Jock's Place - My new political heros: Fisher, Harris, Selden, Hoskyns, Joseph...Thatcher! - Comments

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dave bones — Wed, 22 Mar 2006 05:29:45 +0000

hey Jock. I called Carol Thatcher "daughter of the evil one" on live TV the other day. I was talking about blogging. We could have taken over the studio easy but everyone was pussies.

Have you seen loose change 9/11. Don't know what you think about 9/11 conspiracies. this is the only watchable movie about them in my opinion anyway.

It claims that in the clip (shown) of Bin laden admitting 9/11 he is right handed (left handed according to FBI website) and has a big nose...

surely this is important no?"

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Jock Coats — Sat, 18 Mar 2006 22:20:21 +0000

You know, I used to think that all economists were pretty much pseudo-scientists specialising in human misery...:)

The more I read, especially of the ones that I had perhaps been warned off", the more I find it is those who come after, try to explain or implement (in particular) policies based on those well argued theories that most often are to blame.

That maybe the fate with anything as theoretical as economics - when it hits the real world none can ever be entirely sure they were right, even after several decades.

I was in a session today with people talking about local currencies and so on and suddenly what Hayek I think meant by privatised currencies became clear, but not in the context of global capital finance chasing our custom.

Co-operative schooling was the thing that made me think Friedman could not be all bad...:)

I agree about the IEA, though god help me if some potential readers of this read me saying that!

I remain, however, quite convinced that if they put injected a little bit of Georgism, they would have been much better...:)"

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Jock Coats — Thu, 16 Mar 2006 19:23:49 +0000

You can build the finest buildings you like - put your fantastic flats on an island of their own in Orkney and the land value would still be low.

Development 101: In most cases the developer does not make an aweful lot on land. It's the person who has underused that land for some time that it attracts some developers' attention that tends to make the most.

Something can only be fashionable" through use. You can't per se make an area fashionable just by developing it. It needs to have a locational value as well."

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Anonymous — Thu, 16 Mar 2006 12:05:01 +0000

In many cases the potential price of the land is due to the efforts of the current owner. Somebody can for instance buy a piece of waste land and turn it into a fashionable neighbourhood. Before he turned it into luxury apartments, it was nearly worthless, but perhaps he hired a genious architect to design houses for which one could die for, and then used his own genious to market them with a good price. Well, of course you can always speculate how much value you couldpotentially get from the land, but it might also never become a popular neighbourhood; there is demand only for so much luxury apartments.

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Jock Coats — Thu, 16 Mar 2006 11:27:10 +0000

But you are not, in LVT, taxing the improvements on land. You're taxing the speculative value of land - yes - that speculative value is made up often of the inputs (private, public and social) that have gone into putting that site in a valuable position, but they are not the inputs of the current owner.

You are not taxing work/labour with LVT and as a single taxer" I'd eventually want to see LVT replace these other forms of taxation on effort/work and capital."

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Anonymous — Thu, 16 Mar 2006 11:20:28 +0000

My should" comes from equality principle, that people should be treated from an equal basis, no matter what kind of work they do. I thought you might accept it, but in the end all ethical and political "shoulds" come from thin air, you either accept them or then you don't.

I could of course also argue from a more pragmatic point of view, that if you tax just one kind of work (improving land), or tax it more than other kinds of work, you are distorting the competition and markets, and might cause unwanted side effects."

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Jock Coats — Thu, 16 Mar 2006 11:04:54 +0000

You should remember, that land, as other resources, doesn't have any real value without human effort to use it somehow.

Depends what you mean by human effort to use it somehow". If I own a large, vacant, perhaps even derilict, site somewhere where there is lots of demand, the value of it will grow as the activity around it grows even with me not lifting a finger to develop it. Such speculative kidnapping of land is very destructive and should be taxed to get sites developed appropriately (for example before developing on new virgin previously undeveloped land).

And similarly...

the value of the land what is done for it...

Indeed. The extra value on the house next to a good school compared with one outside the catchment area reflects what is "done for" that land - that it is designated as giving access to a resource that cost money to develop and maintain, the school. Or it could be the services - the road that goes past it, the services under the road and so on. Not all, to be sure, public functions, but not reflecting "effort" on the part of the site concerned.

Ore, however, is an interesting example that somewhat breaks the rules. Sometimes there are things inside the earth that you do not actually want people to use too much of - hydrocarbon fuels for example. How do you account for this in tax? Some people think this is a problem for LVT. I don't think it does. And any problems could be ameliorated through sin taxes of commodities you agree you don't want people to use profligately."

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Jock Coats — Thu, 16 Mar 2006 10:47:52 +0000

Oh, I am a confirmed Georgist. If I weren't a Liberal Democrat I'd call myself a "Geolibertarian".

I am of course quite familiar with that letter from Friedman. The SCI is an invaluable resource for such things relating to LVT. That letter has always perplexed me somewhat though because for a great man like Friedman he doesn't seem to have grasped it all from that letter (bearing out Tolstoy's theory I think it was that "nobody argues against George's ideas, they just don't know them").

Of course you can improve land. But they would be improvements and not taxed. A simple and obvious example of that is with agricultural land. In the UK most agricultural land would probably not be taxed at all as it is virtually all "marginal land" (looking at farm incomes anyway!) so when land changes hands for a premium it is because, often, of how it has been improved by capital - ability to access it, its drainage or relative fertility.

I think I'm quite a rarity in the modern "Georgist" movement in actually wanting or not being phased by the idea of a 100% land value tax (where land is in the Georgist sense of "all material things in the universe not created by man and the application of labour or capital" - so the mobile phone bandwidth auction was a sort of an example, or landing slots at airports or even "air quality" - if you pollute air you leave less of the same quality for the rest of us as in John Locke's proviso).

You see that's something else Friedman gets wrong in that letter. Even if the notional value of a piece of land were zero under a 100% LVT, it does not follow that all speculation would be pointless. You would just have a market that revolved around arbitrage of premia and discounts. SO land would increase in value between, say, local plan periods as owners or speculators trade sites upwards to more profitable uses or pressure for different zoning.

There are people who talk about the economic rent of people as well - taking his point about Frank Sinatra or Muhammed Ali - nowadays it's often sports stars who come in for such attention. I have to say that I think it would be desirable to an extent, but very difficult to calculate or implement. Certainly compared with land values! But it does give scope, perhaps, for individual industries - say the football league, to try to work out a mechanism for taxing perhaps transfer fees to help fund other, loess well endowed, clubs or opportunities for youngsters to develop their skills.

But for me, whilst LVT is the perfect "single tax" I prefer to view taxation not as a means for "raising" whatever an authority wants to spend, but as a safety valve in the monetary system. And here, I think, Friedman would be interested. If you take much of the capital values out of land, what happens to all the debt based money that is held up by those land values? You replace it with debt free money, and spend that into existence as your first source of "government revenue" if you like. If you overshoot the money supplym it will feed through into inflation, and, as we have seen, often that means first land inflation, which, if taxed through something like LVT, then takes that inflationary pressure out of the economy for real by retiring it through taxation."

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Joe Otten — Thu, 16 Mar 2006 10:37:46 +0000

Anon, that's an argument that a flat Income Tax should be the only tax. Your 'should' comes from nowhere, it is an imperative out of thin air.

Land should be taxed because land tax is less damaging to incentives than other taxes.

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Anonymous — Thu, 16 Mar 2006 10:27:59 +0000

It can be taxed, if it isn't taxed more than other resources (such as he skill of Muhammad Ali or of a Frank Sinatra"). You should remember, that land, as other resources, doesn't have any real value without human effort to use it somehow. A simple example is ore; it doesn't have value before it is quarried and dressed and made objects. Likewise, the value of the land what is done for it. So actually if you are taxing the value of the land, you are taxing the value of the work. And in that case that work shouldn't be taxed more than other works."

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Joe Otten — Thu, 16 Mar 2006 09:42:22 +0000

Friedman argues against a 100% LVT, as would I. So what is the argument against, say, a 2% or 10% LVT?

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Anonymous — Thu, 16 Mar 2006 08:41:13 +0000

I'm not quite sure why you are so fond of the land value tax, but I suspect that there might be some Georgist influences behind that.In that case I suggest that you'll take a quick look at this"

My new political heros: Fisher, Harris, Selden, Hoskyns, Joseph...Thatcher!

Jock — Wed, 15 Mar 2006 23:58:13 +0000

Oh dear - they've managed it again. BBC4's "Tory! Tory! Tory!" has inspired me again. And I find myself in awe of some strange political heros. Yes, that's Antony Fisher, Ralph Harris, and Arthur Seldon and John Hoskyns, Keith Joseph and yes...her, the great she-devil herself.

On the face of it, they could not be much further from my political viewpoint. So, was Churchill right about socialist at twenty and conservative at forty being the natural course for man? Have I gone a deep shade of blue? Not on yer nelly I haven't. But the movement that these few, it appears, created, from bunch of crank counter-cultural economists, professional and amateur, to dominance of the world political economic orthodoxy in such a short time was nothing short of revolutionary and truly inspiring.

It gives me hope that it can happen again. That just because people think at the moment land value tax and a debt free money supply are crack-pot ideas it doesn't mean that they will always be. That I have to allow myself twenty years or so to make such an impact.

But there were one or two other interesting things about the program. I noticed a section where they were talking about monetarism and shredding pound notes and so on and in the background they showed an advert being introduced by Gordon Jackson with some cheesy musical singers explaining the principles of monetarism to the Great British Public. "We'll count our blessings if we apply/tight control to our money supply"!