacant foreclosed homes has massively increased this urban blight. Worse still, low land taxes reward middle class families for moving to the suburbs. In doing so, they abandon expensive infrastructure (water, sewage, lighting, schools, etc) that was created to accommodate them. As they spread out into sprawling suburbs, taxpayers must fund new infrastructure.   

Cities and Countries Successfully Adopting an LVT

The final third of Re-Solving the Economic Puzzle relates the success stories of the 25 cities and five countries that have spared themselves economic disaster by adopting an LVT. The communities Rybeck singles out include

• California Irrigation Districts (1887)
• Fairhope Alabama (1894)
• Arden Delaware (1890)
• Cleveland (1901)
• Pittsburgh (1913, 1979)
• New York City (1918)
• Miami (Ohio) Conservancy (1929)
• Rosslyn Virginia (1950)
• Southfield Michigan (1960)\Harrisburg and 15 other Pennsylvania cities (1980-1990)

Sadly many of these communities subsequently caved in to special interests and began taxing capital improvements, rather than land values. Those who did so are confronting a major debt crisis, as well as decaying schools and infrastructure.

Pittsburgh, one of the backsliders, saw the error of their ways in 1979 and instituted a gradual return to what Rybeck refers to as a two-tier land tax. At present, Pittsburgh taxes unimproved land six times as heavily as improvements. The resulting revival of their central city is referred to as Renaissance II. Thanks to their Land Value Tax, Pittsburgh didn’t experience the same real estate bubble as other US cities. Thus their housing market didn’t collapse in 2008. In addition, their current foreclosure rate is the lowest in the country.

Countries which have adopted an LVT include Hong Kong (1843), New Zealand (1878), Denmark (1912), South Africa (1916) and Taiwan (1949).

To learn more about Land Value Tax, check out the LVT Facebook page.

Reprinted from Veterans Today