Monday, November 1, 2010

The Global Natural Resources Bank

We came across this discussion on how to handle private ownership of things, such as land and natural resources, that are in limited supply. Is it possible even to have private ownership of such things? Henry George thought it was not a good idea. Others have maintained that land and natural resources are the only things we can own. Here is how CESJ president Norman G. Kurland responded to this issue from "John."


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John, I'll intersperse my responses below. I love your questions.

Norm

John:

As I get through your book and the other material you sent, some of my curiosity questions may get answered. If that's true, forgive me for taking this direct approach. > >You believe that one value of capital homesteading is that it democratizes capital while leaving undisturbed the present ownership of capital.

Norm:

Not quite "undisturbed." Nature puts a limitation on the rights of private property — the finite life of an owner. Rather than redistributing existing ownership rights, it's easier to change the inheritance and gift tax laws by taxing the estate of the recipient. As proposed, the Capital Homestead Act would enable every citizen to establish from the time of birth a personal Capital Homestead Account that would shelter from asset transfer taxes any gifts or bequests below an accumulation of $1 million and impose a tax on accumulated assets above that exemption level. This hopefully would encourage the wealthy to spread out their gifts and bequests as broadly as possible and thus discourage future monopolies of capital.

John:

A lot of those assets are invested in what I call the common wealth and I particularly wonder how ownership of coal or iron ore or petroleum or diamonds, or buildable land will be affected and what impact the impact it will have on those who do not own it.

Norm:

This is an excellent point where I think Kelso and Henry George can be brought together. As I will point out below, we should separate out (1) treatment of subsurface rights, rights over national parks and nature reserves, scenic coastlines, water, airways and other natural resources, from (2) treatment of surface rights for planning, developing the land and adding infrastructure for building viable, life-enhancing, ecologically sound, energy self-sufficient communities upon the land, from (3) the economic activities that bring people, technology and structures together for the market-based production and market-based distribution of capital goods and consumer goods, including mining rights.

John:

It seems to me there will be an economic balance permitting some more (far more) than their fair share if the concern is CESJ's. Were it not for this thought, I would probably give up my fondness for the citizen's dividend (CD)in favor of total support for Capital Homesteading (CH). I still think it would be better to combine financing the CHA with a portion of the CD. That way, there would be no loans to repay.

Norm:

I think there is a way to avoid loans for land acquisition, build equal land ownership rights among all citizens in a "community" as designated by the State or higher governmental authority, and avoid concentrating direct economic power over land, land planning and land rentals in government, mankind's only legitimate monopoly over the means of coercion. As a plausible expedient in today's USA in dealing with surface rights only, the State could designate all "communities" within its border that would be eligible to form Citizens Land Banks (CLBs) (on a one citizen, one-share basis) for planning, developing, redeveloping and renting surface rights on land within each local or regional community's borders. Assuming the Federal and State governments gave the CLB tax treatment comparable to that enjoyed by ESOPs and supported this bottom-up empowerment model over top-down tax, credit and government land rental redistribution (as in the Citizen Dividend advocated by Georgists) models, then government at every level could transfer free to CLBs government-owned land for distributing property rights free to each local citizen. (The operating Jeffersonian principle is that anything that can be owned by the State can and should be owned by the citizens.)

As for privately-owned surface rights in the community, the law could terminate the private ownership of surface and subsurface rights upon the death of the owner and his or her spouse. Thus, title to surface rights would automatically be transferred under that law to the CLB, while leaving the structures upon the land to continue to be owned by whoever inherits those assets and is willing to pay land rents to the CLB.

Because it would use the land for the benefit of the "public" (in a truer sense of the word than if it were the government), the CLB could be granted by the State its power of condemnation under eminent domain. Then the CLB could buy the structures and improvements at a fairly appraised price and either lease back the structures and improvements to the new owner, sell them to others, or tear them down for redevelopment for purposes more beneficial to the citizens.

There is another option to canceling out land surface ownership rights upon death. The CLB might be required to pay the new owner for title to the surface rights. In that scenario, the CLB would have to borrow under the no-interest productive credit policies under the Capital Homestead Act. The loan would be repaid by future CLB rental incomes from all surface rights in the community, including that from users on the free land granted to the CLB from government.

John:

Completely different question: Has anyone extrapolated the projections you do for U.S. citizens to the global population?

Norm:

No, but I would love to get some academics volunteering their time to do those projections.

While I like to develop models that can be realistically launched as prototypes in order to move toward more universal replication, your question provoked me to think more about global applications of the CLB concept. First, I hope we can find a community with some committed binary economics activists to experiment with the CLB concept; e.g., East St. Louis and Carbondale, IL; Washington, D.C. and the Virginia and Maryland suburbs; Orlando, FL; an Indian reservation; the Ozarks in Missouri; the Mississippi Delta; and maybe, John, in your area in New Hampshire. We'll need people with political clout at the State level first.

When we think globally about how to treat subsurface rights, rights over national parks and nature reserves, scenic coastlines, water, airways and other natural resources, one is tempted to conclude that all natural or God-given resources should be owned equally by every human being in the world, no matter where he or she is located. Looking into the future, I can envision a for-profit Global Natural Resources Bank (operating like a global central bank does with its monopoly and "rental rules" over money and credit policy) that would own all natural resources, set the rules for conserving and recycling non-replenishible resources, arrange for market-based rental fees by auctioning to competing broadly-owned corporations and cooperatives the right to explore and extract minerals and market natural resources, and then paying out rental incomes as dividends to each shareholder of the GNRB. But most observers recognize that global politics is not yet mature enough to implement a GNRB that could overcome the incredible barriers today in trying to reach every human being and enroll them as shareholders, getting a free, non-transferable private property share to each one, and then distributing dividends from GNRB rentals of natural resources. The current nation-state system and the very nature of the UN stands in the way. Hence, I would move in stages toward the more ambitious goal.

I would encourage CLBs wherever the politics permit to set working models for the new approach to citizen dividends. I would also propose, for example, that the US (or Canada) establish a for-profit Federal Natural Resource Bank (analogous to the Federal Reserve System in renting money for productive activity) to serve the functions described for the GNRB but dealing only with all natural resources within the boundaries of the US (or Canada). Every man, woman and child from birth to death would receive free as a right of citizenship a single non-transferable share of stock in the FNRB with full private property rights, including voting and dividend rights but without the right to sell or transfer ownership rights. Thus, rental incomes from the natural resources of America would raise the purchasing power of every family and individual, with no government redistribution required. All citizens would also have the money to pay for government services at all levels, but the power over money would flow upwards from a nation of independent capital owners. The government necessarily become more dependent on the economic strength of citizen owners, rather than forcing more and more citizens into lives of economic dependency.

Under a Capital Homestead Act, citizens would also receive rental incomes from the rental by a local CLB of surface rights in the land of their community. And each citizen would be able to accumulate FNRB and CLB shares in a tax-sheltered Capital Homestead Account at their local bank, where he or she would also receive a periodic allotment of interest-free capital credit to invest in newly issued full-voting, full dividend payout shares of a company in which a member of the family works, a company in which they have a monthly billing account, the local CLB, or qualified companies with a solid history of earnings.

As more democratically oriented nations around the world follow the lead of the US or Canada in enacting Capital Homesteading legislation and establishing FNRBs, they can form a commonwealth of combined natural resources by merging each of their FNRBs into a Commonwealth Natural Resources Bank (CNRB) and distributing free CNRB shares to each of their citizens to replace their FNRB shares. And eventually this process will lead to a Global Natural Resources Bank, building ownership power into every citizen on the globe from the community level up. The process will create a world of capital owners and a truly democratic global economy based on principles of economic justice, the ideal needed to sustain development and peace for truly empowered citizens of the global community.

In the final analysis, John, the issue is in whose hands should power (i.e., sovereignty) be placed. Through Capital Homesteading and binary economics and under the only higher sovereignty, that of the Creator, all power should reside in the individual human being, under a system where it can be delegated upwards. The structured diffusion of economic power through universal access to property rights is the ultimate check against the inevitable corruption and abuses of power that result from concentrated power. As the forces of globalization mount, we need people of goodwill like you and others in your human empowerment network to work with us in transforming structures of greed and envy into structures of justice.

Best regards, Norm

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