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Chris Black — Sun, 25 Jun 2006 12:54:58 +0100

Yes, very good post. The thing about land is that you can't move it from one country to another, and can't hide it.

But could explain for an economics layman like me your sentence:

Ultimately this means realising that money can be created and spent, debt free, into economies as supply side inputs ?

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Jock Coats — Mon, 23 Jan 2006 01:37:02 +0000

Somehow I suspect you're incorrigably true blue...:)

But it might be fun to try! If a little expensive.

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Samuel Coates — Mon, 23 Jan 2006 01:27:36 +0000

Hello Jock! Very interesting blog. I recall you explaining your land tax ideas to me in Morals Bar a while back. I'm afraid I'm officially true blue now as Deputy Editor of ConservativeHome.com but I'm sure you can persuade me to defect if you buy me a few drinks when I get back ;)

A challenge unmet?

Jock — Sat, 21 Jan 2006 17:29:54 +0000

Internet, money and the threat to the liberal state

In the Lib Dems' Meeting the Challenge process I've been struck by how little we make of the challenge of the "super-connected" world. Yet some commentators - such as "The Future of Money: Creating New Wealth, Work and a Wiser World" (Bernard Lietaer) - believe that the combination of demographic change, environmental change, globalization and the internet is about to plunge us into an epochal change of the immensity of the invention of printing, steam power and air travel. That in a few years time we will wonder how we functioned any other way.

I was desperately trying to get a word in at the very interesting Liberator event to raise this within the MtC process. But such was the collective enthusiasm of people falling over themselves to promote Land Value Tax there wasn't the time to set another hare running. So here goes...

Refugees of convenience

The world over, millions are literally stateless - refugees from conflict or poverty - and look at the challenge to peaceful or prosperous states that is causing. At the opposite end of the scale are people who are intentionally stateless, or multi-state, usually the very wealthy who like to be able to choose what jurisdiction they are at any one moment in time depending on whether it's most convenient or usually financial efficient for them - tax exiles are the best example.

And yes, such people also pose a challenge to the state. They are the biggest avoiders of taxation for example, making it very difficult to produce truly progressive tax regimes.

But with the internet comes the ability for many millions more "ordinary" folk to go stateless when it is convenient for them. At the simplest level, we no longer need to spend our cash in our own countries, incurring local sales taxes and import duties which are easy to collect when a container load of iPods arrives on the quayside. Just look at e-Bay. One can fairly easily trade with someone on the other side of the world, arbitraging prices and exchange rates to get the best deal, arranging shipping of individual units as if they were gifts or even second hand so they don't attract taxes.

Already some people are paid in kind across the internet - you'll see "wishlists" popping up where people who appreciate some goods or services are asked to buy something the provider wants rather than pay in cash. It doesn't take a huge leap to realise that if we all did that we could live, pretty well, without monetary income at all.

The end of money as we know it?

Even more fundamental, in a world in which people are able to trade directly with one another, where we get to know, virtually, the people we are trading with, learning to trust them (think of e-Bay's buyer/seller feedback), even agree credit terms after a fashion, what need will we have for money itself. After all, the primary purpose for money is as a commonly agreed "trust" mechanism to guarantee payment in trade; you don't have something I would need, but you can give me money which someone else will accept in return for something I need.

In a super-connected world just as the monetary authorities have done for decades, we can settle with different trading partners in an instant through simultaneous "barter" operations. If you think it's far fetched, just look at the people who are making good incomes simply trading things on e-Bay - they can work completely internally to e-Bay until they want to withdraw some of their profit or put in more money. E-Bay has all the characteristics already of a real currency. We already have virtual currencies, such as Nectar points and the admittedly time limited "Kit Kash" promotion in 2004/5 from Nestle. We have legislated to allow corporations to create private "currencies" already. It's only a matter of time before one succeeds.

If they can't even guarantee or count your "money" what basis does the state have on which to account for your contributions to its own upkeep - your taxes? If we look at our high streets we can see the signs already that the internet could yet have far reaching consequences for the very fabric of commercial centres.

The great leveller

Now this is absolutely not a counsel of despair. Far from it. For those who have access to these new mechanisms the internet could prove to be the great leveller. It's a mark of the wealthy to seek out and consume more exotic - we joke in the office canteen that they've started to do away with the cheddar cheese on white bread and peddle "organic Mongolian yak's cheese and Indonesian crispy kelp in Madagascan rye wraps".

What need have we of bland uniform products peddled by multinational conglomerates set up mainly because it was difficult for individuals to trade internationally in the required commodities if we could buy home made Ghanaian chocolate truffles direct from the village the raw materials were produced in? And with plans afoot to produce $100 internet enabled laptops to supply to African villages, this too is not so far fetched. Trading directly with one another eliminates the need for profit taking by countless levels of middlemen (too bad admittedly if you are one of the middlemen but no doubt if you have you've got some ideas of how you would prefer to be making your living). So long as we maximise access to this super-connected market by the most excluded, more value remains with individuals - producers and consumers.

The role of the state

But it does mean we have to radically rethink the role in all this of the nation state. As internationalists we should recognise that the nation state is actually an impediment to international development, movement and wealth transfer. It is merely a territorial designation in which the citizens agree to arrange their governance in a particular way. A constituency in the global market.

If we want to retain a social safety net and ensure we have the funds to provide it we need to look for other ways in which to finance it. Ultimately this means realising that money can be created and spent, debt free, into economies as supply side inputs. Most people believe this will be inflationary, but it wouldn't be if it is done in a controlled manner (it's not a license for a profligate state apparatus), and with appropriate economic pressure valves to let off the steam by cancelling money as well as creating it.

And on what could that be based? The obvious answer is on land values. If you choose to live in a particular jurisdiction, to occupy a piece of that jurisdiction and prevent others from occupying it, you should pay for that privilege. The value of what you occupy or own is market determined based on the communal inputs that go into that particular unique location.

For more information on Land Value Tax, see some of the links in this blog. This is not really the place to describe the mechanism in detail. I merely wanted to highlight the possibilities for radical and extremely far reaching change that the present circumstances present us with. It is for others to participate in creating the policy to deal with the scenario, and I just hope that I am not merely a Cassandra whose prophesies nobody will listen to.

The horrific alternative

Now here's the sting in the tail. If we do not embrace these opportunities and meet the positive challenges that they present, our alternative is to try, Cnut-like, to turn back the tide, or to mould this new world to our current way of thinking. This means ever more intrusive government, clinging desperately to current understandings of money, income and taxing that income as the only progressive way. We are already seeing huge bites taken out of our civil liberties because of immigration fears, terrorism and taxes. We can present a positive alternative. And if we don't want to live in an Orwellian world where everything is controlled by the state, we must. It is a huge opportunity for global human development and a more sustainable world less dependent on intermediaries and money-monopolies.

Jock's Place - A challenge unmet? - Comments

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A challenge unmet?