“One World in which Many Worlds Fit.”
from OnTheCommons.org — Everything

The following remarks were delivered by Silke Helfrich of Germany, a long-time international commons advocate, to the World Social Forum in Porto Alegre, Brazil, on January 28, 2010. Entitled “The commons as a paradigm for social movements and beyond” (version 1.0), Helfrich’s speech offers a strong, far-ranging case for why the commons holds promise in galvanizing social movements and building a new vision of society.

We can only promote the commons as a new narrative for the 21st century if they are identified as a common denominator by different social movements and schools of thought. In my point of view, enforcing the commons is not only possible, but strategically intelligent. Here are fifteen reasons why:

1. The commons are everywhere. They determine our quality of life in great many ways. They are present (even though often invisible) in the social, natural, cultural and digital sphere. Think about the things we use to learn (read and write), the things we use to move (land, air and sea), the things we use to communicate (language, music and code), the things we use to feed and heal (land, water, medicine) or the things our reproduction depends on (genes, social life).

The commons are about how we share and use all these things. They are a vivid way of reproduction of our social relations— at any time. Therefore, they are better described with a verb (“commoning”) instead of a noun (commons). The commons are a special kind of practice of use and production of knowledge and material goods, where use value is privileged over exchange value.

Commoning is a practice which allows us to take our lives in our own hands, and to protect and widen what is common to us instead of witnessing its enclosure and privatization. Commoners’ rights are independent from formal convention and positive law. We just have them without having to ask anybody for permission, and we share them with others. The commons offer a different kind of freedom than the market. So the good news is — when we focus on the commons, we focus on how to shift things from the market sphere to the commons sphere, we focus on how to shift authority and responsibility from state bureaucracies to the many possibilities for users to “govern the commons,” and we focus on many issues and resources — as 75% percent of the world’s biomass — which are not yet commodified. This is encouraging.

2. The commons bridge sectors and communities, and offers a frame for the convergence and consolidation of movements. The issues we have to deal with have gotten overly complex. In order to reduce complexity, we have fragmented what belongs together. In the public political debate, there is a division into different realms of knowledge and authority. There are those who discuss issues related to natural resources (“the ecos”) and those who discuss cultural and digital issues (“the technos”).

The result is (overly) specialized communities for each of the hundreds of problems we are confronted with and many missing links. For the very diversity of the commons, this fragmentation will continue to a certain extent, but it also contributes to a loss of our common ability to keep track of the ongoing economic, political and technological processes and changes. This diminishes our capacity to react to theses changes and to carefully forward coherent alternative proposals. The commons can unify disparate social change movements, even those that have profoundly different dynamics, because they permit us to focus on what all common pool resources and all commoners have in common and not what separates them. Water is finite, knowledge is not. Atmosphere is global, a park is not. Ideas grow, when we share them, land does not. But all are common pool resources! Therefore none of them can be exclusive property of only one person. All are linked to a community. All are governed best if the rules and norms are self-determined or considered highly legitimate by the people how have to rely on those resources.

3. The commons recasts the ownership debate beyond the (sometimes fruitless) framing of public versus private. The claim for public ownership remains important, but have nation states really served as conscientious trustees of the commons? No. Do they protect traditional knowledge, forests, water and biodiversity? Not everywhere. There is much more than “public” and “private.”

A common pool resource can be possessed for short-term use (to reproduce our livelihoods), but we cannot do with it what we want. It is important to remember that the concept of possession for use is very different to the dominating conventional property. Possession doesn’t allow for alienation. Property does. And property allows for abuse and commodification, maximum monetization and the “externalization of costs” onto the commons — an ongoing process at the end of which all of us are worse off — even the richer among us who flee to gated communities.

4. The commons perspective is not a digital way of thinking. Its mode is not binary, 0 — 1, either — or. Nor does it focus on bottom lines like a single number of “success.” Our search is for solutions beyond opposite poles and beyond numerical metrics of “success.” It’s not simply private versus public, neither right versus left, cooperation versus competition, “invisible hand” of the market versus the plan of the State, pro-technology versus anti-technology.

From a commons perspective the focus is on the forgotten third element. It deepens our understanding about the commonly owned and the universal principles which work for people and protect their common pool resources. In the commons sector we privilege learning, and it is more about cooperation than about competition. The commons enhances self-determined rules and commonly developed and controlled open technologies instead of proprietary technologies which tend to concentrate power within elites and enable them to control us.

5. Talking about the commons means focusing on diversity. In the words of former Governor Olivio Dutra (Rio Grande do Sul) during the “World Social Forum: 10 Years Later” conference: “[The commons] enables unity within plurality and diversity.” The default but not defensive position is: “One world in which many worlds fit.” Doubtlessly, one of the strengths of this approach lies in the idea that there are no simplistic solutions, no institutional patterns, no “one size fits all” panacea, only universal principles such as reciprocity, cooperation, transparency, respect for diversity and others. Each community has to determine appropriate rules for how to access, use and control a common pool resource system based on such principles. This is complex — as the relationship between nature and society is — especially when we talk about global commons. There, the “community” is the whole of mankind, which refers us to the very necessity of a new multilateralism based on a commons approach.

6. Focusing the commons brings three “big C’s” into a new balance: Cooperation, Command and Competition. There is no cooperation without competition and vice-versa, but in a commons based society the recognition is gained by those who perform best in cooperation and not in competition. The slogan is: Out-cooperate instead of out-compete. The specific rules for cooperation in a commons system vary from setting to setting. Nobody can command them from above. From commons research and practice we learn, that all over the world many commons governance systems are self-regulating, that means: they are creating their own monitoring systems. Or they are self-regulating and coordinate at different institutional levels.

As far as “command” is concerned: Nobel Price laureate Elinor Ostrom advises: “It is better to induce cooperation with institutional arrangements fitted to local ecosystems than to try to command from afar.” At the same time “the systems from above” — governments, law, international bodies — can be critically important in empowering and facilitating the commons. But for doing this, they need a commons perspective inscribed into their logics and polity architecture as well.

7. The commons does not separate the ecological from the social dimension as a Green New Deal focus does. To a certain extend, it may be helpful to make the “economic value” of natural resources visible and it is certainly necessary to internalizes ecological costs of production into the whole production process. But it is not enough. Such a focus does not address the social dimension of the problem, it tends to deepen the market biased structures, linking the solutions with access to money. So who has, can afford the cost-internalization. Who has not, is worse off. Instead: the ecological and the social dimension find a common explanation in the commons. There is no such thing as a solution based on a commons perspective where those who haven’t are worse off.

8. The commons concept integrates different world views: There are attractors for socialist thinking (e. g. the common possession), for anarchists (the self-organisational driven approach), for conservative thinking (which values the protection of the creation), obviously for communitarian and cosmopolitan ideas (integral, diversity driven approach) and even for liberals (distance to state accountability, respect for individual interests and motivations in joining a community or a project). But it is quite clear that the commons cannot be a single political party program. That is its strength, and that is why mainstream political players so often misunderstand the commons or even try to co-opt the commons. If we care for a coherent commons discourse (see #9), they won’t succeed.

9. The benchmark for the integration of different political ideas within a commons paradigm is clear and threefold: (a) sustainable and respectful use of resources (social, natural, and cultural including digital), that means: no overuse and no under-use of common pool resources. (b) Equitable sharing of common pool resources as well as participation in all decision making processes about access, use and control of those resources and© the free development of creativity and individuality of people without sacrificing the collective interest.

10. The commons don’t have one, but many centers. Their governance structures are decentralized and varied as well. In other words: it is characteristic to the commons to be polycentric, which stands for a deeply democratizing approach both politically (principles of decentralization, subsidiarity and sovereignty of commoners and commoners rule making) and economically (the “commons mode of production” point makes us less dependent on money and market).

11. The commons strengthens an important core belief about human beings and behavior. We are not only, not even mainly the “homo oeconomicus” they made us believe we are. We are much more than selfish creatures looking for our own interest. We need and enjoy being embedded into a social web. “The commons are the web of life,” says Vandana Shiva. We enjoy to contribute, care and share. The commons strengthens the confidence in the creative potential of people and in the idea of inter-relationality, which means: “I need the others and the others need me.” They honor our freedom to contribute and share. This is a different kind of freedom than the market is based on. The more we contribute, more things we have access to. But note: it is not simply “access to everything for free.”

12. The commons offers analyzing tools that arise from categories different to those of capitalism, therefore the concept helps to “decolonize our thinking.” (Grzybowski) Commoners redefine “efficiency.” They ask how to “efficiently” cooperate and how to encourage and enable people to do so. They claim for (short term) usage rights to reproduce their livelihoods instead of limitless property. They honor traditional ways to protect the commons as well as traditional knowledge systems.

In short: the commons shed new light on many old political and legal regulatory processes. It makes a big difference whether I see the environment as a commons or as a commodity to trade with. It makes a difference whether water is understood as a commons, that means closely linked to the communities needs, or not. Or take seeds; conceive seed-diversity as a commons, means: harvesting self-determination and food-security. If society would recognize regional diversity of seeds as a commons, the State would put all available resources into independent, organic seed breeding and in protecting small farmers to continue their traditional way of seed-development instead of wasting taxpayers money for genetic manipulation and seed engineering.

13. In the commons sector, there is a great diversity and quantity of actors. Over the past several years, international interest in the commons paradigm has quickened. Several organizations and commoners now have significant transnational constituencies (Creative Commons, Wikipedia, Free Software and Free Culture Movement, sharing platforms, the anti-mining organizations, the alliances working for a Bem-Viver approach, the worldwide movements for sustainable agriculture, the Water Commons, community gardening, citizen communication and information projects and many others). Actually, it is a spontaneous, explosive growth of diverse commons initiatives. Since Elinor Ostrom won the Nobel Price in Economics (October 2009) many universities have rediscovered the academic interest in the commons.

14. The commons is an alternative mode of production. The problems we are confronted with are not problems of resource-availability. They are problems that arise from the current mode of production. Fortunately, in some areas, we are witnessing a shift from the capitalist mode of production (based on property, command, value exchange via money, resources and labor exploitation, dependent on growth and striving for profit) into a commons mode of production (based on possession, contribution, sharing, self interest and initiative, where the GDP is a negligible indicator and the aim is a “good life” (bem viver).

Many “Commons-based Peer Production” projects are developing successfully. This is especially true for the production of knowledge (Wikipedia, Free Software, Open Design). But there is a thrilling discussion going on about how principles of commons based peer production can be transferred to the production of what we eat, wear and move with, at least to a certain extent. I believe that this is possible. Firstly because knowledge makes up the lion’s share of each kind of production. All goods are latent knowledge products. There is no car production or egg production without a concept and a design behind (which make the lion’s share of its “market value”).

Secondly because there are many kinds of commons sectors (care economy, solidarity economy) which have not been commodified yet and where commons values and rules are deeply rooted. Those sectors are evidence that every day many of the things we need to live are produced outside the market.

15. The commons discourse is a discourse about cultural change. It is not a mere technological or institutional approach. Instead, it offers a new frame for political and personal thinking and acting.

Why now? Because the moment is ripe for the commons.

1. Given the historical moment of change, the commons are currently being rediscovered in many contexts. Market and state (alone) have failed both in the protection of common pool resources and in satisfying peoples needs. Actually, free market fundamentalism that now prevails is under siege. Its system of economic analysis, public policies and worldview is losing its explanatory value, not to mention public support. More and more people realize that it is not for the market that we enjoy biodiversity, cultural diversity and social networks!

2. New technologies enable new forms of cooperation and the decentralized production of what up to now have been monopolized core technologies of the industrial age. Today, we can relocate even energy or electricity production into the social commons (citizen solar power stations, home-power stations). We can decide which are useful news and information for the community and reproduce them ourselves with “the biggest copy machine” that ever existed: the internet. The ongoing major revolution in production allows for a change of rules. This is a major threat for monopolies.

3. The ongoing processes put the individual in a position to engage in a wider context. A modern commons perspective is not headed “back to the past.” The perspective is not one of mere re-localization, but the horizon is: local, decentralized and horizontal cooperation in distributed networks, so that people can self-enable to create things together, available for them and others — if they want. The aim is to widen the commons sector and commons based production as far as possible and lesser depend on the market.

This is only possible, if the new mode of production is able to solve even complex problems, if it is able to “peer-produces” artifacts even large companies would have difficulties to prepare for logistically, financially and conceptually. And it is! Just think about Wikipedia or an open source car. Maybe we would have developed VIPs (vehicles for individual transportation) based 100% on recyclable materials, which consume only a liter/100km if corporations would not have enclosed technologies and controlled the market. In a world where a commons-mode-of-production is general, there is no more centrer and periphery.

4. There are new legal forms to protect collective use rights and free and/or equitable access to the commons: the General Public License (GPL), ShareAlike licenses, ownership models for natural resources with an built-in mechanism to protect for speculation and avoid over-exploitation, stakeholder trusts on single common pool resources, the acequia water management systems in Mexico or the Johads water management systems in India or the Allemansratten (rights of each person) in countries of Northern Europe. Those are powerful tools we have to learn more about and develop further. It is an area where we need a great deal of creative legal thinking and innovation, and we need respect for the great variety of formal and informal rules to protect the commons worldwide.

5. Last but not least: once you put your nose into the commons, you discover astonishing new things. You connect with hundreds of dynamic communities. You have unexpected insights, you learn about encouraging projects and ideas and you multiply your networks. It’s energizing.

Did you know, that there is an OpenCola project? Or that the biggest lake in New Zealand, Lake Taupo, is full of trout? In the very touristic Taupo region, there is much “pressure on the ressource”, but the trout population continues enjoying the lake because the New Zealanders follow a simple rule: Fish what you need to eat (for doing so, you get a fishing permit from local authorities), but don’t sell the fish. So, you won’t find any trout on the menus of the hundreds of restaurants in the region. Remember: The commons are not for sale.

Or did you know something about open source biology and participatory medicine? Have you heard about the countless local seed banks — especially in the South — and the sheer incredible treasures they care for us? Do you know where the growing international open-access scholarly publishing movement is at in its effort to make sure that we will have free access to what has been publicly funded — knowledge production. Are you aware of the intercultural and the community gardens movement or of the commons regimes used by lobstermen in Maine/USA to prevent over-fishing of lobster? And what to think about the crisis commons, where hundreds of volunteers contribute their expertise and collect information using modern information technologies in support of disaster relief for post-earthquake Haiti?

The commons are something that brings enthusiasm back into political debates. Young people are all ears when they learn about peer-to-peer-production, because that’s what they do. The “ecos” are all ears when they learn about the copyleft principle which enables the viral reproduction of software and content. They learn that “this complicated license stuff” is to defend our freedom for access to knowledge and cultural techniques. That is precisely what they claim for in their field. The “technos” get motivated to use their amazing abilities for helping to manage complex natural resource systems. In other words: The commons widen the horizon, they bring a fresh breeze of non-dogmatic and dynamic collective thinking and practicing along.

The commons are a powerful, self-enabling and self-empowering concept to constantly recreate a dignified life. It is what we need to build a diverse and irresistible movement based on a coherent political and conceptual thinking.

Silke Helfrich
Porto Alegre (RGS), January 28, 2010

Why Nama is such a rip-off is explained at length and in detail by Dr Constantin Gurdgiev. He writes in response to Donal O’Mahony, Chief Strategist at Davys Stockbrokers a pro Nama cheerleader. Question if Nama is theft what does that make Davys ?

Here is a taster…
1) Donal was keen to distance himself and Nama supporters from ‘theoreticians’ and ‘academics’ who exclusively populate the Nama critics land. It is important to note that many of the people who signed the letter of 46 economists, as well as other members of the critics camp are actually practitioners of the same fine art of finance as Donal. Many.

How many? Well, just a quick run through

• myself – former business editor who brought finance coverage to the most respectable Irish business magazine, former director of research at NCB, currently head of research and strategy with an American brokerage.
  

• Greg Connor – former director of research for Barra, Fed employee.
  
• Karl Whelan – former Fed employee.
  
• Other members of 46 run options desks, have been bond traders, worked in central banks and finance ministries… you get the picture.
• Brian Lucey – former employee of the Central Bank;
• Ronan Lyons – former economist wit one multinational company and also chief economist of Daft.ie; and so on.
  

Donal might think we in academia are just performing random walks in various universities’ squares, but no, we actually advise governments, international organizations, businesses and have some relevant experience in the real world.

2) Donal contended that the main problem with Irish banking sector was that after 2001 we had “over competition” from (guess who?) the foreign banks. One assumes he means Rabo and KBC, for the British banks were here before 2001 and in addition we had our banks in their countries as well, aggressively lending to… yes, you’ve guessed it again – property developers there. So the foreign banks, thus, caused a property boom in Ireland. And the foreign banks forced our banks to issue 110% mortgages. And the foreign banks assured that most of our lending has gone to finance property deals of one variety or the other. Of course, it was the foreign banks that made sure that IL&P and Nationwide made strange dealings with Anglo. Why wouldn’t Donal read Noel Whelan’s treatise on the crisis (see my comment here) – he might find out that in addition to the foreign banks, 46 economists also caused the crisis.  (Link to article)

The unthinking classes have a lot to lose if land reform fails again in Britain,  as they are the fall guys for the big landowners and property speculators.  It is not without fostering damaging myths and media management that the landed gentry, the descendants of the Norman invaders, still own more than 80% of the land in Britain.  Bad as we are in Ireland, we have a far more democratic spread of land and property ownership than our nearest neighbour.

Below is a perfect example of UK property owner turkeys demanding that the traditional Christmas dinner continues.  Hat-tip to Dave Wetzel for this story.

LAND TAX ‘AN ATTACK ON MIDDLE CLASSES’

Friday August 7,2009
By Sarah O’Grady

Daily Express

A PLAN to scrap council tax in favour of a land levy was condemned last night as penalising hard-working middle-class families.

The Land Value Tax was proposed by Compass, a Left-wing think tank close to Gordon Brown’s inner circle.

It would raise even more than the £25.6billion a year currently taken by local authorities through council tax and would hit hardest those who have worked their way up the property ladder.

Owners of family homes on decent-size plots with a garden, a drive or a garage would be hit harder than those who live in smaller properties. And if the house is near good schools or public transport links, the land would be taxed even more.

Tory housing spokesman Grant Shapps described the idea as ­thoroughly unappealing.

“The Prime Minister’s favourite think-tank has come up with an idea which will disproportionately hit hard-pressed families who are aspirational and doing their best to get on,” he said.

“Why should they be penalised because they need a house with three or four bedrooms, or a garden or a driveway or a garage, all of which needs space? Annual re-assessments of the tax owed will worry cash-strapped mortgage payers. The plan is another attack on Middle England which this discredited Government is becoming known for.”

The report’s author Toby Lloyd said: “Social justice demands that the gains in land value be shared more equitably with the community than at present, and a tax system that could stabilise the housing market and reduce the chances of booms and busts is in everyone’s interest.

“With an annual Land Value Tax, all land would be taxed on the unimproved site value, which would be revalued for tax purposes annually. It’s important to be clear here – we are not talking about a tax on property values.

Credit tightening threatens China’s ‘giant Ponzi scheme’ – should cause green shooters to pause.  Could it be that  China’s grey leaders are as fallible as ours in boosting liquidity without taxing land – the asset that attracts cheap money like no other?    The figures are very worrying and oddly familiar to the Irish eye…

Mr Xie, who wrote his doctoral thesis on Japan’s bubble in the 1980s, said China’s ratio of property prices to incomes is seven times higher than in the US. It costs three months’ salary per square meter of space – arguably the highest in the world – though tower blocks are sitting empty. Prices are being propped up by state enterprises, abetted by local Communist bosses.

Mr Xie said Chinese booms and busts follow a political rythmn. There is a deeply-rooted belief that the authorities can keep the game going – the “Panda put”, China’s answer to the “Greenspan Put” – and that the Communist Party will not let the rally fizzle before the 60th anniversary of the revolution on October 1. This belief is self-fulfilling, for a while. 

Mr Xie expects China’s rally to falter around October, followed by fresh shots of liquidity before the economy falls into a deeper slump by 2012. “Property prices could drop like Japan’s in the last two decades, which would destroy the banking system,” he said.

Link to full article

I was bemused to learn that a number of my economics colleagues are apparently starting to ‘discover’ the idea of resolving the banking crisis through the use of a voucher-styled equity acquisition in Irish banks and disbursement of these to the taxpayers. Oh, it makes me glad that potentially some of them – possibly including even those who would not give me a fulltime job in their august departments – are now coming around to accepting some of my original ideas.

So to clearly draw a line in the sand, I espoused the idea of voucher-styled recapitalization of Irish banks on the pages of Business & Finance, with Prof Brian Lucey (the only person who saw, amongst academics, any merit in this idea from the start) in the pages of the Irish Times, in the Sunday Times and in the Irish Independent, as well as, of course, on this blog. But my entire view on how the banking crisis should be handled is summarized here:

Step 1: Require banks to take full mark-to-market writedown on their loan book;
Step 2: Travel down the capital ranks to draw down shareholder equity, deplete perpetual bond holders and so on to cover the writedowns;
Step 3: Force the bond holders into debt for equity swap;
Step 4: Open enrollment for a share-participation in Irish banks recapitalization to SVFs, vulture funds and any other form of private capital;
Step 5: Cover all remaining shortfalls in capital base with Government bonds swapped for equity after Steps 1-4 are completed and after an independent assessment of the value of the remaining loans is carried out to determine the true extent of banks under-capitalization;

Step 6: Hold equity in an escrow account (NAMA3.0) on behalf of the taxpayers, appointing a Supervisory Board to every bank recapitalized by the taxpayers money. The SB should consist of one appointee by the Minister for Finance, 3 direct independent representatives of the taxpayers, who are charged with explicitly guarding the taxpayers’ interests, 1 representative of the bank board, 1 representative of NAMA3.0 and 1 independent director. Each member (other than those from NAMA3.0 and the bank) will hold a veto power. A requirement that risk and credit committees of NAMA3.0 include at least 51% majority of independent experts who cannot be employees of the state, NAMA3.0 or any other parties to this undertaking;

Step 7: NAMA3.0 accountability: no indemnity for negligence and incompetence for any employee or director of the escrow organization; no cross borrowing by the Exchequer from NAMA3.0 is allowed, so Brian Lenihan and his successors cannot raid the nest egg; ownership of shares in the account accrues to the taxpayers, not to the state or the public sector; NAMA3.0 cannot lend money to continue any of the banks’ projects;

Step 8: NAMA3.0 transparency: full disclosure of all recapitalization acts and shares held in NAMA3.0 – on the web, updated live; full disclosure of all employment contracts, wages, bonuses etc, CVs of all managers and directors and disclosure of all potential conflicts of interest; full disclosure and updating of the comprehensive NAMA3.0 balance sheet, cost/benefit analysis of the undertaking and live weekly mark-to-market report on the value of shares held;

Step 9: NAMA3.0 operational efficiencies: NAMA3.0 can, with consent of the Minister for Finance and in orderly (market-respecting) fashion disburse all or a part of its shareholdings so as to maximize the return to the taxpayers. This disbursal should be fully notified to the public immediately post execution, with price achieved fully disclosed. NAMA3.0 will then have 30 days to issue every resident of this country – registered at the date of creation of NAMA3.0 – his or her share of the sale proceeds net of NAMA3.0 operating costs and a special withholding tax of 25% on CGT, in a form of the cheque;

Step 10: NAMA3.0 legal remit over assets: NAMA3.0 in recapitalizing the banks will have a mandate to help the banks collect on outstanding loans by aiding them in seizing requisite collateral. In doing so, NAMA3.0 will have to agree a procedure to address problems of cross-collateralization of specific assets. NAMA3.0 will have a right to impose seize borrower’s property (applicable only to developers) when such property has been legally shielded from authorities or banks at any time after July 2008.

Step 11: Conditions for banks’ participation in NAMA3.0 banks wishing to participate in this undertaking will be required to adhere to the following rules, including, but not limited to, the caps on executive compensation at the banks and the requirement to set up fully independent, veto-wielding risk assessment committee at each bank with a mandatory requirement for a position of a taxpayers’ representative on the board that cannot be occupied by a civil servant or anyone who has worked in the Irish banking or development industry in the last 10 years;

Step 12: Re-legitimising the public system of regulation in Financial Services: as a part of NAMA3.0, the Government must address the ever-widening crisis of markets, investors’ and taxpayers’ trust in the Irish system of Financial Services regulation. Many steps must be taken to address this problem, and these can be worked out over time – suggest away. But in my view, there must be a stipulation that all and any regulatory authorities (and their senior level employees) that were involved in regulating the banking and housing sector in this country until now must be forced to take a mandatory pension cut of 50%, a salary cut to put them at -10% relative to their UK counterparts wages, and return any and all lump sum funds they collected upon their retirement. The Government must impose measures to prevent banks from beefing up their profit margins through squeezing their preforming customers. The measures to force the banks to reduce their cost bases by laying off surplus workers must be enforced. From now on, every regulatory office should be required to publish all minutes of its meetings, disclose all its voting, decisions and rulings to the public, create a public oversight board that must include members of the Dail from non-Governing Parties, a taxpayer representative and independent directors.

This is a sketch of NAMA3.0. Please feel free to build a bigger picture with me

A far more efficient and cheaper alternative to Nama is to copy what Barack Obama did with General Motors, and transfer ownership of Irish banks to their bond holders. In this way we can achieve well capitalised banks, run without political interference, at minimal cost to taxpayers.

By converting a portion of Allies Irish Banks’ approximately €40 billion of bonds, and Bank of Ireland’s €50 billion, into shares, each institution can be recapitalised. Transferring ownership to bond holders will not cost the taxpayer a cent and will avoid interminable legal battles over the transfer of assets to Nama.  Link to full article

It is a pity as my informants tell me, Morgan Kelly so set against looking at the fundamental cause of the property bubble i.e. the rise in un-taxed, free lunch land values in this country.

The first glimpse of the emerging entity for the public at large will be in the report of the Taxation Commission in July.  Smart Taxes sincerely hopes its DNA will express the best of what a property tax can be – i.e. an annual land tax.  But its parentage is not yet clear.  Lessor breeding might prevail and a mediocre, misbegotten proposal might well emerge.  Hopefully, such an arrival will be so misformed as to attract all the outraged fire from the entrenched Left and the Right,  so as to make room for its shapely, smarter fraternal twin.

One of the first government sponsored agencies out of the traps to declare for the new arrival is the National Competiveness Council and it picked up on a major feature of such a tax – its benign impact on productive investment.  But a land tax would be even better we point out, as it would support the struggling construction sector to improve existing properties whereas a tax based on the entire of the property value, land and building is, de facto,  tax on improvements.

Competitiveness council calls for property tax: Irish Times Report

THE INTRODUCTION of a valuation-based property tax on most residential properties in the Republic has been recommended by the National Competitiveness Council (NCC).

In a report entitled Getting Fit Again: The Short Term Priorities to Restore Competitiveness published yesterday, the NCC said that without “immediate and continuing action” to restore Ireland’s international competitiveness, the economy runs the risk of entering “a prolonged period of depressed economic activity”.

One of the key issues facing the economy, he said, is the sustainability of the public finances.

The report recommended that additional revenue should be raised by broadening the tax base through measures such as a property tax, rather than through further increases in taxes on income.

He said one positive feature of a property tax was that, unlike additional income tax, “it does not affect people’s incentive to work”.  Link to article

Ronan Lyons takes up their challenge here with a well laid out demolition of their (mainly) logistical arguments in his well researched blog.  Ronan does not seem to be aware of an even better proposal to taxes on property values, that of land value taxes. Land and taxes have yet to be permitted into the same sentence in the public media – but we are confident our time will come. Let us now take a back seat and enjoy the show provided by the brave proponents of property taxes who will bear the first volley of the outrage of landed interests.

Real interest rates in Ireland, 1975-2009

Sometimes, it’s easy to forget – when you see interest rates of just 2% or so on your savings that the real return on savings can be quite high. Even with zero interest rates – as people often have in their current accounts, it may actually be the case that there’s “never been a better time to save”! Earlier this week the latest CPI figures were released, showing an annual fall in prices of almost 5%, as discussed by Karl Whelan on the Irish Economy blog. Link to article

Henry George’s big idea

The land value tax, an increased tax rate on land and a reduced tax rate on buildings and improvements, has been tried in the U.S. primarily in Pennsylvania, and in some cases has been abolished just as quickly as it was instituted. Henry George’s great idea—that taxing land and not buildings would encourage urban development and curtail speculation—seems to have had a checkered history in practice. A new book, Land Value Taxation: Theory, Evidence, and Practice, edited by Lincoln Institute visiting fellows Richard F. Dye and Richard W. England, sheds more light on this distinctive approach to property tax reform.
The book is a comprehensive review of theory and published evidence on the land value tax and explores the results of its implementation in the U.S., primarily in Hawaii and Pennsylvania, and abroad in Australia, New Zealand, Jamaica, South Africa, Estonia, and elsewhere. “There has long been a need for a careful assessment of the statistical evidence on land value taxation,” said Gregory K. Ingram, president of the Lincoln Institute of Land Policy, a think tank in Cambridge, Mass., whose founder, John C. Lincoln, was inspired by the writings of the 19th century philosopher Henry George, an early proponent of land value taxation. “We wanted to learn why a form of taxation regarded as highly efficient by economists is often tried but then discarded, and whether it has achieved desired policy goals.”
As an alternative to the property tax, a land value tax increases the tax rate on land and decreases or eliminates the tax rate on buildings. A tax on land is often claimed to be very efficient and produce few unintended economic costs, to increase the density of development, to reduce speculation in land, and to speed development generally. The authors conclude that theory supports the first two claims and indicates that a land tax will lower gain from speculation though not eliminate it. Land Value Taxation: Theory, Evidence, and Practice suggests that a land value tax does not alter the timing of development.
In addition, the authors found that the implementation and political context for the land value tax has been challenging, often due to problems in assessment and issues that arise concerning fairness. In Pennsylvania, the land value tax is in place in 14 municipalities, but was tried and discontinued in 7 others. Harrisburg, a distressed city in the 1980s, initiated the land value tax as a continuing part of its economic development program. In Pittsburgh, which began a land value tax in 1913, there was evidence of its favorable impact on building activity, but the tax became a scapegoat for poor assessment and rate setting practices, and Pittsburgh reverted to a traditional property tax in 2001. In Hawaii, the land value tax was blamed for overdevelopment in locations such as Waikiki, where singer Joni Mitchell was inspired to write the lyrics “They paved paradise, and put up a parking lot.” The land value tax was abolished there in the mid-1970s.
In many cases relatively mild versions of the land tax have been implemented—often a modestly higher tax on land than on buildings—and so produced only small increases in development density, for example, that are difficult to measure. To be politically and economically successful, the authors argue, a land value tax must be accompanied by a sophisticated assessment system, frequent re-assessments, a nimble rate-setting process, effective land use planning, and ongoing public education.
Land Value Taxation: Theory, Evidence, and Practice provides guidance for additional empirical work by identifying areas where existing studies are weak or contradictory, and informs new attempts to implement land value taxation. It settles some debates about land value taxation and initiates new ones, including issues of fairness and equity in land taxation, winners and losers when a land value tax is implemented, and what political coalitions are likely to form in support of and in opposition to the land value tax.