Friday, November 07, 2014


L.A. Eviction

Much of our thinking about institutions and property go back into the history of Europe to the point where they began to emerge from warring tribes as the source of survival to much more evolved ideas, ranging from religious institutions to financial situations.  

Much depended on boundaries, an idea with its source in the ag plots of early Egyptians, who invented geometry in order to recapture the edges between fields after they had been flooded with fertile mud when the Nile overflowed.  Also, hierarchies of areas (town, county, state, country) developed as needed to keep order through the continents.  These two forces combined to underlie taxation, which once went to the highest forces -- eventually the king, who had the power to reapportion lands.  Religious institutions like monasteries tried to exempt themselves, wall themselves off with service and virtue so as not to offend the King, but it was impossible to avoid taxes and eventually the king might be tempted to re-assign their lands to his friends and allies, no matter how much they invoked God as a higher power.  The Catholic church has not forgotten this.

Out West on the North American continent there was much space, even more after epidemics swept the land, and Euros probing into places they barely knew were resisted by the residents with lethal force.  Forts were necessary.  Supplies came in, often via rivers as the roads of the time, and that meant distribution centers formed towns.  Towns grew, formed alliances, needed services, and pretty soon we had today’s counties.

In cities the threats might be within the concentration of buildings, so fire protection groups (at first by voluntary subscription which got you a plaque on your house so the fire department would indeed try to save the structure) and sometimes by private law enforcement bodies.  By now these have become public, tax-supported, and are considered entitlements, like piped water, electrical networks, fuel sources and so on.  But public government has been sufficiently overwhelmed that private services (rent-a-cop, walled developments, subscription resort fire responders) have returned.

No one questions that public functions all need money and there is no magic source other than taxes.  Even churches cannot survive unless their members are willing to pledge.  Virtue is not the same as resources.  (Though I notice that some officials want to write off anyone who isn’t prosperous and are quite responsive to those with big bankrolls.)  Still, for a long time now in this country the status of citizens has been based on their entitlement to vote, no matter how much that entitlement is eroded.  They tend to vote down taxes and levies.

We can tax income, possessions, sales, and -- most of all -- land.  All these things are governed by law and law is a serpent that writhes.  Law is not geometry.  In fact, land is also subtly or grandiosely counter to the straight lines and neat corners of geometry.  Much of the West in particular took rivers as boundaries without really thinking about the extent to which moving water changes its channels.  Mountains cannot be marked in grids except from high in the air or on paper maps.

Something like the map not matching the territory is happening now in terms of demographics and housing.  We need a LOT more modest housing while some people have so much empty and grandiose property that they never occupy any of it more than a few weeks.  (This is encouraged by tax laws and loopholes.)  When jobs leave, when cities are emptied, the cost of removing the structures remains.  Even more distressing, when there aren’t enough people with enough income to support the infrastructure, it has to shut down.   Turning off the water in Detroit is different in origin but not in impact from the natural drought-imposed lack of water in Southern California.

It seems clear that there are too many people and that they move in great clouds from one country to another, no matter how much countries resist and punish them.  They are order-busters, rule-evaders, crime-carriers, and so on.  Of course, many resettle, assimilate, and form the bulk of the voters.  And many die in misery, which we didn’t have to witness until recent decades.  We see the impromptu violence on our cell phones.

Law-making, assessment of value, maintenance of boundaries, and tax-paying, are useful only so long as the majority of people involved are in voluntary compliance.  If they become alienated or unable to respond, nations collapse.  Middle America didn’t use to understand that nations COULD collapse, or even cities like Detroit or New Orleans. Now we’ve seen it.

Also, we slowly begin to understand that the population we have thought of as people too stupid or criminal to be included in our respectable doings have been forming their own systems and boundaries.  Global.  Desire-based.  Survival-based in a far more urgent way than “nice” Mayberry towns who like to watch crime shows, never quite believing they are real or local.  One of the reasons they don’t get shut down is that they are economically viable, with tentacles into "law and order."

I have been surprised by the range of reactions of the people I’ve told about this situation of major LLC’s buying up delinquent tax properties while keeping themselves hidden and preventing the legal provisions for the steps of redemption provided by law by stalling and diverting.  Some sneered at anyone who can’t keep track of their property.   Why maintain debtor’s prisons (seeming to come back now) when people could just be eliminated, driven off?  Others saw how emotionally inflammable the distress of tax liens can be on top of health, economics, travel -- sorts of stresses that caused the taxes to go unpaid in the first place.  Politicians could be seriously burnt by failure to protect and help the “least of these,” which is one of the reasons for forming political bodies in the first place.  And also a reason to prevent poor people from voting.

When I googled for info about delinquent property tax liens, the entries were mostly about how to profit from acquiring and reselling such things.  I suspect that the guys making videos and selling books about how-to are making more money than the guys who are actually doing it, in spite of people I see “flipping” dubious property by using a lot of paint and cheap carpet to hide things like rotting studs, fragile plumbing or substandard wiring.  But people who deal with the actual buildings and yards are working harder to make less (including dealing with former owners who can’t accept eviction) than insurance agents and speculators who only deal with paper, which is why I suspect that the popularity of these “instruments” is more likely to be based on something like “bundling” and selling as paper investments.  (Toxic assets.)

“The legal definition and the economic definition of taxes differ in that economists do not consider many transfers to governments to be taxes. For example, some transfers to the public sector are comparable to prices. Examples include tuition at public universities and fees for utilities provided by local governments. Governments also obtain resources by creating money (e.g., printing bills and minting coins), through voluntary gifts (e.g., contributions to public universities and museums), by imposing penalties (e.g., traffic fines), by borrowing, and by confiscating wealth. From the view of economists, a tax is a non-penal, yet compulsory transfer of resources from the private to the public sector levied on a basis of predetermined criteria and without reference to specific benefit received.”  

Investing in tax liens is a way of moving the profits back from the public pocket to the private wallet -- one among the many.

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