Fred E. Foldvary

The Depression of 2008

The U.S. economy as well as much of the global economy will very likely fall into a depression in 2008. This booklet will explain why there will be a recession and depression by the end of the decade of 2000-2010, and why the most probable year is 2008. You will learn how you can minimize your losses or even gain from this depression, and how government policies need to change to prevent future depressions.

Small-Group, Multi-Level Democracy: Implications of Austrian Public Choice for Governance Structure

This paper examines the process of mass democracy as the fundamental cause of transfer seeking and the centralization of governance, using Austrian-school theory and methodology such as decentralized knowledge, disaggregated phenomena, and the structure of capital goods. The alternative of decentralized, small-group governance reduces the demand for campaign financing and makes more effective use of decentralized knowledge. In addition, when public revenues originate in the local districts and are passed on to higher levels of governance, it provides incentives for revenue sources which do not have an excess burden on production. The governance structure of cellular, bottom-up, multi-level voting, with public revenue flowing up from the lower to the upper levels, provides a contrast for a comparative systems analysis that can yield insight into the transfer seeking endemic in mass democracy.

Planning By Freehold

Government planning of urban development is inefficient as it is controlled by political processes rather than conducted on behalf of the people it is intended to benefit. Certain forms of property rights such as divisions of freehold and leasehold can, and in practice do, lead to much more effective use of resources and provision of shared services as the owners of the freehold have an incentive to maximise site values and rents.

The Completely Decentralized City The Case for Benefits Based Public Finance

An alternative to centralized top-down city governance is a multi-level bottom-up structure based on small neighborhood contractual communities. This paper analyzes the voting rules and public finances of decentralized, contractual urban governance and the likely outcome of such a constitutional structure, substantially reduced transfer seeking or rent seeking. Tax and service substitution, with lower-level funding and services substituting for higher-level public finance, is the general process by which the governance would devolve. Land rent is the most feasible source of such decentralized public finance, and local communities could also engage in local currency and credit services. Some empirical examples demonstrate the implementation of some of these governance structures. Copyright 2001 The American Journal of Economics and Sociology.

The Ultimate Tax Reform: Public Revenue from Land Rent

An ideal public revenue policy respects a persons right to privacy, does not discourage work or savings, and does not induce dishonesty. While income, sales, and value-added taxes fall woefully short of this ideal, land value taxation meets each requirement.

An Austrian Theory of Spatial Land

Classical economics recognizes three categories of inputs into production: land, labor, and capital goods. The three factors are also germane to Austrian economics.

Public Revenue from Land Rent

Rent, the return on land, can be taxed without creating an excess burden. The geographical benefits of a location, especially its civic services and public works, become capitalized into higher land value, while the taxation of the rent is capitalized into lower prices for purchasing land. The taxation of site rentals thus returns to the government the rentals generated by its services. In principle, the optimal expenditure for a public good impacting territory is where the induced marginal rent equals the marginal cost of the good. This chapter provides an analysis of the ethics, economics, and politics of basing public revenue on land rent, its consequences for an economy and the public well being, and a public-choice analysis of why governments have not widely adopted this type of revenue.

The Complex Taxonomy of the Factors: Natural Resources, Human Action, and Capital Goods.

Contemporary neoclassical economics has reduced factor analysis to two homogenous inputs, K and L. This excessive simplification has led to a deficient understanding of economic reality and a misunderstanding of concepts such as the producer surplus. This paper presents a taxonomy of the factors, including the complexity of natural resources. A better understanding of the role that factors play will enhance an understanding of economic reality and policy. Copyright 2006 American Journal of Economics and Sociology, Inc..

Circumventing California's Proposition 13 for the Public Collection of Rent

Prior to the passage of Proposition 13, local governments in California set their own property tax rates and received the revenues. Californias Proposition 13, enacted in June 1978, severely limits the states ad valorem real property tax. The measure limits the real property tax to one percent of the purchase price, and also limits the annual increase to two percent until the title is transferred. The proposition also shifted the allocation of the revenues from the counties to the state.However, state laws and local initiatives have enabled cities and counties to circumvent the limitations of Proposition 13 to extract revenue from real estate with parcel taxes, special assessment districts, developer charges, and other charges. Real estate is also tapped privately to by homeowner association assessments, which play an increasingly important role in providing civic services. This paper analyzes the impact of Proposition 13 and examines these statewide and local measures to get around the tax limitation.While the initial impact of Proposition 13 was a reduction in the states fisc, increases in the sales and other taxes as well as local revenue sources have now restored the tax burden of Californians to slightly above the national average. Thus, the proposition has been largely an exercise in futility, centralizing government, greatly increasing the complexity of its public finances, and ultimately failing to constrain the size of government.

The Economics of Henry George

Henry George was an American economist and social philosopher who wrote during the last three decades of the 1800s. He combined economic analysis with moral philosophy, as one of his themes was that there is a harmony between economics and ethics: what is economically efficient is also morally just. I will present first his economic theory, then his moral philosophy, and then apply it to policy and markets. Finally, I analyze the relationship between Georgist thought and socioeconomics.