Posts Tagged ‘property’

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Almost 30 thousand people joined the ranks of the global super-rich last year, as booming global stock markets and corporate profits boosted the fortunes of the already very-rich and bumped them up into the ultra-high-net-worth bracket.

The global population of ultra-high-net-worth people, classed as those with more than $30 million in assets, increased by 12.9 percent last year to a record 255,810 people,  while their combined wealth surged by 16.3 percent to $31.5 trillion, according to a report by research firm Wealth-X.

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Not surprisingly, most of the gains were captured by those at the very top of the global wealthy pyramid. While all six tiers recorded double-digit growth in ultra wealthy numbers of between 13 and 15 percent, the fastest- growing tier was that of billionaires, which increased by a net 357 to a record high of 2,754 individuals. Almost half (48 percent) of the global ultra wealthy population had a net worth of between $30 million and $50 million, with the number of individuals in each tier diminishing steadily as the wealth pyramid rises. Average net worth for the approximately 122,500 ultra-high-net-worth individuals in the lower tier was $38 million, rising to $342 million for those in the $250-500-million bracket, and a substantial $3.3 billion for the elite group of billionaires. On a collective basis, only those individuals in the top two tiers of the pyramid—with a net worth of more than $500 million—experienced an increase in average net worth in 2017.

All of that makes perfect sense, given the trajectory of global capitalism during 2017. Notwithstanding the fears occasioned by surprising political events (such as the protracted negotiations for Brexit and the vagaries of Donald Trump’s presidency), the fact is last year represented a “sweet spot” for the tiny group at the top of the global economy, “supporting robust wealth gains in the financial, commodity, technology and industrial sectors.”

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But then the folks at Wealth-X want us to believe that most of the wealth was “self-made,” based on market conditions that

were clearly supportive of personal enterprise and successful investment, driven by higher financial-sector returns, entrepreneurial wealth creation in Asia and further dynamic growth in technology-related industries.

Clearly, this is not the kind of wealth that represents the property of small artisans and peasant farmers, which in fact is being marginalized and destroyed on a daily basis by the growth of finance, manufacturing, and technology—the primary sources of the wealth of the world’s ultra-high-net-worth people.

Nor is it the property of the working-class, since the wealth they create stands opposed to them and serves as the means of extracting even more surplus from the growing army of wage-laborers across the globe—in Asia, Africa, the Pacific, Latin America and the Caribbean, the Middle East, Europe, and North America.

There’s nothing hard-won, self-acquired, or self-earned about the wealth owned by the world’s ultra-high-net-worth individuals. With their cadre of accountants, tax advisers, and financial consultants (not to mention the politicians whose campaigns they finance), they manage to capture, invest, and keep in the form of cash a large portion of the surplus created by workers toiling away in factories and offices around the planet.

Their personal property is therefore social wealth, created by the united action of all members of society. Only when it is made into common property, into the property of all members of society, will it lose its antagonistic class character.

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Special mention

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President-elect Donald Trump’s decision to bribe Carrier into keeping 800 manufacturing jobs in Indiana, instead of moving them to one of its Mexican plants, has met with opposition from mainstream economists, both liberal and conservative.

Clearly, it’s not about the size of the deal (although $7 million in incentives to keep less than one thousand jobs is a big deal). Carrier corporate parent United Technologies is still planning to outsource production that will eliminate 1300 jobs in Indiana. And 900 jobs make up a minuscule portion (0.17 percent, to be exact) of the total number of manufacturing jobs in that Midwestern state.*

No, mainstream economists’ opposition rests on other grounds. Justin Wolfers, for example, uses the silly analogy of a parking garage to defend the process of “creative destruction” and the idea that a “fluid labor market. . .is the secret of American dynamism.”

Think of the American economy as a 10-level parking structure or garage, where each car represents an active firm, and the seats in the car are the jobs available. A well-managed business like this is usually pretty full. But it’s also in a state of constant flux, with new cars entering as some people arrive, and previously parked cars leaving as others head home. Every hour, around a tenth of the cars leave the lot, just as a tenth of existing business establishments close each year and leave the labor market.

The deal at Carrier is akin to Mr. Trump’s intercepting a driver on his way to his car, and trying to persuade him to stay parked a little longer — perhaps by pointing to the enticing Christmas specials at the nearby stores.

Tyler Cowen, for his part, is worried that under a Trump administration, a kind of “crony capitalism”—where companies that are good to a presidency are rewarded—will prevail.

But it’s the response by Larry Summers that interests me the most, since he sees the “the negotiation with Carrier is a small thing that is actually a very big thing—a change very much for the worse with regards to the operating assumptions of American capitalism.”

Central to Summers’s argument is the distinction between two kinds of capitalism. One is “rule and law based,” which he believes is how American capitalism operates now.

Courts enforce contracts and property rights in ways that are largely independent of just who it is who is before them. Taxes are calculable on the basis of an arithmetic algorithm. Companies and governments buy from the cheapest bidder. Regulation follows previously promulgated rules. In the economic arena, the state’s monopoly on the use of force is used to enforce contract and property rights and to enforce previously promulgated laws.

The other is “deals based,” which is the world of New York City under Tammany Hall, of Suharto’s Indonesia, and of Putin’s Russia—and, it seems, under Trump.

Economic actors assume that they have to protect their property and do their own contract enforcement.  Tax collectors use discretion in assessing taxes.  Companies and governments buy from their friends rather than seek low cost bids.  Regulators abuse their power. The state’s monopoly on the use of force is used to enrich and satisfy the desires of those who control the apparatus of the state.

So, what’s the difference? Clearly, Summers is referring to variations on a theme: both are forms of capitalism.

As I see it, the difference between “rule and law based” capitalism and “deals based” capitalism comes down to whether the capitalist class as a whole or individual capitalists are the beneficiaries of state policies. In the former, the rules and laws, backed with the state’s monopoly on the use of force, are such that the capitalist class as a whole—although not necessarily any individual capitalist—has the right to appropriate the surplus and decide privately how to distribute it. They, as a class, are the winners (even when some of the individual capitalists lose out in competitive battles with other capitalists). In the latter, when deals are made with the government, once again backed by the state’s monopoly on the use of force, individual capitalists are picked out to be winners (or, if they’re on the wrong side of the deals, losers). But it’s still the case, even when ad hoc decisions are made, that the capitalist class as a whole is allowed to capture and distribute the surplus.**

In the end, maybe Justin Wolfers’s parking-garage analogy is the appropriate one. Under “rule and law based” capitalism, garage owners compete with one another under a general set of rules and regulations—and some will win while others lose. Under a “deals based” system, individual owners find themselves negotiating concessions with the government, which can decide who the individual winners and losers will be.

So, there are differences. But in both cases, the rest of us are forced to have the freedom to park our cars in garages that we neither own nor have any say in operating.

 

*As it turns out, Indiana is the state with the highest percentage of manufacturing jobs, at 16.8 percent. But the share of those jobs has fallen dramatically since 1990, when it was 24 percent.

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**Another difference between the two systems is how the surplus is distributed and then spent. Under a “rule and law based” system, the state captures a portion of the surplus via taxes and then spends it to create the conditions under which the capitalism system as a whole is reproduced, while under a “deals based” system, individual capitalists can bribe the state with a portion of the surplus they appropriate from their workers and then receive concessions that pertain to them but not to other capitalists. In both cases, however, the surplus is used to protect capitalists’ property and enforce contracts—all the while backed by the state’s monopoly on the use of force.

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This particular protest dates back to 22 May 1816, in Littleport [ht: ja], when about 100 workers left The Globe armed with pitchforks, cleavers, and guns and smashed windows and broke down doors, stealing money, food, and goods from their wealthy neighbors.

The Littleport Riots were not isolated events, but part of “a wave of unrest” from 1815 onwards, according to Anglia Ruskin University historian Rohan McWilliam.

“There was economic dislocation after the end of the Napoleonic Wars and the introduction of the Corn Laws in 1815, which increased taxation on wheat,” he said.

“Labour wages weren’t keeping up with the cost of living, while poor harvests exacerbated the situation.”

Previously common land, on which labourers could grow crops or keep livestock to supplement their wages, was being enclosed by landowners.

Their employment conditions had also changed, said University of Hertfordshire historian Katrina Navickas, to “daily hirings instead of yearly hirings – in essence, the introduction of a type of zero-hours contract”.

This was exacerbated by a breakdown of the Poor Law, which was supposed to help the most vulnerable based on need with small sums of money and “in kind” goods such as shoes. . .

And then to tighten the screw still further, the Game Laws passed in 1816 restricted the hunting of game to landowners, with transportation the penalty for poaching – or even being found in possession of a net at night.

The disturbance broke out when a group of mostly unemployed men met at the Globe Inn, for a meeting of the village Benefit Club.

More than 300 people eventually participated in the riot, which spilled over into Ely and was put down on 24 July by the Cambridgeshire Militia and the 1st (Royal) Regiment of Dragoons.

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On 28 June 1816, five men were hanged, “having been convicted of divers Robberies” during the riots.

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Readers may remember the voiceover (quoting a 31 March 1557 letter from French colonial commander Villegagnon to Calvin) at the beginning of Nelson Pereira dos Santos’s film How Tasty was My Little Frenchmen:

The country is deserted and uncultivated, there are no houses, no roofs, nor any country accommodations. On the contrary, there is much unfriendly and savage company, lacking in courtesy and humanity. So very different from us in their habits and education. With no religion and no knowledge of truth, virtue, justice or injustice, true animals in human bodies.

And, Ayn Rand [ht: ja] later added (during a talk she gave at West Point in 1974): no property rights.

Randian libertarianism has, of course, become increasingly popular in recent years (I certainly hear it from an increasing number of my students), in part because of the public profile of such devotees as Alan Greenspan, Paul Ryan, and Rand Paul. I wonder if and how the fans of Atlas Shrugged and The Fountainhead would defend Rand’s claim that the Europeans had a right to colonize the Americas. How would they defend not her egregious historical mistakes (of which there are many, including the fallacious assertion that Native Americans had no notion of property rights whatsoever), but the terms of Rand’s claim itself:

But now, as to the Indians, I don’t even care to discuss that kind of alleged complaints that they have against this country. I do believe with serious, scientific reasons the worst kind of movie that you have probably seen—worst from the Indian viewpoint—as to what they did to the white man.

I do not think that they have any right to live in a country merely because they were born here and acted and lived like savages. Americans didn’t conquer; Americans did not conquer that country. . .

If you are born in a magnificent country which you don’t know what to do with, you believe that it is a property right; it is not. And, since the Indians did not have any property rights—they didn’t have the concept of property; they didn’t even have a settled, society, they were predominantly nomadic tribes; they were a primitive tribal culture, if you want to call it that—if so, they didn’t have any rights to the land, and there was no reason for anyone to grant them rights which they had not conceived and were not using.

It would be wrong to attack any country which does respect—or try, for that matter, to respect—individual rights, because if they do, you are an aggressor and you are morally wrong to attack them. But if a country does not protect rights—if a given tribe is the slave of its own tribal chief—why should you respect the rights they do not have?. . .

I will go further. Let’s suppose they were all beautifully innocent savages, which they certainly were not. What was it that they were fighting for, if they opposed white men on this continent? For their wish to continue a primitive existence, their right to keep part of the earth untouched, unused, and not even as property, but just keep everybody out so that you will live practically like an animal, or maybe a few caves about.

Any white person who brings the elements of civilization had the right to take over this continent, and it is great that some people did, and discovered here what they couldn’t do anywhere else in the world and what the Indians, if there are any racist Indians today, do not believe to this day: respect for individual rights.

Public art of the day

Posted: 6 October 2013 in Uncategorized
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Banksy

And property is theft. . .

Not surprisingly, the story of Monopoly is even more complicated than I knew and related before. It’s a history of not only landlords but also finance and monopoly.

The story [ht: ja] does, in fact, begin with Elizabeth Magie, in 1904. But, before we get to the modern version of Monopoly, there was another game, created by Dan Layman: Fortune. Fortune was first produced by Electronic Laboratories and then by Knapp Electric. By 1935, Finance was outselling Monopoly 10 to 1. That year, Monopoly again came to the attention of Parker Brothers, when they decided to purchase and produce the game.

Parker Brothers wanted a “monopoly” on Monopoly so they began trying to squash the competition. George Parker went to visit Lizzie Magie-Phillips to try to acquire her 1924 Landlord’s Game patent. The two knew each as Parker Brothers had published some of her games in the past and she considered George Parker the “King of Games”. The negotiation over the purchase was an easy one, Parker Brothers would pay Mrs. Magie-Phillips $500 and agree to publish a few more of her games including The Landlords Game (this was done in 1939 again with very little success). Patent number 1,509,312 now belonged to Parker Brothers.

Knapp (Electronics Laboratories) was another story. Already outselling Monopoly and beginning to market the game on a national level they weren’t convinced as easily. It took $10,000 of Parker Brothers Money (a huge amount in depression torn 1935) to convince Knapp to sell. Parker Brothers then changed Finance completely and, hiding behind a dummy company (The Finance Game Company), filled Knapp’s outstanding orders. In 1936 the board and rules were again changed slightly and Finance became a Parker Brothers game.

Parker Brothers wasn’t about to put all its eggs in one basket though. They had Darrow file for a patent, but knowing the true history of Monopoly they decided to produce their own version of the game. Fortune was the result of this work. As few as 5,000 of these games were made in 1935 before patent 2,026,082 was granted giving Parker Brothers proprietary rights to Monopoly. The name Fortune was then added to Finance which became Finance and Fortune until Parker Brothers used the name Fortune for another game in 1958.

So, as it turns out, the real history of Monopoly is the story of landlords, finance, and monopoly during the First Gilded Age and the First Great Depression.

I wonder what games will have been created based on the finances and fortunes of the Second Gilded Age and the Second Great Depression.

Apparently, the official story about the origins of Monopoly is wrong.

The official history of Monopoly, as told by Hasbro, which owns the brand, states that the board game was invented in 1933 by an unemployed steam-radiator repairman and part-time dog walker from Philadelphia named Charles Darrow. Darrow had dreamed up what he described as a real estate trading game whose property names were taken from Atlantic City, the resort town where he’d summered as a child. Patented in 1935 by Darrow and the corporate game maker Parker Brothers, Monopoly sold just over 2 million copies in its first two years of production, making Darrow a rich man and likely saving Parker Brothers from bankruptcy. It would go on to become the world’s best-selling proprietary board game.

Instead, the game was invented much earlier, by Lizzie Magie.

Three decades before Darrow’s patent, in 1903, a Maryland actress named Lizzie Magie created a proto-Monopoly as a tool for teaching the philosophy of Henry George, a nineteenth-century writer who had popularized the notion that no single person could claim to “own” land. In his book Progress and Poverty (1879), George called private land ownership an “erroneous and destructive principle” and argued that land should be held in common, with members of society acting collectively as “the general landlord.”

Magie called her invention The Landlord’s Game, and when it was released in 1906 it looked remarkably similar to what we know today as Monopoly. It featured a continuous track along each side of a square board; the track was divided into blocks, each marked with the name of a property, its purchase price, and its rental value. The game was played with dice and scrip cash, and players moved pawns around the track. It had railroads and public utilities—the Soakum Lighting System, the Slambang Trolley—and a “luxury tax” of $75. It also had Chance cards with quotes attributed to Thomas Jefferson (“The earth belongs in usufruct to the living”), John Ruskin (“It begins to be asked on many sides how the possessors of the land became possessed of it”), and Andrew Carnegie (“The greatest astonishment of my life was the discovery that the man who does the work is not the man who gets rich”). The game’s most expensive properties to buy, and those most remunerative to own, were New York City’s Broadway, Fifth Avenue, and Wall Street. In place of Monopoly’s “Go!” was a box marked “Labor Upon Mother Earth Produces Wages.” The Landlord Game’s chief entertainment was the same as in Monopoly: competitors were to be saddled with debt and ultimately reduced to financial ruin, and only one person, the supermonopolist, would stand tall in the end. The players could, however, vote to do something not officially allowed in Monopoly: cooperate. Under this alternative rule set, they would pay land rent not to a property’s title holder but into a common pot—the rent effectively socialized so that, as Magie later wrote, “Prosperity is achieved.”