Posted by George on Sat, 29 Sep 2012 01:54 | #

The Golden Dawn recently opened an office in New York City. You should try to contact them directly with this proposal via their NYC office.

Greek Neo-Nazi Golden Dawn Party Opens Office in New York City
“Greece’s neo-Nazi Golden Dawn party has set up an office in New York City, in an effort to reach out to Greek citizens living abroad.”

http://www.israelnationalnews.com/News/News.aspx/160223

Posted by uh on Sat, 29 Sep 2012 03:08 | #

If they agree to open an office down in Tarpon Springs, I will be their man on the ground. Great town.

Posted by loring on Sat, 29 Sep 2012 06:45 | #

Greeks own a lot of diners in the US. Opening an office in NYC is a good idea. There are lots of Greeks in Queens, specifically Astoria, Queens. There are Greek mafia families that operate out of Astoria and some of them have ties to the major Italian mafias. This should be good for establishing shadow networks and governments.

Posted by daniel on Sat, 29 Sep 2012 10:14 | #

I believe that Pete Papaherakles knows this guy. I’ll recommend that he have a look and try to put you in contact with him later..

Posted by sarki on Sat, 29 Sep 2012 15:33 | #

The Golden Dawn is not a Neo Nazi party. The Golden Dawn is a Greek nationalist party. Enough of tripe and balderdash misrepresentation. The Zion truancy to paint any and every nationalist movement as ” neo nazi” . They simply can not stomach nationalism. Zion can only thrive in multiracial, multicultural societies, in those environs they exercise maximum and supreme control. Nationalism the antibioitc to Zion bacteria.

Posted by jamesUK on Sun, 30 Sep 2012 01:23 | #

Golden Dawn Initiation, Ritual Magic, and Alchemy

http://www.youtube.com/watch?v=qndqOHyRuvg

Anonymous - Message To Greece (GREEK SUBTITLES)

http://www.youtube.com/watch?v=4eJP9wDhDoI

Posted by Leon Haller on Sun, 30 Sep 2012 05:45 | #

How many people here wish, like me, that there were an American Golden Dawn? Actually, I think there will be one day, as America continues to slide down the “diversity” rathole.

Uh’s comment about WN being a bunch of highly intelligent (I’d say somewhat intelligent) but dispersed white men sounds about correct. What we desperately need is face to face contact within a larger organizing structure - but one that is not too overtly racist, like NSM or KKK. We need an Americans First Social Club, with self-sustaining local chapters throughout the nation. The emphasis would be on socializing as much as anything ideological. Build the social, commercial and friendship networks, and the ideology can be introduced later. The important thing is not to be too extreme, weird or conspiratorial, or it’ll be defeated before it even gets started. Must be as mainstream as possible - just an organization of ordinary whites to advance their professional and personal interests, exactly along the lines of similar organizations for blacks, Latinos, Jews, etc.

This would be the start of an organization that we would one day hope to transmogrify into the nucleus of a future secessionist White Republic.

Posted by CS on Sun, 30 Sep 2012 06:54 | #

Greece has the advantage of a proportional representation system and a system that doesn’t need a ton of money to get anywhere. It also doesn’t hurt that their economy is in dire straits which tends to produce anger in the population that is targeted to the ruling parties. My guess is that even if Golden Dawn received 49% of the popular vote all the other parties would gang up to keep it out of power.

Posted by James Bowery on Sun, 30 Sep 2012 14:47 | #

CS re the 49% dilemma:  The political system becomes irrelevant if it cannot deliver social goods and the Golden Dawn can.  They are onto the correct strategy in setting up blood donations, food delivery, shadow enforcement, etc. for those they consider Greek citizens.  If they adopt the system I proposed for the delivery of social goods they will go straight for the jugular of the beast.

Posted by CS on Sun, 30 Sep 2012 15:16 | #

JB,

Golden Dawn is sort of bribing people to support them which I don’t really have a problem with. I’m surprised the other parties there don’t do the same thing.

Posted by Anon on Sun, 30 Sep 2012 16:37 | #

How many times have you heard a WN grumble “For the white man to wake up, things are going to have to get a lot worse and the economy turn to ruin. At the moment, the white man is too comfortable watching NFL on his 3D TV”?

That economic collapse scenario is now a reality in Greece. If Golden Dawn fail in Greece, then there is no hope for America. For decades and decades, WN have dreamt of economic collapse and now here it is in Greece. This is the one chance to test the economic collapse theory. If the Greek people aren’t woken up by this, then there is no reason why white Americans will be woken up either.

So WN from around the world should be converging on Greece or channelling American WN money to Golden Dawn to make it happen in Greece. WN have to sieze the opportunity, because if economic collapse doesn’t work in Greece, it won’t work anywhere.

Economic collapse will be more difficult to produce a Golden Dawn party in America due to unfavorable demographics and the higher cost of political campaigning in America. But in Greece, a small amount of American WN money can go a long way.

Posted by James Bowery on Sun, 30 Sep 2012 16:57 | #

CS, “bribe” is a loaded word.  All contracts are mutual “bribes”.  Open borders libertarians attack “the social contract” when they want to deny that men have a reasonable expectation to border control implied by consent of the goverened.  However, if anyone gets serious about the idea of delivering social goods, including enforcement of “property rights”, in a way that would likely constitute a contract willingly signed by the individuals under the implied jurisdiction, they immediately go completely haywire.

Contrary to open borders libertarians—that is to say, Jewish-led libertarians such as those led by Mises (as was Hayek et al)—it is clearly the case that few men would sign a contract that gave up their natural right to defend the material needs for support of their families in exchange for the potential of garnering vast accumulations of wealth that could deprive other men of the means of supporting their families.  Yet that is the construct of property used by open borders libertarians:  Throw the dice and if you win you get to have gangs of men take the food from the mouths of the children of individual men who lost the dice throw*.

What many if not most men would assent to is a contract in which they are partners in a venture that created a machine that produced wealth—a machine sometimes called “civilization”—and in which they shared the profits.

The partnership does not “bribe” those men—nor are they “bribing” each other—when the profits of their busienss relationship are distributed to the partners.

*When I talk of a game of dice, I am talking about civilization as a kind of game played by natural persons, the rules of which are _not_ natural but contractual.  When I talk of civilization as a “machine” I am talking about something less than human that can—with proper controls—serve humans.  When people step out of their role as partners and into their roles as parts of the machine—abiding by the rules of the machine (which may entail following the rules of the “game”)—they are adbicating part of their humanity while acting in those roles.  Those roles are frequently called “positions” or “jobs”.  But do we, as humans, need “positions” or “jobs” outside of the fantasies of those who wish to treat us as extensions of themselves?  NO.  The entirety of civilization, as machine, could be totally automated under the contract I posit, and it would only be to the good of the humans that had entered into the contract.  The open borders “libertarian” scheme would result in vast swaths of humanity becoming dispossessed—necessities “trickling down” at the pleasure of a few elites that controlled the machines.  The communist scheme would have all wealth even more centralized with a political bureaucracy trickling down whatever social goods suits the pleasure of the bureaucrats.

Posted by Wandrin on Sun, 30 Sep 2012 23:26 | #

“bribe” is a loaded word.

Yep, a social contract taking shape to replace the one the current elite have reneged on.

I’m taking notes, for sure.

Posted by gopher on Mon, 01 Oct 2012 17:00 | #

Contrary to open borders libertarians—that is to say, Jewish-led libertarians such as those led by Mises (as was Hayek et al)—it is clearly the case that few men would sign a contract that gave up their natural right to defend the material needs for support of their families in exchange for the potential of garnering vast accumulations of wealth that could deprive other men of the means of supporting their families.  Yet that is the construct of property used by open borders libertarians:  Throw the dice and if you win you get to have gangs of men take the food from the mouths of the children of individual men who lost the dice throw*.

That’s why they hate Georgism:

http://www.lewrockwell.com/blog/lewrw/archives/12798.html

Egads, I hate Georgism
Posted by Stephan Kinsella on April 25, 2007 10:58 AM

Rothbard just demolishes Georgism in his “The Single Tax: Economic and Moral Implications and A Reply to Georgist Criticisms.” I’m reading now Doherty’s excellent book, Radicals For Capitalism, and I must say that when I read the parts about “early” or “proto-libertarians” being influenced by Georgism (or being Georgists), it drives me nuts. I think this is even worse than nutty Galambosianism; even worse than the outright socialism and leftism that some libertarians flirt with in youth before they get some sense. At least no one pretends socialism is libertarian. Why anyone would ever think Georgism makes any sense whatsoever, or is compatible with libertarianism, I have no idea. It has always seemed to me to be pure economic crankism and yet another form of socialism. In my view, our libertarian movement and philosophy should have nothing to do with Georgism.

Posted by gopher on Mon, 01 Oct 2012 17:07 | #

Most the early iconic libertarians favored sharing the unimproved value of land and natural resources.

There is a paper criticizing Rothbard’s criticism of Georgism titled “Reckoning with Rothbard”.

The paper notes that “Rothbard was also the most voluminous critic of Henry George’s single tax in the latter half of the twentieth century”:

http://onlinelibrary.wiley.com/doi/10.1111/j.1536-7150.2004.00298.x/abstract

Posted by James Bowery on Tue, 02 Oct 2012 02:09 | #

Rothbard’s hostility to Georgism is exceeded only by Marx’s:

... Before your copy of Henry George [1] arrived I had already received two others, one from Swinton [2] and one from Willard Brown; [3] I therefore gave one to Engels and one to Lafargue. Today I must confine myself to a very brief formulation of my opinion of the book. Theoretically the man [Henry George][1] is utterly backward!

I have relatively minor differences with Henry George given that he found himself having to generalize his notion of economic rent to the point that it has little practical difference with the liquidation value tax streams I posit.  For instance, if you look at a piece of land, almost all of its value is liquid.  If you accept George’s idea of “monopoly rents” as a form of economic rent, and evaluate what Bill Gates would have paid under my system for his vendor lock-in of the world to the OS standard that dominated during most of the personal computer era, you’ll see a similar outcome.

The Rentenmark‘s backing by land value was able to remedy the Weimar hyperinflation.  It is unfortunate that in addition to land value backing the Germans chose to include industrial bonds as a form of redemption for the Rentenmark, as that seems to have been its undoing.  If there had been some operational definition of economic rent, such as the one I posit, the Rentenmark might have averted WW II.

Posted by Hymie in Afula on Fri, 05 Oct 2012 04:52 | #

like all web sites, israelnationalnews is only representative of its writers….State-Rabbinate-network participants who receive large subsidies from the taxpayers here. And there is a large number of people here who are fighting to cut them off this dole. One problem is…  “one man, one vote”. They breed quite well.

There are websites here ranging from slightly to the right of Ghengis Khan, to Anarchist Lefties. Kinda like as in Greece!

I think that Golden Dawn will be more interested in allying with us, than with WN armchair -pamphleteers who haven’t been able to actually kick their can down the road any measureable distance. GD didn’t open their office anywhere near a “Pioneering Little Europe”, did they?

>>  So WN from around the world should be converging on Greece or channelling American WN money to Golden Dawn to make it happen in Greece. WN have to sieze the opportunity, because if economic collapse doesn’t work in Greece, it won’t work anywhere.

How very true.

Posted by Hymie in Afula on Fri, 05 Oct 2012 05:00 | #

>>  Deciding which escrowed bid to withdraw for use as the Drachmas for a transaction, and which escrowed bid is to be placed as the recipient of those same Drachma’s, would be the job of the shadow banks acting on behalf of depositors

If I’m reading you correctly….. this mechanism already exists in commercial law. Documentary Letter of Credit.

Posted by Pete on Fri, 05 Oct 2012 06:57 | #

GD didn’t open their office anywhere near a “Pioneering Little Europe”, did they?

See comment #3 above by loring.

There aren’t any Greeks in Pioneer Little Europes. There are many Greeks in New York and other major cities and Florida. That’s why they opened an office in NYC.

Posted by Pete on Fri, 05 Oct 2012 07:31 | #

There are lots of good Greek restaurants in New York, especially in Queens in the Astoria neighborhood. And many Greek owned diners where they could have meetings. Doubt you can get a good gyro in a Pioneer Little Europe. They probably haven’t even heard of gyros there.

Posted by Pete on Fri, 05 Oct 2012 08:48 | #

Short documentary about Greek diners in New York City:

http://www.youtube.com/watch?v=qd7i9wuPxKQ

Greeks in Astoria, Queens, NYC celebrating Greek Euro 2004 victory:

http://www.youtube.com/watch?v=UGVyLnYwyME

Posted by James Bowery on Sat, 06 Oct 2012 18:09 | #

Hymie, I think you have a fundamental misconception about my proposed relationship between transactions and escrowed bids.  Let me clarify that relationship:

An escrowed bid is the means by which liquidation value of an asset is assessed.

A transaction is the means by which ownership of an asset is transferred.

Not all assets are assessed directly by escrowed bids.  Usually, the only assets that are so assessed are those that have substantial profit streams (and/or capital appreciation) associated with them.  A candy bar factory is an example of such an asset.  The candy bar sitting on a convenience store shelf, that was produced by that factory, will typically not be assessed (except perhaps as part of the inventory of that particular convenience store—which inventory goes into establishing its value for escrowed bids for the entire convenience store). 

A transaction involving the candy bar will, therefore, not involve withdrawing money that had been placed as a bid for the candy bar, but will, rather, involve the banker of the consumer and also the banker of the convenience store and involve them in the following manner:

The consumer’s banker needs to produce, say $2.95 for the candy bar.  It does so by lowering one or more of its bids it has placed in escrow for some, probably unrelated, asset(s).  The total amount of bid-lowering is $2.95.  It then transfers that $2.95 to the convenience store’s banker, at which point two things occur simultaneously:

1) The convenience store clerk is obligated to turn over ownership of the candy bar to the consumer.
2) The convenience store’s banker has $2.95 that is being assessed an asset tax, but which is not being paid interest by the government (because it is not part of the highest escrowed bid for some asset).

The resulting actions, for all practical purposes, follow instantly (no “float”):

1) The convenience store cleark hands over ownershp of the candy bar to the consumer.
2) The convenience store’s banker finds the best escrowed bid(s) in which to “deposit” that $2.95 so as to maximize its average receipt of interest from the government (because it has the highest escrowed bids for those assets).

This results in a money supply that is entirely backed by liquid value determined by market forces.

Posted by Hymie in Afula on Sun, 07 Oct 2012 22:32 | #

>>  escrowed bids

You’re showing us a mechanism (although plain-vanilla concientious immigration-police work might end up being a cheaper way to cook the same dish) in which banks have an incentive to participate in a plan to exclude non-legals, from participating in the economy.  And, “k’all ha-keVode” for that accomplishment.

But, unless you can legislate that a “bid” must comprise a real “offer”  (as in “offer and acceptance”) to BUY the future-revenue-stream….  your plan is non-actuarial because the banks would have no motivation to stop the escrowed account from growing ever larger than the “present value” of the future revenue stream.  In fact, the bigger the escrowed amount….. the more free money they get!  Unless the government is so visionary that it can instantaneously vary the paid-interest so as to be quite a bit below the said present-value. If you can show me that government, i’ll buy it and import it to Jerusalem.

After all, owning a candy-bar-factory is NOT the same as owning an interest-bearing bond. Owning a business requires a lot of work and a lot of hassle to maintain the integrity of the present-value….  and a good amount of plain luck.

There are tax assessors in this world who are are perfectly willing to calculate an “implied liquidation value”.... when they’re talking about other people’s money.  ACTUAL liquidation values are only discovered when there is an actual liquidation. As in people showing up at an auction with cash in hand, that will CHANGE HANDS.

Whereas, owning an interest-paying bond just requires a desk drawer.

Posted by James Bowery on Mon, 08 Oct 2012 19:14 | #

You’ll have to excuse me for being blunt but the idea of having “tax assessors” is such an abjectly moronic idea (yes I know it is standard practice—that doesn’t mean it isn’t abjectly moronic) that I didn’t think it necessary to specify that an “escrow account” as I use it does what any standard escrow account does:

Require the transaction to take place upon acceptance of the conditions of the bid by the owner.

Indeed, this is the only way that my statement makes sense:

This results in a money supply that is entirely backed by liquid value determined by market forces.

Whenever a banker receives money (whether interest on an escrowed bid or result of customer’s transaction), it is caught between the horns of a dilemma:

If the banker just puts all its income into a single bid to keep it as the highest bid, the banker runs the risk that the owner of the asset will accept the bid and take all the banker’s money.

If the banker doesn’t put its money in the highest escrowed bids he can, he runs the risk of them being out-bid by other bankers that will the enjoy the interest stream from the government to offset their asset tax losses against their escrowed bids, while the lazy banker continues to pay an asset tax on its money without that offset.

Here’s the arithmetic:

RFIR = Risk Free Interest Rate (see Modern Portfolio Theory)
ATR = Asset Tax Rate

The lazy banker’s rate of loss of value on its escrowed bids is the ATR.  The industrious banker’s rate of loss on its escrowed bids is ATR-RFIR.  Aalthough the system, when in ideal equilibrium works with ATR=RFIR (and the total citizen dividend stream being the RFIR on the economy’s liquid value), ATR will frequently be greater than RFIR.  The ATR would typically be the rate of return on a longer maturity government note (say 5 year)—although with yield curve inversion that would not be the case of course.

Note:  The banker’s portfolio includes more than just bids placed in escrow with the government (for the purpose of assessing liquid value to be taxed).  It can include things like mortgages loaned to individuals known to the banker.  The banker’s unique knowledge of the individual is what enables that banker to avoid accepting the bids placed in escrow with the government for that mortgage since those bids will usually be from banks who don’t know the indebted individual as well—and therefore they cannot bid as high as would the banker who knows the individual.

The banker’s after tax rate of return on a mortgage loan is therefore:

ATROR*P = MR*P-ATR*LV
ATROR = MR - ATR*LV/P ; Divide both sides by P
WHERE
MR = Mortgage Rate
P =  Principle
LV = Liquid Value (high escrowed bid for the mortgage)

Another way of looking at it is:

MR = ATROR+ATR*LV/P ; Add ATR*LV/P to both sides

So lets say the banker wants to achieve an after tax rate of return of 3% on his mortgage loans, the asset tax rate is 6%, the amount loaned was $200,000 and the highest bid that any competing bank has put in escrow for the mortgage is $180,000:

MR = .03+.06*180000/200000
MR = .084
MR =  8.4%

The banker must therefore charge 8.4% on his mortgage loans to achieve his targeted rate of return.

From the homeowner’s perspective, however, the tax burden is basically nil (when he first takes out his mortgage) because any bid placed in escrow for his home, thereby creating a market-based assessment of his home’s liquid value, is reduced by the LV of the mortgage he owes the bank.  That is his net worth in his home.  If his mortgage is “underwater”, the escrowed bid for his home could easily be lower than the LV of the mortgage he owes the bank.  At this point, his tax liability is negative!  This means there is an automated “bail out” of home owners that have suffered a systemic attack on their home values—but only if the mortgage lenders see the home owner as being good for his debt.

It is interesting to contemplate the ways in which this system might be gamed by conspiracy but it is clearly going to be easier to correct than is a complex and byzantine tax and financial regulatory code under continual revision by rent-seeking banking institutions shooting for regulatory capture.

Posted by Euro on Mon, 08 Oct 2012 23:47 | #

Hey Jimbo,

I wonder if you would be so kind as to review a criticism of Georgism for me. The author is an American Marxist, but it seems to me he makes some valid points notwithstanding.

Here is the article:

http://michael-hudson.com/wp-content/uploads/2010/03/0801GeorgesCritics.pdf

More stuff here:

http://michael-hudson.com/category/real-estate-and-georgism/

And finally, for your personal enjoyment: “If I owned all the real estate in the world, and you owned all the money, how much do you suppose rent would be?”

http://realestate4ransom.com/

Posted by Hymie in Afula on Tue, 09 Oct 2012 03:22 | #

James Bowery,

You are much more clever than I had previously realized.  It’s possible that you have some detractors due to some assesments that you are prone to histrionics…. but we feed a cat according to how well he hunts the mice, not how sweet are his caterwaulings. Well, I am drowning in work, but I’m going to start paying attention to you. I’m about to start a period of miluim (reservist duty) which will cut down on my free time and my access to non-official satellite-bandwidth.

Posted by James Bowery on Tue, 09 Oct 2012 15:19 | #

Euro, I can’t spend the time to do the in-depth review that you might prefer but since he was kind enough to enumerate these Marxist objections into 12 points, I’ll address those in general by classifying them

1) George was not a savvy politician.
2) George overemphasized land value and under-emphasized monopoly rent seeking.
3) George was too reliant on the private sector for the delivery of social goods.
4) George was for free trade.

Critique 1 may be true but to point to Marx as an exemplar of a savvy politician is to miss the forest for the trees.  Marx (and others) should have placed his (their) political savvy at George’s disposal. 

Critique 2 has some value but to harp on it is to see the mote in George’s eye.

Critique 3 reveals the true agenda of the Marxists:  Centralize power in the public sector.  George did provide for a citizen’s dividend as the means of delivering social goods.  The citizen’s dividend obviates the need for central planning at the same time that it eliminates public sector rent-seeking.

What people don’t get is that rent-seeking happens in both the public and private sectors and you have to dispense with both.  The most vociferous advocates of the Austrian or Chicago School and of the Marxist or Keynesian School are rentiers who want their favorite sector’s rent-seeking to be preserved.

As for 4:  George was off base here.  International trade has to be tempered by national security.  This does mean there will be some degree of central authority related to the military.  I don’t see a way out of that, even with the provision of private security forces built on a foundation of armed and trained citizenry (as are the Swiss).  The only thing I think that is necessary here is to maintain an “arms treaty” between the central military authorities and the people’s militia such that the central military authorities cannot hope to raise a standing army that can defeat an armed uprising of a substantial portion of the people’s militia.

Posted by Eric on Tue, 16 Oct 2012 17:30 | #

I wonder if you would be so kind as to review a criticism of Georgism for me. The author is an American Marxist, but it seems to me he makes some valid points notwithstanding.

I don’t think Michael Hudson is necessarily anti-Georgist. He has worked for Georgist organizations in the past and appears to accept some Georgist ideas.

His main criticism of Georgism seems to be that it focuses on land rent, while he believes the dominant rentiers in the economy today are those in the “FIRE” (finance, insurance, real estate) sector, rather than the landlords that dominated in the past and in George’s day. I believe this is similar to Bowery’s position on rent. Bowery has written about generalizing Georgist type analysis of land rent to rent more generally in the economy.

Here is Hudson on the FIRE sector as the new rentier class replacing the landlord class of yore:

http://michael-hudson.com/2012/09/incorporating-the-rentier-sectors-into-a-financial-model-3/

The FIRE sector deals with the economy’s balance sheet of assets and debts, real estate, stocks and bonds, mortgages and other bank loans – and the payment of interest, money management commissions and other fees to the financial sector, as well as insurance payments and also rental payments for housing. The FIRE sector is today’s form that the rentier class takes. Rentiers are those who benefit from control over assets that the economy needs to function, and who, therefore, grow disproportionately rich as the economy develops. These proceeds are rents – revenues from ownership “without working, risking, or economizing”, as John Stuart Mill (1848) wrote of the landlords of his day, explaining that ‘they grow richer, as it were in their sleep’. Classical economics from Adam Smith onwards analysed rents, its effects, and policies towards rents, but the very concept is lost in today’s economics.

Just as landlords were the archetypal rentiers of their agricultural societies, so investors, financiers and bankers are in the largest rentier sector of today’s financialized economies: finance controls the economy’s engine of growth, which is credit in all its forms. Economies obviously need banking services, insurance services, and real estate development and so, of course, not all of finance is ‘without working, risking, or economizing’. The problem today remains what it was in the 13th century: how to isolate what is socially necessary for “retail” banking – processing payments by checks and credit cards, deciding how to re-lend savings and new credit under normal (non-speculative) conditions – from extortionate charges such as 29% interest on credit cards, penalty fees and other charges in excess of what is socially necessary cost-value.

Posted by James Bowery on Tue, 16 Oct 2012 18:38 | #

JSM’s quote: ‘they grow richer, as it were in their sleep’ is reflected in liquidation value.

To fail to operationally define liquidation value is to fail to define economic rent hence the rentiers of the private sector.

To the best of my knowledge, no one has done that but me and therefore no one has been able to come up with a rational monetary system let alone rational political economy.

Posted by Eric on Tue, 16 Oct 2012 19:32 | #

Hasn’t liquidation value traditionally been defined as the monetary value of assets when they have to be rapidly sold off, such as during bankruptcy?

Do you mean something else by “liquidation value”?

Posted by James Bowery on Wed, 17 Oct 2012 01:05 | #

Although the “standard” definition of liquidation value is less speculative than something like “fair market value”, the “rapid sell-off price” definition is still subject to speculation by the “tax assessor”.  Even though I defined in crystal clear operational terms what liquidation value was, Hymie jumped all over me due to the the presumption (totally ignoring what I had just defined) that I used the “standard” definition you just put forth as adequate.

Posted by Eric on Wed, 17 Oct 2012 02:52 | #

I didn’t mean that it was an adequate definition. Just that it had been defined before. I agree that the standard definition is not adequate since it posits that liquidation value is determined by fire sale prices.

If I understand your definition correctly, it’s a procedure for determining liquidation value via the market i.e. actual transactions while avoiding fire sale prices.

As to the relationship between liquidation value and economic rent, are you saying that the economic rent of any asset in the economy equals the entirety of its liquidation value? If so, does this mean that the value of any asset which you hold onto but don’t use or consume directly comes from economic rent?

Posted by James Bowery on Wed, 17 Oct 2012 06:12 | #

Economic rent is the risk free interest rate (again, see Modern Portfolio Theory) on the liquidation value.

This operationalizes* what Hudson refers to when he says “Rentiers are those who benefit from control over assets that the economy needs to function, and who, therefore, grow disproportionately rich as the economy develops.”  Another term might be the network externality value of an asset.  The preferred term is not “externality” though—it is “network effect”.  No one who gets funding to study economics wants to admit they notice that these profit streams are externalities because, well, that would blow the con game wouldn’t it?

*A nice thing about operational definitions is that they can be criticized.  Things that aren’t operational definitions result in jelly-fish like arguments where you never get anything nailed to the wall.  Of course, that very slipperiness of non-operational definitions is a major reason why the folks who get paid to play word games prefer to avoid operational definitions.

Posted by Eric on Wed, 17 Oct 2012 08:04 | #

Why is economic rent defined as the risk-free interest rate? How does that capture the disproportionate rise in the liquidation value of certain assets as the economy grows? As the economy grows, the value of an asset like land tends to increase disproportionately more than other assets do. Why apply a uniform rate to all assets?

And if the government stopped offering Treasuries and thus there were no risk-free interest rate, how would economic rent be defined?

Posted by James Bowery on Wed, 17 Oct 2012 17:13 | #

Economic rent is not defined as the risk-free interest rate.  It is defined as the risk-free interest rate applied to the operational definition of liquidation value.  The disproportionate rise in the liquidation value of certain assets as the economy grows is thereby captured as economic rent.

If the government stopped offering Treasuries, it would be necessary to set forth another operational definition for the rate of growth in the economy as a whole.

Posted by Eric on Wed, 17 Oct 2012 22:08 | #

Does the risk-free interest rate times liquidation value actually account for the economic rent that arises from the network effect?

For example, let’s say that I purchase a house for $100, and I do nothing to improve the house, but the economy grows and next year the house is worth $1,000. Let’s say the risk-free interest rate is 1%, and so that times $1,000 equals $10 as the economic rent. But isn’t the economic rent much greater than $10 in this example? I’ve done nothing to earn this rise in the house’s value. The ten-fold increase is an unearned windfall that’s entirely due to simply having an asset that’s plugged into the economy i.e. the network. That is, it’s entirely due to the network effect rather than my own efforts.

Posted by James Bowery on Wed, 17 Oct 2012 22:33 | #

You are presuming a decoupling between the Treasury rate and the rate of economic growth (as well as an annual economic growth rate—after inflation—of an utterly ridiculous 1000%).  The demand for capital in such an explosively growing economy will drive up interest rates explosively as well.

Posted by Eric on Wed, 17 Oct 2012 22:54 | #

So in my example, would we expect the risk-free interest rate to be 90% so that times $1,000 equals the $900 rise in the house’s price as the economic rent?

Posted by James Bowery on Thu, 18 Oct 2012 00:51 | #

You’re not thinking about rent.  You’re thinking about principle. 

Think about someone renting the property from a landlord.  When the property value goes up due to network externalities, the landlord will raise the rent.  That’s the equivalent of an economic rent increase.

What actually happens under this system when a property’s value goes up is that a banker looks at the profit stream expected from the property, decides how much of a loan he could pay off with that stream, sees the current bid is lower than that amount and then places a bid in escrow with the government in that amount.  His estimate of the profit stream has to be discounted for risk—that’s his job as a banker—so it is going to be a conservative estimate.  This is known as the net present value calculation.  Different discount (interest) rates are used in the net present value calculations but if the banker has properly discounted the future profit stream for risk, then the discount (interest) rate he uses should be modern portfolio theory’s risk free interest rate.

So let’s do a risk adjusted net present value calculation that yields a more realistic scenario:

For simplicity we’ll say the RFIR is 1%.
The asset starts out being valued at $100.
This means the prior high bid saw the asset’s certain profit stream paying off a $100 loan taken out at 1% interest rate.  Again, for simplicity, we’ll put that at just interest payments:  $1/year.
Then real economic growth hits.  The rent the banker is certain he can charge, if only he were the owner instead of the guy who currently owns the asset, goes from $1 up to $1.10.  If the RFIR stays at 1% the banker raises his escrowed bid from $100 to $110.

If the RFIR is the tax rate, the banker with the highest bid for the asset becomes very interested in what the next lower bid in escrow will be if the current owner triggers the sale and the banker ends up actually owning, hence paying tax on, the asset.  He is so interest in what that next lower bid will be because that will be _his_ liquid value assessment for tax purposes.  If the banker brings nothing in particular to the table—if his marginal value in owning the asset over the next most productive use is virtually zero—he realizes that he won’t really have _any_ profit since it will all be taken by the asset tax.  Only in the case where he believes he brings something of exceptional value to the asset does it make sense for him to even bother placing a non-zero* bid in escrow for the asset.  If he does have exceptional value to bring to the asset, the current owner will take the bid and transfer ownership and the next bid in escrow will represent a rent stream far lower than the new owner and the banker keeps all of that margin (since there is no tax on income, capital gains or sales).

So, in actuality, the banker’s net present value calculation is very different from the calculation he does under the present tax system in that he must discount the expected profit stream not only for risk, but for how close on his heels the next bidder is likely to be. 

Posted by James Bowery on Thu, 18 Oct 2012 16:38 | #

*In actuality, under this system, a banker will make non-zero bids for assets that will, if his bid is accepted, yield zero after-tax profit.  The reason for this is that all of the money supply that is not deposited in escrow with the government as the highest bid for some asset, decays over time as it is taxed even as it is not being paid interest for being the high escrowed bid; that is to say unbid (or not-high bid) money is the equivalent of demurrage currency—a currency that acts like, say, a gold certificate upon which the owner of the gold has to pay a storage fee.

Posted by James Bowery on Thu, 18 Oct 2012 19:50 | #

If someone is a victim of property crime when, if ever, does it become the socially contracted _duty_ of the citizens to provide support and comfort to the victim—and would it be under the same organization that provides police/militia protection?

A possible answer:

If the owner of an asset is allowed to register an offering price (we can presume it to be higher than any bid or he would simply accept the high bid—and we can also require him to accept any bid at that price), and, in exchange for taxing him at that higher assessment he is provided insurance against loss due to force or fraud, would this be a reasonable aspect of the social contract with the government as insurer against property crime—indemnifying up to the self-assessed amount?  Yes, there are all the usual problems with insurance, such as moral hazard, but it is, after all, the government’s purpose to protect property rights beyond those that an individual would accumulate in a natural state (ie: no marauding gangs/governments to defend against).

The conflict between self-assessment and bid assessment seems to be the conflict between government as insurer and government as mere enforcer.

This particular trade-off in roles is something worth considering—particularly when we have things like a citizen’s police force that has been in receipt of a citizen’s dividend.

Posted by James Bowery on Sun, 21 Oct 2012 16:04 | #

An extreme case is that there is only one individual who knows how to get profit from something.  In this case that owner pays nothing for the asset and keeps all profits from it—tax free.

Another extreme case is that just about anyone can see how to get the most profit out of something.  In this case, owning an asset is financially identical to having the high bid in escrow for the asset.

Posted by James Bowery on Thu, 20 Jun 2013 23:50 | #

The Davos Men at The Economist have their panties in a twist over electoral developments:

The Greek far right
Racist dilemmas

Greece needs a more robust anti-racism law
Jun 22nd 2013 | ATHENS |From the print edition

Inky-fingered Dawn
IN AN ugly recent exchange in Greece’s parliament, Ilias Kassidiaris, spokesman for the neo-Nazi Golden Dawn party, denied that the Holocaust had happened. Vassilis Economou, from the Democratic Left party, said that in Germany the penalty for denying the Holocaust was five years’ jail. Democratic Left and the PanHellenic Socialist Movement (Pasok), the two smaller coalition parties, want a new law against hate speech and racism. A draft bill from Antonis Roupakiotis, the justice minister from Democratic Left, aims squarely at Golden Dawn, proposing to ban an association if one of its members is found guilty of a hate crime, including Holocaust denial…

We’ll see if they censor my comment:

In nature males fight individually against males that enter their territory. Even in humans the Y-Chromosome maps show this to be the prehistory behavior. The primordial, if unspoken, “contract” between men and civil society is that men will give up their male single combat behavior and in exchange the civil society will defend their territory as a group. When civil society forgets this primordial contract, it is in collapse. When it does so in an era of modern transportation technology, it is in an implosion. Going on about “Nazis” is the kind of shallow analysis one can expect from civil authorities presiding over social implosion.