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Jobs, shelter, food and clothes for all
Sustainable economics 
without fossil fuels 
Currency, tax and welfare reform to...
2
New Economics Party
proposal
This slideshow has been created by Deirdre Kent
with members of the New Economics Party of
...
3
Six Sections to the slideshow
1. Symptoms, the presenting problems.
2. The Role of Government
3. Diagnosis
4. A New Appr...
Section One
The symptoms of a separate worldview – global
hyperconnectedness, energy cliff, climate change, tax
havens, ha...
5
Global connectedness now
6
Financial contagion
6
7
Issues – economic, social and
environmental
Water security, food shortages, debt, youth
unemployment, derivatives fraud,...
8
A world in crisis
Have we stretched things to the limit?
9
Risks are hyperconnected
“A crisis in one area will quickly lead to a crisis in
another. Attempts at managing them are
f...
1010
11
We are a single closed system
“Human society is becoming so integrated that it
is like a single closed system that enco...
12
Global Warming
There is little time left to reverse climate change
and life on Earth will become more unbearable
with f...
13
Drought on the West Coast
14
Tax havens are a result of
poor tax policies
Governments lose a great deal of their tax
revenue because they don’t tax ...
15
It’s catchy
16
People need sufficient food, clothing, housing
and satisfying work for human dignity. They also
need loving relationshi...
17
Why should I care?
Inequality makes everyone unhappy, whether
rich or poor. Both the tax system and the money
system co...
18
After a certain level of wealth, people don’t get any
happier. The widening gap between rich and the
rest hurts all.
(I...
19
Poverty in New Zealand
20
As energy returns decline,
governments get desperate
It used to take one barrel of oil
to get 100 barrels of oil.
Now y...
21
The economy needs energy
We can’t continually have economic growth as measured
by GDP because it is dependent on energy...
The result is that
• Governments smile favourably on fossil fuel
exploration.
• Banks lend on fossil fuel exploration and
...
Section Two
• The Role of Government
24
economysecurity
A tax system
to suit the banks
banks
government
the people
houses and other 
improvements
land
tax labo...
25
All Levels of Government are
important
Why is central government important?
Community champions have been advocating
st...
26
Politicians decide tax, money and
welfare systems
27
Won’t local currencies be
enough?
Community currencies are great, but they need
capable and dedicated administrators.
C...
28
What we need
An economic recipe to feed the hungry, reverse
climate change and build good houses. Jobs need
to return t...
29
What other outcomes do we
want?
People need to get out of debt and worry less
about money. Families need enough to feed...
Section 3 Diagnosis
• An illogical tax system, a destructive money
system, an out of date welfare system and a
precarious ...
31
It is an illogical tax system
We currently tax labour, sales (GST) and
enterprise (company tax). This is illogical if w...
32
Banks reign
Banks get the best security – land. They benefit
from rising house prices.
Government has to be content wit...
33
What should we tax?
“We should tax the things we hold or take, not
what we do or make.”
Bob Keall in Resource Rentals f...
34
What are resource taxes?
Property owners hold a monopoly on ‘their’ land.
Since some land is more valuable than others,...
35
As landowners gain from rising land prices,
wealth is concentrated with landowners and
banks.
36
The tax system should encourage
long term investments
When you tax labour but not land or resources
everyone’s purchasi...
37
A destructive money system
Our money system results in widening of the gap
between rich and poor, growing debt, habitat...
38
A money system to suit the
banks
When banks create money as interest bearing debt
Competitiveness
Growing debt
Wealth c...
39
The parable of the eleventh
round
Once there was an island where ten families swapped
goods, chickens, pigs etc
A stran...
40
Where does the eleventh
round come from?
After a year of competitive trading, many families
manage to get their 11 roun...
41
When banks create the
principal but not the interest
There is never enough money in the system for
everyone to pay back...
42
Growth imperative
When climate change talks fail because nations
prefer economic growth and when this growth
imperative...
43
Widening the gap
If the money system keeps widening the gap
between rich and the rest, why do we keep it?
A no brainer!
44
A welfare mess
Means tested benefits are costly to administer
and result in the benefit trap where you can only
earn so...
45
The Shadow Economy
Off the balance sheets of banks is a huge and
dangerously precarious shadow economy.
Derivatives are...
46
“Derivatives
are financial
weapons of
mass
destruction”
Warren Buffett
48
Starve the banks!
The gigantic and growing shadow economy is
very weakly regulated, even after the Global
Financial Cri...
49
The big four Australian banks
use them too
Westpac, BNZ, ANZ and ASB, which hold 92% of NZ
mortgages, are all Australia...
Section 4
A New Way of Thinking
• Why we need a systems approach and a
completely new model.
51
Time to think differently?
We can’t solve our problems with the same level
of thinking we used when we created them.”
A...
52
New type of thinking?
“You can’t change things by fighting the existing
reality. To change something, build a new model...
5353
54
A glimpse of hope
55
We plan a second currency
designed to flow like blood
This currency will flow freely to all parts of the
country unimpe...
56
A good currency is like blood
57
Designing a currency
A well designed currency system is a powerful
agent for change. It can build in incentives for
imp...
58
Currency design can affect behaviour so
that generosity becomes the norm
59
Currency creation is a
country’s sovereign right
New Zealand should have tino rangitiratanga (or
absolute sovereignty) ...
60
So the challenge is...
We have to bring about major reforms to the
currency system, the tax system and the welfare
syst...
61
62
It really is a living system
We must treat all the above problems as a whole
system containing patterns which mustn’t b...
63
Intervention Level in order of
effectiveness
Paradigm – deepest held beliefs driving the system
Goals –what the system ...
64
Which intervention gives us the
biggest bang for our buck?
Systems theory says change major paradigms
(the common assum...
65
UBI would shock economy
Universal Basic Income or a full Citizens
Dividend, if suddenly introduced, would shock
the eco...
66
The new thinking is..
We aim to create a new parallel national currency
and link it to a very different tax and welfare...
67
Imaginal cells
When a
caterpillar has
eaten enough,
a new type of
cell (called
imaginal)
emerges with
a new type of
thi...
68
So meanwhile in the undergrowth something is emerging
68
69
If we do monetary reform
only
If interest rates drop a surge of money goes into
housing – a housing bubble. There has t...
70
Introducing land tax alone is
political suicide
You can’t just add a land tax because it is an extra
tax. People alread...
71
Land and Money the Siamese Twins
If we had monetary reform without tax reform,
then we would have a housing bubble. And...
72
Land and money are Siamese
twins
Section 5
Proposal for a Cure
• Linking a new currency to tax and welfare
reform and designing it to circulate without
tax...
74
The next ten slides explain the
ten steps
75
Step One
Allow Treasury to create Treasury Notes, (call
them Zeals). They are dated. That means they are
acceptable for...
76
Step Two
Treasury offers to buy the land of anyone who
volunteers. Treasury uses Zeals to pay. From
then on the land is...
77
Step Three
Link the new currency to a completely new tax
system. Trades in the new currency will not incur
income tax, ...
78
Step Four
• The ground rent would be shared by all levels of
Government (in New Zealand we have only
central and local ...
79
Step Five
• Ground rents would not be linked to inflation
but to the site rental value of the land. A Ground
Rent Index...
80
Step Six
• Zeals and New Zealand dollars could be freely
traded but there will be a financial penalty for
exchange from...
81
Step Seven
• Treasury will refresh and redate the zeals paid in for
tax and from time to time will issue all men, women...
82
Step Eight
• Resource taxes are imposed at source on
the monopoly use of any part of the
commons e.g. Coal, oil and oth...
83
Step Nine
• The homeowner who has been paid in Zeals uses
it to make a long term investment and to pay
taxes in advance...
84
Step Ten
• As people spend their Zeals on labour intensive
industries, production will flow to the regions.
Organic far...
85
The plan in action
• Here are some examples of what might happen.
Most people in this sample are mortgage free,
one has...
86
Woman in Auckland
• She is a 42 year old solo mother (one child), full
time student who owns her suburban house.
Land w...
87
Ecovillage
• The land held by their trust is now worth $2
million so they move into the leaseholding
scheme and pay off...
88
City professionals with kids
and no mortgage
• Land worth $400k. Use Z50,000 to pay two
years ground rent. Use Z100k to...
89
Musician on rural block
• Land worth $30ok. Mortgage free. With the zeals
they build sheds for a music centre, attracti...
90
Rotary club in small town
• They own a building and sell the land to
government, receiving 100k Zeals. Ground rental
pa...
91
Couple on small lifestyle block
• In their early sixties. He commutes to the city.
Land worth $340,000. They want to de...
92
Ground rent paid early
• By now you can see the trend. People use their
Zeals payout to pay taxes in advance. This is w...
93
We have a mortgage
• Our land value is $300,000. So we leasehold our
land to the Government and pay a ground rent of
Z1...
94
I am an absentee owner of
five Auckland homes
• The government decides to force me to sell my
land to them. I own five ...
95
When people receive a small
Citizens Dividend
• Remember that Citizens Dividend paid to all
citizens. Imagine finding y...
96
A caregiver receives more
• I am the mother of five kids and I struggle
financially. My partner and I both have casual
...
97
I am an inventor
• But I make very little money as I love the
inventing side but not the promotion or
production side. ...
Section Six -Actions
• What you can do to further discussion on
this proposal
99
What can you do to help?
• Ideas catch on if they are good. Nobody owns
them. This idea could be applied in all countri...
100
Things you can do
• Visit and join the site of the New Economics Party
http://neweconomics.net.nz. Become a financial
...
Thank you!
101
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Sustainable economics without fossil fuels, a thriving postgrowth economy

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Changing from income and sales tax to land and resources tax is a challenge. At the same time we need to reform the money system. This presentation presents a possible method of doing the two together without shocking the economy. We also now have a method for introducing a Citizens Dividend and for reforming the way local authorities are funded. We remove the growth imperative thereby setting in place the possibility of reversing climate change. We are proposing a post growth economic system where investment is naturally channelled into enterprises with a low carbon footprint.

Published in: News & Politics, Technology
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Notes
  • @VirginiaJillHarrison Hi Virginia. Money is created as debt, and so debt is 'stocks' or supply of money. In his example, he said that in a growing economy, we just tip more 'credit' in to the stocks bucket. And, GDP does indicate money velocity. And, although the system is 'inherently stable so long as it grows' this still makes it a ponzi scheme, in that if it can't grow it collapses. Or said differently, if tomorrow can't pay yesterday's interest payments, it collapses. The shadow economy is an even bigger and stupider ponzi scheme. But the ponzi scheme also applies to our monetary model.
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  • @deirdrekent true a system that grows without bound is not stable - the distinction Keen is making is that it is not the interest payment that's causing the growth, it is the inability to put a stop to ponzi schemes...

    i know this doesn't sound like a large distinction - but Amanda's characterization of stocks=debt flows=GDP is incorrect & posing a solution based on a fallacy that confuses stocks & flows (where stocks=quantity(or money-supply) and flows='velocity of money thru the market' is not likely to succeed when it can be shown the fundamental argument is flawed
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  • @amandavickers169 Yes yes. How come Steve says it can be 'stable' when clearly it doesn't work in the real world with real people paying for real houses with their family money? Nicole Foss acknowledges the limits to human stupidity. And anyone with an ounce of knowledge about the limits of the biosphere can see it is illogical. So really what Steve has done is misuse the word 'stable'. Clearly a system growing exponentially in the real world must collapse at some point.
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  • @amandavickers169 there are some who advocate for leaving money in this privileged position of commanding interest, but then setting up public banking systems to attempt to recycle that gain back into the public infrastructure. nice idea - but it's important to note that once you've given money that advantage over real assets it's impossible to legislate the limits to those who accumulate the wealth.

    consider the statement from the Malaysian forestry minister when he wryly noted that it made more economic sense to cut down all the trees because the interest on money grows faster than trees. then consider a money that depreciates over time. if you cannot store your value in the currency, then you are required to store the value in the living systems - meaning that if you want wealth in the future, then planting more trees as a crop to meet future needs makes more sense
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  • @amandavickers169 Amanda, we are so much in agreement i hesitate to speak to the differences. i think there's much to be gained from describing solutions & that we see quite the same problems. the only reason i go back to this 'theoretical model' showing that it _can_ work is that it also helps to make clear for me the reason it _doesn't_ work in real life. this gives the most powerful evidence for removing the power of money to command interest imo
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  • ----- Meeting Notes (15/07/13 21:21) ----- Between also write $70 trillion
  • ----- Meeting Notes (15/07/13 21:21) ----- Dont currently not wont
  • ----- Meeting Notes (15/07/13 21:21) ----- Wade people in NZ under living wage in that age group.
  • ----- Meeting Notes (15/07/13 21:21) ----- property
  • ----- Meeting Notes (15/07/13 21:21) ----- Rex
  • ----- Meeting Notes (15/07/13 21:21) ----- People on quite high incomes are on accomm suppl
  • ----- Meeting Notes (15/07/13 21:21) ----- understand?
  • ----- Meeting Notes (15/07/13 21:21) ----- Crown does own all the land now
  • ----- Meeting Notes (15/07/13 21:21) ----- New currency, new rules
  • ----- Meeting Notes (15/07/13 21:21) ----- Switzerland
  • ----- Meeting Notes (15/07/13 21:21) ----- Includes its disposal cost
  • ----- Meeting Notes (15/07/13 21:21) ----- pay in advance
  • ----- Meeting Notes (15/07/13 21:21) ----- Stories, pictures, examples, fewer numbers.PR person for presentation. reduced simplified. To get the general public to listen to the stories, also need all the theoretical stuff to be solid, the numbers to work out. Not much on fossil fuels.Maori issue. Extremely controversial proposal partnership, two countries within one country. All land alienated from Maori is vested in the crown.
  • Transcript of "Sustainable economics without fossil fuels, a thriving postgrowth economy"

    1. 1. 1 Jobs, shelter, food and clothes for all Sustainable economics  without fossil fuels  Currency, tax and welfare reform together. New  political solutions for climate change and inequality
    2. 2. 2 New Economics Party proposal This slideshow has been created by Deirdre Kent with members of the New Economics Party of New Zealand. Deirdre is the author of Healthy Money Healthy Planet –Developing Sustainability through New Money Systems Contact her deirdre.kent@gmail.com or on twitter @deirdrekent
    3. 3. 3 Six Sections to the slideshow 1. Symptoms, the presenting problems. 2. The Role of Government 3. Diagnosis 4. A New Approach Needed 5. The Cure. Proposal in ten steps, with its results 6. Actions to take
    4. 4. Section One The symptoms of a separate worldview – global hyperconnectedness, energy cliff, climate change, tax havens, habitat destruction
    5. 5. 5 Global connectedness now
    6. 6. 6 Financial contagion 6
    7. 7. 7 Issues – economic, social and environmental Water security, food shortages, debt, youth unemployment, derivatives fraud, terrorism, cybersecurity, rising greenhouse gas emissions, energy crisis, land mismanagement, storms, floods, droughts, demonstrations, riots, war, refugees, tax avoidance, austerity measures, currency crises, banking crises etc.
    8. 8. 8 A world in crisis Have we stretched things to the limit?
    9. 9. 9 Risks are hyperconnected “A crisis in one area will quickly lead to a crisis in another. Attempts at managing them are fragmented and simplistic and are not up to the challenge.” – David Sherman, Business Strategist, Northeastern University, Boston after World Economic Forum Global Risks, 2013
    10. 10. 1010
    11. 11. 11 We are a single closed system “Human society is becoming so integrated that it is like a single closed system that encompasses the entire globe. The crisis we are facing now is actually very unique. We are all close together in the same system and we can no longer do whatever we want.” Dr Michael Laitman, biocybernetics, ontology, Israel in the movie Crossroads: Labor Pains of a New World View. http://www.youtube.com/watch?v=5n1p9P5ee3c ).
    12. 12. 12 Global Warming There is little time left to reverse climate change and life on Earth will become more unbearable with frequent storms, droughts and floods. Severe weather events damage the New Zealand economy and raise food prices for all.
    13. 13. 13 Drought on the West Coast
    14. 14. 14 Tax havens are a result of poor tax policies Governments lose a great deal of their tax revenue because they don’t tax land. Unlike other assets, land can’t be hidden in offshore tax havens. A 2012 report from the Tax Justice Network estimated that between USD $21 trillion and $32 trillion is sheltered from taxes in unreported tax havens worldwide. That is over a third of the global GDP so you have to either pay more tax or be prepared to receive less education and poorer health services.
    15. 15. 15 It’s catchy
    16. 16. 16 People need sufficient food, clothing, housing and satisfying work for human dignity. They also need loving relationships and enough leisure. We MUST reverse environmental damage like climate change, loss of species, depleted soils, deforestation etc. The economics of happiness
    17. 17. 17 Why should I care? Inequality makes everyone unhappy, whether rich or poor. Both the tax system and the money system contribute to growing inequality. New Zealand is now in the top four in the world for income disparity with USA, Portugal and UK (R Wilkinson and K Pickett, The Spirit Level. See also Born for Love: Why Empathy is Essential and Endangered Maia Szalavitz and Bruce Perry)
    18. 18. 18 After a certain level of wealth, people don’t get any happier. The widening gap between rich and the rest hurts all. (Inequality A New Zealand Crisis ed Max Rashbrooke)
    19. 19. 19 Poverty in New Zealand
    20. 20. 20 As energy returns decline, governments get desperate It used to take one barrel of oil to get 100 barrels of oil. Now you get less oil for your one barrel of oil. (EROEI is Energy Returned on Energy Invested)
    21. 21. 21 The economy needs energy We can’t continually have economic growth as measured by GDP because it is dependent on energy and energy returns are falling. So GDP growth is falling.
    22. 22. The result is that • Governments smile favourably on fossil fuel exploration. • Banks lend on fossil fuel exploration and extraction. • Banks also lend on mergers and acquisitions so that corporates can influence governments. 22
    23. 23. Section Two • The Role of Government
    24. 24. 24 economysecurity A tax system to suit the banks banks government the people houses and other  improvements land tax labour, sales,  and enterprise no land tax you tax labour loans value expressed in interest bearing debt laws less purchasingpower tax payments
    25. 25. 25 All Levels of Government are important Why is central government important? Community champions have been advocating strong, vibrant local economies for decades. But central Government policy has never yet provided the right conditions. Governments should make the rules, then get out of the way.
    26. 26. 26 Politicians decide tax, money and welfare systems
    27. 27. 27 Won’t local currencies be enough? Community currencies are great, but they need capable and dedicated administrators. Community currencies, however, can’t generally provide finance for housing, farms or other business investment.
    28. 28. 28 What we need An economic recipe to feed the hungry, reverse climate change and build good houses. Jobs need to return to the provinces. We have to remove the growth imperative yet have a thriving economy. So let’s find a way to provide liquidity for all the many businesses necessary in a post fossil fuel economy.
    29. 29. 29 What other outcomes do we want? People need to get out of debt and worry less about money. Families need enough to feed their children and our youth need training and jobs. NOTE: What this slide show will not mention is how to “get on the property ladder” as nobody should make money from the “ownership” of land. Life is not a competition and we need to rediscover the economics of co-operation.
    30. 30. Section 3 Diagnosis • An illogical tax system, a destructive money system, an out of date welfare system and a precarious shadow economy
    31. 31. 31 It is an illogical tax system We currently tax labour, sales (GST) and enterprise (company tax). This is illogical if we want to encourage work, trade and initiative. In New Zealand these taxes comprise 79% of our revenue. The tax system has grown in a rather unconscious way and it is time to rethink it.
    32. 32. 32 Banks reign Banks get the best security – land. They benefit from rising house prices. Government has to be content with revenue coming from less secure sources like labour. We need to weaken the link between banks and land and strengthen the link between Government and land.
    33. 33. 33 What should we tax? “We should tax the things we hold or take, not what we do or make.” Bob Keall in Resource Rentals for Revenue paper
    34. 34. 34 What are resource taxes? Property owners hold a monopoly on ‘their’ land. Since some land is more valuable than others, those landholders should compensate others for this privilege. Those who have the monopoly use of resources supplied by nature like water, minerals, radio spectrums should compensate others. And those whose products cause harm others should pay up too e.g. tobacco, alcohol, gambling, pollution.
    35. 35. 35 As landowners gain from rising land prices, wealth is concentrated with landowners and banks.
    36. 36. 36 The tax system should encourage long term investments When you tax labour but not land or resources everyone’s purchasing power is diminished. Money goes into bidding up the price of assets instead of going into real production.
    37. 37. 37 A destructive money system Our money system results in widening of the gap between rich and poor, growing debt, habitat destruction from the growth imperative and instability. And because everyone is competing to pay their debt with interest, it also shapes our behaviour towards being competitive rather than cooperative.
    38. 38. 38 A money system to suit the banks When banks create money as interest bearing debt Competitiveness Growing debt Wealth concentration Instability Growth imperative which leads to habitat destruction
    39. 39. 39 The parable of the eleventh round Once there was an island where ten families swapped goods, chickens, pigs etc A stranger came and said they should improve the system. He cut up a hide and gave each family ten rounds of leather. He asked them to pay it back next year with 10% interest.
    40. 40. 40 Where does the eleventh round come from? After a year of competitive trading, many families manage to get their 11 rounds. But some don’t manage it, so have to go back to the stranger to ask for another loan. They go further into debt. This is what is happening now. For more information on the money system see http://positivemoney.org.nz
    41. 41. 41 When banks create the principal but not the interest There is never enough money in the system for everyone to pay back their debt so someone has to go further into debt to pay the interest. This means the total money supply has to keep increasing. This means economic growth must continue – the growth imperative!
    42. 42. 42 Growth imperative When climate change talks fail because nations prefer economic growth and when this growth imperative is caused by the currency system, why do we keep it? A no brainer
    43. 43. 43 Widening the gap If the money system keeps widening the gap between rich and the rest, why do we keep it? A no brainer!
    44. 44. 44 A welfare mess Means tested benefits are costly to administer and result in the benefit trap where you can only earn so much or your benefit is cut. A plethora of government income support programmes result in a complicated and expensive welfare system quite unsuited to the 21st century.
    45. 45. 45 The Shadow Economy Off the balance sheets of banks is a huge and dangerously precarious shadow economy. Derivatives are bets on the value of something else, usually a stock or bond, a security or an interest rate. The notional value is the size of the thing that you are betting on and that is now over $1.2 quadrillion or nearly 20 times the size of the global economy. A default could lead to an even greater crisis than the 2008 global financial crisis. In this game of musical chairs there is only one seat for every 100 or more players.
    46. 46. 46
    47. 47. “Derivatives are financial weapons of mass destruction” Warren Buffett
    48. 48. 48 Starve the banks! The gigantic and growing shadow economy is very weakly regulated, even after the Global Financial Crisis. Derivatives were at the heart of the Global Financial Crisis. Banks are now both too big to fail and too big to jail. The wealthiest top 1% can now easily influence Governments. So if we can’t control them, let’s just starve them by starting up a second national currency.
    49. 49. 49 The big four Australian banks use them too Westpac, BNZ, ANZ and ASB, which hold 92% of NZ mortgages, are all Australian owned. But they are really global companies. Major shareholders include HSBC Custody Nominees, JP Morgan Nominees Australia, National Nominees, Citicorp Nominee . They are all hugely exposed to toxic derivatives. “Even if 1% of these contracts default because third parties get into trouble, the whole shareholder wealth would be wiped out and the banks could be broke” Adele Ferguson, senior business writer and columnist for The Age and Sydney Morning Herald.
    50. 50. Section 4 A New Way of Thinking • Why we need a systems approach and a completely new model.
    51. 51. 51 Time to think differently? We can’t solve our problems with the same level of thinking we used when we created them.” Albert Einstein
    52. 52. 52 New type of thinking? “You can’t change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” Buckminster Fuller (engineer, designer and inventor) e.g. Wikipedia replaces Encyclopedia Britannica, Model T Ford in 1908 changed the transportation system, email is replacing postal mail
    53. 53. 5353
    54. 54. 54 A glimpse of hope
    55. 55. 55 We plan a second currency designed to flow like blood This currency will flow freely to all parts of the country unimpeded by taxes on work, sales or enterprise. It won’t pool in any city or coagulate in anyone’s bank account. It will incentivise its users to invest long term. It will nourish each local economy and reward enterprise and work.
    56. 56. 56 A good currency is like blood
    57. 57. 57 Designing a currency A well designed currency system is a powerful agent for change. It can build in incentives for import substitution. It can shape behaviour towards co-operation and generosity. In the event of a financial crisis it can be the deciding factor between resilience or collapse.
    58. 58. 58 Currency design can affect behaviour so that generosity becomes the norm
    59. 59. 59 Currency creation is a country’s sovereign right New Zealand should have tino rangitiratanga (or absolute sovereignty) over its right to design its own currency system and not let privately owned banks take charge of this. We want an ecosystem of currencies, not a monoculture.
    60. 60. 60 So the challenge is... We have to bring about major reforms to the currency system, the tax system and the welfare system but do it in a way that doesn’t shock the economy.
    61. 61. 61
    62. 62. 62 It really is a living system We must treat all the above problems as a whole system containing patterns which mustn’t be broken. We must keep the relationships. This means we have to choose where to intervene to get the most leverage. Treating one thing in isolation won’t work. A family is a system. Family therapists presented with a troubled child treat the family as a whole system, choosing the most effective intervention.
    63. 63. 63 Intervention Level in order of effectiveness Paradigm – deepest held beliefs driving the system Goals –what the system is trying to achieve Structure – as a whole, e.g. enhancing connections Feedback and delays – self-regulation, self- reinforcement, adaptation Structural elements – subsystems, actors and the physical structure of a system (Source: http://www.donellameadows.org/)
    64. 64. 64 Which intervention gives us the biggest bang for our buck? Systems theory says change major paradigms (the common assumptions and beliefs) about the currency system and the basis of taxation. And we need to change the goals. The true aim of a vibrant economy is not growth. Growth of GDP is what is killing the planet. People can thrive without economic growth. The economists assumption that we can keep going as we are is wrong.
    65. 65. 65 UBI would shock economy Universal Basic Income or a full Citizens Dividend, if suddenly introduced, would shock the economy with inflation. These three reforms of tax, currency and welfare reform if done separately would all shock the economy. But when done together and introduced gradually as a small but growing Citizens Dividend, they won’t disrupt it.
    66. 66. 66 The new thinking is.. We aim to create a new parallel national currency and link it to a very different tax and welfare system. This currency will grow slowly. We must introduce it gradually and monitor its effects closely to avoid inflation.
    67. 67. 67 Imaginal cells When a caterpillar has eaten enough, a new type of cell (called imaginal) emerges with a new type of thinking. They start to build a butterfly.
    68. 68. 68 So meanwhile in the undergrowth something is emerging 68
    69. 69. 69 If we do monetary reform only If interest rates drop a surge of money goes into housing – a housing bubble. There has to be something to stop it. A capital gains tax is not good enough. Even if all money is created by Government at zero interest, it doesn’t create jobs because you haven’t swapped income tax for land tax. You need to unblock the riverbed so that money flows into production. Besides, wealth still pools with landowners.
    70. 70. 70 Introducing land tax alone is political suicide You can’t just add a land tax because it is an extra tax. People already pay for their mortgage and they pay rates or local taxes. Why should they pay a third? So it is not politically feasible. The point of a land tax is that you must untax labour and sales at the same time and this is tricky to do. Despite many tax reviews recommending land tax in New Zealand, no government has implemented those recommendations.
    71. 71. 71 Land and Money the Siamese Twins If we had monetary reform without tax reform, then we would have a housing bubble. And if we had land reform without addressing the money system as in Hong Kong, the banks get up to all sorts of mischief.
    72. 72. 72 Land and money are Siamese twins
    73. 73. Section 5 Proposal for a Cure • Linking a new currency to tax and welfare reform and designing it to circulate without tax impediments.
    74. 74. 74 The next ten slides explain the ten steps
    75. 75. 75 Step One Allow Treasury to create Treasury Notes, (call them Zeals). They are dated. That means they are acceptable for the payment of tax until that date. They turn into a pumpkin at a certain date so naturally people want to spend them and keep them in the country. Like Flybuys loyalty points they drop off if you don’t use them.
    76. 76. 76 Step Two Treasury offers to buy the land of anyone who volunteers. Treasury uses Zeals to pay. From then on the land is leasehold in perpetuity. A full ground rent is payable on that land.
    77. 77. 77 Step Three Link the new currency to a completely new tax system. Trades in the new currency will not incur income tax, sales tax or company tax. ..newcurrrency, new rules..Currency No income tax, GST or company tax, only resource taxes
    78. 78. 78 Step Four • The ground rent would be shared by all levels of Government (in New Zealand we have only central and local Government) and would be set by auction where possible. No further rates (local taxes) would be payable. Central Government Local Government share revenue
    79. 79. 79 Step Five • Ground rents would not be linked to inflation but to the site rental value of the land. A Ground Rent Index would be established for each area by taking a sample. Ground rents would only rise if new public infrastructure was built and would only fall if there was an earthquake or subsidence or, say, a rail link was discontinued. They vary very little over time otherwise and are not subject to lease reviews because they are leases “in perpetuity”. No sudden rises!
    80. 80. 80 Step Six • Zeals and New Zealand dollars could be freely traded but there will be a financial penalty for exchange from Zeals to NZD. However, because Zeals are dated, they would need to be in New Zealand at the time of the expiry date. Importers will need the trading currency NZD and employers will favour the new Zeals.
    81. 81. 81 Step Seven • Treasury will refresh and redate the zeals paid in for tax and from time to time will issue all men, women and children with a Citizens Dividend in Zeals. Thus the ground rents from the land are shared with the people. It will be digital only.
    82. 82. 82 Step Eight • Resource taxes are imposed at source on the monopoly use of any part of the commons e.g. Coal, oil and other mining, fisheries, water, radio spectrum etc. Revenue to be shared by all levels of government.
    83. 83. 83 Step Nine • The homeowner who has been paid in Zeals uses it to make a long term investment and to pay taxes in advance. As they must be used for New Zealand-sourced goods or services, Zeals cannot be spent on overseas travel or on imported goods. This encourages import substitution manufacturing e.g. wool insulation of homes, food products, clothing, furniture, fuels, natural paints and other NZ-sourced building materials.
    84. 84. 84 Step Ten • As people spend their Zeals on labour intensive industries, production will flow to the regions. Organic farming, smaller farms, restoration of land will result from more labour input and less fossil fuel input. Businesses with a low carbon footprint will thrive because of this new capital injection. And the price of houses on leasehold land will halve.
    85. 85. 85 The plan in action • Here are some examples of what might happen. Most people in this sample are mortgage free, one has a mortgage. (We are choosing mortgage free people to start with because there is no opposition from banks.) One is an absentee owner. In the next slides some are individuals and some are organisations.
    86. 86. 86 Woman in Auckland • She is a 42 year old solo mother (one child), full time student who owns her suburban house. Land worth $200,000. Ground rent would be about Z10,000 a year so she pays two years in advance leaving Z180,000. She decides to build a second storey so she can rent it out. No tax or sales tax on all trades in Zeals. No more rates.
    87. 87. 87 Ecovillage • The land held by their trust is now worth $2 million so they move into the leaseholding scheme and pay off six years of ground rent Z100,000 a year. Remainder of 1.4million Zeals is now invested in a range of sustainable businesses which require buildings and labour and NZ sourced materials. By the end of six years the income in Zeals exceeds the ground rent. The saving on rates is considerable each year.
    88. 88. 88 City professionals with kids and no mortgage • Land worth $400k. Use Z50,000 to pay two years ground rent. Use Z100k to lease country land and plant trees for firewood or timber. Use Z250k to insulate and upgrade their house so that they pay lower power bills. A flat is added to bring in rental in Zeals. Their next project with zeals will be to set up an apiary on a friend’s rural orchard.
    89. 89. 89 Musician on rural block • Land worth $30ok. Mortgage free. With the zeals they build sheds for a music centre, attracting top musicians who get paid in zeals, no tax. Overseas artists need to spend the zeals before they leave the country, so they use them to buy food while here and make sure they visit him first so they have time to spend them while in NZ. Food forest established after paying for permaculture advice. Cool food storage room built and fences. No further rates, saving $2600 a year.
    90. 90. 90 Rotary club in small town • They own a building and sell the land to government, receiving 100k Zeals. Ground rental payable is 4000 Zeals a year. They pay off three years and use the remaining 88,000 Zeals to become a partner in a local business manufacturing and selling its bio-fuel made from old tyres.
    91. 91. 91 Couple on small lifestyle block • In their early sixties. He commutes to the city. Land worth $340,000. They want to develop the block to produce an income. They set aside ground rent and pay for labour and for buying fruit and nut trees. They plant a cash crop (say pumpkin or garlic) which they sell within New Zealand. They pay a permaculturist for advice and pay for labour to plant a food forest. They insulate the house and build fences.
    92. 92. 92 Ground rent paid early • By now you can see the trend. People use their Zeals payout to pay taxes in advance. This is why the Government, after sharing some of the bounty with local government, is able to distribute a Citizens Dividend quite early.
    93. 93. 93 We have a mortgage • Our land value is $300,000. So we leasehold our land to the Government and pay a ground rent of Z15,000 a year instead of a mortgage payment on the land to the bank of $15600 a year. We also save $3000 in rates a year, making a saving of $3600 a year.
    94. 94. 94 I am an absentee owner of five Auckland homes • The government decides to force me to sell my land to them. I own five expensive homes in Auckland and the total ground rent is exhorbitant so I decide to sell all properties. I can only spend these Zeals in New Zealand and I don’t live here so can’t spend them. I could cope with the rates but this ground rent is many times higher and I have to sell. The houses are bought by New Zealanders.
    95. 95. 95 When people receive a small Citizens Dividend • Remember that Citizens Dividend paid to all citizens. Imagine finding you have 50 Zeals in your bank account or on your multicurrency debit card from Kiwibank. Spend it in a mainstreet shop, Four Square store or supermarket for NZ produced food. Spend it on local entertainment. Use it to pay part of your power bill (the company also needs NZD). The Government has a role in persuading Fonterra, power companies and others to accept it for part payment. Buy New Zealand is now possible!
    96. 96. 96 A caregiver receives more • I am the mother of five kids and I struggle financially. My partner and I both have casual work. We decide I will be designated the chief carer so I receive six Citizens Dividends or six times 50Zeals or Z300. I can give up my cleaning job and care for my children myself. Some school fees are payable in Zeals. I give my 14 year old her share so she can use it for clothes (without going to the mall)
    97. 97. 97 I am an inventor • But I make very little money as I love the inventing side but not the promotion or production side. I just want to invent more things. The Citizens Dividend is now helping so much that I am in heaven. I can invent to my heart’s content and even sell my inventions to production companies.
    98. 98. Section Six -Actions • What you can do to further discussion on this proposal
    99. 99. 99 What can you do to help? • Ideas catch on if they are good. Nobody owns them. This idea could be applied in all countries. Do we have to wait for financial collapse before we solve our political problems? Do we have to wait till our planet is unliveable?
    100. 100. 100 Things you can do • Visit and join the site of the New Economics Party http://neweconomics.net.nz. Become a financial member. • Go to our Facebook page http://www.facebook.com/NewEconomicsParty. • Discuss the issue with your friends and family and online. • An article on this is on a blog at http://neweconomics.net.nz/index.php/2013/06/how-to-build-a- • Contact us info@neweconomics.net.nz.
    101. 101. Thank you! 101
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