A rejoinder on Land Tax

My article in the Sunday Tasmanian (22 Nov 2009) drew a response from Bob Elliston in the following issue.

I felt he deserved an answer to his critique, and post it here:

2 December 2009

Dear Mr Elliston (Bob)

I am attempting to create serious debate on the best way of raising public revenue in Tasmania, and Australia.  I am interested in others’ contributions, but I have been disappointed with the quality of many of the arguments.  The local seminars for the “Henry Review of Taxation” were pretty dismal, and mostly devoid of recognition of ‘good and ‘bad’ taxes.  Most people there were only interested in their own circumstances.  The more recent Land Tax ‘debate’ follows a similar pattern.

If I may, I’ll interpose my comments against your own letter:

BE:…“rent for the exclusive use of the land we occupy” challenges the definition of ownership.

LF:   Why?  We own freehold titles now, but Land Tax is payable to the government, and rates are payable to local councils. Is ‘rent’ such an intimidating term?  It is my argument that rent is a far better description of the relationship we enjoy with the land.  Sometimes it is called a lease, but that puts a legal construct around the relationship, and will inevitably be tested before the courts.  But you can call it ownership, leasehold or whatever you like.  In the end, you hold the land subject to some bureaucratically determined system that gives you a title, and therefore exclusive use.

BE:  “…since when did landholders have exclusive use of their land?”

LF:  By ‘exclusive use’, I mean that you can exclude me from the land you own (or lease, or rent).  I can’t see where that concept is contestable.  That’s what trespass laws are all about. If I can use your land, or someone else can take mine over, then titles mean nothing.  Have I missed something?

BE:  “Imagine Land Tax in a Third World country; the multi-millionaire banker in his suburban home is taxed negligibly compared with the subsistence farmer on a patch of barren soil.”

LF:  No, he isn’t.  Wealthy people occupy the best land, which has higher land values.  They will pay heavily for the privilege.  Subsistence farmers operate on marginal land, which has little value.  Farmers will pay very little, probably zero if it is truly marginal land.

As an example, take Zimbabwe.  White farmers had the best land.  Mugabe stole it and redistributed it to non-farmers, ruining the economy, when all he needed to do was to charge them the full rent of their land value, and distribute that to his people.  Over time, black farmers could have bought the land for themselves, with an orderly handover and proper agricultural training.  Interestingly, that was exactly the policy proposed by Joshua Nkomo at the initial election after independence.  The world could be a very different place if we would just learn from history.

BE:  Land Tax is unfair…

LF:  A flat rate land rent system, based on the value of the land we occupy, is absolutely fair.  I pay my fair share for a block in Lenah Valley; you would pay only your fair share for land at Great Bay (considerably less per acre than Lenah Valley); and both of us would pay far less than residents of Battery Point or Sandy Bay.  Everyone would pay for the benefits we receive.  Nothing fairer exists to my knowledge.

BE:  Land Tax  …..   cannot force productive use.

LF:  Oh yes it can.  The charge is levied on the land we occupy, whether we use it or not.  To pay the tax (rent), any rational owner would put the land to productive use, or, if they are not so work-inclined, would sell it to someone more industrious.  Either way, the land would be put to use.  Compare that to some of the land banks currently held by developer/speculators, which are deliberately held out of use until some poor prospective home owner is willing to pay the extortionate ransom demanded.

Of course, it also would bring into use those vacant allotments held within cities, that are currently sitting idle.  More production; more work; more economic activity.

BE:  A 0.01% assets tax would be a much fairer equaliser.

LF:  I’d be happy to hear your arguments for this.  At first glance, it seems to me that most assets could easily be moved off-shore to avoid the tax, or split amongst family members.  But you might have ways of curbing avoidance.

But, in any case, I would always want to draw a distinction between earned income (and assets), and unearned income.  If I work harder or smarter, I should benefit from that. We should reward work, and initiative.  But, if the community provides services to my land, thus increasing its value, at least some of that increased value should be returned to the community.  Otherwise, I profit personally from the community’s efforts.  That is unfair.  I can’t think of anything fairer than paying for the benefits we receive from our community, as well as providing our government a perfect incentive to provide better services.

Finally, rents on land values have the capacity to fund all public services currently provided in Australia.(1)  There may even be some left over for a ‘Citizens Dividend’.  Can your assets tax do that?

If you want to continue dialogue of an important subject, I would be pleased to continue the exchange.

Yours Faithfully

Leo Foley

(1)  “The Taxable Capacity of Australian Land and Resources” in the journal Australian Tax Forum. Author Terry Dwyer is Visiting Fellow, National Centre for Development Studies, Asia Pacific School of Economics and Management, Australian National University.

[Via http://leofoley.com]

Is free the future?

Chris Anderson, editor-in-chief of Wired is a man with a radical vision of the future. Observing trends created via the Internet, Anderson envisions a future in which things cost less, rather than more, a world in which the very nature of the digital world means things which were once available only on a paying basis, become available for free. He’s outlined his vision in his book Free: the Future of a Radical Price( ironically available for $21.49 on Amazon).

The entire premise of this work is based on the concept that, thanks to the underlying technology of the Web, things (at least digital things) are getting much cheaper. Due to advances in computer science, Web-mail services like Yahoo can now offer their users unlimited storage space for free.  Similarly, because of globalization the price of many manufactured goods has dropped drastically (thank you China). Anderson expects this trend to continue, and even grow.

Of course, as he is quick to point out, this trend towards free doesn’t mean no one is making money. Instead, the burden of purchase has begun to fall not on consumers, but rather upon advertisers, Web businesses, etc. A case in point of this would be Google. Google offers all sorts of e-services from email to search engines for free. And how does it fund this massive digital empire? Why with sponsored advertising, of course.

Other means of revenue generation and innovation Anderson outlines are premium services (i.e., the basic service if free, but users must pay for the good stuff), cross-subsidies (buy this, get that), labor exchange (e.g., fill out a survey and receive access), and altruism (shareware written out of the goodness of a programmer’s heart).

According to Anderson, the entire concept of free will change everything. This is probably best demonstrated in the music industry. No one buys CDs anymore, and it’s probably safe to assume that many people don’t even pay for downloads. With the rise of file-sharing networks like Napster and Limewire, to the emergence of services like MegaUpload and RapidShare, never before has music been shared so easily. As as a result, the giants of the recording industry are witnessing their own destruction (not that many music lovers have much sympathy). Many people, including lots of artists, feel that music was made to be shared, and actively engage in what might be termed as “piracy”. Though it has cut deeply into the massive profit margins of Island, RCA, et al, kids today are exposed to more music in a week than their grandparents were in their entire lifetime. According to Anderson’s theory, this is the model that will be followed by more and more industries in the future.

Of course, not everyone agrees with Anderson. Malcom Gladwell of the New Yorker posted a rather unfavorable review of the book here.

Is free the future? It seems only time will tell. Until then, Anderson’s theory is definitely worth a longer look.

[Via http://billboardsandcavedrawings.wordpress.com]

Taxpayer money safe for now

TARP is working! Critics lambasted Obama’s administration’s Troubled asset Relief Program some months ago. It was not only a political risk for President Obama but also the taxpayers. It was not a small sum either, it was US$700bn. Yet, various signs have indicated that these concerns are very pessimistic.

Recently, bank of America decided to repay US$45bn to the federal government, leaving Citi Bank to be the last largest financial institution to repay its debt. There were also signs that TARP- the biggest and first use of taxpayer money may break even, as the loan to banks come in dividends and interests.

On the side note, US economy has two pieces of good news, lower than expected unemployment (10%) and evaluation of the US dollar (perhaps not good news for traders).

While these indicate that the economy is recovering, they create uncertainty as well. We can only aver “we’re out of recession” after a few months of observation. During this period, we’ll expect speculations.

[Via http://thecriticalangle.wordpress.com]

Science & Soul: Cellular Automata

Science News in Brief

Turns out that the Iron Curtain helped isolate Eastern Europe from more than the Western world.  It also blocked the import of alien bird species.  Restrictions on the movement of people and trade in Soviet bloc countries prevented invasive birds being imported, a problem which has plagued much of Western Europe.

There is a difference: An introduced, alien, exotic, non-indigenous, or non-native species is one found outside its native range, having been brought their by humans through deliberate or accidental means.  Invasive species are introduced, but also have a detrimental effect on the environment.

The Intergovernmental Panel on Climate Change (IPCC) released a statement that the emails hacked from scientists’ computers did not contain information which indicated that human created greenhouse gases were not a factor in global warming.

Quirky Quote: “There is an anti-change group. There is an anti-reform group. There is an anti-science group, there is a flat Earth group, if I may say so, over the scientific evidence for climate change.” –Gordon Brown

Researchers have released a study showing that there are large variations in the amount of carbon being absorbed in the North Atlantic: as much as 10%.   They are still doing research to understand what causes these differences.  Currently, the ocean absorbs about half of carbon emissions from human activities.

Apocalypse Scenario: Here’s a nice positive feedback loop for ya: as the climate warms, the ability of liquids to absorb gases decreases (think pop cold vs pop warm), increasing global temperatures, decreasing the ability of the ocean to absorb carbon dioxide…crap.

Cool Creature: Superb Fairywren

Cute Superb Fairywren

The Superb Fairywren, Malurus cyaneus,  is a a small bird found across south-eastern Australia.  The male of the species has a bright blue head, back and tail, with a dark mask, and buff belly.  The female, however are a dull brown colour.  This example of sexual dimorphism is fairly common in the bird world.  The bird is known for its strange mating behavior.  The male wren will pluck yellow flower petals and display them to females.  Although it is socially monogamous, in that they will form fairly regular pairings, but one male will father many chicks with multiple females.  And, he will help raise most, if not all of them.  This causes a rather complex social dynamic.

Feature Story: Cellular Automata

So this is my first post where I talk about what I do as a bioengineer.  People often tell me, “So you mess with genes and stuff, right?”  First, nobody is “messing” with anything.  Second, not really.  I specifically enjoy working with complex ecological systems.  I work to better understand the causes and effects of environmental changes due to natural and human-caused events. Bioengineering allows me to have a holistic look at ecological systems.  Emergent behaviors result from nonlinear interactions between individuals in these ecological systems.  Eventually, I plan to do field research as well as computer modelling to help change the many problems our environment faces.   One of my tools as a bioengineer is cellullar automata.  Have no fear: this is not going to be a trip down molecular biology lane.  Not necessarily anyway.

Networks are built when individuals interact with their local neighborhood, their surroundings.  Thus, range and links are important in a network.  If a system is a complex system with multiple networks, nonlinear interactions among individuals can spontaneously create patterns from an initially random or uniform area. A grid model made up of many individuals represented by cells, or automata (us engineers like to make things complicated sounding), whose possible states are finite and distinct can be updated based on a function which refers to the state of each automata’s neighbors.

Perhaps a good way to explain this is to delve right into an example.  Image a 100 x 100 grid.  This represents a theater.  Each grid space represents a person in the theater.  We want to test the effects of fire on the movie goers.  Let’s say that if 4  people or more around an individual is scared, the middle person is scared.  Otherwise, the cell’s status is normal.  By using a computer program, we can quickly perform multiple iterations of these tests on each of the 10,000 individuals in the test to see if there is any emergent behavior.  Emergent behavior is such that results from nonlinear interactions between autonomous agents in a complex system. That is, it is neither completely random nor completely structured.

So how does this relate to the environment you ask.  Well, I recently completed a project to model ecological succession from bare soil.  Each individual tree species is predisposed to a certain environment.  In turn, each tree affects the environment.  For example, most climax trees are shade tolerant, that is, they grow well in light deficient conditions.  This allows them to grow where there are already a number of pioneer (fast-growing, light-loving) trees.  They in turn create more shade, helping climax trees compete against pioneer trees.  In developing my model, I decided to focus on three main variables which determine plant growth: the soil’s water content, the soil’s pH, and the amount of light in the area.  I also chose the most common trees in an Eastern deciduous forest as my possible states.  To account for the possible variables in the environment, I calculated the amount of trees surrounding a given cell.  The higher the number of trees, the higher the amount of shade, and the less sunlight will reach the trees. I also totaled the number of trees surrounding each cell to calculate water usage.  The more trees there were (as opposed to blank spaces), the less water there was for that area of land.  There are no units for the variables per se, but they can be interpreted as described above.  I then developed a function which would analyze the current state of a cell and compute what the future state of the cell will be.  So, if the current state in the cell is bare soil, then it will either continue to be bare soil or a tree will grow there.  The simulation began with a white field (all blank) as would a piece of land after a disaster leaving bare ground.  In the next time step, pioneer trees came on the scene.  Following this, a few climax trees appeared, and more pioneer trees grew, removing many more of the plots of bare ground.  In the subsequent time steps, more climax trees grew and ultimately dominated the field in the simulation.  By the tenth time step, there was some flux, but most of the trees were of the climax varieties.  There would always be some pioneer trees.  When a tree “died” and resulted in open ground, the first trees to fill the gap would often be pioneer trees, but these are quickly weeded out.  Thus, I used cellular automata to model a biological phenomenon involving emergent behavior.

Secondary Succession: A Cellular Automata Application

Cosmic Perspective

What am I, as a bioengineer, doing with this information?  In my example, I modeled secondary succession, an already understood process.  However, there are other applications.  I know individuals who have used this technique to model forest fires based on forest density.  I have seen the effects of the surroundings on a cell’s (living cell, that is) processes modeled to test new drugs.  The future is truly limitless, but we must understand that we must also ask ourselves whether or not our methods are being applied in such a way to help, rather than harm, the world.  Science is useless without ethics.

[Via http://scienceguy288.wordpress.com]

U.S. Economy Lost Only 11,000 Jobs in November

The United States economy shed 11,000 jobs in November, and the unemployment rate fell to 10 percent, down from 10.2 percent in October, the Labor Department said Friday.

The government also revised the October number to show that the economy lost 111,000 jobs instead on 190,000.Though pace of job loss has been declining since a peak in January, the November number was surprising. Economists have been expecting a turning point to come in the late spring or summer, with employers finally adding workers as a recovery takes hold. The last time the number was this good was December, 2007, when the economy added 120,000 jobs. “We’re moving toward stability in the labor market and the end of the tremendous firing that has plagued America,” said Allen L. Sinai, the founder of Decision Economics, a research firm. “But it’s going to be bleak for years. While it is going to be better than what we’ve seen, it’s still going to be terrible.”

A large number of employees are working fewer hours than they would like because many companies are operating below capacity and have resisted adding staff until orders turn up and the incipient recovery seems likely to endure. Indeed, a broader measure of unemployment fell in November to 17.2 percent, from 17.5 percent in October. This broader measure covers not only those seeking work but those whose hours have been cut and those too discouraged to look for work.

The number of Americans facing long-term unemployment, which includes people who cannot find work for 27 weeks or more, has been at record highs in recent months, reaching 5.6 million in October. It was more than 5.9 million people in November, or 38.3 of percent of those unemployed. Once hiring resumes, those workers are likely to be among the last to land jobs.

“You create this class of people who essentially become permanently unemployed and can’t get back in,” said Nigel Gault, chief domestic economist at IHS Global Insight. “You have people who have lost contact with the labor market, whose skills are not relevant for jobs for the future, who employers regard with skepticism because they have been out of work for so long.”

In recent months, the economy has shown modest signs of stability in manufacturing and construction — each a big source of job loss in the nearly two years since the recession began freecreditreport. But consumer spending remains tepid even as holiday shopping gets under way.

On Thursday, President Obama convened a jobs summit and said he would announce proposals next week to strengthen employment. “We cannot hang back and hope for the best,” the president said, though he added “our resources are limited.”

Economists generally say that the worst of the recession has passed, and most forecast mild growth into next year. But that does not change the economic reality for millions of Americans, who must deal with piles of unpaid bills, worries about unexpected medical expenses and concerns about losing their homes.

Kathy M. Henry, 39, who lives in a subsidized apartment on the South Side of Chicago, was laid off from her job as an administrative assistant at an advertising agency two years ago. Since then, she says, she has applied for more than 500 jobs. She has received a $1,200 monthly unemployment check since August of last year, which she describes as not enough to support herself and two of her children who live with her.

“It’s a constant cycle,” she said. “I’ve applied everywhere, from big corporations to minute corporations, and I don’t even get an e-mail back. I’m worried people see me as old and out of touch and decrepit.”

Earlier this week, Ms. Henry’s son, a high school senior, came home with a packet of class photographs. The $40 cost was beyond her means, she said, so she decided against purchasing a memento of her son’s senior year.

In Canada on Friday, the government reported that the country’s economy added more jobs than expected in November, erasing the losses in October. Statistics Canada reported a net employment gain of 79,000 in November, topping expectations of a 15,000 gain. The unemployment rate fell to 8.5 percent from 8.6 percent in October.

U.S. Economy Lost Only 11,000 Jobs in November

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Hopes for Costly Plane Are Riding on a Test Flight

It has been said that all modern aircraft have four dimensions: span, length, height — and politics.

As Airbus engineers make the final preparations for the first test flight of its A400M military transporter next week, they will be hoping that the sight of the plane taking wing will help persuade European governments to commit to the program and shoulder some of its rapidly rising costs.

Nearly four years behind schedule, several tons overweight and as much as 7 billion euros ($10.6 billion) over budget, the A400M has become a financial albatross for Airbus and its parent company, European Aeronautic Defense and Space. The company has already written off 2.4 billion euros in costs for a project that continues to expend cash at a rate of around 100 million euros each month.

Under the terms of the original contract in 2003, EADS agreed to supply Belgium, Britain, France, Germany, Spain, Luxembourg and Turkey with 180 of the planes for a fixed price of 20 billion euros — with the understanding that any overruns would be swallowed by the manufacturer.

But faced with billions of euros in additional bills linked to another troubled plane, the A380 superjumbo passenger jet, EADS told the governments last year that the A400M contract would need to be renegotiated or the plane could not be built. The governments agreed in June to suspend the contract and vowed to reach a deal this year on a new financing arrangement and delivery schedule.

As that deadline draws nearer, analysts said, the milestone of the plane’s first flight gains in symbolic importance.

“A first flight gives the program a lot more security,” said Alexandra Ashbourne, an independent aerospace consultant in London. “It’s a lot easier to kill something if it hasn’t flown yet.”

Military officials from the countries met Wednesday in Berlin as part of a final push to reach a common negotiating position on how much additional development costs they were prepared to shoulder and how long they were prepared to wait for the planes, which would replace aging transports like the American-made Hercules C-130 and the French-German Transall.

Analysts and industry leaders say they are confident the program will be saved, given the enormous financial and political costs of abandoning it easy payday loans. Canceling the A400M would require EADS to return the 5.7 billion euros in deposits it has already received from the governments — wiping out the bulk of its roughly 8 billion euros in cash reserves and costing thousands of European jobs. The governments, moreover, would have to find alternative transport lifters elsewhere to meet their NATO commitments in crisis zones like Afghanistan.

“I am not working on a Plan B,” Louis Gallois, the EADS chief executive, said during an interview in October.

That said, expensive military aircraft programs have been halted before. The TSR-2, a supersonic bomber developed by British Aircraft, was canceled in 1965, barely six months after its first flight, after its costs rose to more than £750 million, or about $14.2 billion at current exchange rates and after accounting for decades of inflation, from a budget of less than £100 million. The initial flight test plane was bequeathed to a British artillery unit, which used it for target practice.

Inside EADS and Airbus, there is a growing sense of exasperation about the slow pace of the talks — complicated by the recent national election in Germany and the anticipation of new elections next year in Britain — and concern that they could extend beyond the Dec. 31 deadline.

“Our company needs to go back to a decent accounting,” said one EADS executive, who requested anonymity because he was not authorized to discuss the matter. “We can’t afford to prolong the uncertainty.”

But some said the governments’ various distractions, while outside the control of EADS, also offered a modicum of reassurance about the A400M’s future.

“The good thing about pan-European programs is that it is so hard to get everyone to agree to cancel,” said Nick Cunningham, an analyst at Evolution Securities in London. “We are really very deep into herding cats at the moment.”

Hopes for Costly Plane Are Riding on a Test Flight

[Via http://finbel.wordpress.com]

Gains Made in Lung Cancer Survival

WEDNESDAY, Dec. 2 (HealthDay News) — In the past two decades, survival rates for advanced lung cancer patients in the United States have improved modestly, a new study has found.

Researchers analyzed data on more than 100,000 patients diagnosed with stage 4 non-small cell lung cancer (NSCLC) between 1990 and 2005. The patient information was in the U online accounting schools.S. National Cancer Institute's Surveillance, Epidemiology and End Results database.

The study found that one-year overall survival increased from 13.2 percent in 1990 to 19.4 percent in 2005, while two-year overall survival increased from 4.5 percent to 7.8 percent.

The researchers said the improved survival rates may come from changes in the management of advanced NSCLC over the past two decades, including new chemotherapy agents and regimens, increased use of salvage chemotherapy and the introduction of molecularly targeted therapies.

"Although the development of several new agents led to a statistically significant survival improvement between 1990 and 2005, it is sobering that the one-year survival has improved by only 6 percent during this time," study author Dr. Daniel Morgensztern, of the Washington University School of Medicine, said in a news release from the International Association for the Study of Lung Cancer. "Real progress can only be achieved with a better understanding of tumor biology and development of [new] therapies."

The study is published in the December issue of the Journal of Thoracic Oncology.

More information

The U.S. National Cancer Institute has more about lung cancer.

Gains Made in Lung Cancer Survival

Hot News: Women Who Want to Want

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