Author Archives: Joe Bourke

The Philosophy of Henry George

Liberal economic philosophy has its roots in land reform and economic justice. John Locke said that “God gave the world in common to all mankind….” Thomas Paine stated that “men did not make the earth… It is the value of the improvements only, and not the earth itself, that is individual property.”

John Stuart Mill wrote: “When the ‘sacredness’ of property is talked of, it should be remembered that any such sacredness does not belong in the same degree to landed property.” Mill also wrote: “The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title.”

In a free market capitalist economy markets allocate resources through the price mechanism. An increase in demand raises price and businesses produce more goods or services, but they cannot produce more land.  The quantity of products consumed by people depends on their income, but rising income translates to increased land rents when supply is static.

John Maynard Keynes challenged the idea that free markets would automatically provide full employment. He instead argued that aggregate demand determined the overall level of economic activity and that inadequate aggregate demand could lead to prolonged periods of high unemployment. Keynes advocated the use of fiscal and monetary policies to mitigate the adverse effects of economic recessions and depressions.

William Beveridge set out the framework for the modern welfare state to tackle poverty, health, housing, education and unemployment.  Following the principles of Keynes, the post-war government took control of key industries. Under this managed economy tax money could be used to keep an industry afloat, even if it faced economic difficulties and maintain full-employment.

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Basic Rental Income

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The Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) published its detailed proposals for a basic income in 2015.

The proposals are based on the Citizen’s Income Trust ‘pure Basic-Income’ model. Disability support and housing costs are not included in the scheme as they are not in the Citizen’s Income Trust’s scheme.

Housing and council tax benefits (and, for the record, disability payments) are an important source of support to those at the bottom of the income distribution.

An option which the RSA proposes for further exploration is the introduction of a ‘Basic Rental Income’. The Basic Rental Income would not be income-contingent and therefore does not have the same disincentive or perverse incentive (eg family break-up) effects as housing benefit and council tax credit. A Basic Rental Income based upon local market conditions would be granted to every individual who rented rather than owned a property. Local authorities would retain their statutory duty to house the homeless and should be given freedom to borrow and invest in new low-cost housing.

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Funding Social Care costs

Andrew Dilnot, the economist who reviewed social care for the coalition government has described the social care system as a classic example of market failure  where the private sector cannot do what’s needed.

On the Tory plans, he said:

The changes just fail to tackle the central problem that scares most people. You are not tackling the big issue that people can’t pool their risks. There is nothing that anybody can do to pool their risk with the rest of the population, you just have to hope that you are not unlucky.

It is not providing insurance. You could easily have care costs of £300,000 each if you are a couple; you are not able to cover that extreme risk which is what we all want to do faced with anything else which we can insure. That’s the market failure and these changes do nothing to address that.

Shadow Health Secretary Norman Lamb has said:

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Crackdown on unfair Leasehold Practices

 

The Communities secretary, Sajid Javid, has issued a consultation to look at a range of measures to tackle unfair and unreasonable abuses of leasehold.

The Leasehold Knowledge Partnership and Carlex seek to represent the interests of residential leaseholders and end unfairness in this form of property tenure.  Carlex, the Campaign Against Retirement Leasehold Exploitation, represents the interests of retirement leaseholders. They provide the secretariat to the new All Party Parliamentary Group on leasehold and common hold, formed on September 7 2016.

Ed Davey MP, has been closely involved in the investigation of Cartel-like practices and Leasehold abuses in retirement homes.

England and Wales are unique in the world in perpetuating flat “ownership” in the form of a tenancy – leasehold – with all the vulnerability that that involves. Many who live in flats are young, old and single. Often knowledge of leasehold is very limited, and in disputes they are disadvantaged.

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It’s time for an All Party Parliamentary Group on Land Value Taxation

The rioting in Hamburg on the occasion of the meeting of the G20 this month highlights the oftentimes violent confrontation that exists between alternative theories of capitalism and socialism, as represented by the established orthodoxy and those that would seek to tear it down.

 At the heart of this conflict lies differing interpretations of economic theory, often depicted simplistically as left v right; Keynes v Hayek; socialism v capitalism; social liberalism v economic liberalism; or progressives v conservatives.

Henry George’s Progress and Poverty envisioned a capitalism that would allow all people to own the product of their labour, but that things found in nature, particularly land, belongs equally to all humanity. 

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Adult education and skills training

Since the election there has been much angst among Liberal Democrats over the party’s position on University tuition fees.

Martin Lewis is said to be among the most trusted source on personal finance with the general public. He has recently posted a detailed review of tuition fees arguing:

The student loan isn’t a debt; if we changed its name to the more accurate ‘graduate contribution’ this myth busting guide would be less needed.

What is missing, however,  from much of the debate over tuition fees has been the ongoing training needs of the 60%+ of school leavers who are unable or choose not to take a degree course.

Skill shortages are having a detrimental effect on the UK’s productivity and this needs to be addressed urgently in order to meet immediate economic and workforce challenges, including those arising from Brexit. The UK faces a particularly acute issue in the thousands of adults who lack English, maths and digital skills, creating a serious barrier to their progression in employment, training or education. This is compounded by the diminishing availability of adult education opportunities and the inequality of access to provision where it does exist. The current level of provision does not support the needs of our economy or our society. Add to this the pace of technological and demographic change and the need for a fresh new approach to adult skills and learning becomes crucially apparent.

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A progressive alliance round Land Value Taxation?

The Grenfell Tower fire has focused attention on the extent of the crisis in the UK social housing system.

Reverend Paul Nicolson of Taxpayers Against Poverty comments:

There are rows of empty “investments” in London, and the four big builders have 600,000 unused plots in their land banks.

The Liberal Democrat 2017 Manifesto included genuinely progressive housing proposals

  • a new national Housing and Infrastructure Development Bank,
  • increasing housebuilding to 300,000 homes a year
  • allowing councils to end the right to buy, lifting the borrowing cap and targeting “buy to leave” empty homes with a 200% council tax.
  • penalising land-banking with with a penalty on failure to build after three years of winning planning permission.
  •  a “community right of appeal” in cases where planning decisions go against the approved local plan.
  • a “rent to buy” model, where rental payments give tenants an increasing stake in the property, leading to outright ownership after 30 years.

However, the manifesto incorporated only a single sentence with respect to LVT. “We will also consider the implementation of Land Value Taxation.”

Labour’s manifesto went a little further with respect to describing its LVT intentions promising:

 We will initiate a review into reforming council tax and business rates and consider new options such as a land value tax, to ensure local government has sustainable funding for the long term.

The Greens promised “Action on empty homes to bring them back into use and a trial of a Land Value Tax to encourage the use of vacant land and reduce speculation.

The SNP have previously included LVT proposals in their manifesto and at their spring conference this year adopted a resolution “must include exploring all fiscal options including ways of taxing the value of undeveloped land” in its gradual land reform programme.  Other parties like Plaid and the Alliance Party have incorporated LVT proposals in the past.

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  • User AvatarLorenzo Cherin 19th Sep - 4:15pm
    Dve ,We are in a sense back to the two party system of allegiance , but with a multi party activism of members. This party...
  • User AvatarRoland 19th Sep - 4:10pm
    Half hearted? Yes half-hearted! I agree "project fear" might have been running but as we saw the Leave movement had those who could conjure up...
  • User AvatarManfarang 19th Sep - 4:09pm
    Dave That's the conundrum. A two-party system that will never deliver. It seems most people don't remember what British Rail was really like. In the...
  • User AvatarDerek Wood 19th Sep - 3:54pm
    Best leader's speech since Jo Grimond.
  • User AvatarP. J. 19th Sep - 3:45pm
    Will we ever learn the lessons of the Brexit debate. Remain lost because it concentrated on the economic argument and ignored the sovereignty argument. Leave...
  • User AvatarDave Orbison 19th Sep - 3:37pm
    Lorenzo - bias yes I am. Aren't you? So let's be objective. LibDems are bumping along at 7%, Labour now at 43% and over half...