Jock's Place - libertarian - Comments

iain - you know I was

Jock — Sat, 27 Sep 2008 20:32:37 +0100

iain - you know I was thinking about your comment a bit more about in-groups and out-groups. It seems to me that whilst it may be moderated slightly by "democracy" the state also does this and we do vote for it. We vote to be hard on immigrants, say, or hard on gay people depending who we vote for and occasionally we get our way.

Would it not be better for me as a gay man to live in a free society where I can find somewhere to fit in, than to live under a Tory government, say, in the age of Section 28, where nationwide legislation does me over even though a minoiryt of all people voted for a party of which that was part of their platform?

And, as i say, I think the difference between the intolerance of one self-governing community and another would nowadays be lessened because we are all living in a market and can see what our neighbour, near and far, are doing and face pressure to do likewise if it works for others.

Thanks for that

Jock — Sat, 27 Sep 2008 19:39:24 +0100

Thanks for that sanbikinoraion. So DWP is quite efficient (though I suspect if I paid a 6% management fee for indpenedent management of my finances I would be appalled). Which is something. My 40% however does not all go into this does it. Overall we know there are billions spent on QUANGOS and all sorts of government waste which is not only above and beyond what we should be looking to the state to do, but keeping real people, often useful intelligent people, out of productive employment!

Besides, however efficient DWP might be, I do not know for myself that my money is being wisely spent supporting people who need it, people who only need it because of the benefits trap, or people who don't really need permanent support and would find some way of earning a part of their keep in a more local, individualistic, welfare system.

Sorry

sanbikinoraion — Sat, 27 Sep 2008 15:07:29 +0100

Hi, sorry, the anonymous comment was from me.

There's a *thrilling* 244 page document here - http://www.hm-treasury.gov.uk/media/E/B/pesa07_complete.pdf - that has a lot of numbers on government expenditure. DWP spends £6bn out of its ~£120bn budget on administration (table 1.9 on p32).

Now, I don't know whether that's Whitehall admin or admin total - and I sure as hell can't be bothered to find out! - but even adding an extra six billions on to account for running the courts and so on would give the 10% figure.

Hmm - I do refer to LVT as

Jock — Sat, 27 Sep 2008 00:20:40 +0100

Hmm - I do refer to LVT as part of my solution of course.

In my move to my new blog layout I hope I will get the time to redo categories a bit

Land Value Tax tag

Tom Papworth — Fri, 26 Sep 2008 23:31:32 +0100

Jock,

I notice that this item is tagged with "Land Value Tax".

Do you think this is a helpful tag that will assist one in sorting postings from within your blog? ;o)

Given that we have a

Paul Lockett — Fri, 26 Sep 2008 13:11:31 +0100

Given that we have a lifeboat sevice funded entirely by private donation, I'd say that the idea that state-intervention is the only way to provide a safety net is dubious to say the least.

If you go with the state-interventionist belief, lifeboats would be one of the areas where you would expect people to be saying "it's their own fault for going out to sea," or "if they need a lifeboat, they should pay for it themselves or take out insurance," but people freely support the RNLI with millions of pounds of donations.

Iain, point taken. I do

Jock — Fri, 26 Sep 2008 12:02:49 +0100

Iain, point taken. I do think, however, that nowadays with mass communications and so on, these issues could be dealt with. "Parishes" (I'll continue to call them that though it's not necessarily what I mean - communities, neighbourhoods, individuals even are more like it) are not so isolated as they perhaps once were. If one community is failing its people and another next door is doing the right thing I think there would be pressure sufficient to make some changes. Second I also think about non-geographic communities. Minority groups are particularly good at establishing these in any case. I for example have helped out people on a gay social networking site whom I have never met in person.

Anon - thanks for the figures - I am very surprised that it is so "efficient" though I'll bet that 10% is only calculated as a proportion of what they actually receive - so there's the treasury's costs of collecting tax, the cost of evading tax (I'll best most people who really object to contributing something towards their fellows are already the one who evade as much tax as they can anyway). And I was also including stuff like health and education where it seems to me that the non-teaching and non-clinical budgets are enormous. There is debate of course about how necessary non-delivery departments are but I suspect they could be more efficient with local "competition" too.

Also, I am not in any way suggesting the basic income funded from land fees should not happen - that to me is a touchstone of equity. So we are "only" talking about those who actually need more than this subsistence level. I suspect that takes much of the sting out of arguments against.

Two things on this -

Anonymous — Fri, 26 Sep 2008 11:47:35 +0100

Two things on this - firstly, a couple of years' back I delved into the figures and IIRC the govt spends about 10% of the total welfare budget on administration costs.

Second: I when welfare payments are devolved to such a low level whether it really is the "deserving" poor that get the money or "the friends of the parish councillors", which is something different. Surely one can see the scope for pillorying a cheating husband or whatever by denying benefits payments? In that sense, I would rather have a large impersonal organization figuring out how much I'm worth. Of course, I would much rather there was no "figuring out" at all and everyone just got paid a basic income...

Human beings are very good

Iain Coleman — Fri, 26 Sep 2008 03:11:46 +0100

Human beings are very good at defining in-groups and out-groups. We are considerate and generous to those in the in-group, and riuthless towards those in the outgroup. Voluntary charity works fine for the in-group, but does nothing for the out-group. Which is a long-winded way of saying your proposals are fine, unless you are gay, or black, or female, or otherwise excluded from the group of Most Privileged People.

I didn't blog on this one

Auberius — Thu, 18 Sep 2008 22:22:17 +0100

I didn't blog on this one (because let's face it, in matters of Lib Dem energy policy I'm something of a heathen) but I quite agree, it's an terrible verdict and one that will invite even more dangerous acts.

Further Reply

Paul Lockett — Mon, 11 Aug 2008 23:25:15 +0100

Tim: "If you are a homeowner and the value of land goes up around you, LVT may well force you to sell up at a time not of your chosing. Can you not see how that is, frankly, an obscenity?"

No I don't. If the value of fossil fuels goes up, somebody living in a larger property may have to down size to reduce their bills. That is the effect of a free market in natural resources and I don't find is especially obscene.

"Land does not ask not to be bought and sold. Land is inanimate. A slave wants to be free and is denied freedom."

A freed slave would also want access to natural resources. Take his freedom or take his ability to access the natural world without paying tribute to somebody else - the result is much the same

"LVT as you describe will force land to be put up for rent, but the State will be taking 90% of the earning potential of that land"

No, as I described it, the value would be paid out to the electorate in equal shares. You seem to be throwing in the word "State" like a McCarthyite shout of "Communism" to invoke a sense of horror to mask the argument. I'm afraid that doesn't work for me; I'm not a complete anarchist. I'm perfectly happy to have a limited state which upholds the rule of law and basic rights, of which I consider equal rights to use natural resources to be one.

"Sorry, could you repeat that please, for I could not quite hear it over the sound of hairs begin split"

Freeholders have secure tenure, not absolute ownership. Hence freeholder, not owner.

"Answer - end the Crown ownership angle, not make it worse by replacing it with the State."

So your suggestion is to extinguish the legally recognised ownership of land in order to defend ownership of land?

"why don’t you just say you want to nationalise land instead of using LVT as a back-door mechanism?"

Because, from my perspective, nationalisation involves state control of a good or service. LVT would not increase the state's ability to control land in any way; in fact I'd like to see a weakening of that control through a scaling back of the planning system. One reflects an equal right to land, the other a collective right to land.

Mortgages end. Your LVT will follow people to the grave."

So does rent if you aren't able to buy. So for that matter do food costs, heating bills, transport costs, etc. Again, that's a free market for you.

"Land value is high when surrounded by well built and maintained houses. It is fantasy to think that you can separate the two in a country like Britain where we value old buildings and the condition and nature of our neighbours and neighbourhood"

Your original point was about somebody not be able to exploit the value of their own house. This point is about somebody having the ability to exploit the value of somebody else's house. The value of a plot of land is what that land would be worth with nothing on it. Hence, the value of the buildings on it would be ignored, but not the effect of buildings on plots of land around it (or for that matter, roads, schools, etc.).

"LVT as you portray it would reduce the scope for the little guy to retain land far more than the big guy. Think about that implication - it should not take very long"

I think that is completely wrong and with a little thought, I'm sure you'll see why. At present, the big guy just needs to gather enough capital to buy a plot and he can then sit on it and wait for the value to rise. With LVT, holding that land would be costly and would give no gain from increasing land values. Sitting on land and not using it would be money down the drain. The big guy would have to put the land to work, or pass it on to somebody who would. The little guy doesn't tend to be in a position to hold land just for speculative gain, he usual just hold lands that he has a use for. Think about it; who is more likely to off-load their land, Mr Average in his average house who would be paying the LVT but getting a chunk back, or the owners of Battersea Power Station, who have been sat on a valuable plot of land for years enjoying land value gains without facing significant costs and would suddenly be faced with paying the market rent for that land.

"but as a means to end private landholding it is another."

Complete straw man. Nobody is suggesting an end to private landholding. Anybody privately holding land would continue to be able to do so.

Sorry for the late reply, a

Tim Carpenter — Mon, 11 Aug 2008 10:00:36 +0100

Sorry for the late reply, a very busy time.

Paul: I don't see how introducing LVT would add more value to that knowledge. In fact it would reduce it, as that windfall gain would no longer be available

LVT is worse as it presumes value before it is capitalised. It is the State having first call. If you are a homeowner and the value of land goes up around you, LVT may well force you to sell up at a time not of your chosing. Can you not see how that is, frankly, an obscenity?

Paul: The calculation of land rental values with a high degree of accuracy is perfectly possible.

Then provide a mechanism to do it. The one you have provided is systemically dysfunctional for the reasons I have given.

Paul: This is not a strawman. In both cases, someone is claiming ownership over something which it is later decided they have no right of ownership over.

Land does not ask not to be bought and sold. Land is inanimate. A slave wants to be free and is denied freedom. You might as well say I only have secure tenure over my fridge.

Paul: Under LVT, freeholders would still retain secure tenure. As those freeholders would have been aware that the government exercises tax collecting powers when they obtained the freehold, the argument that they have had the rules of the game completely changed on them does not apply.

You are jumping into your worldview as if it is already running. How do you get from where we are now to that place? Incrementally cranking up LVT is “an answer” but does not solve the problems of implementation, but only alter the manner in which the upheaval will unfold.

Paul: As an aside, when the slaves were freed in the US, many of them ended up worse off

LVT as you describe will force land to be put up for rent, but the State will be taking 90% of the earning potential of that land. It is, in effect, when used in the way you describe, National Feudalism, where people work the land and the State Uber Landlord demands almost all the value of that land each year. People, especially little people, cannot hold land unless it is worked constantly AND constantly upgraded to yield almost as much as the surrounding plots.

Paul: There are numerous examples of LVT working in practice. The only difference is that they haven't been enacted at higher rates.

That is like saying that there are numerous examples of Income Tax working, so it is ok to charge 90%. LVT as a single tax? LVT as 90% of yield? LVT retrospectively applied to what was a mixed freeholding population?

Paul: Freeholders have secure tenure, not absolute ownership.

Sorry, could you repeat that please, for I could not quite hear it over the sound of hairs begin split. Answer - end the Crown ownership angle, not make it worse by replacing it with the State.

Paul: Yes, landholders would be paying 90% of the rental value of the land every year (if the rate were set at 90%). The word "indentured" is clearly wrong. Anybody holding less than the average value of land would receive more in dividend than they pay out, which is hardly a burden. If they are indentured, it is to a business of which they are an equal shareholder.

Indentured is not about equal ownership, but I do concede it is the wrong term. Nationalised Feudalism is a more appropriate phrase for the form of LVT you seem to be in support of. In fact, why don’t you just say you want to nationalise land instead of using LVT as a back-door mechanism? The whole cost and unintended consequences of the dividend is an entire conversation in itself.

I think it highly dangerous to liberty that people living in their prime residence will be subject to constant and ever changing and unpredictable demands for cash rental value upon that place by the State. Council Tax is obscene enough. LVT as you describe will make it far worse.

Paul: Compare that to the current situation where most people spend their working life paying off large amounts of mortgage debt and I know which looks more like indentured servitude to me.

Mortgages end. Your LVT will follow people to the grave.

Paul: No, just the land. It would be a Land Value Tax. The house is private property and the full value would belong to the owner.

Land value is high when surrounded by well built and maintained houses. It is fantasy to think that you can separate the two in a country like Britain where we value old buildings and the condition and nature of our neighbours and neighbourhood. In places like Asia, people always tear down properties and rebuild. Land is more of size and location and so LVT can be more effective. I know that from personal experience. In Britain it is far far more complex than just land value. I also know that from personal experience.

Paul: People can either choose to drive a smaller car and use less of it, or splash out and pay more.

Yes, but the analogy does not travel. People cannot uproot that house they call home but you say is not a factor in all this. People can change their car but that is no where near is disruptive as the need to change their very home, the kids school, furniture that no longer fits, leaving behind that new kitchen, their place of work even which might be necessary. It is also a matter of degrees. A new car lasts 10-15 years and one should in truth not be buying a new one without the idea that it could be lost, destroyed and most certainly not holding value.

Paul: LVT would reduce or eliminate the scope for the landholder to profit from sitting on land.

LVT as you portray it would reduce the scope for the little guy to retain land far more than the big guy. Think about that implication - it should not take very long. They would be forced to work it, justify it or develop it just to stand still. Retired people in a bungalow would not be able to sit there until they are happy to move or retire to sheltered accommodation and cash in, no, they would be forced due to high LVT to "sell up" to someone with the capital to convert that plot into something that could justify the LVT imposed, but sell up for what? Your version of the scheme is to render sale price marginal and not even factor in the bricks and mortar. This is why I see the mechanism moving towards State Landlord (de facto) and a form of National Feudalism that will concentrate landholding.

LVT on commercial property in respect to planning gain caused by public works is one thing, but as a means to end private landholding it is another.

Tim: "Again, this will play

Anonymous — Tue, 05 Aug 2008 22:35:02 +0100

Tim: "Again, this will play merry hell with sales, prices and put even more value on knowing what future plans the government has, i.e. corruption."

The value of knowing what the government plans to do is already huge. If you obtain land and for example, transport infrastructure is built near by, you stand to make a huge windfall gain. I don't see how introducing LVT would add more value to that knowledge. In fact it would reduce it, as that windfall gain would no longer be available

"Your LVT is not a “market force” but a tax imposed by the State, OK?"

As I've said previously, I don't agree. The calculation of land rental values with a high degree of accuracy is perfectly possible.

"This, Paul, is another strawman. I cannot see how you can in all honesty compare owning land with owning a person!"

This is not a strawman. In both cases, someone is claiming ownership over something which it is later decided they have no right of ownership over. I don't accept that anybody has a right to own a person, the land or the air around us. Whether one act is worse than the other doesn't change the underlying concept. The key difference is that slaveholders lost control of their slaves. Under LVT, freeholders would still retain secure tenure. As those freeholders would have been aware that the government exercises tax collecting powers when they obtained the freehold, the argument that they have had the rules of the game completely changed on them does not apply.

As an aside, when the slaves were freed in the US, many of them ended up worse off, because of an inability to access land. As they had no land to work or live on, they were still effectively reliant on the previous slave holders to give them access to it. The real downside was that, when the slaves were treated as property, the slave holders had reason to keep them healthy, as they were a valuable investment. Once they were freed, that incentive disappeared. An inability to exploit natural resources was in many respects just as bad for slaves as an inability to exercise their self-ownership.

"LVT would be an enormous upheaval and the mechanisms do not appear to be thought out let alone tried and tested elsewhere."

There are numerous examples of LVT working in practice. The only difference is that they haven't been enacted at higher rates.

"LVT is to fundamentally alter a basic underlying concept in England – land ownership."

There is no legal concept of land ownership in England. In law, all land in England is owned by the Crown. Freeholders have secure tenure, not absolute ownership.

"You need to explain what you mean by this. It seems you want to take 90% of the rental yield in taxation every year? Landowners then are not just tenants but indentured tax collectors!"

Yes, landholders would be paying 90% of the rental value of the land every year (if the rate were set at 90%). The word "indentured" is clearly wrong. Anybody holding less than the average value of land would receive more in dividend than they pay out, which is hardly a burden. If they are indentured, it is to a business of which they are an equal shareholder.

Compare that to the current situation where most people spend their working life paying off large amounts of mortgage debt and I know which looks more like indentured servitude to me.

"the house and land would be worthless in sale terms"

No, just the land. It would be a Land Value Tax. The house is private property and the full value would belong to the owner.

"In the end I suppose they would have to find some cranny somewhere that charges less rent than CBI. Why bother, eh?"

That's all down to personal choice. Somebody wanting to live a cheaper lifestyle may choose to live on a smaller cheaper plot of land. Somebody may be prepared to spend a bit more and pay out more than they receive in the dividend. I don't think this is any different to oil. It is a natural resource which can fluctuate in price too. People can either choose to drive a smaller car and use less of it, or splash out and pay more.

"As I have said before, LVT will probably do more to concentrate land ownership in the hands of the few (or the State) than the current system ever could."

Given the immense concentration of landholding already, I can't see that happening, but even if it did, it wouldn't be as much of an issue, because LVT would reduce or eliminate the scope for the landholder to profit from sitting on land.

Paul:I think that sort of

Tim Carpenter LPUK — Tue, 05 Aug 2008 14:30:00 +0100

Paul:I think that sort of answers the question. LVT would increase in response to price rises which were due to a market perception of a rise in value.

I am struggling with how to respond to this one as it is so non-sequitur, an inversion almost. LVT distorts and brings down the sale value, so how can the rise in that value be used to increase LVT? You have a negative feedback loop! You said you use market rates, actual sale values, NOT a “perception”, though I can say I think the State would fall back on its “perception” of “market value”. Rentals are not accurate until the planning gain has actually materialised, surely? Again, this will play merry hell with sales, prices and put even more value on knowing what future plans the government has, i.e. corruption.

Paul: But VED was increased on the whim of the state, not by market forces. A more relevant example is the fact that a number of people are in the same position with their cars purely because oil prices have increased and it has become less attractive to run a large-engined car.

No, Paul, No. Your LVT is not a “market force” but a tax imposed by the State, OK?

Paul: Exactly the same argument was made about the abolition of slavery. Some argued that, even if the slaves had the right to be free, freeing them would violate the slave owners' property rights, as they had bought their slaves in good faith. It was a reasonable point, but I don't think it would have ever been enough to make retaining slavery correct. I don't hate landowners, but I don't view land ownership as a valid concept, just land holding.

This, Paul, is another strawman. I cannot see how you can in all honesty compare owning land with owning a person!

Paul: If you feel uncertainty about the outcome of change (which there will always be), is sufficient to reason to retain the status quo, it seems strange that you are active in an organisation which seeks to move away from the status quo quite substantially in a number of areas.

Paul, please do not be disingenuous about views on uncertainty here. LVT would be an enormous upheaval and the mechanisms do not appear to be thought out let alone tried and tested elsewhere. LVT is to fundamentally alter a basic underlying concept in England – land ownership.

Paul: In principle, I would like to see zero land sale prices, although in practice, I'd be quite comfortable with a rate set at, say, 90% of rental value, with the other 10% rolled up into a selling price.

You need to explain what you mean by this. It seems you want to take 90% of the rental yield in taxation every year? Landowners then are not just tenants but indentured tax collectors!

Paul: Personally, I'd prefer to see it introduced gradually over a twenty year period. Given the amount of mortgage debt in the country, I don't think making the move too quickly would be sensible. I'd like to see the rate at 5% of rental value in the first year with all the revenue paid out as a citizens' dividend, so it is kept completely separate from other tax revenues and not seen as another tax grab by the state. The rate could be increased to 10% of rental value in the second year, then 15% in the third year and so on. As the citizens' dividend increased, it would allow the steady reduction of other taxes, as expenditure such as benefit payments could be fairly painlessly withdrawn.

So, a person owning their own home would pay the rental value in tax to the State and in return get “a share” via CBI. If rental rates do not alter much, the owner of a house will probably end up with a mortgage paid off but still paying to the State an LVT equivalent to their mortgage…for the rest of their working lives, the house and land would be worthless in sale terms and so they do not even get any retirement value from downsizing, just less tax. Oh joy. In the end I suppose they would have to find some cranny somewhere that charges less rent than CBI. Why bother, eh? All that effort just to have some choice over paint schemes and when to fit a new kitchen. As I have said before, LVT will probably do more to concentrate land ownership in the hands of the few (or the State) than the current system ever could.

Paul: That is exactly what I consider the situation to be.

Then you misunderstand what common land is/was and the difference to someone clearing uninhabited wilderness, or chose to conflate the two.

Paul: Yes, I am saying that land cannot be property. Not of an individual, not of an organisation and not of the state.

But the State is collecting and setting rates to the extent of reducing sale value to zero and forcing landowners to a) develop just to keep incomes up to match the demands by the State and b) become tax collectors.

Reply

Paul Lockett — Thu, 31 Jul 2008 21:04:01 +0100

"How do you intend to collect reliable data when the price of land (the value to the owner) is being constantly devalued and distorted by LVT? As soon as prices might start to rise due to a market perception of a rise in value, land taxation increases, forcing it down"

I think that sort of answers the question. LVT would increase in response to price rises which were due to a market perception of a rise in value.

" I refer back to the VED example. VED was retrospectively increased. The real loses will be the existing owners who a) have to pay more or b) try and sell, but can only sell at a price that already compensates for the tax increases for the remaining life of the car. The owner is stuffed either way."

But VED was increased on the whim of the state, not by market forces. A more relevant example is the fact that a number of people are in the same position with their cars purely because oil prices have increased and it has become less attractive to run a large-engined car.

"Only if you hate landowners, perhaps. Many landowners paid for the land “privilege” already, even if it was to the wrong person. You need to address that if you are to have even a shred of respectability to the scheme."

Exactly the same argument was made about the abolition of slavery. Some argued that, even if the slaves had the right to be free, freeing them would violate the slave owners' property rights, as they had bought their slaves in good faith. It was a reasonable point, but I don't think it would have ever been enough to make retaining slavery correct. I don't hate landowners, but I don't view land ownership as a valid concept, just land holding.

"In a theoretical environment this is an attitude people feel they can take, but it is not one for a Government."

If you feel uncertainty about the outcome of change (which there will always be), is sufficient to reason to retain the status quo, it seems strange that you are active in an organisation which seeks to move away from the status quo quite substantially in a number of areas.

"So you want to zero land sale prices? So land becomes just a tenancy?"

In principle, I would like to see zero land sale prices, although in practice, I'd be quite comfortable with a rate set at, say, 90% of rental value, with the other 10% rolled up into a selling price.

"Putting that aside, the point about phasing in. Fine – so outline the process. This is part of my reservations re LVT as a single tax. Everyone talks about the end point and almost nothing done about how to get there sensibly without chaos or revolution or even real thought about how the mechanisms will persist over time."

Personally, I'd prefer to see it introduced gradually over a twenty year period. Given the amount of mortgage debt in the country, I don't think making the move too quickly would be sensible. I'd like to see the rate at 5% of rental value in the first year with all the revenue paid out as a citizens' dividend, so it is kept completely separate from other tax revenues and not seen as another tax grab by the state. The rate could be increased to 10% of rental value in the second year, then 15% in the third year and so on. As the citizens' dividend increased, it would allow the steady reduction of other taxes, as expenditure such as benefit payments could be fairly painlessly withdrawn.

"Enclosures are not the same - the fencing off of the commons without consent from all."

That is exactly what I consider the situation to be.

"What you are in truth saying is land cannot be property, in effect, right? If it were like other property, the State would not be “granting” the monopoly (very Socialist/Statist mindset, the term “grant”, btw). It might seem like semantics, but it is a HUGE difference in mindset."

Yes, I am saying that land cannot be property. Not of an individual, not of an organisation and not of the state.