Friday, July 9, 2010

Martin Wolf in the FT on fine form:

Why we must halt the land cycle

"I have long been persuaded that resource rents should be socialised, not accrue to individual owners. Yet, as [Fred] Harrison tellingly remarks, “as a community we socialise our privately earned incomes (wages and salaries), while our social income (from land) is privatised.” Yet, whatever one thinks of the justice of this arrangement, the practical consequences have become calamitous. Do we want to start yet another credit-fuelled property cycle as soon as the debris of the present one is cleared away, some years of misery hence?"

Posted by mark wadsworth @ 03:46 PM (3660 views)
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20 thoughts on “Martin Wolf in the FT on fine form:

  • charlie brooker says:

    That article is a great way to end the week.

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  • powerofnow says:

    excellent article

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  • the number cruncher says:

    wow – what a brilliant piece. viva George!

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  • sceneclub68 says:

    Great article. I often wonder whether, hundreds of years from now, this sort of enlightened thinking (which, in fairness, is not much more than common sense, at least to HPCers!) will have been put into practice, and people will look back on the folly of the current system in the same way that we might view the medieval belief that the earth was flat. I have my doubts, but it’s something to hope for.

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  • There is a massive problem with commons though, it is depleted of resources at a tremendous rate that produces immense waste thus minimises its income.

    land should be socially owned but not commonly owned because of that famous tragedy of the commons. Members of society must be able to throttle the supple of resources to maximise its value to society. That requires trade of property rights, hence some sort of social lease where members of society can jointly lease property rights in land for fixed terms and demand compensation from the members of society that want the property rights leased if they don’t. The balance of the trade cannot be set by some authority figure even with a vote on who should be the authority but must be set by public trade itself.

    “are slapdash”

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  • The tragedy of the commons is a myth. Only in societies like ours do you find it. Societies that have a multiple generation horizon time are hardly going to use up their resources so their kids/grandkids/great-grandkids starve.

    The tragedy is that of convincing people that living as isolated individuals is a good idea.

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  • Why governments in western developed countries just talk about Quantitative Easing but no one says anything about Qualitative re-structuring?

    Pouring money into the economy to push up properties bubble or expanding the public sector creating so-called non jobs won’t do any good for future prosperity……………..All we need is like emerging economies to up-grade our production efficiency, improve technology, renew infrastructure etc.

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  • A good company does well in peace and in war, in boom and in bust, and in deflation and inflation; OK over the past decade a lot of clever people made money buying and selling “instruments”, but that’s not what the real world is about. The real world is about real people, doing real things and creating new things and processes, and figuring out ways to keep the government off their back. Long-term, that’s worth investing in; regardless of what the “instruments” are doing.

    It’s time to get back to basics, and forget about all those ideas about making Big Money from nothing; in those deals someone always loses, and sometimes it’s you.

    Those days are gone, but that doesn’t mean it’s the end of the world, in fact, it’s just another beginning.

    By Andrew Butter

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  • So the long-awaited emergence of the emerging markets consumer is at hand. More than that, the emerging markets are also becoming a source of innovative ideas. Fortune 500 companies are happy to set up brainy shops in emerging markets. They already have 98 R&D facilities in China and 63 in India. GE has a vast R&D facility in Bangalore, its biggest in the world. Cisco is spending $1 billion on a second HQ, also in Bangalore. Accenture has a quarter of its work force in India. Microsoft’s biggest R&D center, outside of Redmond, is in Beijing.

    And they are enjoying tremendous success. For example, GE’s Bangalore laboratory invented a new hand-held electrocardiogram that sells for $800, instead of the usual $2,000. The cost per test is only $1 per patient.

    As The Economist put it, emerging markets have become a “fizzing cocktail of creativity.” Moreover, it’s not just Western companies doing the creative work. (Huawei, a Chinese telecom giant, is now the world’s fourth largest patent applicant.) Companies in China, India and other places outside the US are inventing game-changing technologies. A few of the stories The Economist highlights in its report are simply amazing.

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  • letthemfall says:

    A succinct piece from Martin Wolf, and good to see mark w showing his socialist credentials. You’ll have uncle tom and mr g at you next for your champagneyness.

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  • Wageslavex14 says:

    He’s preaching to the converted on here, but what can we do to get the idea of a land value tax onto the mainstream political agenda?

    It just makes SO much sense, and would fix SO many problems and injustices. The first problem is the idea that the media thinks the issue is politically toxic, whilst I personally think that real people would actually be very receptive to the idea.

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  • the number cruncher says:

    Why is it that every thinking person, when enlightened about Henry George and Land Value Tax, instantly thinks it is a brilliant idea.

    Yet mainstream politics and media seams to have a ban on the very mention of that idea.

    I try to limit my conspiracy theory paranoia but If you read the book ‘The Economic Hitman’ He mentions that mainstream media has effectively banned discussion about land and resource exploitation, except in the economic papers like the FT and WSJ. He mentions this as those papers are only read by people who would not make a fuss, and he seams to be right on this occasion. I vacillate between a grand conspiracy and the sad fact that most humans are too stupid and dull to understand or care. The truth is that there have been conspiracies to prevent LVT and that those of wealth and power rely on most people being idiots.

    LVT will only happen if people come together and form a popular movement that can circumvent the media blackout. I am a member of a few organisations such as the one below which campaign for LVT ; I recommend that all HPC’ers, of whatever political hue, fully verse themselves with the works of Henry George and his successors.

    International Union for Land Value Tax – http://www.theiu.org/
    Visit this site for links to other sites, videos, free educational resources etc..

    Most of the stories of unfairness, stupidity, house prices, economic madness, unfair taxes etc. that we discuss, day in and day out, on this website have a simple answer. That answer is a general Land Value (and resource) Tax.

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  • mark wadsworth says:

    LTF, why do think I’m socialist? I’m a small government, free market liberal is all. Land is inherently a monopoly – and while state-protected exclusive possession of land is vitally important for everything, that does not mean it has to be a source of speculative wealth for a chosen few.

    TNC, your conspiracy theory paranoia is not unfounded. Have you noticed how Cable and Huhne haven’t mentioned LVT since they got into government? Do you think Martin Weale will ever mention it now he’s on the MPC? Even the Green Party seem to have dropped LVT from their manifesto.

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  • letthemfall says:

    Oh mark, I’m poking a little gentle fun; I know you’re a mad right-winger really! I agree with you about land ownership (or to some extent anyway). What is it? 90% owned by 10% of the population or something like that? A profound inequality at the heart of our society.

    On LVT, the reason it is not popular is because of 1) the undue political and media influence of those who benefit from rent-free land; 2) all those disadvantaged by this somehow believe that one day they will join the landed and moneyed elite, encouraged by the notion of “aspiration” peddled by these same people. Hence people vote Tory who will inevitably get screwed by them. They also read the newspapers that want to screw them too. Funny old world.

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  • I always thought LVT was a bit wooly…..this article was the most lucid I’ve read, and the author’s credentials are seemingly unimpeachable.I’m intreaged, and intend to learn more.Middle England will be will take some peruading, though.

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  • the number cruncher, mark wadsworth,

    I don’t think there’s much conspiracy to it. It’s all very well for the FT, with its niche audience, to pontificate intellectually on such matters, but other newspapers have to sell to the masses. Just imagine a Daily Express or Daily Mail headline reading “Massive Council Tax Increase”, followed by a sob story inside about a poor widow living in a mansion.

    I’d like to think that the government is quietly getting on with laying the groundwork, working out who the winners & losers might be, and how best to implement it. Even Martin Wolf acknowledges that: “Socialising the full rental value of land would destroy the financial system and the wealth of a large part of the public. That is obviously impossible.” He goes on to say: “But socialising any gain from here on would be far less so.” I’m not sure how a government would go about doing that?

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  • mark wadsworth says:

    Drewster, what MW alludes to is DBC Reed’s “Sentinel tax” aka “Bubble tax”, i.e. they allow prices to fall as low as they dare, and then they slap a big fat tax on any increases above that level.

    This may prevent bubbles arising and raise no tax at all – very good.

    Or it might prevent bubbles arising AND raise loads of tax, enabling us to reduce other taxes (starting with VAT, Employer’s NIC and higher rate tax) in which case even better; or if you want to keep the Daily Mailexpressgraph people happy, spend the extra money on higher old age pensions, see if I care.

    As to “widows in mansions”, that’s about 1 per cent of the population, surely it can’t be too difficult to set up a voluntary emergency fund to enable other people to tick a box on their land tax form saying that they are happy to pay a small surcharge to bail out said widows??

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  • Mark, I’m all in favour of LVT. I’m just saying it’s a hard sell. Even those intellectual FT readers seem unable to grasp it, judging by some of the comments.

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  • letthemfall says:

    It is indeed a hard sell. The only time any serious effort was made to redistribute wealth was back in the 60s, when death duties were heaped on to the aristocracy, and this did work to some degree. Now any such attempt, let alone LVT, would be attacked and crushed by the usual suspects in the tabloid press and the rich beneficiaries of the status quo. We know what the Tories think about inheritance tax. LVT? No way. The only means of this happening in the foreseeable future would be a modern peasants revolt. At present that’s not very foreseeable.

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  • “…the only time any serious effort was made to redistribute wealth was back in the 60s, when death duties were heaped on to the aristocracy”

    Imagine the entire country being owned by the National Trust!

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