In Poverty is not Natural, the author George Curtis draws upon the work of 19 th -century American economist, Henry George. It was George who looked into the cause of wealth disparity during the Industrial Revolution.
It’s a well-known fact that the world’s most renowned construction projects, monuments and buildings have historically been built to celebrate something. To commemorate the past, in other words. Whether they are ancient works, like the Great Pyramids of Giza being used to celebrate the glory of the Egyptians pharaohs
Currently the growth model of economics, as measured by GDP, is on a collision course with environmental limits. The idea of endless growth is incompatible with what Nature can provide. So what is the alternative? Reporting on the 1988 Conservative Party conference The Economist, in an article entitled ‘The Greening of Mrs Thatcher’, quoted her as stating: ‘No generation has a freehold on the earth. All we have is a life tenancy with a full repairing lease.’
According to a report in The Times(17/7/20), the campaign to make ‘ecocide’ an international crime at the International Criminal Court begun by Polly Higgins, who died last year, has been picked up by ‘Malala Yousafzai, the Nobel peace prizewinner [who] has joined Greta Thunberg and 150 celebrities and scientists calling on world leaders to make ecocide – the mass damage of nature – a criminal offence … Such a law could make company bosses and government ministers responsible for funding, permitting or causing severe environmental damage.’
The author, is, unusually for a supporter of land value taxation and free trade, a graduate in economics, having gained a first class honours degree in Politics, Philosophy and Economics at the University of Oxford. This puts him in the advantageous position of being able to apply a critique of mainstream economics in its own terms, something which most of us are unable to do.
In their global risks report the World Economic Forum listed five environmental issues as the top risks to the global economy in 2020, overshadowing all other risks, including economic, and called for a new “growth paradigm” that addresses the interconnectedness of socio-economic factors with climate change.
The first United Nations Sustainable Development Goal is to ‘End poverty in all its forms everywhere’, and yet regardless of whether there is a left wing, right wing or centrist government in power, the gap between rich and poor continues to increase, suggesting some common cause that is being overlooked.
So often, the debate about public ownership is based on a narrative that sets the public interest against the private interest. In this debate in western democracies, one can characterise the period since the Second World War as having been a game of two halves. In Britain during the war, a social democratic narrative emerged, where the interests of society would be put first, in part to reward the collective effort to defeat the Nazi dictatorship, but also perhaps, to defuse the attraction of the alternative collective ownership experiment in the Soviet Union. This social welfare model was presented in the UK with the publication of the Beveridge Report in 1944, and its main recommendations were introduced during the following three decades. Living standards rose dramatically, and public service provision of housing, healthcare, and education among others became the normal expectation. We had ‘never had it so good’.
Economists have long asserted that three factors of production, land, labour and capital, lie at the root of their subject. Yet in the development of the subject into theories and practical applications there has been a thorough analysis of labour and capital but a grievous omission of the factor of land. This is reflected in the minimal place it holds in modern textbooks, in popular discussion and political debate. Much of the argument about major issues, like industrial policy, the distribution of wealth and income and government policy reverts to a polarised struggle between two antagonists, labour and capital. The third factor, land, hides in the background unacknowledged yet exerting a major influence on the outcome of the whole economic process.
A legal duty of care for the Earth Fifteen years ago Polly Higgins abandoned her career as a barrister to campaign for an international crime of ecocide. Sadly she died of cancer on Easter Sunday at the early age of 50.
Over the last year or so there have been a number of articles broaching the subject of land-value taxation in the national press. The Economist (9th August) even suggested ‘The time may be right for land-value taxes’, but
there is also much misunderstanding about that a land-value tax (LVT) is.
In the first place it is not a tax. A tax was defined by Hugh Dalton, later Chancellor of the Exchequer, in his Principles of Public Finance as “a compulsory contribution imposed by a public authority, irrespective of the amount of service rendered in return”. An example will illustrate: the Jubilee Line extension to the London Underground system cost the taxpayer £3.5 billion. Millions of taxpayers who contributed to its cost will never use it. Those who use it for their daily commute or to go shopping pay for its use through their fares, but the big beneficiaries are the land owners along the route. They will have contributed to the cost as all other taxpayers, but the huge uplift in value of their land within a 100 metre radius of the 11 stations along the line was estimated to have been £13.5 billion. Properties beyond the 100 metre radius would also have benefited, but progressively less the further they were from the stations. The cost was born by all taxpayers but the ‘service rendered’ was not reaped in proportion to ‘contribution’. This is the nature of a tax.
With a Land-Value Tax (it is more accurate to regard it as an annual ground rent) there would be an equivalence between ‘contribution’ and ‘service rendered’ – the greater the services received, the higher the
contribution. The ground rent is a market estimation of the value of the services rendered. For example, the existence of a good school in a neighbourhood will increase property prices in exactly the same way as proximity to a station. It is not an arbitrary amount decided by government. LVT is therefore unlike a tax.
LVT differs from taxes in another respect. It does not distort economic activity. Some taxes, the so-called ‘sin taxes’ on tobacco, spirits and petrol, are introduced with the deliberate intent of discouraging certain behaviour by making it more expensive, but all taxes have this negative effect. They reduce economic activity. For example Stamp Duty discourages people from downsizing and affects adversely labour mobility. VAT makes goods 20% more expensive, thus reducing sales and affecting the viability of small businesses.
Further Reading: Public Revenue Without Taxation by Ronald Burgess Land-Value Taxation by Kenneth C. Wenzer 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...
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?
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.
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.
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”.