By Dr Peter Bowman
The market mechanism provides the most efficient way of allocating the resources of an economy. Yet public services, which can count for around half of economic activity, are charged for indirectly through taxes which have no direct connection to what the payer receives in return.
These taxes have many adverse effects on the economy, depressing growth, distorting costs and prices and providing perverse incentives which greatly distort the market and prevent it from operating optimally.
Public services could be paid for through a market mechanism. To achieve this it needs to be recognised that landed property values have two components. The private component relates to the buildings on any particular site but the second, the location value, is a public component since it quantifies all the external benefits the occupier expects to receive from the location.
If these location values were used to replace taxes to fund public services at local and national level it would effectively bring the public sector into the market mechanism. People would pay directly according to the services they received. Removing the burden of taxation from production and trade would bring greater freedom and provide opportunities for genuine wealth creation.
Read more From Land & Liberty Winter 2017
By John Symons: People debate endlessly whether or not Churchill would have supported Brexit. But what of the great man whom Churchill recommended to the King in 1942 as Archbishop of Canterbury? Which side would William Temple, perhaps the greatest Archbishop in the last century, have supported?read more
In Progress and Poverty Henry George sought the ‘cause of industrial depressions and the increase of want with the increase of wealth’ and offered a ‘remedy’ which remains as relevant to the problems of poverty and inequality we face today, as when he first wrote, but it also opens a new way of dealing with environmental pollution.read more
This essay on Pittsburgh by Ian Hopton follows the theme of an earlier essay on New Zealand enquiring into the reasons why clearly successful systems of Land Value Taxation were nevertheless abandoned.read more
The Observer (3rd Dec) revealed a new initiative to tackle the housing crisis from the Tony Blair Institute for Global Change. Blair is proposing that council tax and business rates, which are currently based on the value of the site and any building or improvement on it, be replaced by a tax which relates solely to the value of the land under the buildings, arguing that it is a “fairer and more rational system of property taxation”.read more
“You can become wealthy by creating wealth or by appropriating the wealth created by other people. When the appropriation of the wealth is illegal it is called theft or fraud. When it is legal economists call it rent-seeking”
John Kay, Financial Times 27th Dec 2009
“If a free society cannot help the many who are poor, they cannot save the few who are rich.”
John F Kennedy, Inaugural Speech, Jan 1961
“If science is defined by its ability to forecast the future, the failure of much of the economics profession to see the crisis coming should be a cause for great concern”
“Today we live in a world that is divided. A world in which we have made great progress and advances in science and technology. But it is also a world where millions of children die because they have no access to medicines… It is a world of great promise and hope. It is also a world of despair, disease and hunger”
Rent Unmasked explores the new economic paradigm that policy-makers need to solve global problems in the post-2008 era. With conventional economic theories discredited, the new model must equip governments with tools to re-stabilise societies in a dangerous world. Rent Unmasked explains why one paradigm only qualifies to serve this purpose: the dynamic model that reinstates time and space in economic theorising.
ISBN 9780856835117 | Price: £19.95