Geonomics: A Summary for Newcomers

Karl Williams, former President, Prosper Australia Inc.

200 Word Overview

Geonomics (‘law of the Earth’) represents a completely different way of looking at The Earth. Starting from the self-evident (but ignored!) principle that The Earth (land and natural resources) should be the equal and common birthright of all humanity, a radically different set of economic and social principles emerge. However, the means to implement these principles is relatively simple – essentially, taxing land values rather than production.

That unemployment is inevitable in modern industrialised economies is not true. In economic terms, land has the unique qualities which gives landholders unique monopolist powers and the ability to make massive speculative profits while their land lies idle or under used while its value is rising.

At once we turn economic relations on their head by the collection of the land rent which will force landholders to put their land to full use (employing others and not wasting surrounding amenities) or passing the land titles on to those who can use it themselves. The flip side is that this massive source of government revenue allows us to phase out unfair, punitive taxes on production.

Many unique and urgently-needed environmental benefits flow from Geonomics – halting urban sprawl, encouraging sustainable agriculture and allowing us to put a true value on the intangible benefits of natural resources.

Geonomics encompasses a set of sweeping changes to the present economic systems based on a relatively simple adjustment to our tax system. It is based on a timeless philosophy that was elaborated upon to the greatest degree by the 19th century social philosopher and reformer, Henry George. The underlying philosophy is undeniably self-evident, but how far have we strayed from these noble ideals today?! It is that the Earth (land and natural resources) should be every person’s natural birthright – i.e. should be our equal and common inheritance – as it was not created by any person, but is rather the gift of Nature/God/The Universe. This should be the first listing in the UN Declaration of Human Rights, but it doesn’t even get a mention!

Universal land rights are central to Geonomics for not only indigenous peoples have been dispossessed, but nearly all of us find that we’re born on to a planet where “all the seats are taken” with the result that, effectively, we have to pay someone else for permission to live.

Land is not just a piece of dirt, but is the necessary “living space” integral with human existence – at least as long as the Law of Gravity holds! In economic terms, the nature of land also has unique qualities, including:

  1. Being relatively fixed in supply (you can’t make any more of it)
  2. Having a constant demand (we all need at least enough on which to stand)
  3. It’s value is not built up by the landholder, but by the community (the all-important locational value of land would be nothing if not for the presence of population and tax-funded infrastructure).

Previous attempts to achieve land justice have all been flawed because they have clung to the sense of wanting to “own” the Earth like another mere commodity. Many indigenous peoples have reiterated that we belong to the Earth, rather than the Earth belonging to us. But in more economic terms, so called “land reform” that relies on outright land ownership in perpetuity is doomed to failure, in terms of social justice, because to “divvy up” land equitably is impossible for the following reasons:

  1. Land has vastly different values. How can one divide up amongst the population central business district land, suburban land, rural & agricultural land, and wilderness?
  2. Even if (1) could be overcome, land values change constantly. Sooner or later all would have unequal landholdings, depending on such circumstances as population movements and the siting of infrastructure such as roads, schools, electricity supply, the provision of irrigation etc.
  3. Even if (1) & (2) could be overcome, what about next year? And the year after that, and after that ……? In other words, the newborn have missed out on the impossibly-fair divvy-up, not to mention immigrants and other newcomers who will constitute the new class of landless who happened to arrive too late.

Land is not confiscated

It should be stressed that Geonomics does not propose the confiscation of land in order to have some shared Commons, as to own a permanent home is an almost universal human need. The actual solution is elegantly simple, but with profound effects. It is this:-

In return for each individual’s exclusive use of Our One Earth, it is only fair that society be reimbursed for the loss of that resource. Therefore, each landholder should repay society a land rent (not at all an arbitrary tax) in precisely-calculated accordance with the value of the land holdings. That is, those who use more valuable land should pay more rent back to society based on the land value. Importantly, land titles and security of tenure remain as before.

This rent represents a potentially huge source of community/government revenue. But there is a flip-side to this revenue-raising equation.

A more just tax system

By collecting the land rent and thereby dispensing land justice based on our differing needs for Our One Earth, we can start to phase out taxes on production. These taxes are robbery! – why should someone be treated as a social nuisance and effectively fined every week through the imposition of, say, income taxes just because they work and support themselves and perhaps even provide employment for someone else? Therefore we have TWO forms of robbery which Geonomics eliminates:

  • The economic rent (the technical term for rent based on land values) misappropriated by landowners. This rightly belongs to society.
  • The taxes on production (income tax, sales tax, payroll tax etc.) which rob people for no justifiable reason at all.

The rationale for this type of reform could be summarised as:

  • “What society does for you, you should return to society.”
  • “What you do for yourself is rightfully yours.”

It should be noted that this principle certainly does not stand for any loony right-wing individualism – Geonomics only applies to the means of government revenue raising. So far as government expenditure is concerned, there is every means by which social welfare for the underprivileged can be made as before.

Unemployment

Arguably, the most serious problem in the world today is that of unemployment. All the think-tanks, political policy makers, social commentators and ordinary people will NEVER solve this absurdly-unnecessary problem unless the land problem is addressed first and foremost. Why call it “absurd”? – because on the one hand there are millions of people out of work who want to work and, on the other hand, there are endless needs for more work to be done (more teachers, carers for the elderly, builders of better housing & infrastructure etc.). Something is screwed up here! The key to this absurdity is the fact that we’ve made it profitable to make speculative profits through holding land idle or grossly under-used. The right land can be held until its value is built up by the community, then sold back to the community (who effectively pay for it twice, the first time through their taxes). Not only are there truly “unearned” forms of income here (and there are losers for each speculative winner), but essential land is kept idle or under used. And idle land equates to idle hands.

How can Geonomics encourage the full and efficient use of land? Essentially, it is because the land rent financially encourages the landholder either to use the land to its full potential (thereby creating a need to employ others to work on that land) or else to pass on the land to someone else who will do so. This is because the land rent remains fixed – so whether the landholder uses the land or not, that same rent is payable. One cannot keep land idle for long, for the land must be productively used in order to cover the rental dues belonging to society.

Taxes on pollution

Some taxes are necessary, such as carbon taxes and pollution taxes which discourage the abuse of natural resources. Similarly, taxes on alcohol and tobacco (forcing users, in effect, to pay for their future health costs) should remain. Other social undesirables, such as violent pornography, could also be discouraged through the tax system. However, the vast majority of taxes are those which fall on production – income, sales, company, payroll taxes etc., – and these not only rob people for no good reason (remembering that we are now collecting the land rent), but discourage real wealth creation. Encouraging truly productive activities will be as simple as ending the confiscation of part of their earnings! In other words, the private sector is given every incentive to create wealth and jobs because earnings will be retained rather than being taxed.

Historically, there have been huge campaigns mounted by a very few wealthy, vested interests to oppose this simple but fundamental change to our tax system. The traditional land barons and property developers have, more than anyone else, much to lose – what they will, in fact, lose are their privileges! Large landholders under the present system can simply sit on their land and wait for the community to build up its value as population grows and tax-funded infrastructure expands. The land can be kept unused, without penalty, until the community is prepared to bid what the landholder is prepared to accept. However, when the community is collecting the rent, the boot will be on the other foot. Labour will be in demand, as land is used as it should be.

If you were running an enterprise and arranged for the purchase of a large and expensive item of capital equipment (say, a printing press or a network of computers), how long would you wait to use it after it had been delivered? Paying millions of dollars for your purchase, no businessman in his right mind would let the shrink-wrap remain for a single day before immediately putting the item to full use? Have you then, ever wondered about multi-million-dollar blocks of land that are used as single-storey car parks in the city for years or, in the suburbs, as market gardens or simply as land which grows nothing but thistles? And all around live thousands who need that land in order to work – not to farm it, but to use its valuable location (why it’s so expensive in the first place) in order to produce goods and services. Collect the rent and there’ll be lots of busy hands and no more thistles!

But it’s not just in the private sector that there will be employment-producing, wealth-creating activity magically spring into being with the simple adjustment of taxing land values rather than production. Have you not also wondered why governments cannot afford to keep investing in badly-needed infrastructure such as roads, schools and public meeting places? It’s because the governments’ funds (OUR taxes) disappear into the “Black Hole” of land values!!! If we collect the rent this could never happen.

Rejuvenating public transport and community

To illustrate the point, let us look at something that’s long been neglected because of its expense – public transport. Rail networks are efficient and environmentally-friendly people-movers, but governments can’t afford to invest the hundreds of millions that are needed for a proper system because the investment goes, like all infrastructure spending, into improving land values. In order to recover part of its outlay, governments must set prohibitively-high fare structures which often, in the end, yield less revenue because people are so discouraged by the expense. But if we switched from the false principle of “user pays” to “beneficiary pays” and required the landholder to pay for the benefits conferred of a railway line being opened up, then such infrastructure could be self-funding. Here we would have a completely different ball game – with any infrastructure spending there would be increased land values and, importantly, more land rent to collect. With rent to collect, fares could be reduced. As fares are reduced, adjacent land becomes more desirable – hence there is more rent to collect. More rent means less fares means more rent means ……. until, in the end, the only question to answer is whether public transport should be free or whether some nominal charge should be imposed to make it appreciated and prevent unnecessary overuse.

Why not have magnificent botanical gardens in every single suburb? Because we’re not collecting the rent to pay for such quality of living and to encourage truly productive labour. Why not more public plazas, community facilities, sports grounds, public libraries? Because up until now the funds which paid for these facilities disappeared into the Black Hole. And besides the beautification of our surroundings, the improved quality of life for all and the boost to employment, isn’t it simply nicer to live as a community? We’ll still have our own houses and back-yards, but we’ll bring back the “village feel” to living, as we have common access to attractive shared facilities with our neighbours. Compare this to so-called Economic Rationalism which would have the “winners” in society living in private fortresses, like millionaires in Beirut! There is much more to say on these ideals, which address many social problems concerning urban alienation and anonymity – nut it out for yourself!

Open and just tax collection

In our truly civil society, massive resources will not be wasted on the tax system as they are now. We shall have professionally-qualified land valuers make an annual assessment on all land, taking into account access to all community-created amenities such as distance to schools and public transport, clarity of water and TV reception etc. and discounting for things such as noise and pollution from roads and factories. Everyone’s assessment will be supported by the factors taken into account, made more objective by computer-assisted comparisons between similar sites. Importantly, you’ll also be able to scrutinise your neighbour’s assessment and that of Kerry Packer. The system is virtually corruption-proof! And what about this: this tax cannot be evaded! No-one can shift it offshore or bury it in convoluted accounting transactions! Of all things on this planet, land is the one thing which cannot be hidden.

Furthermore, this will enable us to scrap the massive waste of having an army of Tax Department officials chasing an army of smart lawyers and creative accountants. This expensive absurdity produces ZERO wealth and, in any case, makes tax virtually optional for the rich. Moreover, it intrudes for no good reason into our private lives – why on earth should we be accountable for the income we earn or the goods we sell? And the compliance costs of filling in returns and forwarding remittances and keeping records and dodging taxes where possible through the black economy – isn’t this not only an unproductive way of spending our valuable time, but also a financial burden?

What’s the other barrier to employment – probably so accepted within our present paradigm that we can’t see it for what it is? It’s simply the price of land. Before anyone can undertake any work, unless they’re squatters, they need some land on which to stand. If they want to work more productively, that land will have passing traffic and surrounding amenities, and will be accessible to customers. But the big up-front barrier to self-employment (whether individually or collectively) is the vast amount (often representing decades of life savings) required to purchase land or the constant drain of loan repayments and interest. So what will change with Geonomics? Simply this – land will have no price!!! At the point where we’re eventually collecting the full site rent, the value of the surrounding amenities will be exactly offset by the rental dues to society. Here the zero (approximately) price of land (buildings and other improvements, of course, have retained their purchase price) will be asserted rather than fully explained, but it should be noted that when one is to purchase a property, one will be effectively bidding for the improvements and ensuring that one can make suitable use of the surrounding amenities which will be paid for through rental dues.

Globalisation – Glocalisation

The breathtaking changes brought about by this simple switch in the tax system go on and on. Urban sprawl will be greatly curbed – unused or under-used sprawling land will give way to a natural urban landscape. Cities will be much more compact, further encouraging public transport networks, cyclists and even pedestrians. Other great urban environmental problems will be dramatically curbed – cities sprawling over farmland and natural reserves, wastage of resources as pipelines and roads “leapfrog” over idle land, and time and fossil fuels being wasted because of daily commuting from distant suburbs.

Agricultural/rural problems? By basing the rental calculations on what is termed the “maximum sustainable yield”, farmers will be positively encouraged to farm sustainably as they will be saddled with the same fixed annual rent in perpetuity based on what the land is capable of producing in the long term. They will have to plan long-term in order to cover their rent. Again, technicalities won’t be discussed here.

Wilderness, natural reserves and other natural resources?

Today, they too often go to the person who makes the highest cash bid, with little accounting for externalities (detrimental effects impacting elsewhere). Furthermore, intangible benefits (ecological, aesthetic, recreational, spiritual and inherent worth) are rarely taken into account in determining land use as they are not traded on the market place and are not accorded a $ value. But the focus on land assessment (rather than the scrutinising of individual activities) positions Geonomics to factor all these items into a “good guess equation” to determine whether, say, the $ returns to the community through the rental collection will outweigh the benefits that society (non-human as well, if we like) would otherwise derive from preserving such an area. A good guess at the true value of land and natural resources is better than a wild guess, and a wild guess is better than no guess at all. This is the absurd state of things today with respect to “natural capital” – not even a guess is made of its value, and it can be depleted without affecting our Gross National Product at all.

This we also assert, (and debate it rather than laugh at it if you disagree) that Geonomics encompasses a set of “natural laws” that promote prosperity and social justice. These laws cannot be ignored without dire consequences – witness our endless economic problems despite every best effort as well as the advances of science. Geonomics is not a panacea for all economic and social problems, but without it there can be no solution to such problems. Many other problems would be addressed, directly and indirectly, by conforming to The Law of the Earth, such as inflation, high interest rates, foreign control and, if not already self-evident to you, the reader, great disparities of wealth.

Rewarding creativity

There will still be some lesser disparities of wealth, but not because of lack of opportunity. Some will prefer to live a life of voluntary simplicity, perhaps, and society requires little in return from those who reside on land with few surrounding amenities. On the other hand, some great inventors, sports persons, actors and authors, for instance, will earn much more than others if, in a free and fair market, people are prepared to pay for what those individuals demand for their services. But, mostly, all the great forms of privilege will be abolished, for the simple rule of not reaping what one has not sown will be our society’s guiding light. Other speculative forms of wealth can be discouraged through the tax system – for example, a 1% tax on foreign currency transactions and share market trading will discourage frenetic speculative activities but not those of genuine long-term investors. These speculative activities are just legalised forms of robbery – the massive profits that can be literally made in hours are taking wealth out of someone else’s pockets.

The good and inspiring society

The EarthSharing network truly represents The Good Society, and we want all to understand how we could simply bring about social justice and economic prosperity for all. Your willingness to understand and pass on the true laws of economics will be your personal contribution to achieving this noble ideal.

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https://prosper.org.au/2007/11/07/geonomics-a-summary-for-newcomers/