On 18 January LDCRE (Liberal Democrat Campaign for Racial Equality) hosted a very interesting and informative discussion with Dr Philip Woods about Britain’s role in the slave trade, the institutions involved in it, and issues such as reparations, education and commemoration. We had 47 people register for the talk. We had extensive technical and advertising help from London Lib Dems, for which we are grateful. We were delighted to see participants from a number of Lib Dem groups.
Here is a summary of some of the issues discussed, to inspire you to think about policy responses.
Titled “Britain’s Role in the Transatlantic Slave Trade and its Abolition: some current issues. A Discussion with Dr Philip Woods.” we learnt about the shocking scale and brutality suffered by millions of African people. Africa could have had double the population if it hadn’t been for slavery depopulating the continent, and this would have contributed to Africa’s economic growth. It disrupted established kingdoms in Africa, led to warfare on the continent, and diverted economic activity away from domestic uses such as growing crops for domestic consumption to coastal activity instead.
Slavery became a key part of globalisation and contributed to economic growth in Britain and elsewhere. The Royal African Company was a key vehicle for the slave trade in the 18th century and the Company became enormously wealthy as a result.
There has been involvement by all sections of the British establishment, including the monarchy, the government, the Church of England and the City of London. Other key institutions who have benefited from the slave trade include universities and the heritage sector such as the National Trust. It was a key part of the industrial revolution and a key part of the growth in investment within slave-trading countries. To end slavery in this country, the government paid £20m to 40,000 slave owners: this was an enormous sum, constituting 40% of the annual budget. The government borrowed in order to fund this compensation, and some of this was finally repaid in 2015.
There have long been calls for reparations to be paid and the Black Lives Matter movement has reignited this desire in society. This has been a more active topic of discussion in the USA over a longer period of time compared to the UK. It is a complex subject but some topics discussed included the role of affirmative action such as scholarships, and the removal of monuments and street names, as well as the need for reparations.
The way forward must include better education for us all, and one positive development in that regard is that the current A Level history syllabus from the OCR board has a unit on African Kingdoms. More needs to be done, however, both within schools and in wider society.
In my view, all major institutions must conduct an audit of their role: the Bank of England currently has an exhibition about its involvement in the slave trade as part of their ongoing work to understand and disclose how the Bank of England benefited from trading in slaves. In order for government policy to be developed in an informed way, I believe that government should require these audits rather than leaving them to be voluntary, and these audits should have to follow legislated requirements in order for them to be thorough and comparable. Companies have to follow laws about how their financial statements should be set out and what has to be disclosed about their environmental impacts, so why not have similar clear requirements about disclosures about their links with slavery? A clear timeline should be established for these audits so that government action can be taken in a timely fashion. We have seen how deep-rooted racism is in our police service, and yet the pace of action to eliminate it is woeful. This demonstrates the need for a tough line from government on the issue of slavery if we are serious about facing up to our past. There are useful examples from around the world in how nations respond to shameful periods in their history, such as South Africa and its apartheid regime as well as Germany and its Nazi past.
The dehumanising of people is something that very sadly is not in our past, as we continue to see it in our nation and around the world today. There are a range of government policy responses that arise from this and I would like to see us move forward with this project in our Party.
If you would like to get involved with our work, or to join LDCRE, please email us at [email protected].
The views expressed in this article are Humaira’s and do not necessarily represent the views of the LDCRE.
* Humaira Sanders is the Policy Officer for LDCRE (Liberal Democrat Campaign for Race Equality). She served on the Working Policy Group on the 21st Century Economy and on the Working Policy Group for Immigration, Asylum and Identity. Humaira has been a member of the Ealing branch Executive for over 10 years, and is an Approved Westminster Candidate.
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44 Comments
I understand Sir John Gladstone (father of W.E.G.) was one of the biggest recipients of this largesse, as was the Trevelyan family (though Laura T., to her credit, is now trying to do something about this).
It’s a funny old thing, but governments can always find money for something when it suits their purposes. Members of any future Coalition or Government Arrangement should duly note and remember this.
This link may be of interest : The Database | Legacies of British Slavery
University College London
https://www.ucl.ac.uk › lbs › project › details
The records of the Slave Compensation Commission, set up to manage the distribution of the £20 million compensation, provide a more or less complete census …
The past should never be forgotten. Every generation should learn from history. History in schools should be a lot more than the Tudors and WWII. And if people choose to rename streets, fine.
But reparations?
The economic growth mentioned in the article also came from exploiting workers in mill towns across the north of England. Children crawled under looms and breathed in cotton fibres. Elsewhere, children worked in coal mines. What about the Highland Clearances? The Inclosures in England and Wales that forced people off the land – and into the factories and into overcrowded slums where disease was rife? All these people were ‘free, but their labour was exploited and their lives were miserable and often short.
So, where do reparations start? How do you measure how much anyone alive today has benefited from things other people did 200-300 years ago?
And who do they go to? How do you decides who deserves it? How do you ensure (here) that only the descendants of the guilty lose out as a consequence of any payments? The National Trust, by the way, is a weird ‘beneficiary’.
Talk about the past, sure, but when it comes to ‘policy responses,’ I’d far rather the government focussed on human rights abuses and racism and slavery that tarnish life in 2023.
@ Cassie “The economic growth mentioned in the article also came from exploiting workers in mill towns across the north of England. Children crawled under looms and breathed in cotton fibres. Elsewhere, children worked in coal mines. What about the Highland Clearances? The Enclosures in England and Wales that forced people off the land – and into the factories and into overcrowded slums where disease was rife ? ”
They were exploited by the same lot of rogues that benefited from slavery, Cassie, not just in England but throughout the UK and what is now Ireland.
My Great Granddad died of miners lung in County Durham aged 27 having been down the pit since he was 12 and leaving a widow and four young children (no state benefits then). One of the children (my Granddad) had his house windows smashed by the army sent in by the LLG Government on Black Friday in 1921 when wages were cut. The pit they worked in helped to provide a multi-millionaire lifestyle for Lord & Lady Londonderry and the Vane,Tempest Stewart lot.
“History in schools should be a lot more than the Tudors …”
And despite that, how many English people hold the notion that King Henry VIII was a “jolly good, fun loving, chap” even though he had two of his wives executed so he could marry yet another woman, and it is estimated at least 57 000 political and religious opponents executed? By comparison, Queen Mary, given the epithet “bloody”, had 227 men and 56 women executed for their protestant beliefs.
But history in schools usually includes the Stuarts as well but not the inconvenient truths.
In the history of the English slave trade it is usually omitted that it was Stuart family of Scotland, namely the two sons of Charles I, viz Charles II and especially James II (then Duke of York) who financed and promoted the trade through the Royal Africa Company, along with various merchants of the City of London. Following the Dutch invasion of 1689 by Willem II van Oranje, his military defeat of James II, and his coronation as King of England and Scotland, Willem II bought all of Bristol slave trader Colston’s shares in the Royal Africa Company. Clearly the slave trade was a most profitable source of revenue for “the royals”.
As David Raw points out above, the important consequence of the abolition of the slave trade by Great Britain was that the tax payers of the nation had to pay the bill of the government paying compensation to the slave owners (NOT the emancipated slaves) for the loss of their “property”.
@Cassie – reparation is indeed a tricky issue. But I take the view that it is not for me, as a white woman, to comment on how slavery has impacted on the current descendants of slaves.
You ask “How do you measure how much anyone alive today has benefited from things other people did 200-300 years ago? And who do they go to? How do you decides who deserves it? “. But who is the “you” here? – surely not the descendants of those who benefitted from slavery. White people should not be setting the agenda here.
Any talk of reparations will be about as electorally successful as revoke was. You will be asking the voters who a currently going through a hard time to shell out large sums of money to pay for sins that they did not commit.
White people should not be setting the agenda, but in this country reparations will not happen unless a very large number of White working/middle class people vote for them. It is simple demographics.
@mary. But who is the “you” here? – surely not the descendants of those who benefitted from slavery.
The ‘you’ was in the sense of ‘one’. How can anyone measure…? How can anyone decide…?
But the alternative to the present beneficiaries ‘setting the agenda’ is what? Someone else identifying those beneficiaries and forcing them to pay for what their 10x great-grandparents did, and deciding how much it should be?
The A Level history course on pre-colonial African Kingdoms is a welcome addition to the options available and something we could all benefit from by reading more widely about. The course ebook African Kingdoms: A Guide to the Kingdoms of Songhay, Kongo, Benin, Oyo and Dahomey c.1400 – c.1800 concludes:
“For several centuries the kingdoms of Oyo and Dahomey flourished in the regions of what are now Benin and Nigeria. Their rise as powerful states exhibited common features with many other states of this period: tributary provinces, militarization and taxation, ritual authority, and a dependence on the slave trade which was the equal to that of the European nations of Britain, France, and Portugal.”
“…their growing power and centralization clashed with traditions of political independence and religious autonomy. As the profits of trade grew, access to these profits exacerbated the tensions caused by this conflict of centralization and autonomy. The importance of slavery and status also grew, creating faultlines across societies, and a ready body of people willing to adopt different paths. The rise of the Fulani jihad in Sokoto gave this opportunity, precipitating the collapse of Oyo and reforming its relationship to Dahomey”.
Africa is a vast continent with as many different cultures, languages and traditions as Europe. As the introduction to the course text notes “A Senegambian in the 15th century had much more in common with someone from Portugal than they did with someone from – say – Kongo: Islam was practised in both Senegambia and Portugal, and there was a shared language for some in Arabic, where none of that was the case in Kongo.”
David Raw,
as the Monty Python sketch goes – your grandad was lucky. According to my late grandmother her relations home and shop in County Clare was burned down by Black and Tans sent in by the LLG Government about the same time your grandfather’s house windows were smashed in.
On reparations – Martin Luther King associate & Gay rights activist Bayard Rustin puts it into perspective…
“The idea of reparations is a ridiculous idea,” Rustin said. “If my great-grandfather picked cotton for 50 years, then he may deserve some money, but he’s dead and gone and nobody owes me anything.”
We all have a lot of ancestors. Perhaps a million would have lived during the period of the trans-Atlantic slave trade. Many of them will have done horrible things whether connected to the trade or not. Some grew rich by them. Some didn’t but overall our level of wealth is still quite strongly related to how many of our ancestors got away with it.
Rather than re-examine every cold case back to the Norman conquest, we should be trying to reduce the impact of inheritance. That means more of our revenue coming from inheritance and income from wealth and more expenditure on helping children get a start in life that doesn’t depend as strongly on their ancestory.
Might we also remember the theft of common lands and common land livelihoods which were the intended purpose and consequence of the enclosures and the clearances?
Might we also address current exploitations of the many by the few resulting from our current socio-economic policy of Neoliberalism?
It’s important to retain balance in accounts of the Atlantic slave trade (AST). Saying that it ‘disrupted established kingdoms in Africa’ denies responsibility to the African chiefs like the King of Dahomey who were raiding the neighbours for slaves as late as 1859, long after the Atlantic slave trade had been abolished and the continuing illegal trade was being intercepted by the Royal Navy. On this, see The Last Slave Ship (1944) by the pioneering black woman journalist Zora Neal Hurston. The AST was only a minor factor in the industrial revolution; more important was that Britain had a plentiful supply of coal and engineers of genius. The slave trade in East Africa continued into the late nineteenth century long after the abolition of the AST and was suppressed by British military action: see Churchill’s The River Wars. On the other hand, it’s an important truth that the British government paid out huge amounts to the slave holders – something the Liberal MP John Bright objected to at the time arguing that the money would be better spent on the British working class. And as David Raw says, there is a government-funded research project into the records of the Slave Compensation Commission. So let’s continue this research and investigation but let’s not let the history of slavery and the slave trade get monopolised by the single issue lobby.
I am ambivalent on the compensation issue, but it does make me wonder how far back do we go. Could we not claim compensation off Rome for the misery and pain the Romans inflicted on the peoples they conquered, including Britain, etc etc. Somewhere lines have to be drawn. David Raw’s comments about 1921 and the Military action here in this country identifies how wide the subject encompasses.
Great article Humaira, thank you.
An excellent book which analyses British politics of that time is The Interest by Michael Taylor.
The idea of offering simple monetary compensation is probably a non-starter and may be very offensive to the descendants of those who suffered so much, when we can’t even get Windrush right.
Perhaps a more useful approach is for the British government to seriously invest in the development of the African continent through national infrastructure projects; roads, railways, ports, schools, universities and hospitals all still seriously lacking, and could make a massive difference in a short space of time.
The other thing we can do as a political party is to expose those MPs and Lords who are still benefitting from their estates in the Caribbean (and probably elsewhere) for example Richard Drax… and others in high places of privilege.
We should support the National African American Reparations Commission (NAARC) in their work.
Britain’s massive role in the slave trade and slavery should be a compulsory part of the national curriculum.
I hope LDCRE will be giving input to the LD general election manifesto being prepared now.
The lesson I draw out of this is that political parties ought to look at Inheritance Tax and all the ins and outs of a capital levy on the very rich (see ‘The Times Rich List’ for starters). That’s what I expect a radical political party to do.
It seems inequitable that a miner’s daughter whose parents’ windows were smashed by the LLG military in 1921 (and picked slack from the slag heaps to keep her family warm in the 1926 General Strike) should have 40% removed from the very small excess over the IHT excess threshold on her estate when she died in 2007……. something slave owners descendants will have avoided using expensive solicitors and trust funds. I also gather the Royals are exempt from IHT and allowed to keep their wills secret.
Lib Dems and Labour should tackle the ‘One rule for them and one rule for us’ phenomena so prevalent these days. I know what Tories are like, but I expect other political parties to be more enlightened on matters of inequality in 2023.
@ Joe Bourke Thanks for the ‘Black & Tan info, Joe. No wonder Scottish traditional political allegiances in Glasgow and the Central Belt changed so dramatically in 1922.
Mark Frankel,
the slave trade long predated the Atlantic slave trade and continued after its abolition as you note. It was dominated by the most Powerful African tribes/Kingdoms. It’s expansion in the 17th and 18th century with the arrival of slave ships engaging in the triangular trade between Europe, Africa and the New World led to intense competition among African Kingdoms/tribes to monopolise the trade with these ships. It was this competition among the most powerful tribes that disrupted established kingdoms in Africa.
Britain has long been a major investor in African countries and continues to be so, particularly in South Africa. Bayard Rustin was right that reparations will go nowhere – whether its Africa, India, the Caribbean, Ireland or other former colonies. One point the A Level course book makes is the idea of Africa as a single entity is a very western concept. It is a vast and diverse continent with its own history and culture (of which European colonialism is but a small part somewhat akin to the Crusades on the holy land); abundant in resources and with a young and vibrant population that can drive economic growth.
Our focus as a party should be on British citizens of commonwealth ancestry. As Peter Davies comments “That means more of our revenue coming from inheritance and income from wealth and more expenditure on helping children get a start in life that doesn’t depend as strongly on their ancestory.”
David Raw 2nd Jun ’23 – 12:47pm:
…political parties ought to look at Inheritance Tax and all the ins and outs of a capital levy on the very rich…
Which would drive wealth out of the country and deter people from bringing in or creating wealth, thus making the nation poorer, as the Norwegians remind us…
‘Super-rich abandoning Norway at record rate as wealth tax rises slightly’ [April 2023]:
https://www.theguardian.com/world/2023/apr/10/super-rich-abandoning-norway-at-record-rate-as-wealth-tax-rises-slightly
I also gather the Royals are exempt from IHT…
Only the reigning monarch…
‘King Charles won’t have to pay ‘inappropriate’ inheritance tax on Queen’s estate’ [13th. September 2022]:
https://www.mirror.co.uk/news/royals/prince-charles-wont-pay-inappropriate-27978154
LibDems do need to be able to address the issue of more and more working/middle class families being drawn into the inheritance tax net “My dad worked hard all his life – he would have been heartbroken by what the taxman took’ It is a flawed tax in need of reform. The simplest and most equitable reform would be replacing council tax, stamp duty and inheritance taxes on land with a Land Value Tax (and much lower housing services tax based on building value only for tenants), collecting taxes annually rather than in a lump sum from an estate.
@ Jeff “Which would drive wealth out of the country and deter people from bringing in or creating wealth, thus making the nation poorer, as the Norwegians remind us…”
Sorry, Jeff. 30 billionaires (the number in your quote) leaving Norway is not an unquenchable glacier melt down. By your logic all taxes should be scrapped . I’m afraid the Laffer Curve is a right wing Tory mantra propagated joyfully out of self interest.
2. “Only the reigning monarch ?” : “Charles won’t have to pay ‘inappropriate’ inheritance tax on Queen’s estate’ .
What’s ‘inappropriate’ about Charles being subject to the same tax regime as the rest of us ?
And are you saying Charles is the only recipient of the Queen’s estate, that the Duke of York, Duke of Edinburgh, Princess Royal et al will have their share reduced by IHT ?
3. The new monarch “surrenders his entire estate to the UK Govt in return for a Sovereign grant equivalent to 33 percent of his estate’s income”. No he doesn’t, he inherits the benefit of the Duchy of Lancaster, and William gets the Duchy of Cornwall with all the tax quirks that implies.
Joe Bourke is right – we need a land value tax. Not least because land doesn’t get up and move offshore. Which would address Jeff’s point about wealth moving offshore.
“Joe Bourke is right – we need a land value tax. Not least because land doesn’t get up and move offshore”
Neither does the infrastructure (factories, oil refineries, chemical works, warehouses etc), or even the workforce in large numbers who are the real wealth creators of modern society.
This is not to suggest that we shouldn’t include land also but neither should it be regarded as a special case and somehow different from, say, an expensive mansion in central London. It wouldn’t be that easy to move any of those!
The dispute over ownership of land was part of the 19th century struggle for political supremacy between the older aristocracy and a newly emerging capitalist class. The former being Tory and the latter Liberal. Haven’t we moved on from all that?
@Peter Martin
“This is not to suggest that we shouldn’t include land also but neither should it be regarded as a special case and somehow different from, say, an expensive mansion in central London”
The expensive mansion stands on a piece of land which could be subject to a LVT.
@ Nonconformistradical.
True. But so would a public park, a public library, a museum, an art gallery etc
So you’d charge the same amount of tax, per square metre of land occupied, to, say, the owners of the Shard sky scraper as you would to St Paul’s cathedral?
“So you’d charge the same amount of tax, per square metre of land occupied, to,….”
Please don’t put words into my fingers.
Here is a reading list about Britain’s involvement in the slave trade, which was provided by Dr. Woods for the LDCRE discussion I have summarised in this article.
Hochschild, Adam. “Bury the Chains: The British Struggle to Abolish Slavery.” London: Macmillan, 2005, introduction
Hilary McD. Beckles “Britain’s Black Debt: Reparations for Caribbean Slavery and Native Genocide” (UWI Press 2013)
Steeds, Mark, and Roger Ball. “From Wulfstan to Colston: Severing the Sinews of Slavery in Bristol.” Bristol: Bristol Radical History Group, 2020
https://www.ucl.ac.uk/lbs/project/details/
Centre for the Study of the Legacies of British slavery [UCL]
http://archive.understandingslavery.com/index.html
Understanding Slavery Initiative
Stuart Eizenstadt “What Holocaust Restitution taught me about Slavery Reparations”
https://www.politico.com/magazine/story/2019/10/27/slavery-reparations-holocaust-restitution-negotiations-229881/
@ Nonconformistradical,
I’ll take that to be a ‘no’, then, to the question asked.
You’ll see the problem. Once you start taking into account the social differences between some forms of land usage you won’t be able to ignore any of the differences.
We should leave the Georgists and Georgism where they belong. That’s way back in the 19th century.
David Raw 2nd Jun ’23 – 2:45pm
30 billionaires (the number in your quote) leaving Norway is not an unquenchable glacier melt down.
The FT puts the figure at 36, which appears to be just under 10% of Norwegian (NOK) billionaires — enough to put this tax rise on the down slope of the Laffer Curve, as reported. In addition, there will be other aspiring and future wealth creators who will locate elsewhere prior to becoming wealthy.
By your logic all taxes should be scrapped.
Not by my logic, but tax rates should always be below the peak of the Laffer Curve.
I’m afraid the Laffer Curve is a right wing Tory mantra propagated joyfully out of self interest.
If an economic activity is taxed at 0% it will bring in zero tax revenue. If it is taxed at 100% it will also bring in zero revenue as no one will engage in the activity for taxable remuneration. Somewhere between those two extremes there’s a percentage rate that will maximise the tax revenue. That’s all the Laffer Curve shows. It’s an economic fact that tax raising authorities ignore to their cost.
David Raw 2nd Jun ’23 – 2:45pm
What’s ‘inappropriate’ about Charles being subject to the same tax regime as the rest of us?
Presumably because the monarch’s principal assets are held in trust for the benefit of the nation. From the Daily Mirror article…
And are you saying […] that the Duke of York, Duke of Edinburgh, Princess Royal et al will have their share reduced by IHT?
That’s what the article says.
…he inherits the benefit of the Duchy of Lancaster, and William gets the Duchy of Cornwall with all the tax quirks that implies.
The late Queen voluntarily paid tax on her personal income. Presumably King Charles will too and Prince William already does…
‘Frequently Asked Questions’:
https://duchyofcornwall.org/frequently-asked-questions.html#question_11
The Duchy of Cornwall is exempt from corporation tax. End of.
And not only corporation tax but capital gains tax as well …….. as is the Duchy of Lancaster. End of again.
For those interested in an understanding of what drives inequality in the modern economy, it is worth reading the articles of Martin Wolf in the Financial Times – one of the UK’s preeminent financial and economic journalists The case for a land value tax is overwhelming
For more information on the topic, please visit Alter’s website and attend our stand at Conference. PS: For anyone planning on attending the Labour Conference the Coalition for Economic Justice will have a stand promoting Land Value Tax
@ Joe Bourke,
It’s good to see that the ALTER website can actually bring itself to mention the name of Henry George even though I couldn’t find any reference to a LVT also being the “single tax” as he proposed it should be in the 19th century.
Various countries have implemented a LVT but, in practice, it’s just another tax and doesn’t do much, if anything, to create a more equal society. Or, if you think it does, maybe we can have some practical examples.
Peter Martin,
Joseph E. Stiglitz is perhaps the pre-eminent economist focused on issues of inequality. His 2015 paper THE ORIGINS OF INEQUALITY, AND POLICIES TO CONTAIN IT “…critiques the notion that unfettered inequality is an inevitable consequence of contemporary capitalism, and provides an alternative, new framework for analyzing changes in income and wealth distribution.
…Specifically, I suggest that much of the increase in inequality is associated with the growth in rents — including land and exploitation rents (e.g., arising from monopoly power and political influence).”
Land value taxation is currently implemented throughout Denmark, Estonia, Lithuania, Russia, Singapore, and Taiwan; it has also been applied to lesser extents in parts of Australia, Mexico (Mexicali), and the United States (e.g., Pennsylvania). Most modern LVT systems function alongside other taxes and thus only reduce their impact without removing them.
After 1945, the Labour Party adopted the policy, against substantial opposition, of collecting “development value”: the increase in land price arising from planning consent. This was one of the provisions of the Town and Country Planning Act 1947, but it was repealed when the Labour government lost power in 1951. Today’s Labour Party as well as the Libdems have adopted policies around reforming the 1961 Land Compensation Act Labour plans to tackle housing crisis by forcing landowners to sell at lower prices
@ Joe,
Our disagreement isn’t about whether or not we should have a LVT. It’s about what we can expect from it. Denmark has a whole range of progressive taxes. It doesn’t rely on LVT as “single tax”. So it’s far from what Henry George had in mind. Danish public spending in recent times has been well over 50% of annual GDP. What percentage of this is ‘funded’ by a LVT?
A LVT is a form of wealth tax. Stiglitz is on record as saying:
“I think a wealth tax is a good idea because we have so much inequality in wealth, even a moderate rate like 3% on billionaires and 2% on those over $50 million, raises an enormous amount of revenue..”
This is my view too. We’d have a wealth tax and LVT would be a part of that. Land would be taxed like any other kind of wealth and not as some kind of special case. It’s also important to appreciate, but I doubt that many Georgists do, that taxation isn’t to collect revenue for the Government to spend. Unless we tax the super rich at a sufficiently high level to force a reduction in their spending the exercise is macro-economically neutral – in the short term.
This isn’t a reason for not doing it, though!
Wealth taxes have proved ineffective where they have been tried and can only realistically be assessed on the super-wealthy i.e. not on the life cycle savings for house deposits/tuition and pension pot investments of the great majority.
As Stiglitz writes in his paper – Land, natural resources and monopoly rents constitute a special case of returns on capital that are nor produced.
“Much of the growth in inequality and the increase in the wealth-income ratio are related to an increase in rents and land values. In the middle of the last century, land was essentially dropped out of the models used by economists. After all, agriculture, the source of the major demand for land, had shrunk to a very small fraction of GDP. But as I noted earlier, housing services is an important component of GDP (approx 25%), and land values, especially in our urban areas, are an important part of housing services. Indeed, with urbanization, one would expect an increase in land values.”
“Piketty’s recent book noted the enormous increases in the wealth-output ratio in most capitalist countries in the last third of a century. But these increases have been partly, and in some cases largely, related to increases in the value of land. A tax on the return to land, and even more so, on the capital gains from land, would reduce inequality and, by encouraging more investment into real capital, actually enhance growth. This is, of course, an old idea, promoted most famously by Henry George (1879).”
Stiglitz continues “One of the main drivers of land prices (or the value of other non-produced assets) is credit availability. As quantitative easing made so abundantly clear, a flood of liquidity can drive up asset prices. If credit is made available to those with collateral and provided at interest rates below the expected rate of return, there will be a heavy demand for those assets (like land) that can easily be used as collateral. Thus, changes in monetary and regulatory policies that lead to an expansion of credit will contribute to an increase in the value of land — to an increase in “wealth” — but not necessarily to an increase in the country’s real capital stock.
Such monetary policies can contribute at the same time to growth in income and wealth inequality, and the mechanism by which this occurs represents a fundamental change in our understanding of the structure of the economy. Keeping interest rates close to zero seems to have contributed to wealth inequality, too. While this policy didn’t stimulate the economy much (as predicted — though it may have prevented the economy from falling into an even deeper downturn), it hurt owners of short-term government bonds — older, risk-averse people who had acted conservatively — but helped the owners of equity, disproportionately the very rich.
“Wealth taxes have proved ineffective where they have been tried and can only realistically be assessed on the super-wealthy”
Sounds like a reasonable idea as a starting off point – start with the very wealthy.
France abolished its wealth levy in 2017 partly because it generated little revenue. The idea of a wealth tax has never got much traction in the UK, although it is collected in four European countries – Norway, Spain, Belgium and Switzerland. Theoretically, a 2% tax on UK rich list families ‘could raise £22bn a year but a significant element of that wealth is represented by overseas investments held offshore. There is no such problem with a Land Value Tax on UK land holdings.
Fiscal policy including tax policy has to be designed to support economic growth. As Stiglitz notes in his paper “A tax on the return to land, and even more so, on the capital gains from land, would reduce inequality and, by encouraging more investment into real capital, actually enhance growth.”
@ Joe,
It looks like you’re happy to cite Stiglitz as an authority when it suits and ignore him when it doesn’t.
You could also be right that a LVT will be easier to collect than a more generalised wealth tax. There’s no reason not to try both though. I’m sure Stiglitz will have some opinion on why the French tax was ineffective and what we need to change to make it more effective.
The economic argument for Land Value Tax or taxation of economic rents is that such taxes do not carry the deadweight losses associated with taxes on earned income, returns from productive capital or consumption taxes. A wealth tax on share capital invested in productive assets that are depleted in the course of producing goods and services would not meet this criteria. Similarly, a tax on luxury goods can be equally counter-productive.
In 1991 the US enacted a luxury tax to reduce the Federal budget deficit. This tax was levied on material goods such as watches, expensive furs, boats, yachts, private jet planes, jewelry and expensive cars. Congress enacted a 10 percent luxury surcharge tax on boats over $100,000, cars over $30,000, aircraft over $250,000, and furs and jewelry over $10,000. The federal government estimated that it would raise $9 billion in excess revenues over the following five-year period. However, only two years after its imposition, in August 1993, Bill Clinton eliminated the “luxury tax” citing a loss in jobs, particularly in the boat building industry.
A wealth tax has to avoid deadweight losses. In particular any depletion of investment in real capital. The answer to this problem is the Land Value Tax. As Stiglitz has written ” “A tax on the return to land, and even more so, on the capital gains from land, would reduce inequality and, by encouraging more investment into real capital, actually enhance growth.”
I remember learning about the Atlantic slave trade while at a secondary school.
According to Wikipedia about 12.5 million people were taken from Africa to be transported across the Atlantic over 400 years and between 11.5 and 15 million were transported to Muslim countries over 1200 years and maybe a further 4 million to India and beyond. Also according to Wikipedia British ships transported about 2.7 million slaves.
Adrian Bagehot,
Please can you provide reference for the 57,000 people executed during the reign of King Henry VIII? (57,000 is about 1500 a year.)