How to Effectively Make Dreams Come True

Be A Visionary

“I have a dream that… little black boys and black girls will be able to join hands with little white boys and white girls and walk together as sisters and brothers.”

Martin Luther King’s speech was ‘I Have a Dream’, not ‘I Have a Plan’. There is a secret to inspiring people the way MLK did, a magic that you can possess and be a part of with enough focus.

A vision is the constitutive feature of a force of change. A movement is the collective behavior resulting from an idea that persuades people to work toward a common goal. The most important feature of a movement is the communication of that vision in such a way that it galvanizes and coordinates action. When that happens, people spontaneously work together, like once randomly-strewn iron filings suddenly aligning around a magnetic field.

Once the vision is perfectly communicated, the right action becomes obvious and spontaneous.

Related image

Where Groups Go Wrong

In a 2015 survey of over 900 non-profit boards, researchers at Stanford University concluded that the primary thing these boards should do to achieve their goals is to first define them. The failure to do so is the primary reason for failure. Indeed, by definition, a goal can not be accomplished if it is not defined. This may seem obvious, but very intelligent people have great difficulty in grasping its ramifications. For example:

An NGO with a beautiful and charismatic director obtained a great deal of outside funding without thoroughly defining the organization’s vision. This director had figured out how to tell wealthy donors what they wanted to hear, regarding curbing climate change. Even while believing that she was making progress, she was flexible on every issue and, in truth, optimized her activities for one thing and one thing only -money.

There was no guiding principle. The result was a 300 percent increase in donations, millions of dollars, in a very short period of time. Yet, everyone in the organization was racking their brains as to what to do with all of the funds. They knew they want to do ‘good’ but in the absence of a vision, there was a great deal of inertia and very little focused action. Despite the funds, the organization went bust in a few years. They had assumed that having more money than they knew what to do with was a good problem to have. But as the rapper Notorious B.I.G once said “Mo money mo problems.” [sic]

A famous philosopher, who will also remain anonymous, with many very technical and detailed philosophical ideas, dreams of just having enough to host low-budget conferences for coalition-building. Faced with the decision of how to envision the results of these conferences, what those in his coalition would realistically do to further the vision, he quickly becomes overwhelmed and depressed. To regain a sense of progress and improve his mood, he tries to focus on small things he can do without having to face the tough questions. He longs for a strong-willed individual out there who can move mountains, much like the charismatic director mentioned above. He falls into the trap of believing that money is the limiting factor in getting his ideas off the ground when in reality it’s his lack of vision that fails to attract funding.

He removes the possibility of receiving the help of a go-getter by failing to accept that no progress can occur without a clear vision. Conversations with these would-be empowered leaders quickly turn from the overall vision back to tactics, almost imperceptibly. Would-be volunteers, supporters, leaders, etc go along executing random tasks in the hopes that things will get better, but that is impossible. Vision is being unconsciously avoided by the person with the authority to make decisions. Subordinates of all types are less likely to be able to articulate a vision themselves, but even if they were, they would not have the necessary authority, in association with our philosopher at least, to set that vision.

Another group is a foundation with a sizeable corpus which aims to achieve a particular social reform. However, it is afraid to focus its energies on a particular strategic outcome. Its board knows the policy change it would like to create in the world, but when asked to think strategically about influencing outsiders with political or cultural influence, the conversation quickly devolves into one about tactics, aesthetic preferences, personnel, and other considerations that can only be answered definitely in light of a strategic vision.

One philosophy among the board is that the foundation should be considered a family or a social club. Those receiving funds should be paid to be who they are because there are not many advocates out there and they need support. Those advocating the position are not intentionally harmful or nepotistic; their actions flow from a desire to treat these advocates with decency and respect. They are, however, misguided. Another philosophy that is prevalent is that this group should act diffusely, actively resist focus, and try a bit of every tactic. The idea is ‘who knows what will ultimately work? A shotgun approach is likely to be the best one.’ These vague perceptions reinforce one another and eliminate the possibility of making a bona fide difference that would intuitively meet the board’s deepest aspirations. A goal can not be attained, a question can not be answered, a theory can not be tested, without first defining it.

These groups need a well-defined vision. They need to drop the superfluous and focus on the strategic.

Inline image 1

Know What You Want

People go their whole lives believing they want something only to find that it did not satisfy them in the way they thought it would.

A man decides that he wants a Lamborghini, and it becomes a fixation that is seemingly at the center of everything he does. He gets a job he hates, working for people who treat him poorly and sacrifices a lot of day-to-day happiness for his goal. He envisions the beautiful car every time he laments his mistreatment. Ask him why he wants the car, and he might respond that he wants women to desire him, a symbol of his masculinity and financial security. Ask him again why he wants these things and perhaps he will say that he wants to have the freedom to live a life unshackled from employment and to share it with someone who loves, supports and challenges him.

How far have we now come from the original goal? And how distorted and misguided a goal was it considering the true ambitions that the man held for himself? This is but one example of countless personal priorities and broader social structures from the level of small business to political decision-making. Adherence to the Delphic maxim “know thyself” is to be able to cast off the distractions disguised as goals and locate the real outcome you seek. The truth is that personal goals scale up to affect everything, and are in fact a prerequisite for good decisions.

Image result for rich and sad

How can we achieve great things and accurately measure our progress if our goals haven’t been clearly defined from the outset? People often speak of efficiency in a vacuum, without defining to what end it is efficient towards or somehow expedites the realization of a goal. We feel strongly that we know what we value, that it’s obvious, and that it is really in line with what will ultimately make us fulfilled. Yet, the tasks we set for ourselves can be horribly misguided and misaligned with what we truly want, had we done the hard work of thoroughly reflecting on it.

For example, people tend to use their daily to-do lists wrong, by identifying a series of random tasks they believe they need to work on. Actions at the level of tasks are essential, but they must be aligned with a larger vision to be worth doing. Tasks are manageable and achievable today, goals are aspirational and long-term. Outcomes go beyond a single action, and encompass a vision of what completion looks like.

Goals Must Be Easy To Envision

Visions are visual. They motivate us at a level deeper than words. We literally have to be able to imagine them visually in order to motivate action. They must paint an idea of the type of world we want to create. For the hiker and mountain climber, tasks include traversing trails, clambering over rocks, fording streams, and the goal or outcome is to reach the peak. The vision is the view overlooking the summit and feeling a sense of accomplishment.

This vision is set with reference to the climber’s values, and so it is with any goal or outcomes we want to achieve; they must reflect our values. Without being aware that we hold different values we can neither prioritize them nor have a chance to synthesize.

Concise, Elegant Goals Automatically Prioritize Action

Richard Branson famously said of a business goal that “if it can’t fit on the back of an envelope, it’s rubbish.” Being able to easily understand a goal in tangible and non-abstract terms is a vital first step before people can get excited about it and take meaningful steps toward it. Beyond this, productivity depends on simple tasks — the what — that can always be referred back to a central goal — the why.

In the private sector, consumers respond first and foremost to the values imbued in a product, not to its technical features and points of difference. Apple doesn’t open any of its communications with the actual details of its newest iPhone or computer; it says things like “We believe in thinking differently. We challenge the status quo with products that are beautifully designed and simple for anyone to use.” This philosophy is what drives its immense popularity, and its central goal as an organization is also its most prominent public message.

Author Simon Sinek has discussed at length and authored books on the subject of purpose in business and leadership. Sinek rightly points out that very few people or organizations know why they do what they do.

And by “why” I don’t mean “to make a profit.” That’s a result. It’s always a result. By “why,” I mean: What’s your purpose? What’s your cause? What’s your belief? Why does your organization exist? Why do you get out of bed in the morning? And why should anyone care? As a result, the way we think, we act, the way we communicate is from the outside in, it’s obvious. We go from the clearest thing to the fuzziest thing. But the inspired leaders and the inspired organizations — regardless of their size, regardless of their industry — all think, act and communicate from the inside out.

Sinek describes how in the human brain, the neocortex corresponds with the “what” level of language, rational and analytical thought. Dig deeper and you will find the limbic system, responsible for feelings, behavior, and decision-making. The implication of this is that emotions, values, visions, drive behavior far more than information. “Reason is, and ought only to be the slave of the passions” – David Hume

The Best Managers Don’t Manage

People don’t need to be managed, just inspired and aligned with a vision. Humans are not mindless automatons without needs and wants of their own. They are ends in and of themselves. You cannot program them like a computer to do your bidding, or whip them into submission. To influence, to win hearts and minds, you have to inspire people. You have to value them, you have to give them the freedom to choose your vision as not only in their personal self-interest, but in the interest of a greater purpose.

Consider recent college graduates seeking to make a difference. If the organization is not aligned with a clear vision, they will grow disillusioned and a great deal of talent will be lost. An organization may chalk up the result to a failing on the part of the subordinate, but it is more likely to be a failing on the part of the organization as a whole to organize its priorities. Managers are usually in a safe position to blame their subordinates, but we have good reason to assume that it is a deeper problem with the organization itself, especially if criticism lies along ageist reasoning. Their impatience is vitally important to pushing organizations in the right direction.

If a coherent, concise strategic vision can be presented, competent subordinates will be empowered and encouraged to work toward that end. They won’t need supervision, only support. They will seek out the needed feedback and critique with a receptive and open mind. This creates an environment of trust and safety, which has been empirically shown to be the most important factor in creating effective teams.

To rally the troops, they must be aligned on precisely why they are working together. Why does it matter and what is their individual role? If they can infer that immediately, without someone barking orders at them, they will search for ways to best use their skills; they will give everything they have for that purpose. Those lower on the totem pole in an organization need to have an emotional stake in outcomes if they are to be achieved in the most efficient and vigorous manner possible. They need to feel safe and protected by those above them in the hierarchy.

If people feel like pawns in an unethical and unfulfilling enterprise, their reliability will be greatly diminished. That said, even if the higher-ups mean well, and their cause is just, this is not enough. People literally have to be able to hold the vision of a desired goal in their mind. It has to motivate them more than money. If your vision is articulated in a manner that does not start with its overall importance, and instead begins with a proposition that is overly complex, technical, or laden with tactics, it will obscure the vision; those you need help from will be unmotivated and ineffective.

Our hearts have to be in the right place, first and foremost, but our analytical brains do as well. Subordinates quickly suss out what an organization is ultimately trying to achieve, and if the organization behaves in irrational, disorganized, and whimsical ways, this will frustrate subordinates. This is especially true of those with a great deal of leadership potential because these are the individuals who care the most about whether they are making a difference or not.

Game theory tells us that preferences must be complete and transitive in order to meet a basic definition of rationality, meaning they are ranked logically with a clear order of preferences, even if some outcomes are equal in weight to one another. With this in mind, every person and organization should be capable of defining meaningful goals within a value system.

Effective Governance

The Carver model of governance is a system of guidelines for boards to align interests in effective ways. It suggests that proper evaluation is “impossible unless the board has first stated its expectations and assigned them to a specific delegatee.” Once the board has done its job, effective monitoring becomes possible and is less time consuming, because they know what they are expecting to see proven or unfulfilled. It is up to the board to make sure that they have a coherent vision and then to hire people who can be held accountable to objective deliverables. If goals are left arbitrary, this is a great waste of resources to the organization and inevitably creates unnecessary confusion and conflict.

The point is to maximize accountability and autonomy on specific outcomes that align with larger goals while minimizing micromanagement and supervision. Give the delegatee good parameters and then get out of their way. Let them work their magic. Empower them to come up with creative, expedient, efficient, cost-saving, better-aligned strategies, and tactics corresponding to predefined goals. Don’t breathe down their neck. So long as a few specific objective outcomes are achieved, how they are achieved is irrelevant. Only a few basic ethical and quality control parameters are necessary. Interference in their work is unnecessary. ‘If it ain’t broke, don’t fix it.’

One challenge of studying the literature of goal-setting is an inconsistent use of terms. Goals and vision are used somewhat interchangeably in this article, for instance. The main idea is that a vision is defined and communicated clearly and concisely. It is inspiring and easy to understand. It is implemented in a fashion where all items in a hierarchy do not conflict with the higher values in the hierarchy. Tactics cannot conflict with a goal or else they should be thrown out. Strategies should not conflict with visions, or they should be thrown out, and so on. Use whatever terms you like, but the point is that there is a hierarchy of priorities that guide all action.

The MOST system takes a broad approach to setting and accomplishing such goals. By specifying — from the top down — Mission, Objectives, Strategy, and Tactics, it aligns high-level goals with the day-to-day tasks in a way that shows everyone they are aiming for the same target. General Electric has long been a model of task-setting, with its pioneering SMART system. SMART goals are Specific, Measurable, Achievable, Realistic, and fit into a Timeline.

If an outcome is too large and abstract, as is often the case with nonprofit causes, break these goals down into multiple bite-size chunks, or Goldilocks goals. When breaking them down, don’t lose sight of the ultimate desired outcome.

Common Reasons People Avoid Getting Clear on Goals

One obvious reason people fail to set priorities is simply a lack of focus and mental fortitude. It’s hard to shut off our monkey brains. However, the major impediment to sparking a coordinated social force is the belief that the goal already exists and is self-evident, when in fact it isn’t. People can’t understand why others don’t want to do things their way. They believe that it is obvious what the group is about, and others should just fall in line.

Image result for t is impossible to begin to learn that which one thinks one already knows. – Epictetus

The Vietnam War is a good example of this. In the U.S., the public was never clear whether it was fighting to improve the lives of the Vietnamese, to prevent Southeast Asia from becoming communist, or to make profits for companies that produced military hardware. Some citizens wanted to withdraw, and others wanted to escalate. The latter necessarily saw goals in purely tactical terms of “winning,” but they were unable to articulate what winning would look like.

An organization’s goals have to be so obvious that it is unmistakable.  But most organizations stop articulating their goals at the point equivalent to claiming that the purpose of the war in Vietnam was to win. A standard vague goal of for-profit companies is “to satisfy customers.” A standard vague goal of nonprofits is to “help people”, “end poverty”, or “reduce suffering.” But until a business knows the specific customers it seeks to satisfy and which unstated goals or needs of those customers it seeks to fulfill, it is not ready to begin satisfying them.

In the case of nonprofits, having a goal requires specifying an outcome in terms of a change in the condition or actions of a defined group. In education, these are called “behavioral outcomes,” which generally means new skills or understandings that have been acquired as a result of a learning unit. Teaching does not occur just because a teacher goes through the motions. Teaching implies learning. The same principle applies to the Red Cross or the Sierra Club.  Their goals cannot be vaguely worded statements like “save people” or “protect nature.”  They have to refine them to the point that they can judge whether the experiences of a target group have been modified in the way the organization hopes.

The parameters, delineation, and definition of the goal has to be so meticulously designed and elegantly presented such that it truly is obvious to the point of almost being understood non-verbally. There can be no mistake or it will be impossible to coordinate. It’s sort of like writing a contract; all contingencies have to be accounted for. However, creating a vision is much more challenging because all of these contingencies need to be accounted for in a concise format. Just as a picture tells a thousand words, so should a strategic vision.

Another reason spontaneous coordinated action is often difficult is real ideological differences. Since values are so variable and cause conflict, we run the risk of sacrificing effective goal-setting for the short-term benefit of keeping the peace. We also think we can argue the facts in a vacuum, free from values and goals. Everyone’s interests, aesthetic preferences, and moral compasses point in different directions, failing to satisfy basic game theoretic conditions for group rationality (Arrow’s Impossibility Theorem).

We are told that there is nothing we can do about it except pretend that we don’t have values or biases. Modern culture exhibits a kind of scientific fetishism, embracing the theatrical trappings of science but not the actual philosophy underpinning the scientific method. It is to the philosophy of science what the labcoat-wearing snake oil salesmen on Alex Jones are to actual scientists.

To be objective in academia, people must deny values and purposes, as they are a source of inexorable biases. This presumes that it is even possible to be free of bias. News networks impossibly deny their own bias as well, making it all the more pernicious.

Photo: Gage Skidmore Sean Hannity via photopin (license)

The anti-purpose mentality is so pervasive it is hard to notice. Stephen Hawking, however, was not so subtle when he said “Philosophy is dead”, suggesting that physics can provide us with everything that philosophy does, but better. It may even tell us what we ought to value, that is if we really let the data do all the talking. However, data does not interpret itself. Daniel Dennett wrote: “There is no such thing as philosophy-free science; there is only science whose philosophical baggage is taken on board without examination.”

This anti-purpose worldview can also be observed in the way people intuitively think about history and religion. In a cyclical view of history, events are viewed as recurring, no different than before, merely a changing of the seasons. In fact, novel change is not even possible under such a lens. One doesn’t easily recognize they are thinking this way, but it has important implications. Goals are denigrated in favor of the unalterable status quo. Tasks are favored over outcomes; how something is done is deemed more important than why it is done. Otherwise pointless activities become traditions and are even assigned mystical and religious significance. This is the philosophy of Dilbert’s world. It stands in contrast to a linear view of history which forces us to ask what the ultimate outcomes of our efforts are and if what we are doing now aligns with where we ultimately want to go.

There Is No Technological Substitute For Disciplined Goal-Setting

The ease with which many tasks can be completed thanks to tech is a blessing, but the hidden danger of ongoing automation in our quotidian groove is that it blinds us to the need to still have an overarching hierarchy of focused goals. Having a series of automatic reminders for appointments or intelligent filtering of your inbox doesn’t do anything to help this process. Even our most advanced AI is only going to be able to take you as far as listing all the Lamborghinis for sale within a 50-mile radius; it’s not going to say this is the wrong priority in the first place.

There is a place for plug-and-play algorithms in achieving our tasks, though. Whatever our goals are, privately or in the public sphere, they can be achieved in more or less efficient ways. Why wouldn’t we want scientists, marketing experts, and even artificial intelligence to help with efficiency? We will always be limited in the consistency of our work and in the information we have available to us. So, we should let algorithms work to provide us with solutions to problems that we, most importantly, have ourselves already defined.

Metric Fetishism: A Measure Of A Goal Is Not A Goal

The faux-scientific fetishism mentioned earlier crops up in a similar place. Those seeking to signal their intelligence will fetishize numbers, metrics, and mathematization to the exclusions of purposes and goals. ‘I see numbers. I don’t understand them. The presenter must be smarter than me. I’d better accept that their opinion and their goals are superior to mine.’ This is the ultimate rhetorical goal of someone seeking to mislead with numbers, not to provide earnest evidence.

Photo: MellieRene4 145 – Crunching the Numbers via photopin (license)

For example, gross domestic product (GDP) is often taken as a general metric of economic well being. There could be a hurricane that causes a spike in construction and thus GDP, but you would not conclude that we are better off because there was a hurricane. We could pay people to start digging holes and fill them again, increasing GDP. GDP could even be going up while the median income is going down. We could be breaking windows just to fix them. We could be increasing GDP by reducing leisure time or destroying the environment.

GDP could go up when we spend more money on healthcare than is necessary because insurance is cartelized. In this case, increasing competition in the healthcare sector and efficiency could actually drive GDP down with lower healthcare costs, but we would be better off. GDP doesn’t tell you what our ultimate goal is or if we are any closer to reaching it. Yet, lay people and economists alike constantly slip into talking about GDP as a goal in and of itself. It is but one metric, one that is not really even that useful when discussing our aspirations as a society. We are optimizing our economic policies on the basis of this metric, and it does a lot of harm. Metrics do not tell you what you ought to value.

Why Setting Goals Is Difficult

People are running around thinking about this detail and that detail — an emotive, self-referential mess. We could get a sense of accomplishment from shuffling paper if we were under the illusion that that was our ultimate goal. Institutions, including big companies, do this constantly. They may have been successful innovators in the past, but they fall into the trap of doing what they’ve always done, tactically but not in purpose, getting hung up on outmoded ways of doing things because they forget that it is the ultimate outcome that matters. Eventually, they adapt and get new life blood or they become sclerotic and die out.

A primary reason people don’t prioritize their goals is that it is computationally difficult, mentally and emotionally taxing, and forces us to recognize our mistakes. In a competitive dog-eat-dog environment where management fires people for mistakes instead of encouraging learning, it’s obvious why the topic would be avoided.

It takes a lot of focus, research, time and energy to come to sensible conclusions about what ought to be done. You can feel confused and that you’re not getting anywhere. It’s much easier to just adopt a belief system that is spoon fed to you about what you ought to do than to be the Übermensch, as it were. If the ‘why’ isn’t understood and held above all else, devotion to an ideal becomes about completing random sisyphean tasks.

Why Communicating Goals Is More Critical Than Ever

Just when we thought we had made so much progress purging the world of Nazis and supposedly winning the Cold War, in battling racial and LGBT oppression, we have become complacent. We were so confident that we knew our purpose and had articulated our priorities poetically that we thought the work was done. We let our political parties erode into nothing more than naked self-interest.

Photo: Gage Skidmore Donald Trump via photopin (license)

We’ve rested on our laurels for far too long, and our self-righteous laziness has been disturbed by a series of vulgar and rude awakenings over the last year. The most esteemed position in our society, the person most emblematic of our collective aspirations is a flagrant narcissist, racial opportunist, and fascist.  We are experiencing an existential crisis over who we are and what we believe. And not only that, our political existential crisis is bordering on a real one as the U.S. and North Korea square off over nuclear weapons.

It is not enough that we have rosy abstract ideas of what the world should be or a neat 12-point plan. Our strategic visions need to galvanize emotions and direct spontaneous and well-coordinated action. They need to be concise and instantaneously prioritize certain actions over others, tradeoffs that may be difficult to make but are absolutely necessary.

We cannot merely define ourselves in opposition to Trump. We get rid of him, what then? We get rid of Saddam Hussein, what then? We get rid of ISIS, what then? We get rid of Kim-Jong un, what then? We get rid of this banker or that CEO, what then? We get rid of this director or this bad manager, what then?

Our goals and actions have to point to a clear destination. More than ever, the world needs a vision.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Heather VanCura: How To Ally For Women In Tech

BIL: Oakland 2016 Recession Generation was an Earthsharing.org conference in Oakland, California on July 9th. Heather VanCura spoke about the need for companies and employees in the tech industry to change direct and subconscious behaviors and “ally” for women in tech.

There are myriad ways to encourage more women to take up roles in the ever-expanding tech industry, but policies that attempted to force change could be counterproductive, VanCura said. “Giving people quotas and forcing things on them… people react very negatively to it,” she said. “Just try to focus on being human.”

It was helpful to think of ally as a verb, not a noun, to encourage the idea that small actions could make a huge impact on employment culture for women, VanCura said. Things like being aware of how assignments are distributed, being prepared to change the subject from conversations about sex, and creating normalized expectations about salary negotiation and job competencies all have the potential to create a more positive environment for women.

“Women do not want to put themselves up for a job, they want to be told that they should go for that job. They will not put themselves up for a job unless they have all the requirements listed in the job description,” VanCura said.

 

Photo: wocintechchat.com Women In Tech – 92 via photopin (license)

Almost half of the women who take tech jobs leave within 10 years, and this was in part to an environment in which work traits were interpreted very differently in men and women.

“Some of the feedback that I received from my mentors and sponsors was that I was perceived as a little bit bossy or aggressive, sometimes abrasive, where when I think about it myself, I saw myself as a strong leader, independent, taking the lead, being brave. So there’s two different ways you can think about those types of behaviors.”

In an environment where perception is as or more important than performance, it was extremely difficult for women to succeed solely on the basis of their skill set. “I really did think it was a meritocracy, and I think that’s a big misconception,” VanCura said.

Overall, there is a need to disrupt the natural tendency to make assumptions about people, and to build a culture where everyone is treated as an individual.

“Remember that we are all human. We are more similar than we are different and we can all be the change that we wish to see if we focus on people as individuals and focus on what brings us together rather than what divides us.”

 

Heather VanCura is chairwoman of the Java Community Process standardization efforts at Oracle. She spearheads efforts to transform the JCP program and broaden participation and diversity in the community. She is passionate about women in technology and development, and is a regular international speaker and organizer of developer hack days around the world.

Featured photo: Ars Electronica Deep Space 8K / Play Spaces via photopin (license)

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Will Robots Take Our Jobs?

This year at BIL San Francisco 2017, talks such as “When the Robots Don’t Work”, “Are Robots Trying to Kill Us?”, and “Why AI Works – The Epistemology of Deep Learning” take on a subject similar to presentations given at BIL Oakland 2016, for example, the “Will Robots Take Our Jobs? panel”

Julia Bossman argued that, given an explosion in robots and AI, there will be massive unemployment, with Timothy Roscoe Carter arguing that we need a basic income to protect people from such unemployment. Edward Miller questioned the assumption that AI will permanently replace human labor, instead arguing that AI will cause disruptions that temporarily displace workers as they attempt to provide their ‘comparative advantage’, referencing the classical economist David Ricardo.

Miller goes on to state that Ricardo’s Law of Comparative Advantage, demonstrating that even parties who are worse at producing everything (e.g. futuristic humans) will still be involved in the productive economy. This is true even if the other parties, in this case robots, are vastly better at producing everything.

Bolstering his point with an example, he said that there are even cases of de-automation especially in poor nations where labor is much cheaper. Miller went on to say that basic income will tend to increase people’s rent, such that the benefit provided by a basic income will be siphoned off by people who own high-value land in places like the San Francisco Bay Area. He cites a similar dynamic in the Bay Area where an increase in many people’s wages have simply driven up rent.

It was mentioned in the panel that humans in the future will likely not be separate from AI, leveraging it to augment their own intelligence as cyborgs, as opposed to a disembodied super-computer. Perhaps AI will not “take” our jobs because we will merge with them.

Andrés Gómez Emilsson questioned the panel’s assumption about what humans would even desire in a world with advanced AI, saying that such advancement would enable humans to fundamentally alter their own motivational systems, indeed human nature, not to mention our economic systems. This tied in with Miller’s statement about barring fantastical futuristic scenarios like in The Terminator, ones where robots literally try to exterminate humans, and in effect do a lot more than merely take our jobs. A more sober view is one in which land, natural resources, and other fundamental aspects of political economy persist, regardless of technological advancement. In such a scenario, It was argued that a land value tax would be the best way to fund a basic income because, as the basic income bids up rent, these higher land values would be continuously recollected via the tax to fund increasingly higher levels of basic income.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Won’t Somebody Think Of The Family Farmer?

My father’s side of the family were peanut farmers and Angus ranchers in west Texas and east New Mexico. I grew up riding horses, and was active in both 4-H and Future Farmers of America. I even took part in junior bull riding. I thought that Willie Nelson was just about the greatest guy ever. Ok, let’s admit it, Willie Nelson is an amazing person, both as a musician and in his desire to help people and animals alike. The kinds of people Willie really intends to help with his farmer benefit concerts are the type of people I would like to see helped.

Billions of taxpayer dollars go toward subsidizing crop production each year. So often, the supposedly vulnerable members of the agriculture community are held up as an example of why this is a necessary and compassionate policy. Not only is this perception false, but the very image of the struggling, cash-strapped family farmer is one that doesn’t really hold true in the 21st century. In the 1930s, about 20 percent of the U.S. population were actively working in agriculture. Today, it’s only one percent and the rate of new farmers entering the workforce is dropping dramatically.

When we imagine a family farm, we think of the painting American Gothic, Charlotte’s Webb, Babe, and the Hidden Valley Ranch Dressing label. It’s a reminder of how things supposedly ought to be, an idyllic country fantasy of modest people working and often struggling to provide the rest of us with food.

Photo: David Reece Gathering the Hay via photopin (license)

Everyone seems very concerned about the plight of family farmers these days. But, what does the term “family farmer” really mean? Pretty much everyone has a family. What I really want to know is: who are these farmers who don’t have families? They are the ones who really need help!

The USDA claims that 97 percent of farms are family farms. However, this classification relates to the ownership structure and the top-level management rather than who actually works the land. Just 59 percent of farm laborers and supervisors are U.S. citizens. Half of the hired labor on crop farms, according to the USDA, is people not even legally allowed to work in the United States. They are mostly Mexican migrants making abysmally low wages. Farming subsidies surely don’t go to these ‘family farmers’. Many probably miss their families desperately.

‘Small family farms’ as the USDA defines them, operate 48 percent of all farmland and own 47 percent of the value of farm real estate including land and buildings. In 2012, they held 40 percent of U.S. cattle, 89 percent of the horse inventory, and “grew 64 percent of all acres in forage production”. Yet, despite owning so much, they only produce 20 percent of agriculture sales and five percent of the country’s net farm income. Almost half of small farms are “off-farm occupation farms” which means that the operator’s primary occupation is not farming.

Farmers soak up about $20 billion in subsidies each year. Despite the rhetoric of “preserving the family farm,” the vast majority of farmers do not benefit from federal farm subsidy programs. According to Environmental Working Group president Ken Cook, most subsidies go to the largest and most financially secure farm operations.

The first thing to keep in mind is that two-thirds of the farmers counted by the census of agriculture do not get farm bill subsidies. So most farmers don’t get anything… And even within the third that does get money from farm bill subsidy programs, the very large ones dominate. And it’s getting more and more concentrated all the time.

Farming subsidies largely prop up wealthy landowners who are not what we would we would intuitively agree to be real family farmers at all. In general, the concept of the nice old landowning family farmers struggling to make ends meet simply doesn’t exist on a large scale anymore. The average farm household enjoys an income about 15 percent higher than that of the average U.S. family.

Cook goes on to describe to Mother Jones how historical subsidies can be enjoyed by subsequent generations who have no involvement in production:

Absentee owners exist everywhere. Let’s say you and I are brothers. You came to town to be a journalist, I came to work at an environmental group, but we both came from a farm family in Arkansas. If mom and dad give us 5,000 acres in their will, we don’t have to go back down to Arkansas and farm. We’ll get the direct payments automatically for that rice and cotton mom and dad kept growing, and on top of that we’ll get other payments.

What we should do is not only cut off these subsidies to landowners but tax the farmland in proportion to its value. This would enable us to fund government without taxing farm equipment and labor.

Photo: David Cornwell Favored by the Sun via photopin (license)

This would actually help small farmers, whose major startup cost is purchasing land. But wait, if you tax land, wouldn’t their costs go up? No. Unlike taxing consumer goods, which drives up prices, taxing land has the benefit of not reducing its supply. Somebody always owns it. Taxing it makes hobby ownership less attractive, thus actually lowering the purchasing price.

If you’re an economics wonk, here’s an explanation of taxes on inelastic supply:

If the taxes on labor and equipment were reduced while the cost to purchase land went down too, this would be a boon for families purchasing small plots of land to grow food. Their holding costs for land would be higher, but that would just incentivize them to use land more efficiently, like real family farmers used to do.

We could actually see a resurgence of what we would agree is real family farming. These families could hire a lot of workers and pay them more without the burden of paying wage and sales taxes. And if all of these families were using less land and employing more people at higher wages, family farms could thrive and new farmers could enter the market.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

How Political Polarization Is Predetermined

What if there was a set of questions that could predict with a high degree of accuracy your political views on a variety of issues? Social scientists suggest that we process information based on our pre-existing worldviews. In other words, our cultural outlooks shape our thinking. Cultural Cognition Theory suggests that this can be used to predict perspectives and help us understand how they form.

Hotbed issues such as climate change continue to draw political battle lines among the general public, despite scientific consensus. Even neutral information is processed through our own individual political filters.  But why? Addressing this question is vital for understanding public perceptions of risk and building support for crucial new policy. Is it a lack of credible information, a failure to communicate evidence effectively, or something else entirely?

Dan Kahan is a distinguished professor of law and psychology at Yale University whose research has been focused on risk perception, science communication, and applications of decision science to law and public policy. He is part of the Cultural Cognition Project, examining the impact of group values on perceptions of risk. Across a number of studies, his research has explored public divergence over climate change and scientific expertise in general.

Photo: 350.org Philadelphia, PA via photopin (license)

The cultural theory of risk was developed by Mary Douglas and Aaron Wildavsky in the 1970s, asserting that people form risk perceptions and beliefs that are influenced by and harmonious with their ways of life. A simple example is the “white male effect”, which is a propensity for Caucasian men to perceive social threats as less significant than do women and minorities.

Kahan’s research has concluded that people form perceptions of risks to society that emphasize their worldviews and cultural outlooks. Thus, political polarization occurs surrounding contentious issues despite the presence of empirical data and scientific consensus. In analyzing how and why these perceptions form, this kind of research can offer insights into the best ways to shape and inform public opinion on risks to society, and to develop and implement better policy.

Intuitively, support for public policies that address societal risks like green technology, vaccinations and gun control should increase as people become aware of and sympathetic to these issues. The problem is that facts are less important than values in the formation of perceptions, and Kahan argues that “identity-protective cognition” causes people to dismiss information that conflicts with their values as a kind of “identity self-defense mechanism”.

Cultural cognition is evaluated through attitudinal scales, which Kahan says “should be thought of as measures of latent or unobserved dispositions, for which the items that make up the scales are simply observable indicators.”

La naturaleza del Riesgo. Una aproximación sociocultural
Source: Cultural cognition as a conception of the cultural theory of risk, Dan Kahan, 2008.

Two continuous scales rank attitudes along two dimensions, referred to as “grid” and “group” ways of life. The first scale, “Hierarchy-egalitarianism”, runs from “high grid” individuals who support the maintenance of status-based systems through to “low grid” individuals who believe entitlements should be based on merit rather than position.

On the second scale, “Individualism-communitarianism”, individuals classed as “weak group”  expect to fend for themselves while those classed as “strong group” value solidarity over competitiveness. Responses in agreement or disagreement with value statements are aggregated to form continuous “Hierarchy-egalitarianism” and “Individualism-communitarianism” worldview scores.

Cultural cognition research has revealed a tendency for people to perceive knowledge, honesty, and shared interest in experts who they believe to share their values. A common idea in science communication is that evidence of environmental threats has been ineffectively conveyed to the public, or that scientific literacy is too low. However, it has been shown that polarization over environmental threats is actually greatest among the science-literate. Dramatic public division on these issues is not a result of incomprehension, but instead stems from a distinct cultural conflict of interest.

Photo: Simon Blackley Frank discussion via photopin (license)

A 2010 study on perceptions of HPV vaccine risk showed that people will selectively accept evidence to validate previously held beliefs, which suggests that even a balanced argument may increase polarization in people with opposing values. People also base their perceptions of expert credibility on values rather than the content of any argument. The study showed that if a person hears an argument they are predisposed to reject being made by an advocate whose values they share or vice versa, polarization shrinks to insignificance.

Kahan’s research demonstrates that bombarding the public with information or expert evidence on social risks can create a backlash and thus become counterproductive. This is likely to occur in people regardless of their political party or cultural belief system. To reduce combative polarization, it is more effective to present a culturally congenial solution that fits within prescribed worldviews.

As Kahan puts it, “don’t try to convince people to accept a solution by showing them there is a problem. Show them a solution they find culturally affirming, and then they are disposed to believe there really is a problem in need of solving.”

Cultural cognition theory has useful applications in the context of Earth Sharing and Henry George’s ideas about Land Value Taxation. While presenting any policy argument based on a demonstrable problem is liable to be rejected on the basis of predetermined values, presenting the same policy argument framed around the solution and decorated with sympathetic values is likely to succeed. Proponents of significant political change are too often focused on highlighting risks that they believe need to be addressed, failing to speak to people’s core values. In the absence of a framework of values, the substance of the message is lost to partisan interpretations of the supposed risk.

Featured photo: Feggy Art: Say No More via photopin (license)

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Rent-Seeking Drives Inequality

In 2010, the world’s 62 richest billionaires collectively held $1.1 trillion in wealth. At the same time, the poorest half of the world’s population held wealth amounting to $2.6 trillion. Just six years later, in 2016, those 62 billionaires had amassed a further $660 billion, and the poorest half had been stripped of the equivalent of more than $800 billion.

This should be the dying breath of trickle-down economics. Ahead of the World Economic Forum earlier this year, Oxfam Great Britain chief executive Mark Goldring said that “it is no longer good enough for the richest to pretend that their wealth benefits the rest of us when the facts show that the recent explosion in the wealth of the super-rich has come at the expense of the poorest.”

Oxfam senior economist and former special adviser to President Obama Didier Jacobs published a discussion paper in November 2015, called Extreme Wealth is Not Merited, in which he detailed the “six rungs” of the rent-seeking ladder: crime, cronyism, inheritance, monopoly, globalization, and technology.

He argues that few, if any, of these rungs allow a person to become extremely wealthy based on merit, and that “meritocracy calls for talented people to be rich, but not extremely so”. In an analysis of the wealth portfolios of the Forbes list of billionaires, Jacobs offers insight into the relative importance of each rung:

“Fifty percent of the world’s billionaire wealth is found to be non-meritocratic owing to either inheritance or a high presumption of cronyism. Another 15 percent is not meritocratic owing to presumption of monopoly. All of it is non-meritocratic owing to globalization.”

 

Photo: Ravi_Shah 168/366 – Classic via photopin (license)

According to Jacobs, for the world’s richest, wealth begets wealth, and clearly the most prosperous avenues to enormous wealth are through currying favor with politicians or simply receiving a fortune as a hereditary right. All billionaires have benefited from globalization, population, and economic growth. Jacobs suggests that the world will inevitably see its first trillionaire in coming decades, and it will be the result not of some extraordinary talent but of continued growth in the global economy.

In a February 2016 interview with Inequality.org, Jacobs compared modern wealth with the merit of Johan Gutenberg. “He invented the printing press in 1439. Most of us would agree, I think, that the printing press amounts to an invention as least as important as Google. Yet Gutenberg did not become a billionaire…because the world economy in the fifteenth century was simply too small and too fragmented to support any billionaire fortunes.”

Jacobs says the idea of meritocracy makes sense for the middle class, and “an outstanding nurse is likely to make more money than an average one and would deserve that extra income”. But the kind of extreme inequality of wealth we see today cannot be justified by the same concepts of meritocracy, as these fortunes are so dependent on collective resources.

Henry George’s definition of land was actually very broad, encompassing “all natural forces and opportunities”. In this way, we can see applications of his principle of shared utility to not just land and natural resources, but to intellectual property, and the forces of globalization and ongoing economic growth. That we should begin to see the existence of trillionaires while so many still struggle to live on wages and are taxed on their labor is a great injustice.

George promoted the idea of the Land Value Tax as a way to fairly distribute economic rent, what would otherwise be unearned wealth, concentrated in the hands of the mega-rich. He also advocated a guaranteed basic income or citizens’ dividend, and a policy of this nature should be funded by taxing the economic rent from land. This way, when public initiatives and global systems create added value for businesses and the rich, that value will be returned to the public instead of being lost to further private stockpiling.

Jacobs says that today, every single billionaire’s wealth “depends on having access to a large population that’s linked through a globalized economy”. Those massive increases in wealth are crystallized in high land values, especially in ritzy locations in major global cities like New York and London. The rich can’t take their land with them to the Switzerland or the Cayman islands.

“The more this global economy grows, the richer our billionaires get. This growth happens independently from any one individual’s effort and talent, so we can’t say that billionaires deserve the profits that go hand in hand with economic growth.” Much of what appears on the balance sheets as profits for productive activities is really land holdings in global hubs. By simply taxing the value of land, we could capture that surplus, without taxing any earned wealth or reducing productive incentives. There would be enough to fund all healthcare, schools, transportation systems, etc without any taxes on normal people. We could have all of the wealth creation of a purely capitalist system while realizing the noble dreams of socialism.

 

Featured photo: FraVal Imaging Malaga muelle uno via photopin (license)

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Is The American Dream Dead in Northern California?

In 1931, historian James Truslow Adams said the American dream mandates that “life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement”, regardless of social class or circumstances of birth. But what does that actually mean?

For some, the vagueness of the American dream concept makes it difficult to quantify. Identifying a more specific metric of focus would offer a clearer picture of American opportunity for prosperity and success, and an upward social mobility for all people.

TechCrunch.com journalist Kim-Mai Cutler delivered a presentation at Earthsharing.org’s BIL Oakland 2016: Recession Generation event on July 9, in which she focused on the intersection between opportunity, technology, and land. To address this intersection, she referenced the research of Stanford University economist Raj Chetty.

screen-shot-2016-12-06-at-6-20-10-pm-1
Figure 1

Chetty analyzed the family income records of 40 million children over the past 20 years and calculated the likelihood of a child born into the poorest 20 percent (lowest quintile) of society reaching a higher quintile in income. Isolating geography as a determining factor, Chetty found that, for example, the city of San Jose provides the best opportunities for a poor child to reach the 80th percentile in income distribution, compared to all other cities across the country. This is shown in Figure 1.

screen-shot-2016-12-06-at-6-20-27-pm
Figure 2

Despite this, Figure 2 shows a trend reflected statewide and across the United States wherein median wages are increasing, but poverty is also on the rise, and homeownership is falling.

This trend in Santa Clara County flies in the face of conventional thinking, whereby poverty should decrease as incomes and opportunities multiply. If people are making more money, yet are less able purchase a home, the home price must be rising faster than the wage.

screen-shot-2016-12-06-at-6-21-02-pm-1
Figure 3

Similarly, apartment rent is skyrocketing. There is a lot of job growth, which would tend to indicate that labor is more in demand and that incomes will be higher, but most of the new jobs do not pay well – most make less than 50 percent of the average median income (AMI), as seen in Figure 3.

To add insult to injury, Figure 4 shows that many lower-wage workers fall well short of average asking rents, and are therefore unable to work and live in the same area. These people must either cohabitate or commute long distances in order to secure housing that they can afford.

screen-shot-2016-12-06-at-6-21-46-pm
Figure 4

These are direct consequences of Proposition 13, which greatly limits property taxation in the state of California. Proposition 13 defines what a parcel of real estate can be taxed, how much that tax can grow annually, and when the parcel’s value can be reassessed. Over time, this has created severe market distortions, as developers have no incentive to build additional housing that is affordable. This ultimately limits housing supply, forces workers to commute further from the urban centers, and leads to additional sprawl.

How does this all affect upward mobility? For starters, family commute times correlate with a child’s future success and earnings. Figure 5, from Chetty’s study, shows that a transit time of 15 minutes or less significantly correlates with a child’s upward mobility.

screen-shot-2016-12-06-at-6-21-15-pm
Figure 5

If the American dream is precipitated by upward mobility from one income quintile to the next, it is becoming an unattainable dream for an increasing percentage of the population. Without significant policy change, it will become impossible for many families to escape wage slavery.

Remedies do exist – some to resolve the problem altogether, and others to mitigate it. Metro San Francisco has seen a significant growth of working professionals choosing cohabitation, as well as the tiny house movement of 100-400 square-foot spaces. Unfortunately, these behaviors do not address the structural inequities and land misuse created by the current policy environment and Proposition 13.

With this in mind, it would be sensible for new housing construction in the Bay area to occur where economic activity is most concentrated, namely downtown San Francisco. Downtown areas tend to have the greatest land values, but traditional strategies for construction in the city center tend to be very expensive, politically treacherous, or otherwise ineffective. While cohabitation and tiny houses might make the area more affordable for a few, government must incentivize urban development in high-demand areas to effectively turn the tide of this crisis. To this end, the city and state must consider a Land Value Tax.

The economist Henry George documented this phenomenon of market exclusion 137 years ago in his seminal work Progress and Poverty. George demonstrated how rent increases faster than wages, and to expedite new construction, he recommended eliminating taxes on work and consumption and shifting the source of revenue to Land Value Taxation. His idea was to encourage landowners and developers to increase residential and commercial space in order to pay the Land Value Tax, while generating a respectable return and providing value to others. Land Value Taxation naturally becomes even more effective wherever land values are higher, like the urban core of cities. Implemented in cities, Land Value Taxation leads to a substantial increase in both living and working space.

California faces a unique challenge due to the limits imposed by Proposition 13, and overcoming this would require a difficult voter-approved constitutional amendment to completely overhaul the property tax system. State legislators and regional and city planners would be remiss not to consider a Land Value Tax, which has had demonstrated success in increasing residential space in the United States and abroad.

 

Watch Kim-Mai Cutler’s presentation below:

 

Images: Keynote presentation by Kim-Mai Cutler at BIL Oakland: Recession Generation 2016

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Origins of the Silicon Valley Housing Crisis and How to Fix it

Most of the wealth being generated in Silicon Valley is the result of advanced engineering, risky venture capital and cut-throat business acumen in the face of rapidly-evolving competition. Visa, HP, Intel, Adobe, Ebay, Apple, Google, Facebook – the concentration of multi-billion-dollar enterprises in this tiny pocket of Santa Clara Valley is staggering.

But not everyone making big money in Silicon Valley had to major in a STEM field or produce any real wealth to do so. For those who have speculated on rising land values, the last 40 years has been a gamble that keeps paying off. In the 1960s, when the land in Santa Clara Valley was producing prunes instead of circuits, John Arrillaga Sr. and Richard Peery could see the wheels of a new boom beginning to turn. These young entrepreneurs spent the next decade building the corridor through which much of Silicon Valley’s world-changing innovation would pass.

By constructing custom and cost-effective office units quickly for emerging tech companies, Arrillaga and Peery dominated the region and became its go-to developers. Their signature, low-slung concrete buildings called tilt-ups made for cheap and quick construction early on. The pair was also among the first to build before tenants were confirmed, in the hopes that immediate availability would be attractive to businesses. The land they had bought up as young men began to generate formidable returns, and the speed of technological progress coupled with an apparently insatiable demand for more space created today’s Silicon Valley, synonymous with skyrocketing land values. While this new value injected into Santa Clara Valley draws people to the area and creates prosperity for those in innovative industries, it also attracts speculation where it is possible to capture significant wealth simply by owning land.

Arrillaga is worth more than $2.5 billion, a fortune earned in part from unparalleled skills as a developer, but also because he was able to extract a great deal of unearned wealth. The contribution of pioneering land developers to economic growth is undeniable, but unfortunately, taxation structures have not kept pace with the rapid transformation of unproductive land into a cybercity of millionaires and billionaires. The wealth that has been obtained from constructing buildings is hard earned, but the enormous increase in rental income resulting from rapidly-increasing land values has not been earned. It’s not as if aging structures have grown more valuable, it’s the land underneath them that has skyrocketed in this hub of innovation, land values created by an aggregation of economic activity not attributable to any one person, developer, or tech company. The value of this land is indeed a socially-created value.

Today, the success of entrepreneurs starting tech companies has made Silicon Valley the most expensive place to live in the United States. As these tech giants grow, the reach of their impact on the housing market spreads, and migrant employees move with their money to suburbs farther and farther out from where they work. In so doing, they shape land values and make other lasting changes to the urban environment. The gains generated by developers like Arrillaga and captured by speculators can ripple out into the wider community and inflate the cost of living.

By Unsplash via Pixabay.

The incredible wealth now being generated by high-tech industries in Silicon Valley has put a premium on all surrounding land, both commercial and residential. Working-class residents can only hold on to rent-controlled accommodation for so long before the profit motives of private developers see them evicted, and their housing demolished. According to the Guardian:

Between 2000 and 2013, the number of low-income households in the Bay Area increased by 10 percent, but the region lost 50 percent of units defined affordable for this population, according to researchers at the University of Berkeley, California, who have closely studied gentrification and displacement.

The proliferation of wealth in our communities is a wonderful thing; the only reason it causes such polarization is because systemic inequalities go unaddressed.

We can have the best of both worlds. For men like Arrillaga and Peery to have the opportunity to create these cash cow business parks and bring thousands of talented professionals to Silicon Valley is incredible, it should be celebrated.

As people have come together to produce a great deal of wealth in the tech industry, land values have boomed. Those who were able to get on the property ladder before an oncoming swell in land values simply sell or rent for huge windfall gains, unearned wealth, while prior tenants are displaced. Incoming renters are squeezed or turned away entirely by the high rent.

The problem is not the tech companies or their workers, and it is not the vulnerable tenants; it’s not even the landlords who benefit from, perhaps unconsciously, playing the working class renters and the angry anarchists off the techies. It’s our system of property taxation. The best and simplest way to correct the imbalance, to give justice to everyone, is to implement a system of Land Value Taxation while reducing taxes that harm the poor and the production of new wealth.

From the developer’s’ perspective, a Land Value Tax would in no way detract from the incentive to build in the first place, as the taxes on buildings would be eliminated, after sales and wage taxes. Furthermore, the incentive to build on unused, centrally-located land would increase. They would have an even greater incentive to build immediately because owning the land without having tenants would leave them in the red after paying their Land Value Tax bill each month. The site would not be a speculative asset, but one that only yields a positive return if a developer uses it well to meet people’s needs.

For Arrillaga and Peery, the taxes due on their development portfolio would have grown with the unprecedented business success of their tenants, from dirt cheap taxes on empty lots to large tax bills on lucrative land accommodating high-end office buildings. This would have generated a massive amount of public revenue without harming incentives toward innovation. The seeds of gentrification are nurtured by insufficient housing supply, but Land Value Tax would mean that centrally-located land would be developed to accommodate increasingly more people at comfortable densities.

By lauramba via Pixabay.

This policy encourages landowners to maximize the revenue they can generate by constructing and maintaining buildings of the highest caliber to attract tenants. As opportunity brings more people to an area for work, demand for housing pushes land values even higher, which increases revenue from the Land Value Tax even more. A landowner can then create more housing, often vertically, to cover the larger tax, or if they are unable or unwilling, sell to a developer who will. This applies not just to Silicon Valley, but to any in-demand area where the concentration of jobs forces living costs higher than many can afford.

Land Value Tax can be used as a source of revenue to fund great social programs, even while reducing wage and sales taxes -from health vouchers to housing for mentally ill homeless people, or even a universal basic income. Without a Land Value Tax, however, the benefits these social programs create will simply be captured by landlords through higher rent charges. Thus, the positive effects of these social policies would nearly be wiped out, funneled into the pockets of landlords as rent hikes. For example, if everyone was given a $10,000 basic income each year, all else being equal, what would happen to the cost of rent? It would go up by a comparable amount, and largely cancel out the benefits of basic income to the most vulnerable people. However, with Land Value Tax, incentives to increase housing supply would result in people being able to protect their basic income from rent hikes.

Governments will not be able to subsidize their way out of this housing crisis with palliative measures. Creating a system of incentives in which the market is enabled to correct itself is the most sustainable way forward, and offers the best hope of ensuring affordability for all while simultaneously giving a boost to incredible growth in future industries.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Fixing The Bay Area Housing Crisis

The San Francisco Bay Area is in the midst of a severe housing affordability and displacement crisis, the result of years of inadequate public policy, a clash of generational attitudes, and ubiquitous obstruction of new housing projects. At the BIL Oakland: Recession Generation conference, hosted by EarthSharing.org on July 9, a panel of four housing advocates shared their thoughts on where to go from here.

Zac Shore, Stephen Barton, Alex Lofton and Tim Colon described a multi-faceted crisis requiring concurrent and complementary solutions.

Zac Shore is the director of development for Panoramic Interests, a construction company focussed on affordable student housing, workforce housing and homeless housing in San Francisco.

The company has a modular construction ethos that crystallized when they traveled to the U.K. and witnessed the construction of 190 apartments in eight days using shipping containers.

“When we saw that, we were convinced, and now we’re starting to build with it on a large scale in San Francisco.”

Panoramic Interests has built hundreds of apartments for students and workers, and is now beginning to build for the homeless. Shore cited demonstrable cost savings associated with housing homeless, cutting down on chronic use of emergency services and offering an economic incentive alongside the humanitarian one.

Stephen Barton represented the Bay Area Community Land Trust and the Committee for Safe and Affordable Homes. Barton has a PhD in city and regional planning from the University of California, Berkeley, and was director of the Housing Department and deputy director of the Rent Stabilization Program in Berkeley, California before retiring recently. He has written widely on housing policy and co-authored Common Interest Communities: Private Governments and the Public Interest.

Barton argues that new construction does not have the ability to solve the Bay Area’s housing crisis.

“It’s not to say that increasing the housing supply is not important, because it’s desperately important,” he said. “But of course we have Prop. 13 here in California and its progeny designed to protect real estate investors’ windfall profits, and of course encouraging land speculation because people who own vacant and under-utilized land hardly pay anything in taxes.”

Using taxes to treat rental property like a business rather than personal real estate would be a step in the right direction, “to recapture through taxation the value that we and those who came before us have created,” Barton said.

“If you applied a two percent tax to rental property in the whole Bay Area, you would raise $500 million a year and it could lead to construction of as many as 50,000 affordable apartments.”

“About half of the rent that tenants pay in the Bay area is not, in fact, necessary to profitably operate and maintain the housing once it’s been built and the construction costs are amortized. Instead, it’s basically an admission charge – ‘welcome to the magic kingdom, here’s how much you have to pay to be here in the Bay area’.”

Alex Lofton is a co-founder of Landed San Francisco, a community-based brokerage organization that raises capital from investors interested in local real estate, and uses that money to support first home-buyers with down payments.

“Our whole system is set up on the intergenerational transfer of wealth: you’ve got to ask your mom or you dad, or brother or sister, or grandparents to help you buy your first house, especially in expensive places. So we just say ‘Why can’t there be other options than mom and dad…to borrow that money?’”

“You live in a place like this and you question if you’ll ever become an owner…the leap from renter to owner is just impossible.”

While affordability was the main problem with Bay Area housing, requiring greater supply and higher incomes, another way forward was thinking about the concept of ownership differently, and coming up with creative ways for whole communities to help people get started in the property market.

“There isn’t a silver bullet, it does take a lot of solutions.”

Tim Colen, at the time of conference, was executive director of the San Francisco Housing Action Coalition, an organization promoting well-designed and well-located housing. Prior to this, he was president of the Greater West Portal Neighborhood Association, and spent 25 years working as geologist.

San Francisco is cursed by having a red-hot economy, and highly-skilled workers flooding into a city that has a history of under-producing the amount of housing it needs.

“We have chosen policies for the last two or three decades that have led us to this position where our population is growing by about 10,000 residents per year… a city that has a historic production rate [of houses] somewhere around 1700-1800 units a year.”

“It’s already a city that’s become hostile to the young, young families, seniors, immigrants, the artists, the weirdos, the hippies, everybody. It’s going in the direction of becoming a luxury resort with a certain amount of housing we can afford to subsidize.”

In Sacramento, liberal democrat Governor Brown has taken a bold step by introducing “by-right housing”, whereby if certain conditions are met by developers then new builds cannot be obstructed.

“It’s the first tool we’ve seen in ages that says ‘you can’t appeal projects to death anymore’,” Colen said.

The dominant conversation around housing has been one of intergenerational change, and the desire of previous generations to keep things the way they are, Colen said, and this has tipped the balance of power toward those who say no to development and increase construction costs.

“We’re strangling ourselves,” he said. “There is not enough money in the world to subsidize our way out of this problem.”

 

This panel discussion highlights a struggle between established residents and newcomers, who should be joining forces against an entirely different threat. Renters are being squeezed out of the Bay as prices surge, while would-be newcomers, many of whom are tech workers, are kept out by the same phenomenon. Both blame each other, yet it is landowners who are making a killing off the skyrocketing costs for space in the Bay Area.

Yes, tech workers drive up the cost of land, but freezing new construction also makes apartment rents artificially high. Both groups are right, but it is unfettered and untaxed landlordism that is the real problem.

There is a way to help protect those in danger of being forced out of the Bay, while also giving access to newcomers in innovative industries: tax the rising value of land and reduce taxes on working and exchanging. A citizen’s dividend paid out of the revenue from a land value tax, what some call a basic income, should be given to everyone to be spent as they wish. They would use this money to subsidize their apartment, while construction could boom in downtown San Francisco and elsewhere in the Bay. With more people able to fill the new units in the central locations, this would take pressure off areas even slightly outside the central business district. This in turn would retard the rise in rent from what it otherwise would be, while putting more money in vulnerable people’s pockets to secure housing.

 

 

Feature photo: Guner Gulyesil City Romance via photopin (license)

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Julia Bossmann: Challenges Of A Post-Work Society

BIL: Oakland 2016 Recession Generation was an Earthsharing.org conference in Oakland, California on July 9th. Foresight Institute president Julia Bossmann presented an argument for moving toward a post-work society, and the changes both economic and social that would be required to achieve this.

Bossmann recounts the incredible advances in artificial intelligence we are witnessing, whereby computers are writing original imitations of Shakespeare, dispensing effective legal advice and piloting cars through traffic. Bossmann believes that innovative scientific research will be next on the list of A.I. accomplishments.

Photo: FritzchensFritz AMD@14nm@GCN_4th_gen@Polaris_10@Radeon_RX_470@1622_M60J5.0A_215-0876204___Stack-DSC07208-DSC07236_-_ZS-PMax via photopin (license)
Photo: FritzchensFritz AMD@14nm Radeon_RX_470 via photopin (license)

“They have theoretically unlimited memory, they have a way faster speed of reading, they can find insights and facts from all across and then draw connections and find patterns. So now that we may have reached the limit in medical research – that one human mind may not be enough to figure it all out – having a machine mind may open the floodgates to finding out much more.”

Bossmann’s scenario of a post-work society presents significant economic challenges, with a disruption of millions of jobs across the professional spectrum. Truck drivers could be an early casualty, but many others earning an income by selling their time and labor stand to lose their current employment due to automation.

“How would a human even compete with someone who can drive for thousands of hours at no end and not ask for a salary?”, Bossmann says.

Photo: jurvetson Your Uber Otto has arrived via photopin (license)
Photo: jurvetson Your Uber Otto has arrived via photopin (license)

In general, a person’s income is derived either from time, or from ownership of assets like land and other property. Bossmann states that “once the time goes away, the only thing left is ownership. And we all know that ownership is not distributed in a way that all of us could just live on that alone; in fact, most of us need to sell our time to live”. A radical shift in how we think about ownership is required if society is to remain prosperous, Bossmann says.

As artificial intelligence progresses, those who own the valuable sites where A.I. research takes place, especially in Silicon Valley, will continue to become more disproportionately wealthy vis a vis the appreciating value of their land: rents they can charge, prices for which they can sell, etc. They will become wealthier not by doing the research and development themselves, but simply by owning valuable space in areas doing R&D. Regardless of Bossman’s predictions about the rate of A.I. progress and its replacement of human labor, a greater proportion of the wealth created will continue to go to owners of prime land.

Those who own prime locations already have a large advantage over wage earners, simply by their ever-appreciating real estate values. We have seen a huge explosion in labor-saving devices, wealth production, and wealth inequality in the last two centuries. These gains disproportionately go to the owners of property. So, there is already a need to share the returns from owning natural resources like land.

This need to redistribute the benefits of land ownership become even more obvious in Bossmann’s prediction of the future – where she assumes a lack of A.I. winters/ceilings, no comparable human intelligence augmentation, and where the Law of Comparative Advantage (between humans and robots) no longer holds. In such a scenario, obedient robots would simply produce enormous amounts of wealth, and this wealth would all go to those humans who own the natural resource inputs needed for A.I. The people who did not own land, or receive a dividend/basic income of some kind, would simply have no income.

Henry George, a prominent political economist and author from the late 19th century, argued that gains derived merely from the ownership of land and other natural resources should be considered the property of everyone, not just the title-holders. A system of land value taxation would be a pragmatic way of shifting the burden of raising public revenue from workers to landowners. It would be the obvious choice for funding a basic income that would protect people from unemployment now, and facilitate any kind of post-work society.

“Once we have figured out this dilemma, and we have machines that will do most of the work on the planet… we will look back and think that it was barbaric that people had to sell most of their living time on this planet, doing things they didn’t want to do,” Bossmann says. But reaching an economic consensus is not all that is required to reach a prosperous post-work society.

“Many of us define ourselves by our jobs, what we do for a living, how much money we make, all these things are important to so many of us. Are we willing to give up this kind of thinking for something better?”

Julia Bossmann is president of Foresight Institute, a think tank promoting transformative future technologies, and founder of Synthetic, a startup building A.I. of its own. Bossmann is a McKinsey Fellow, Singularity University GSP graduate and master of science in neuroscience and psychology. She lectures on Artificial Intelligence, hard technology, innovation, the future, and technology transforming society.

 

Photo: Tej3478 <a>Artificial Intelligence</a>. Licensed under Creative Commons.

Facebooktwittergoogle_plusredditpinterestlinkedinmail