Bailing Out the Auto Industry

Cars, the most hopelessly inefficient form of transportation ever invented, have done wonderful things for us.

Car ownership has enabled people to live in the outer suburbs, far from their jobs, stores, schools, and places of social life. This makes outer suburban land more potentially useful and therefore more expensive, thus feeding the forces of land speculation.

As a byproduct, this car dependence has required large parking lots in inner cities, thus requiring stores, industries, schools, etc. to acquire more land for these parking lots. This feeds the forces of speculation in inner city land.

So now that we've become so totally dependent on cars for all our transportation needs, our dependence appears to justify propping up the car industry when they begin falling victim to the very same land speculation that they, themselves, encouraged.

Perhaps we might change our perspective a bit. Maybe we could go ahead and let the car companies fail. Then many people will become unemployed and many dwellers of outer suburbia will be stranded in their remote luxury mansions without cars.

That would be horrible! But look! There's an obvious solution! Modify our tax structure to increase the location component of property taxes and decrease taxes on buildings, incomes, sales, and everything else.

This would cause land usage patterns to become more dynamic, enabling people to move closer to their work, stores, schools, etc. so that walking and bicycling would become practical for more of their transportation, thus decreasing their need for cars. The more dynamic land usage patterns would also permit the establishment of business forms that are more relevant to people's actual needs, thus re-employing the workers displaced by the failure of the car companies.

This tax shift, described in the nineteenth-century book Progress and Poverty by Henry George, looks like it would be very easily implementable within almost any reasonable governmental form. When I receive my property tax bill every September, the location value and building value are already separated out and re-added back together again, so implementing the tax shift looks like it would involve leaving a step out rather than adding a step. And if the income tax could be eliminated, yet another burdensome administration could be eliminated.

Hey, don't tell me it can't be done!

Global Warming

Now that global warming has happened, what do we do about it?
 
Sea levels are rising.  Do we spend billions on dikes and levees?  Or do we encourage lowland-using activities to relocate to higher ground?
 
Major rivers are likely to change their courses.  Do we spend billions on trying to confine the rivers?  Or do we relocate our river-dependent industries?
 
Agricultural zone boundaries are much farther north than they were forty years ago.  Do we spend billions trying to force nature to do our bidding?  Or do we learn to grow different crops, and grow our old crops in different places?
 
Formerly well-watered places are now arid, and formerly dry places are now suffering excess rainfall.  Same pair of questions.  Spend billions on dubious technology or learn to relocate?
 
Our current tax structure and land-ownership pattern makes relocation unduly difficult.  Land is too expensive to buy but too cheap to own for long term.  Relocation means abandoning now-worthless land that was initially bought at great cost, and buying new land at even greater cost.
 
Landowners are not making much from this scheme.  The only winners are banks who loan ever-increasing amounts of money for bigger and bigger mortgages.
 
What if we got smart and levied high real estate taxes on the location value of land, thus making it impractical to own land that's not immediately needed?  It seems that initial purchase prices of land would be greatly decreased.  Land that becomes worthless to to changes in the natural world would be much easier to abandon because new land could be more readily bought elsewhere.  The only losers would be banks, who would no longer have a market for huge land-purchase mortgages.
 
Of course there's still a need to curtail human activities that needlessly result in unnecessary global warming, but a more dynamic land usage pattern is going to be a necessary part of any solution.

Is a church really a charity?

When we do our income taxes, we can deduct charitable giving, including giving to our church, and the church itself pays no taxes. But is a church really a charity? Does it really do anything for the community, or is it merely a self-indulgent social club?

Right now I have before me our church's budget summary for Fiscal Year 2007, trying to ascertain how much of it is actually used for charitable benefit to the community.

47.70% of the budget is for salaries and benefits to a full-time preacher, a part-time assistant preacher, an organist, and an office manager.

What do the preachers do? Primarily, they put on a grandiose show for us. They lead the Sunday morning services, attend our social events, and may perform some administrative duties. Nobody outside of the church sees any of this. It's all for the benefit of the church members. The preachers also serve as figureheads for the church in our dealings with our community, but for the most part, the people outside of the church barely know that the preachers exist. Hardly any charity here.

The organist greatly enhances our enjoyment of the church service, but that has no impact on anybody outside the church. No charity here.

The office manager is necessary for the administration of the church, but does nothing except help keep the church in existence. No charity here.

36.20% of the budget is for operating expense. It's just to keep the church in existence. No charity here.

12.47% of the budget is for buildings and grounds. Two chapels, a parish hall, a graveyard, and about eleven acres of land to do maintenance on. No charity here.

2.42% of the budget is for insurance. A necessary expense, to be sure, but it's not charity.

0.83% of the budget is for ministries support. That serves certain special needs of the congregation members, so I suppose that, by some stretch of the definition, it could be called charity, but it's only for church members, not the community at large.

0.37% of the budget is for outreach. This could be construed as charity of sorts, but it's primarily intended to extend invitations to folks to join the church, not to actually do much good. Charity? Well, maybe.

(I think the remaining 0.01% is the result of arithmetical rounding.)

In addition, some church members participate in a charity called SMILE which is run by a consortium of several of the churches of the community. None of the churches' budgets contribute anything to SMILE, however.

My conclusion is that our church is an almost purely self-indulgent social club, and we've done a masterful con job into hoodwinking the IRS into exempting the church from taxes. The tax break is actually an outright gift from the state to the church, thus constituting a breach in the traditional separation of church and state. Personally, I feel a bit guilty participating in this blatant fraud.

Property taxes

September is property tax month in my county. I just paid mine. It has gone up substantially since I had my new garage built about a year and a half ago. The garage replaced a decrepit shack that was a neighborhood eyesore and possibly somewhat of a safety hazard, thus ripping it out and replacing it with a decent building was a service to the neighborhood, so I get rewarded with a tax increase.

We're all accustomed to property taxes. The more property you own, the more tax you pay. Fair? Well, perhaps not. The commodity we call "property" is actually two separate things: land and buildings. I don't truly "own" land. I only possess the privilege of putting my house, garage, and garden on it. It's right that I should pay taxes for this privilege, even if I didn't actually exercise the privilege.

It's much better for the community if I keep my buildings in good shape and replace them when they become decrepit, but if I'm penalized with higher taxes for doing so, that rather decreases my incentive, doesn't it?

All of my neighbors except one have had new garages built in the last fifteen years. All except that one have gotten their property taxes increased. The one neighbor who hasn't done so is thinking about it, but his budget is tight and he's not very eager for a tax increase on top of the building cost.

My property sits on a whopping five eighths of an acre, about twice as much as I really need. I suppose I could subdivide half of it off and sell it, but why bother? The legal manipulation would eat up most of the profit and the decrease in my property tax would be insignificant. Besides, it'll probably be worth more next year anyhow.

Just think of what would happen if my neighbors and I paid much higher taxes on our land and little or none on the buildings! We'd all have more incentive to upgrade our houses, garages, and gardens to the max, thus improving the appearance of the community. Those of us with large lots would have more incentive to sell off the excess, allowing a more densely built community with less urban sprawl.

Opinions, anybody? What do you think is fair?

A sermon on poverty and hunger

At a recent church service, the sermon topic was poverty and hunger. After the obligatory weeping and wailing and gnashing of teeth over the amount of poverty and hunger in the world, the preacher presented a comparison between Herbert Spencer and Jesus Christ. Naturally, in accordance with the Christian Party Line, the conclusion was that Jesus Christ had the True Answer. We must increase our charitable giving.

Herbert Spencer was a nineteenth-century English philosopher and political theorist who, upon reading Origin of Species by Charles Darwin, concluded that natural selection leading to the survival of the fittest applied just as well to human society. Give the poor nothing, he said. They're poor because they're less fit. Allow them to starve, and the next generation will be stronger and wealthier because the weaker members will have died without leaving descendents.

Spencer was, in principle, correct, except for one problem. The laws of his time, like the laws of our own time, grant certain people unnatural advantages because they've been born into positions of special privilege, or had the good luck to move into positions of special privilege. If fitness were the primary determining factor of wealth, Paris Hilton would probably be a homeless waif sleeping on steam grates and begging crumbs.

So I think we can safely dismiss Herbert Spencer's proposed solution. But did Jesus Christ really do any better?

We Christians love to think that Jesus was the Supreme Humanitarian. Unfortunately, there isn't much in any of the Gospels to support that view. Although he was a pretty nice guy in most of the Gospel stories, he really doesn't appear to have been particularly intelligent. He appears to have had no idea that poverty is caused primarily by legally enforced special privileges, leading to inequality of opportunity. Charitable giving was all he could think of, utterly ignoring the underlying injustice.

There is one thing that all human activities, without exception, require, and that is a location, a place to be while you are doing it. You can just about hear the real estate salesperson in the background, whispering, "Location, location, location." Food can be grown more easily on land near where strong people live to till the land, and near where hungry people live to eat the food, and people move around for various reasons and their needs and wants change with the seasons.

Our present laws treat land, that is, locations, as property. It doesn't work that way. A location is part of the world, not manufactured by any person, and its value is determined by the activities going on around it, not by anything the owner does. The law of supply and demand simply drives the price up to the point where land is difficult to buy and sell, but easy to own on a long-term basis. We can't just build another factory to make more land and ship it to anywhere we need it, the way we do with automobiles or refrigerators or whatever.

When a piece of land is very expensive to purchase initially but very cheap to hang onto once you've got it, it changes hands very slowly. However, the need for dynamic usage of land is very great. It must change hands frequently as society's needs change.

Therefore, we've got to think of some way to make land very cheap to purchase initially but very expensive to hang onto, in order to dump currently unused, underused, misused, and inappropriately used land onto the market priced for a quick sale. A variety of methods have been proposed, but the simplest approach appears to be to adjust real estate taxes to bear more heavily on the value of the location and more lightly, if at all, on the buildings. Perhaps other taxes, such as income taxes and sales taxes, can also be reduced.

But would our religious leaders ever think of anything like that? Well, it's been about two thousand years and they haven't thought of it yet.

Now, don't get me wrong. Charitable giving and welfare programs will still be needed. But the fundamental justice provided by dynamic land usage patterns is a prerequisite for any sort of charity to be effective.