© by Mark Dempsey
A recent decision by the Local Agency Formation Commission (LAFCo) approved expanding Elk Grove’s borders by about 1100 acres. Sacramento County Supervisor Sue Frost was one of the deciding votes in this 4 - 3 decision. The irony of Supervisor Frost’s vote was that she portrays herself as the Fiscally Responsible™ Supervisor, fretting publicly about low budget reserves. But the outlying development she voted to approved increases the cost of all the infrastructure local government must provide. The region also has 20 years worth of unbuild infill, already served by existing infrastructure. Building infill is a much cheaper for government.
Why did she vote for outlying “greenfield” development? Because it’s enormously profitable for a tiny plutocracy of land speculators. These plutocrats can buy or option outlying agricultural land for a fraction of what it’s worth once local government permits development. The speculators paid roughly $2,000 an acre for North Natomas--that’s 20’ under water floodplain surrounded by weak levees--and sold it to builders for $200,000 an acre once development rights were granted. Speculators do not even pay income tax on this enormous, 10,000% gross profit if they swap their land for some more real estate--often apartments or shopping centers that provide them with income.
When I complained about this to a respected local environmentalist, he attempted to console me. “You have to understand,” he said, “Sacramento does not have much industry. At least this provides a boost for the local economy.”
But industry is something necessary, or productive. Sacramento’s Siemens plant assembles light rail cars, and nearby Intel makes computer chips. Even the State Capitol makes legislation. Does land speculation make any new land? Do we need any more development land? No, land speculation simply redistributes income. Classical economics called the profit from speculation “economic rent.” Rentiers are parasites who run what today we call a “racket.”
What does a productive economy do about economic rents? The Germans make developers sell their land to local governments at the agricultural land price, then re-purchase it at the development land price. The public gets the entire benefit of that "unearned increment" of profit.
The Germans have a good educational system and nice infrastructure, too--not infrastructure rated D+ by its engineers, as is the case in the U.S. In Germany, college tuition is free even for foreigners, and the arts budget for the City of Berlin exceeds the national endowment for the arts for the U.S. of A.
The rentier/plutocrats also support the complement to paying economic rent: austerity. The excuse for austerity is “We’re out of money,” and “There is no alternative!” (TINA) but to tax more and spend less. Austerity de-funds public services like infrastructure, education, health care, and retirement benefits. Strangely enough, the $16 - $29 trillion in financial sector bailout from the Federal Reserve in 2007-8, and that multi-trillion-dollar war in Iraq, received no "We're out of money" excuse.
After austerity cripples services for the general public, then the “solution” is to privatize and financialize. Consider higher education: Federal funding for it declined 55% since 1972. State funding has declined even more. Why do you suppose tuitions continue to rise and student loans make debt peons of graduates?
It’s probably not newsworthy that a politician like Ms. Frost is a hypocrite, but now, even environmentalists are running interference for speculators, calling what they do “industry” instead of what it really is: a racket.
A recent decision by the Local Agency Formation Commission (LAFCo) approved expanding Elk Grove’s borders by about 1100 acres. Sacramento County Supervisor Sue Frost was one of the deciding votes in this 4 - 3 decision. The irony of Supervisor Frost’s vote was that she portrays herself as the Fiscally Responsible™ Supervisor, fretting publicly about low budget reserves. But the outlying development she voted to approved increases the cost of all the infrastructure local government must provide. The region also has 20 years worth of unbuild infill, already served by existing infrastructure. Building infill is a much cheaper for government.
Why did she vote for outlying “greenfield” development? Because it’s enormously profitable for a tiny plutocracy of land speculators. These plutocrats can buy or option outlying agricultural land for a fraction of what it’s worth once local government permits development. The speculators paid roughly $2,000 an acre for North Natomas--that’s 20’ under water floodplain surrounded by weak levees--and sold it to builders for $200,000 an acre once development rights were granted. Speculators do not even pay income tax on this enormous, 10,000% gross profit if they swap their land for some more real estate--often apartments or shopping centers that provide them with income.
When I complained about this to a respected local environmentalist, he attempted to console me. “You have to understand,” he said, “Sacramento does not have much industry. At least this provides a boost for the local economy.”
But industry is something necessary, or productive. Sacramento’s Siemens plant assembles light rail cars, and nearby Intel makes computer chips. Even the State Capitol makes legislation. Does land speculation make any new land? Do we need any more development land? No, land speculation simply redistributes income. Classical economics called the profit from speculation “economic rent.” Rentiers are parasites who run what today we call a “racket.”
What does a productive economy do about economic rents? The Germans make developers sell their land to local governments at the agricultural land price, then re-purchase it at the development land price. The public gets the entire benefit of that "unearned increment" of profit.
The Germans have a good educational system and nice infrastructure, too--not infrastructure rated D+ by its engineers, as is the case in the U.S. In Germany, college tuition is free even for foreigners, and the arts budget for the City of Berlin exceeds the national endowment for the arts for the U.S. of A.
The rentier/plutocrats also support the complement to paying economic rent: austerity. The excuse for austerity is “We’re out of money,” and “There is no alternative!” (TINA) but to tax more and spend less. Austerity de-funds public services like infrastructure, education, health care, and retirement benefits. Strangely enough, the $16 - $29 trillion in financial sector bailout from the Federal Reserve in 2007-8, and that multi-trillion-dollar war in Iraq, received no "We're out of money" excuse.
After austerity cripples services for the general public, then the “solution” is to privatize and financialize. Consider higher education: Federal funding for it declined 55% since 1972. State funding has declined even more. Why do you suppose tuitions continue to rise and student loans make debt peons of graduates?
It’s probably not newsworthy that a politician like Ms. Frost is a hypocrite, but now, even environmentalists are running interference for speculators, calling what they do “industry” instead of what it really is: a racket.
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