Our May/June 2018 Annual Labor Issue

0518cover--for-blog

Our May/June 2018 issue, which is our Annual Labor Issue, has been sent to subscribers, and we’ve posted several articles from it to our website, including David Bacon’s How Filipino Migrants Gave the Grape Strike
Its Radical Politics
, Ellen David Friedman’s What’s Behind the Teachers’ Strikes, and (posted today), the first installment of Jane Paul’s series “A Sustainable Economy Rises in Los Angeles,” Financing a Sustainable Economy in Los Angeles.

 

Here is the page-two editorial note from this issue:

Our New Annual Labor Issue

With this issue, we move our Annual Labor Issue from September/October to May/June—or, as we have been telling people, from the bosses’ Labor Day to where it belongs: near May 1st, which is celebrated almost everywhere besides the United States as International Workers’ Day.
Our cover story, by veteran labor organizer Ellen David Friedman, looks at the biggest story in the U.S. labor movement today—the teachers’ strikes that have caught fire in West Virginia, Oklahoma, Kentucky, Arizona, and Colorado. The strikes caught many people by surprise because they are happening in “red” states with relatively weak unions and labor rights. But GOP austerity policies in those states have squeezed public-sector workers, and teachers in particular, for years; the strikes are a response by teachers who have reached a breaking point. Friedman analyzes the insurgency as the last recourse teachers have when politicians and labor bureaucrats have failed them. But this “movement moment” also includes the growing democratic rank-and-file caucuses in the blue states, like the one that took over the Chicago Teaches’ Union, which are linking up with likeminded teachers in the red states.
Public-sector workers are about to feel yet another squeeze—from the expected U.S. Supreme Court ruling in in Janus v. AFSCME Council 31. That ruling, which could come by early summer, is likely to eliminate the requirement that workers who don’t want to join an existing union have to pay an agency fee for the collective bargaining services that the union provides. In his “Economy in Numbers” column in this issue, Gerald Friedman provides some background to Janus, including the precipitous rise of public-sector unions in the 1960s and ’70s; the steady rate of unionization in the public sector since then, even as the rate in the private-sector has fallen; and the fact that women, African Americans, and Latinos are disproportionately likely to work in the public sector and to be in public-sector unions. These groups will be affected most by Janus, but the ruling will also undermine the positive pressure public-sector unions have on wages and pensions for all workers.
As is the case in teaching, women are also represented disproportionately in the hospitality sector. Economist Ellen Mutari’s feature in this issue examines how that affects the dynamics of sexual harassment in the sector, with a focus on casino workers. Mutari emphasizes how intersecting institutionalized power structures of gender, race, and class are key to understanding workplace harassment and how it differs from sector to sector. Collective action, including militant action through unions and through organizations like the Restaurant Opportunities Center United, will be key to moving the #MeToo movement from a hashtag/media phenomenon focused on Hollywood to a robust social movement encompassing industries with lower-wage workers.
History holds important lessons about the importance of labor militancy. As Jane Slaughter noted recently in Labor Notes, the striking teachers in West Virginia wore red bandanas in homage to that state’s heritage of militant organizing among coal miners. Similarly, David Bacon’s feature on the role of militant Filipino activists in the history of the famous grape strike of the late 1960s credits the activists for keeping a legacy of labor militancy alive through another period of reaction, the Cold War.
Also in this issue: John Miller looks at the Wall Street Journal’s criticisms of Trump’s tariffs and the resulting trade war with China and outlines a progressive alternative to both Trump’s trade chaos and the Journal’s free-market trade policies; Arthur MacEwan responds to a reader’s question about what regional wage variations mean for the proposal to raise the minimum wage to $15/hour; we begin a new series by teacher and community activist Jane Paul on efforts to build a sustainable economy in Los Angeles; and more!
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We are very pleased to announce that Dollars & Sense has a new co-editor, Nick Serpe! Nick worked for several years as an editor at our comrade publication, Dissent magazine, and more recently did graduate work in economic history at Columbia University, where he studied the political economy of Silicon Valley. He brings extensive experience in editing and left publishing and also a passion for labor organizing and left political activism. Welcome, Nick!

 

How Colonies Can Liberate Themselves by Taxing Real Estate

By Polly Cleveland

Greece, Haiti, and Puerto Rico have something important in common: they are colonies. Puerto Rico started out as a Spanish colony and was then acquired by the United States as a “gift with purchase” of the Philippines in 1898. Greece and Haiti (itself a former colony of France) have become debt colonies of the multinational banks and their supporting governments. In all three, wealth is highly unequal. Most of the land, and all the best land, is owned or controlled by absentee natives or by outside organizations—foreign corporations, banks or governments. Local government is corrupt, incompetent, and obligated to outsiders if not actually controlled by them. There’s a two-fold net effect. On the one hand, there’s a continuing drain of working capital and labor to the outside, as rents, interest, profits flow out and young adults emigrate. On the other hand, the extraction process cripples the economy, by cutting off working capital and killing labor incentives. The local government, cannot or will not provide adequate services, due to corruption and lack of tax money. Metaphorically, these colonies are being bled dry.

Suppose a reform government were to come to power in these places and suppose it could stave off foreign threats. How could it stop the bleeding?

New settlers in the 19th-century United States faced a similar problem. Large chunks of good land were held vacant by absentees, often railroad companies. The resulting scatter made it hard to build public works like dams and canals for irrigation. Meanwhile, the railroads charged exorbitant monopoly rates to ship the settlers’ grain to market. The solution: tax the value of property in the district. Because the absentees were not using their land, the tax helped force them to sell to incoming settlers. Until the middle of the 20th century, property taxes were the dominant means of state and local finance, so using them to bring in revenues for local development while nudging out absentees made perfect sense.

The same strategy can work for modern colonies. A reform government can heavily tax the value of real estate, possibly with exemptions for small resident property owners. Better yet, and much easier to implement, tax only the land component of real estate. Such a tax would force absentee owners to send euros or dollars back to the colonies. The government could then begin to provide services and repair infrastructure. But why tax real estate? Why not tax income or imports? Because absentees and foreign based corporations can easily avoid income taxes by funny accounting. Taxes on most imports are regressive and a drain on the economy. The real money is in real estate.

All but the most primitive governments keep some sort of registry of property, crude and out of date in Greece, Haiti, and Puerto Rico. A reform government can easily create new cadastral maps—that’s what George Washington did as he surveyed Native American land. In the age of GPS it’s even easier. The government can then place the existing claims on the map. The recorded “owner” may be a shell corporation based in the Bahamas, but no matter. Just tax it. Where claims overlap, they can be taxed twice—forcing owners to resolve the boundaries. The government can claim any blank spots—forcing hidden informal owners to declare themselves or lose the property.

How should a reform government estimate the value of property in order to tax it? This may appear a daunting problem when the property market is not very active—large absentees mostly do nothing—and many transactions are informal. But an experienced appraiser can in fact put a reasonable assessed valuation on property by walking around and observing activity. A great advantage to taxing land only is that value depends entirely on location and tends to vary smoothly from one spot to another. Property owners then can, and will, challenge their valuations—but they will have to show that the valuation is out of line with that of neighboring properties.

Another strategy for getting initial property values is to ask owners to declare the values themselves, with the government having the right to purchase the properties at the declared value. The government right to purchase, if enforced, takes away owners’ incentive to understate the value.

Once the government imposes taxes, some owners—absentees especially—will decide to sell in order to pay the tax. These sales will provide government assessors with more information, enabling them to make more accurate assessments. Meanwhile the purchasers of the property will put it to use, generating production and jobs.

When Fidel Castro’s revolutionary government took power in the American colony of Cuba, they nationalized most foreign-owned property. In accordance with international law, they offered compensation, which all but the Americans accepted. I have to wonder, if they had tried taxation instead of nationalization, could they have pulled off a smoother transition, while giving the U.S. less excuse for military intervention?