When asked what he would do if he ruled, Confucius replied he would first “rectify the names”--in other words, start calling things what they really were, calling a spade a spade. I’d suggest that’s one of the tasks environmentalists must take on: creating the language of sustainable, ecological development.
That’s why I was shocked to hear from a respected fellow Environmental Council of Sacramento (ECOS) colleague. As usual, I was complaining about the abuses of land speculation in our region, unhappy about how such outlying development lengthens commutes and impoverishes local jurisdictions with unsustainable infrastructure demands, and this colleague was trying to console me, telling me that Sacramento didn’t have much industry, so it needed outlying development like the recently approved 1,100 acre increase in Sacramento suburb Elk Grove’s outlying land to make the region economically healthy.
Setting aside the industries the region does have (the Capitol, Intel, Siemens, etc.) proposals for outlying development continue to appear, in spite of the 20-years-worth of infill land available to build. Why? Because current public policy allows land speculators to purchase (or option) that outlying land for a few thousand dollars an acre, then once local government grants development permission, sell it to builders for 50 - 100 times more than they paid for it. This public policy provides enormous economic incentives to corrupt local government, and to continue speculating, but calling it “industry” is really beyond the pale.
Classical economics defined industry as something that’s productive. Adam Smith’s example is carving a tree branch into an axe handle--but land speculation does nothing productive. It makes no new land, and does nothing to configure any existing land. It’s not an industry. Classical economists called such speculation the extraction of “economic rent.” I’d suggest the modern term is a “racket.” That's right, land speculation is not an industry; it’s a racket.
Economic rent is money paid for no productive purpose, owed simply because of the rentier’s political influence or social status. Classical economics also decried rent as what kept an economy from being truly productive.
Economic rent is money paid for no productive purpose, owed simply because of the rentier’s political influence or social status. Classical economics also decried rent as what kept an economy from being truly productive. Keynes famously advised “euthanizing” the rentiers...basically taxing economic rents out of existence so people could have the most productive societies.
What does a truly productive economy do about economic rents? The Germans make the developers sell their land to local governments at the agricultural land price, then re-purchase it at the development land price once government grants the entitlement to develop. The public gets the entire benefit of that "unearned increment" of economic rent.
And Germans have a good educational system and nice infrastructure, too--not rated D+ by its engineers, as is U.S. infrastructure. In Germany, college tuition is free even for foreigners. The arts budget for the City of Berlin exceeds the national endowment for the arts for the U.S. of A. That’s what you get when economic rent inures to the benefit of society at large rather than the land speculators.
One other example of such an unproductive racket would be the monopoly rent professional sports get to charge. In the U.S., professional sports are exempt from antitrust prosecution, so they can (legally) be price-setting monopolies. Teams' threats to leave town can therefore extort stadiums and other economic concessions from their communities. This is true not just for the quarter-billion-dollar stadium subsidy recently given the Sacramento Kings, but for other teams too. The Davis family has extorted money and stadiums from Oakland, Anaheim and now Las Vegas for the Raiders. Three quarters of George W. Bush’s net worth comes from such a stadium deal in Arlington Texas.
One other hallmark of the rentier's agenda is the complement to economic rent: while the aristocrats get huge subsidies, the rest of the public gets austerity. The cry is “We’re out of money,” and the line that “There is no alternative!” (TINA) but to tax more and spend less are the constant refrain of the narrative supporting the oligarchy.
Austerity de-funds public services in everything from infrastructure, to education, to health care, to retirement benefits. Meanwhile, the $16 - $29 trillion in financial sector bailout after Lehman's bankruptcy received nothing like the "We're out of money" cry, but we are led to believe Social Security's shortfall simply cannot be filled. (Bank bailout figures are from the Federal Reserve's audit mandated by Congress after the Great Recession began.)
After austerity cripples and defunds services for the general public, then the population at large "spontaneously" says the solution is to privatize these services. Consider the example of higher education: Federal funding for it declined 55% since 1972. State funding has declined even more. Why do you suppose tuitions continue to rise, and public schools continue to accommodate privately endowed professorships, even if they are filled with crackpot advocates for the TINA line, or climate change skeptics?
Do the oligarchs fund propaganda to support these "solutions"? One example: the Kochs spent $889 million in the 2016 election cycle. "Lefty" (capitalist, currency speculator) George Soros is supposed to balance the Kochs right-leaning spending but Soros spent only $17 million in the 2016 election cycle, so not exactly an even balance coming from even such a doubtful lefty.
Corporate America outspent unions 2-to-1, says the Washington Post. You'll hear Hillary spent twice what Trump spent, but that does not account for the "Citizens United" spending by PACs.
Implicit subsidies for land speculation, and explicit subsidies for stadiums and privatization are all in service of the rentiers. They are rackets, and all the protestations of support for sustainable development and economic justice are futile as long as economic rent and austerity dominate the public policy landscape.
This dynamic hardly applies only to Sacramento. The British austerians are lobbying to reduce funding for their popular National Health Service (NHS). The austerian agenda is to make NHS bad enough that the population will submit to its partial or wholesale privatization.
Margaret Thatcher began this process in the U.K. by, among other things, privatizing the U.K.'s publicly-owned rail system, which promptly raised fares while cutting back service. Poverty skyrocketed during Thatcher's term, too, tripling for U.K. children.
Demonstrating that social justice and sustainable environmental policies go hand in hand, austerians excuse any environmental degradation as simply an economic necessity. Along those lines: when the topic of affordable housing came up, another respected environmentalist and ECOS member suggested we needed to deregulate builders to solve that problem. That's right: To him, regulation was the source of high housing costs. Funny, the Kochs have been saying exactly that, too, and now environmentalists are lobbying on their behalf!
Naturally, austerity has had an enormous impact on affordability as public housing programs have been gutted, while subsidies for upper-income housing remain intact. Reagan's '86 tax law retroactively disallowed tax breaks that encouraged apartment building too, making limited partnerships that built apartments fail. While Reagan halved the top marginal income tax rate, between Reagan and his successor, payroll taxes on working America increased eightfold.
Actually, besides austerity, low real estate taxes make speculation and skyrocketing home prices possible because landowners can keep their land off the market at a minimal cost--you know, like that 20 years worth of infill in the Sacramento region. Take a look at the RealEstate4Ransom.com website for the full story here. Prop 13 makes real estate more expensive, getting government out of the housing business does not make it cheaper, either.
Meanwhile, it's starting to look like the environmentalists are doing the Koch’s lobbying for them, urging us to support simpler “streamlined” regulation...maybe setting aside CEQA while we develop that affordable housing as the legislature did for the Kings’ stadium.
The real agenda behind “streamlining” of regulations or “simplification” of taxes means our oligarchs, with their armies of consultants, accountants and attorneys, can game existing regulations and tax law. What these campaigns to "simplify" really urge is a system that’s easily bypassed when economic rent is to be had.
So...sadly, the expectation I had was that environmentalists would see these things, and resist them. That's clearly not been realistic as expectations go.
As for the condition of the environment now, it's not an exaggeration to say the fate of humanity hangs in the balance. But the real heroes here won't draw their light sabers, they'll change their minds and change their ways.
If you have had the patience to read this far, to take a look at this from J.D. Alt, who exposes one of the most deceptive practices in the current narrative and provides genuine and hopeful solutions for our most severe environmental and social justice problems. Not bad! (Unfortunately, now it’s in the "great idea," stage, and not widely shared….)
But hey! I’m typing as fast as I can!
It's Simpler Than It Looks