BIL: Oakland 2016 Recession Generation was an Earthsharing.org event which took place on July 9th in Oakland, California. Keynote speaker Chuck Marohn presented his experiences as an engineer, city planner, and founder of the non-profit Strong Towns to explore the problems with large, specialized systems of government, and the case for localization.
In a world where city planners and engineers must work within a narrow vision on the same sorts of projects, Marohn says there is a disconnect that only leaves space for endless repairs and fix-ups, and very little room for real creative thinking or new technology. With many cities struggling financially or going broke, Marohn makes a case for innovation that not only can increase the productivity and self-sufficiency of a town, but can improve the lives of all who live there.
Marohn suggests that while big governing organisations tend towards specialists as decision-makers, localized government is most effective when generalists are in charge. People who can make connections with others, seek out the experts on any given subject, and bring together combinations of skills will be the most successful leaders.
“The large systems that we have created – really a byproduct of the things that happened in the Depression and World War II – allowed us to accomplish a lot of things in a very short period of time, but come with their own fragility, their own kind of disconnectedness.”
“You can see in things like the Brexit vote, you can see in things like the conversation we’re having in our election cycle… you can see this disconnect between the large systems we have to govern ourselves, the large systems we have to run our economies, and the way we actually live our everyday lives.”
He has also advocated for shifting from the traditional property tax to a land value tax. He explains:
“The property tax system punishes investments that improve the value of property. The land tax system… punishes property that is left idle.”
Charles “Chuck” Marohn works as a licensed engineer in the State of Minnesota. He is a member of the American Institute of Certified Planners and founder and president of Strong Towns, a national media organization that supports the development of resilient cities, towns, and neighborhoods. Marohn holds a Master’s degree in Urban and Regional Planning from the University of Minnesota and a Bachelor’s degree in Civil Engineering from the University of Minnesota’s Institute of Technology. He is the author of Thoughts on Building Strong Towns. Volume I and A World Class Transportation System.
BIL: Oakland 2016 Recession Generation was an Earthsharing.org event which took place on July 9th, 2016 in Oakland, California. Keynote speaker, Robin Hanson, shared a fascinating vision of the future in which cheap, replicable robots are able to do most human work, and the implications of such a possibility.
Hanson presents an idea divergent from what he says are the two most prevalent in the world of artificial intelligence, those being either slow, ongoing developments in AI research over the coming decades, or some “grand new theory” that hasn’t been discovered.
“The third scenario is where we port the software that’s already in the human brain,” Hanson says.
“If we have good enough models for how each of the cell types work, we have a good enough scan of a particular brain, we have enough cheap, fast computers, then we can make a model of that particular person’s brain on those computers; and if it’s cheap enough, you could run that simulation cheaper than you could rent the human, that changes everything.”
He thinks this means “humans retire” and become completely replaced in the labor market by these emulated brains. However, he says humans “start out owning everything” and “their investments double as fast as the economy, i.e. every month.” So he thinks this means that humans who have access to wealth, and he mentions real estate in particular, will profit tremendously. He implies that those who don’t have wealth will suffer.
This parallels a lot of the discussions we usually have at EarthSharing about the need to fairly share the fruits of nature, so that we can all benefit from technological progress. Even these far-future forecasts aren’t, ultimately, so different from ages past. In the Guilded Age, we had industrialists profiting enormously off resource wealth and land during a time of rapid technological growth.
What this discussion shows is that no amount of technology can be relied upon for solving the problems of political economy. Poverty, in particular, cannot be solved without economic justice.
Who owns outer space? Our most idealistic visions of the future require us to transcend our narrow personal or nationalistic interests, but increasingly, space seems likely to be divvied up among the powerful, as has so often happened with the Earth. Can space be managed to serve the common interest?
Managing a Commons
Space is generally thought of as a commons. A commons is a resource which is not under the exclusive control of anyone. This makes it an interesting and challenging economic coordination problem. The US Department of Defense classifies outer space as one of the “global commons” alongside the oceans, atmosphere, and cyberspace. Former Under Secretary of Defense for Policy, Michele Flournoy, and Shawn Brimley of the Center for a New American Security write:
“…as rising nations and non-state actors become more powerful, the United States will need to pay more attention to emerging risks associated with the global commons, those areas of the world beyond the control of any one state—sea, space, air, and cyberspace—that constitute the fabric or connective tissue of the international system.”
Even during the heated Space Race between the United States and the USSR, there were lofty ideals about how to treat the cosmos. The Outer Space Treaty, ratified by all major world powers at the time, limits the use of orbital pathways and celestial bodies to peaceful purposes. Weapons of mass destruction are specifically banned. More interestingly, it also prohibits any signatory nation from claiming ownership of celestial resources.
The resources of space were not to be seen as just a bunch of loot waiting to be plundered. According to the Treaty, managing outer space was viewed as an international responsibility of utmost importance, for the benefit of all.
New Space Race
But a new space race is on. This time, a private space race. Billionaires are funding serious commercial spaceflight companies such as SpaceX, Blue Origin, Planetary Resources, Virgin Galactic, Stratolaunch Systems, and Bigelow Aerospace, and other lesser-known private companies and defense contractors are also competing. Additionally, competitions like the Google Lunar X Prize are under way. All of these enterprises share the goal of making space more accessible.
Elon Musk once raised the possibility of launching as many as four thousand micro-satellites into low Earth orbit for the purpose of providing worldwide high-speed internet access. Mark Zuckerberg had planned a similar service via Internet.org. Both men have quietly put these plans on the back-burner; however, the inexorable trend of cheaper spaceflight is continuing to increase satellite congestion surrounding Earth.
The progress that SpaceX has made with reusable launch vehicles does help reduce the quantity of space junk per-launch, but it also makes spaceflight cheaper thus encouraging more congestion. Junk continues to accumulate much faster than it is burned up.
Space junk is any small debris left in orbit by spacecraft. The problem is that it can impact orbiting spacecraft at speeds up to twenty times faster than a bullet. Worse yet, in the event of a collision, more debris is created.
In the worst-case scenario, this process of collisions creating more debris starts a chain reaction called Kessler Syndrome. If there are enough orbiting satellites, this chain reaction can eventually consume all of them, and leave behind a speeding cloud of bullets encircling the Earth and keeping humanity grounded for a century or more.
To reduce this threat, a number of mechanisms have been proposed. Decommissioning large obsolete satellites can significantly reduce the likelihood. However, doing so is expensive and of little direct benefit to the individual spacefaring organization. Nonetheless, the European Space Agency has already planned missions as part of its Clean Space initiative.
Another theoretical mitigation technique includes the development of lasers to shoot down space junk, or to redirect it whenever it threatens important orbital spacecraft.
Financing cleanup efforts
Who ought to be paying for these cleanup efforts? If billionaires intend to start launching thousands of satellites, is it simply up to the public to clean up the mess?
The ‘polluter pays principle’ is standard in environmental law. In addition to aligning with our moral intuitions for responsibility, taxes on pollution have the benefit of discouraging the damaging activities that create pollution in the first place.
In keeping with this thought, it would be sensible to propose a Pigouvian tax on anyone who creates space junk, in proportion to the amount of junk that they create. Since this junk can be accurately detected, it would be straightforward to measure and determine the tax.
Amending the Outer Space Treaty and establishing a body to implement the polluter pays principle would be a common sense method by which we could work to eliminate the threat of space junk.
There’s another possible source of revenue if we consider that the orbital paths themselves are a finite resource. Satellite collisions have happened in the past and will continue going forward. Indeed, every satellite launched brings with it a small risk of collision. And the more satellites we have, the greater the likelihood of collision and, eventually, of triggering Kessler Syndrome.
Certain orbital pathways are more desirable than others. Geo-stationary orbits might be more desirable than low Earth orbit; a sun-synchronous orbit may be more desirable than an alternative orbit. If billionaires start launching thousands of satellites, it is entirely possible that we could eventually be forced to allocate these orbital paths by auction, in order to fund general collision insurance.
Such a model would certainly be more fair and predictable than our current process, which is for companies to patent orbital pathways, and sue anyone who infringes on it (regardless of collision risk). Granted, the FAA’s Office of Commercial Space Transportation also has a permitting process in the United States. But permitting practices vary by nation, and there’s little or no international coordination for revenue-sharing, insurance, or cleanup. Motherboard interviewed Andrew Rush, a patent attorney and entrepreneur with expertise in space law, who said “As more and more companies start commercial activities using satellites, and using new and innovative ways to do so, we should see an uptick in patent activity.”
“We may also see the attendant uptick in patent litigation around some of those activities,” he added. “I personally hope that’s not the direction that we go. I hope there’s a lot more licensing and a lot more cooperative ownership and stewardship of patents, rather than just suing each other. “
An exemplary model of proper resource management can be found in the Norwegian Oil Fund. Upon discovery of its oil reserves, Norway instituted the collection of economic rent based on the revenue generated from oil extraction, plus oil exploration licensing fees. The resulting revenue was then kept in a trust fund and used to invest both within Norway and internationally. As of June 2015, the fund has accrued $873 billion. Given its size and stake in companies worldwide, the fund has become an significant player in international affairs. As such, it pursues economic and social justice through its decisions concerning its holdings, divesting from companies that violate its ethical standards.
If our civilization is able to use market pricing to collect economic rent from the Earth’s geosynchronous orbits, we would enjoy similar success as Norway while preserving a critical resource. Such concepts are already proving successful here on Earth. London uses congestion pricing to reduce traffic in its city center, and uses that revenue to fund public transportation. Congestion in space is ultimately no different. Let’s preserve our common inheritance of space for future generations, not at the expense of our current generation, but by achieving justice. We all deserve to share the benefits and the value of outer space.
Finding a new apartment in a competitive housing market can be exhausting: constantly scouring classified ads, racing from one showing to another, hoping that your credit history and persona can charm potential landlords. But just when you thought finding an apartment couldn’t be more difficult, prospective tenants are finding themselves in rental bidding wars, as landlords exploit competitive real estate markets to maximize revenues.
It is not uncommon for prospective renters to conduct searches spanning months, which can cause substantial disruption in their lives. But some landlords are now taking steps that will exacerbate this problem – once you find an apartment in your price range, bidding wars between applicants will probably increase the list price.
As Devin Cox and his roommate hunted for an apartment in Vancouver, they noticed that approximately a quarter of all rental applications asked prospective renters to list the maximum amount above the asking price they would be willing to pay. According to Cox, multiple landlords notified them of higher offers and gave them the chance to increase their bid.
This practice is not illegal, and is even being highlighted in classified ads. A recent Craigslist posting for a studio apartment noted that monthly rent would be determined by an on-site auction. While this practice might be gaining steam in Vancouver for the first time, it has plagued US cities with limited housing stock for several years, particularly New York City and San Francisco.
Housing advocates cite bidding wars as a reason to implement stricter rental laws. At present, Vancouver officials are taking no action to curb this practice. Bidding wars have been blamed for worsening Vancouver’s housing crisis, although no studies have investigated the full extent of their effect.
Bidding wars are another way in which landlords are taking advantage of Vancouver’s economic success. Yet, they are just a symptom of deeper issues. The city’s infrastructure, people, and businesses are enticing large swathes of educated workers to relocate there, increasing the value of land in the metropolitan area. This increasing land value is a social product that should be reinvested in the community. Unfortunately, this value is being depleted through rising rents that are far outpacing wages.
If Vancouver will not take steps to eliminate bidding wars, it should at the very least take steps to increase residential space. Government officials should consider implementing a land value tax (LVT).
American political economist Henry George argued that taxing productive activity discourages production. Taxing buildings punishes those who build vertically, and results in a reduction in urban housing and worksites. To encourage more construction, he proposed abolishing the building taxes altogether, and shifting all taxes onto land. He argued that land is our common inheritance, and we can achieve justice by sharing the revenue from land.
There are many nuanced arguments in favor of this strategy. George argued that sufficiently-high land value taxation would actually encourage landowners to develop residential and commercial space, adding value for others, in order to pay the land value tax as well as provide themselves a respectable return. This additional housing inventory would ultimately reduce housing costs. But also the increase in construction and development would create a high demand for labor, thereby reducing unemployment and improving wages.
Given the extreme nature of Vancouver’s housing market, officials should move quickly to keep Vancouver a place where all people can afford to live and live well. The Vancouver mayor and council can be contacted online, over the phone, in person, or using a mobile app, details of which are listed at vancouver.ca. Read more on the problems of bidding wars and speculation.
Earthsharing.org organized BIL: Oakland 2016 Recession Generation on July 9th in Oakland, California. The Optimal Taxation Panel participants were Yoram Bauman, Joshua Vincent, Fred Foldvary, Robin Hanson, and Kris Nelson. The panel moderator was Edward Miller (bios below).
The discussion revolved around the essential role that natural phenomena play in all economic activity and how to fairly treat these resources vis a vis taxation. Resources like land, minerals, access rights, the electromagnetic spectrum, domain names, and atmospheric carbon were discussed.
Joshua Vincent: Executive Director at theCenter for the Study of Economics since 1997. Vincent has consulted for more than 75 municipalities, counties, NGOs and national governments. He works with tax departments and elected officials to restructure taxation to a land-based system, and has testified as an expert witness on the impact of land value taxation. Vincent is the editor and publisher of Incentive Taxation, a journal on land value taxation.
Fred Foldvary: Board member at Robert Schalkenbach Foundation (RSF), a non-profit organization established in 1925 to spread the ideas of the social and economic philosopher Henry George (1839-1897). Foldvary received his B.A. in economics from the University of California at Berkeley, and his M.A. and Ph.D. in economics from George Mason University. He has taught economics at the Latvian University of Agriculture, Virginia Tech, John F. Kennedy University, California State University East Bay, the University of California at Berkeley Extension, Santa Clara University, and currently teaches at San Jose State University. Foldvary is the author of The Soul of Liberty, Public Goods and Private Communities, and Dictionary of Free Market Economics. He edited and contributed to Beyond Neoclassical Economics and, with Dan Klein, The Half-Life of Policy Rationales. Foldvary’s areas of research include public finance, governance, ethical philosophy, and land economics.
Kris Nelson: Principal at Phoenix Finance, which provides access to capital without collateral to small businesses and startups. Nelson also serves as Legislative Director of Common Ground OR-WA, a non-profit organization that promotes a more democratic treatment of land and natural resources. Previously, Nelson worked as a Principal at Genomics Consulting, where he helped launch a clean technology venture capital firm. He holds a Master’s degree in Business Administration from Willamette University and a Bachelor’s degree in Journalism from Evergreen State College.
Edward Miller: Co-organizer of the Recession Generation event. Miller is the Administrative Director of the Henry George School of Chicago, a non-profit educational organization which provides educational opportunities to the public on the topic of classical political economy. He serves as a board member for the Center for the Study of Economics. Previously, he has worked with the Institute for Ethics and Emerging Technologies.
Kim-Mai Cutler’s recent article “Nothing Like This Has Ever Happened Before” puts forth a sophisticated argument critiquing the naïve sentiments suggested by her title. As a whole, Cutler emphasizes the longue durée of economic history over the immediate, citing the work of economist Carlota Perez to demonstrate a rich historical pattern of bubbles and recessions followed by “golden ages” of prosperity.
The topic resonates with many Americans who are still recovering from the 2007-08 financial crisis and experiencing the effects of increasing income inequality. For many, the promise of a “golden age” to come seems a far-off reality. This sentiment abounds in the San Francisco Bay Area, where in recent years poverty has spiked as profoundly as housing prices. The immense wealth and venture capital being poured into Silicon Valley both exemplifies a new frontier of financial opportunity while presenting new challenges for ensuring that large swaths of Americans are not left behind. But if history can teach us anything, Cutler suggests, it may be time to revisit the nineteenth-century ideas of political economist Henry George.
Many Americans today would identify with Cutler’s portrait of George: a man who was hard-working, but at times could not find enough work to make a living. At his lowest point, he was forced to beg for money to feed his wife and newborn child. Whereas it can be argued that Silicon Valley is responsible for San Francisco’s current housing crisis, in George’s era it was the monopoly that the booming railroad industry had over the land and its inflated prices.
When he published Progress and Poverty in 1879, then, George was understandably committed to advocating for a system that would provide better financial stability in the economy at large. His proposed solution “was a single land value tax that would replace all other government revenue sources”. Because the land value tax would be based on the actual value of the property itself, the urban landlords, often the wealthiest citizens, would face the largest tax burdens. It is easy to imagine how such a concept would slow the displacement of poorer residents through gentrification and disrupt sharing economies like AirBnB, both of which have steadily out-priced local residents in places like San Francisco to the benefit of those with the capital to invest in property.
The reasons for circling back to George’s idea of a land value tax are in alignment with Perez’s documentation of the cyclical nature of bubbles, or what she refers to as periods of “gestation,” in which new technologies are developing, and the so-called “golden ages,” when these same technologies reach maturity, usually after a period of recession or depressed activity. The model has been selectively adapted by the private investment community, however, which often undermines one of Perez’s central arguments: that the turning-point in technological revolutions is contingent upon governmental institutions adapting by passing appropriate regulation in response to these new economies. As Cutler explains in her interpretation of Perez’s work, government plays an essential role “in creating an equitable framework that allows everyone to participate in benefits of technological change.”
Which brings us back to George. While Cutler floats the idea of George’s single land value tax as a potential avenue for regulation by keeping land bubbles from inflating in the first place, she does not actively pursue the idea in a modern context.* The question of how it might affect employment, rent, and the use of space in cities is fascinating. Speculation on urban land creates a lot of wasted space; think of central urban locations with vacant lots, derelict buildings, uninhabited units, short buildings in an area with lots of tall ones, etc. With the “buy low, sell high” mentality that pervades our current real estate system, there are incentives to waste space and speculate on the rising value of urban land. That is to say, if the number of housing units are kept artificially low through speculation, and if there are more people seeking housing than units available, the result is artificially high rent as people compete with each other for scarce space. The same is true for businesses. If there is an artificial scarcity of physical space for businesses to operate in central locations, then this negatively affects employment opportunities among those looking for work.
A land value tax would kill two birds with one stone by increasing access to space in the choicest locations for both housing and jobs. Much of this comes down to better urban planning. Landowners in dense cities who prefer sprawling residences more typical to the suburban landscape would be financially liable for this excess. In short, they would be paying for the housing that doesn’t exist due to poor urban planning. In a piece for TheEconomist, Edward Lucas details some of the more compelling arguments for a land value tax, which many economists agree would have a socializing effect on the economy. It is worth mentioning here that the land value tax idea is not unprecedented, though it may sound foreign to many Americans. According to Lucas, “more than 30 countries have some form of land-value taxation.” Moreover, many Americans are unaware of versions of the land value tax that currently have a shaping influence on policies at home. In the comments section on Cutler’s article, Joshua Vincent, the director of the Center for the Study of Economics, reminds readers that “over 20 cities and counties in the USA use a form of Henry George’s land value tax.”
But there are obvious perceived barriers that are worth consideration, as well. Industries that require enormous physical space would lose in a dramatic transition to full LVT from the current tax system. While many environmentalists may not have much of a problem seeing golf courses and huge parking lot car dealerships pushed to the edge of financial viability, more would perceive problems with the way that the same policy might make public services, like parks, less feasible. Some may argue that public services like this would not be affected, since the land value tax would only be levied on private land; however, in an era where government institutions are being increasingly defunded, it is easy to see obstacles that would arise from land set aside as exempt from taxation.
In other instances, one might speculate that a land value tax could inadvertently encourage practices that do more harm to the environment. Lucas gives the example of “urban homeowners with gardens,” who may feel pressure to develop their land to offset new expenses that the land value tax would impose. There is a give and take here, for while it is true that some urban retreats like this may disappear under a land value tax system, it would also encourage a smarter management of urban resources. Perhaps this urban garden is merely transplanted to the rooftop, thereby creating innovative green spaces, opening urban housing to a former city commuter, and reducing car exhaust to boot.
Another key distinction is one of moving from public ownership to community collaboration. As Visualizing Earth Sharing explains, there are many potential economic and social benefits to the land value tax. The public could still protect ground-level gardens and urban farms as part of greater community infrastructure, and because there would be a strong financial incentive to use space well, rooftops and other parts of buildings could be used to grow food. Without taxes on regular people’s wages, hiring people to work in/on urban farms would be less expensive, too. More people would be able to live near the urban farms that employed them, for a rent that was compatible with this type of employment. Building owners might even use such activities to attract urban tenants longing for more green in what is now a concrete jungle. Cutler concludes that modern developments such as automobiles, suburban sprawl, and greater home ownership have made George’s ideas less relevant in terms of igniting an overhaul of the tax system.. While these things may have helped ease absolute poverty to some degree, they have resulted in an environmental nightmare that has slowed material progress and left us isolated in suburbia. Furthermore, land prices and rent in suburban areas are still rising faster than wages. The land problem is just as damaging as before; we’re just less aware of it.
The increasing polarization of American politics–especially evident in the rise of more radical political agendas such as those of Donald Trump, Ted Cruz, and Bernie Sanders–suggests that citizens are pushing with more energy to move the pendulum away from the status quo. And, as new initiatives like Obama Care have demonstrated, any new, paradigm-shifting regulation will inevitably be a work-in-progress. Things are changing in unpredictable ways, though. It is more important than ever that we start to think about fundamental issues such as restructuring our tax system, not just in terms of how high or low taxes are, but what types of activities are taxed. On Earth Sharing, we back the spirit that George promoted in his advocacy for a land value tax: to create a world in which everyone can participate equally in prosperity rather than one in which the influence of speculative practices works to enrich the wealthy at the detriment of progress and environmental justice.
On July 9, 2016, EarthSharing.org is hosting a conference in San Francisco around this topic. The conference is titled The Recession Generation, and will focus on what young people in particular can do to find gainful employment while making a difference for a number of good causes. If you are interested in participating, please let us know: firstname.lastname@example.org/files1. There is currently an early bird discount for registration. If you have any questions or concerns, please let us know how we can help.
* In fact, modern economists who have studied George’s theory of boom bust cycles actually believe that rising land values create the incentives necessary for sprawl, and at some point peripheral land is actually over-supplied with basic infrastructure. This counterintuitive oversupply actually causes land prices to drop, but prices can’t just smoothly level off because loans were extended on the assumption that land prices would go up forever. Once this illusion is exposed as nothing more than irrational exuberance, the market panics; the collateral for all loans (land) is suddenly not worth what everyone thought it was. The land value tax would reduce the price of land because the return to speculating on its rising value would be taxed away. As a seller you would not hold out decades for a higher price if the rising land value was continuously taxed away.
How can we reduce pollution globally? It’s important that we not only ask individuals to change their personal behavior but that we also change the incentives under which they operate. We should tax the use and abuse of natural resources. We should make companies pay taxes in proportion to how much they pollute. This would give them not only a moral reason to pollute less but also a financial one.
One of the major causes of pollution is urban sprawl. Sprawl is caused when central locations are not used efficiently and people are forced to outlying areas as a result. The best way to curb sprawl is to tax the value of land so that owners of central locations will use their land efficiently, making the land available for the otherwise would-be sprawlers. To learn more about taxing the value of land, see our illustrated article Visualizing Earth Sharing.
Clickable text version
Pollution is one of the top ten dangers to life.
Table: Risk factor, deaths in millions, percentage of total: 1: Tobacco use: 1.5; 17.9 2: High blood pressure: 1.4; 16.8 3: Overweight and obesity: 0.7; 8.4 4: Physical inactivity: 0.6; 7.7 5: High blood glucose: 0.6; 7.0 6: High cholesterol: 0.5; 5.8 7: Low fruit and vegetable intake: 0.2; 2.5 8: Urban outdoor air pollution: 0.2; 2.5 9: Alcohol use: 0.1; 1.6 10: Occupational risks: 0.1; 1.1
Studies correlate nitrates in bacon, drinking water, etc. (from modern farming practices) with harm to the pancreas, increased risk of diabetes mellitus, as well as Alzheimer’s, Parkinson’s disease, and more. So… Care about what you eat and learn where it comes from. If you can’t afford organic, at least remember that how animals are reared will affect you, and may come at a high price. Source: http://sciencedaily.com/releases/2009/07/090705215239.htm Pollution can make you fat
Studies correlate air pollution with cells being less able to cope with free radicals, causing stress due to generally poorer health . So… Exercise! Walk more! Get fit! Studies also show that physical exercise helps your body fight back, compensating for the damage due to air pollution. Sources: http://sciencedaily.com/releases/2015/03/150324210045.htm Pollution makes it harder to breathe
Studies correlate air pollution with damage to brain cells, leading to increased autism in children, unhappiness in all ages, and anxiety and decreased brain function in middle aged and older people. So… Use your brain while you can! Understand the bigger economic picture: Why are we so messed up that we would poison our own air? And how can we make a better world? Learn the economics of wealth and poverty: http://understandecon.com/igivetest/register.php
This is Audrey. Audrey is a high achiever, likes nice things, and is lots of fun to be with. Her goal is to have a nicer house. She likes to share things, but her house will be her own.
Audrey has no interest in history or politics which is ironic because she causes them. Why? Because the desire for your own place is the driving force behind human history.
This is Audrey’s current house. Her parents grabbed it when it was cheap. Since then, house prices have skyrocketed, so it’s a nice little nest egg.
The woman in the picture cleaning Audrey’s steps is Jaanai. Jaanai attended the same college as Audrey and got the same grades. but Audrey got a good job, and Jaanai didn’t: she wanted to be an architect, not a cleaner. So what went wrong?
This is Audrey and Jaanei’s college. Audrey spent her evenings networking, and developing a wide range of interests. After graduating she landed an unpaid internship at a prestigious company. Now she is climbing the career ladder.
Unlike Audrey, Jaanai spent her evenings working as a waitress. She thought she could pay her way through college. But an architectural degree is very long, and she miscalculated. She had to drop out and take another job.
The problem? Jaanei had to find $900 in rent every month. Whereas Audrey is free.
Jaanei would have been a really good architect. She could have built Audrey her dream home. But Audrey will never see that home, because Jaanei has to pay too much rent.
Audrey and Jaanei’s story is repeated a billion times around the world. Some people are free to reach their potential and some people are not.
Let’s look at how it all began.
How it all began
The story of mankind is the story of a hundred billion Audreys: we all want our own home, where we don’t pay rent to anybody.
Originally this was not a problem. There was plenty of land. If somebody said “this is my land” people could just say “OK” and move somewhere else. So mankind spread across the planet (See the appendix for details.)
You could walk almost anywhere. There were no borders, and the ice age was ending, so there were convenient land bridges/ As the ice receded more land became available.
But some land was much better than others. Soon Audrey’s ancestors were fighting over the best bits, like the warm fertile coasts and rivers of the middle east. Often they were willing to share the land, but only if Jaanai paid them rent. Because Audrey got there first.
But once land was scarce, Jaanai’s ancestors could not move on. They had to pay Audrey’s ancestors rent. This changed everything. Audrey’s ancestors were now rich, and Jaanei’s ancestors were now poor.
Audrey’s ancestors no longer had to be “better” to own the land: they could pay other people to do the fighting and thinking. All they had to focus on was keeping the rent coming in.
Since kings own the land that people need, people have to do what they say. So even those who disagree with the king become his unpaid servants.
Unpaid servants can never reach their potential. They cannot make their own decisions and they cannot invest in their own future.Just as bad as the lack of investment is the lack of critical thinking. Kings must discourage people from questioning their authority. A third weakness, besides the lack of investment and the subjugation, is war. The quickest way for a king to increase his power and income is to have a war: grab more land and collect more rent (called taxes). But wars are expensive and destructive.
The combination of no investment and periodic wars meant most nations were dirt poor and stayed that way for thousands of years. Some nations however won the wars, and gained more land. This made it easier to win the next war. Gradually kingdoms became empires, and empires grew bigger.
But the unwillingness to share land made the empires weak. Pliny the Elder (the Great Roman statesman) identified the problem:
“latifundia perdidere italiam”
(“the great estates destroyed Italy”)
Every rich person wanted to grab land; soon the land was covered by a few gigantic estates. These estates were so big that they became self sufficient. They no longer cared what happened in the city of Rome. So, Rome became weaker and weaker, and eventually fell. Other kings grabbed the land.
The common people didn’t like this endless war and poverty. A lot of them preferred the teachings of “holy men” who said we should share. But the words of “holy men” could be used selectively, allowing rulers to say “we must be the chosen people” and grab even more land.
Eventually “new” lands were discovered (such as America), leading to more land grabs.
Gold (and other loot) from America allowed Europe to finance even more land grabs. Soon Europe had the biggest empires of all.
Britain grabbed the most land, because as an island it had the best navy. France grabbed the second largest amount because it had Napoleon.
Africa was a popular place to grab land, as it was nearby. The Europeans just walked in, measured it up, and took almost everything.
The Europeans were still fighting each other, of course. In this picture the German leader tries to grab all of Europe in the First World War .
Meanwhile something amazing was happening in America.
Earlier we saw how concentrating land is economically inefficient, as the poor people cannot reach their potential. The people who moved to America learned from this: they decided to have no kings, but to share the land a little more. So America quickly changed from just another colony to being the most powerful nation on Earth.
But the same old forces still applied. Americans who grew rich grabbed the land. America produced a different kind of king: the global corporation. Big farms bought smaller farms. Railroads bought land for the rails plus a lot of land on each side. Businesses that did not need land found ways to influence the government (the effective landowners) and get favorable rules. This picture shows Standard OIl, a corporation that grabbed most of the oil bearing land and made everybody else pay.
And so history continues as it has always done, as one big land grab. That is the history of the world in a nutshell. Like children, we often do not want to share. Children fight over sweets, but adults fight over land. Because whoever grabs the land wins.
So when Audrey wants to own her house without paying rent, and Jaanai has to pay too much rent, they are acting out the history of the world, and ensuring that it continues as usual.
The problem with grabbing too much land
1. Even the rich eventually lose.
People with the most land always want more. So the land, especially the most valuable land, goes to fewer and fewer people.
The game of Monopoly (originally called The Landlord’s Game) was invented to show why this is a bad thing. If you don’t share the value of land then one by one everybody goes bankrupt.
It’s fun for the winner, but only for a short time. Because once everybody else is bankrupt there is nobody left to give you money, and it’s game over. Society ceases to function.
2. Even when they win, they lose.
Being a king has its downsides. You can never sleep easily. Somebody somewhere is always out to kill you: they all want your job.
Worse, by keeping other people poor you stop scientific progress. So when a really big problem appears, you can’t solve it. If the next kingdom is more efficient, you lose. And if you get sick you are more likely to die.
Audrey will never get the house of her dreams because Jaanai could never become the architect she was destined to be.
All those poor people who can’t pay their rent could have been doctors and scientists, architects and great thinkers. They could have solved our biggest problems. However, they never reached their potential, and that hurts everyone -even the rich.
The Rise of Earth Sharing
After thousands of years of war and poverty, things did began to improve a little. Science began to advance. Hunger began to go down. Why? Because a few more people gained the freedom to reach their potential.
Gradually more people gained some land. They then created laws to reduce poverty. This gave more people the freedom to reach their potential. More people could get an education and then invest in their futures. They created businesses, machines and ideas. Each advance led to another advance, so progress accelerated.
How people began to break free
How did more people gain land when the king wanted to be all-powerful? Largely due to war. Not sharing leads to war, and war shakes up the economy. After each war a few more people gain land: this is why:
Wars drive down incomes, so landowners have to charge less in rent. But after a war the government has to rebuild, so more people have jobs. There is a brief period when land is cheap but people have more jobs . Remember Audrey’s parents? They bought their house soon after World War II, before prices went up and jobs went down again.
So many people gained a share of land after World War II that unprecedented numbers of people were free to try new ideas. Science and technology exploded, as did funding for new science. People could see a better world.
Those who control the world’s resources are still very powerful. There will be setbacks. But Earth sharing is happening, slowly. And every tiny step makes the world a better place.
Most people are kept back from reaching their potential because they don’t have their share of the planet. They cannot take chances and invest in their future because they must spend all their spare money on rent just to live.
We are losing generations of scientists and artists and thinkers because they are not free to develop. This hurts everybody, including the rich.
Life can be many times better for everyone, wonderfully better, if we just let everybody reach their potential.
Appendix: early land monopoly
On territoriality (i.e. grabbing land as your own):
“As with other vertebrates, the territoriality of protohominids and early hominids had a significant influence on their behaviour. In the case of primates quite generally, the relevant territory is that of the band as a whole, i.e. the group’s territory. […] the defence of the territory is taken on by all the fit members (males) in the group. However, while both protohominids and their arboreal forebears were group-territorial, the nature of their territories differed. When the ancestors of humans became hunters, their group territories went from being relatively small and vegetation-dense to being large and open, encompassing the whole of the area in which they migrated throughout the year.” (“Too Smart for Our Own Good: The Ecological Predicament of Humankind” By Craig Dilworth, Cambridge University Press, 2009, p.172)
On fights over who controlled the land:
“Attempts to exclude others and utilize a territorial system provide advantages if there is competition for available resources. Among early hominids this was probably the case. Starting out as omnivores, they probably competed with members of the same species, and with other species, for the same food sources. Thus, if members of one group were able to exclude others using some type of territorial strategy, they were preserving more resources for themselves and thus enhancing their fitness.” (“Human territorial functioning: An empirical, evolutionary perspective on individual and small group territorial cognitions, behaviors, and consequences” by Ralph B. Taylor, Cambridge University Press, 1988, p.37)
On how people left when other land became available:
“[There is no evidence that early humans migrated due to learning new skills.] However, as a result of the warmer climate conditions, the habitats to which East African australiopithecines became adapted may have shifted ever further away from the equator. Although paleobotanical evidence for vegetation conditions is largely absent in the Pliocene, it can be assumed that the southern part of the East African Rift Valley might have served as a prime corridor linking eastern and southern Africa.” (From the chapter “Origins of human territorial functioning” in “The Global Prehistory of Human Migration” by Immanuel Ness and Peter Bellwood, Wiley-Blackwell, 2014, p.11)
On how increasing wealth led to increasing investment in keeping others out:
“Given the emergence of elite groups marked by warlike status kits, it would be very surprising if competition and wealth accumulation did not extend to land and to the crops and stock it supported: the substantial palisades around the major settlements presumably served to keep the stock inside and the raiding party outside.” (“Prehistoric Farming in Europe” by Graeme Barker, Cambridge University Press, 1985, p.150)
Notes and images
The names are fictional, but the situation is a simplified composite of a common scenario: one person is able to get a better education due to parents not having to pay a mortgage or rent. The name “Audrey” means “noble strength.” The name “Jaanai” means “answering afflicted, made poor”.http://www.meaning-of-names.com/israeli-names/jaanai.asp
The house steps image is from the out of copyright magazine Punch, October 3rd 1917, via Project Gutenberg.
The school image is the author’s own work, based on the public domain image “Arsenal Technical High School” from the Historic American Buildings Survey, via Wikimedia.
The migrations map is “Human migration out of Africa” by “Ephant”, Creative Commons 3.0 (sharealike), via Wikimedia.
The fertile crescent sketch map is from the out of copyright book “Ancient Man”, by Hendrik Van Loon, via Project Gutenberg.
Other sketch maps and similar graphics: from the out of copyright book “The Story of Mankind”, by Hendrik Van Loon, via Project Gutenberg.
The painting of Columbus is from “The return of Christopher Columbus; his audience before King Ferdinand and Queen Isabella.” by Eugene Delacroix (who died in 1863), via Wikimedia.
The slaves painting is from “Israel in Egypt” by Edward Poynter (1867), via Wikimedia.
The crusaders image is from the out of copyright book “The Story of the Crusades” by E. M. Wilmot-Buxton, via Project Gutenberg.
The Cecil Rhodes image is: “The Rhodes Colossus” from the out of copyright magazine Punch, December 10th 1892, via Wikimedia.
The assassination image is from the out of copyright book “Beacon Lights of History, Volume X, by John Lord” via Project Gutenberg.
The dying aristocrat image is from the out of copyright book “History of France” by Guizot, Volume I, via Project Gutenberg.
The Pliny the Elder image is public domain, via the National Institutes of Health, via Wikimedia.
The Kaiser eating the world is “Guerre 14-18-Humour-L’ingordo, trop dur-1915”: an out of copyright propaganda image from 1915, via Wikimedia.
The Standard Oil Octopus is from the out of copyright magazine “Puck”, v. 56, no. 1436 (7th Sept 1904) via Wikimedia.
The Landlord’s Game is an out of copyright image (from 1906) via landlordsgame.info.
The image of carving up the world is from the out of copyright image “plum pudding” by James Gilray, via Wikimedia.
The other charts’ copyright details are printed on the charts.
True, before Pythagoras there were accountants and architects who used math, but Pythagoras took it much further: he said that math could explain everything: you don’t need tradition or ignorance, you can measure it all. All science is based on measurement.
It took thousands of years for the world to adopt this approach, but when it did, knowledge increased exponentially, and so did wealth.
So Pythais’ investment of her time and assets in her son was probably the greatest investment ever. Pythais never saw a penny of the results, but we are all seeing it now.
Investment in modern times
Investing in people and ideas can create an explosion of wealth. Take Alan Kay for example.
Alan was inspired by ARPA, a body devoted to pure research, not to making money. When he worked for his next company he persuaded them to put ideas before short term profits:
“[We] had a written agreement with Xerox that they would not try to tell us what to do for the first five years. That turned out to be absolutely critical. But because they had that, you know, we basically went after the ARPA dream.”
The result? Alan and his friends created the personal computer, and much more. That invention alone added 30 trillion dollars to the world (so far).
“25 of us at Xerox PARC – create something that has brought almost 30 trillion dollars of new wealth to the world from the efforts of 25 people. […] There are many, many lessons to be learnt about what real innovation is actually all about and how to make it happen.” – Alan Kay
The secret to investment
The secret to investment is to create things that create more things. That allows amazing compound growth. For example, if you grow by just 7.5 percent per year then you create ten times the original wealth in just over 30 years.
The next thirty years gives ten times that result, and so on.
If you want fabulous wealth for everyone, put people before short term profit. Vote to share ideas, to share land and other natural resources, to help the poor. Invest in education and pure research. And if someone says “we’ll lose money” ask if they have heard of compound growth.
Because if we don’t think of the long term, then we are not thinking at all.
Footnotes and references
All links retrieved 5th March 2015, 10-11 am GMT The year 1400 BC Phoenicia was a set of cities around the coasts of the Mediterranean. It was arguably the first “modern” nation: that is, they lived by trading more than farming. So that’s a good starting point for economic growth. They gave the Greeks their alphabet around 1700 BC, settled Cyprus around 1500 BC, and made a treaty with Egypt around 1300 BC. Later they were the first people to sail all the way round Africa, and the single Phoenician city of Carthage as the biggest threat to ancient Rome (hence Hannibal and his elephants). That’s why we don’t have Phoenicians any more: just Google the phrase “Carthage Must Be Destroyed!”
The year 1400 is also chosen because, according to the Bible, it is the date when Moses produced his land laws. These are extremely interesting from an economic viewpoint (he taxed land, not work), but that’s another story. Incidentally, the wealthiest cities in Israel were Tyre and Sidon – Phoenician cities.
The picture of Pythais As a forgotten wealth creator there are no paintings of Pythais. But there is a famous play by Euripedes called “The Phoenician Women”, about how the good people are ignored and forgotten while the bad people fight to steal the land. The painting (“Farewell of Oedipus to the Corpses of His Wife and Sons” by Édouard Toudouze) illustrates that play. It shows Antigone, wife of Oedipus, mourning the death of his brother, who died fighting to be king over the land, and of their mother, who then died of a broken heart.
Pythais the mathematician?
Pythais was a Phoenician, the wife of a trader. We don’t know of anyone else at home at the time, so until further information appears we must assume that she handled his accounts: that she understood maths. Given the importance of early childhood development, she must have played a big part in Pythagoras’ mathematical genius.
Pythagoras the greatest thinker
Pythagoras was the first man to call himself a philosopher, a lover of wisdom. According to Aristotle (in Metaphysics 1:5) his followers taught that “the principles of mathematics were the principles of all things”. This insight was arguably more advanced (that is, more precise and more useful) than any of the later philosophers, and was not confirmed until the theoretical physics and high energy energy experiments of the twentieth century.
Pythagoras invented math
According to Aristotle (in Metaphysics 1:5) his followers were the first people to take up mathematics. True, the Egyptians knew some maths before that, e.g. for building pyramids that don’t fall down, but the Pythagorians were the first to “advance the subject” and be “saturated with it”. They were the first to see maths as a tool to apply to everything.
Math and global wealth For thousands of years, people thought you become rich by amassing property: by taxing, stealing land, having a monopoly, etc. But that is only true in the short term. In the renaissance and enlightenment people began to demand that the numbers should add up: they wanted numerical proof. Adam Smith did the sums, and discovered that real wealth comes from trade, from specialisation, from taxing ground rents instead of income, and so on. He invented economics: he applied maths to nations. Hundred of years later our governments still do mathematically stupid things (like taxing work instead of land) but gradually we are learning to add up, and so our wealth is increasing.
Pythagoras and earth sharing
Though Pythagoras is known for his mathematics, his main concern was in creating an ideal society, in which everything was shared. This was not simple communism as such, because the movement expanded until it ran entire cities, so it was a sophisticated economic structure. But it ended when Cylon, a man listed as a Pythagorean city administrator, set fire to some or all of the Pythagorean headquarters, sending the whole movement into disarray. Presumably he had some kind of conflict with the leaders over how he should administer the land. So now you know why “Cylons” are the bad guys in Battlestar Galactica.
Image: “deviantartmaster07”, licensed for noncommercial sharing. For the history of Pythagorians, see “A History of Pythagoreanism” by Carl A. Huffman, Cambridge University Press 2014.
Pythagoras statue photo Taken by “Galilea” and uploaded to Wikipedia on a “sharealike” licence.
Photo by Marcin Wichary, vial Wikipedia, under a sharealike licence. Alan Kay quote from an interview with Mike Richards for the Open University TU100 computing course, block 2 part 2, .
Pythais was probably your ancestor Statistically you are probably descended from the early Phoenicians. This is why:
You have two parents, four grandparents, eight great-grandparents, and so on, Every generation doubles. If no relatives ever marry then every 20 years back (because your ancestors married young) your ancestors double: in 100 years you have 2x2x2x2x2 = 32 ancestors. Another 100 years is 32×32 = 1024 ancestors. Another 200 years: over a million ancestors. Another 200 years, to AD 1400, over a billion ancestors, more than the population of the world back then. So you would be descended from everyone.
Of course in reality people tend to marry people nearby, so after a hundred years there is a lot of overlap. But people travel: it might take just 200 years for everyone to be descended from everyone in the area, then an incomer might marry and have children. Two hundred years all of your group probably includes her as an ancestor, so they also have all of her ancestors. In this way, the further we go back the more likely it is that we share all the ancestors from farther afield.
And the Phoenicians travelled a lot. They were the first mainly seafaring nation: they met and intermarried all over the ancient Mediterranean. So if you have European or north African ancestors you probably also have Phoenician ancestors, and if you go back a couple of hundred years more then you are probably descended from every Phoenician at the time (or at least, those that had children).
So while we cannot prove that you are descended from Pythais, if you have any European or north African ancestors there is a good chance that you are.
(Note: some people say the Pythagoreans were celibate, which would have limited Pythais’ descendants. This is not true, They just tried not to be sex obsessed. But they encouraged people to have children, especially to procreate in the winter months, when there was less work to do, and children could then be born in the late summer when there is plenty of food. see “A History of Pythagoreanism” by Carl A. Huffman, Cambridge University Press 2014.)
Phoenician picture Adapted from “Phoenician traders on the coast of Britain” by Lord Leighton (now out of copyright)
Money picture Adapted from “Money” by “Patyvo” from the stock.xchng photo site
Compound growth chart
Adapted from the chart by “MartienTheRock” at Wikimedia. Creative Commons 2.0 sharealike.
All the financial assets of planet Earth are current valued at $156 trillion.
Global GDP Adapted from “Contours of the World Economy 1-2030 AD: Essays in Macro-Economic History Paperback” by Angus Maddison, via the version used by Michael W. Kruse, then updated via the CIA World Fact Book
Where the numbers come from
Although Pythais lived around 600 BC, Phoenician trade really took off around 1400 BC. We’ll start with effectively nothing: minimum subsistence level (below which you starve to death) is around 400 dollars per year (today’s money, the famous “dollar a day” a few years ago). An easy to achieve growth rate is 2 percent: many modern nations exceed that, despite often investing in the wrong things. We are actually doing a lot of things better than our ancestors did. Here I simply suggest that our ancestors do a few things we do not (trade, education, opportunities for entrepreneurs, etc.)
Planet Earth pic
Adapted by the author from public domain NASA imagery