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This website acknowledges that land is free – as free as sunshine, air and water. However, the further fact is that we think it can be owned, and this has a serious effect on the distribution of wealth.

That land is free by nature cannot be disputed.

It is here when we arrive, and we cannot take it when we leave. By natural law, all must have equal rights to its use. But we have devised  a system of absolute ownership with the right to charge a rent to a user. This is completely entrenched in the law of the land.

Of course, man must be able to use land for a reasonable term so as to be able to bring his product to completion and sale, and also to continue in business. The use of certain pieces of land bring benefits, either due to fertility, or more importantly, due to facilities provided by the community around.

So the question is, how to recognise the freedom of land, wbookshile providing security of tenure, and return to the community the result of its efforts as they apply to each piece of land. If we do not upset the laws we have too much, so much the better.

The method for collecting revenue supported by this website is a levy of a site value each year on each site. Although termed a tax, it is really a return to the community for the benefits attached to each site, whether negligible or enormous.

The following Topic Papers explore some of the implications of this proposal. The general intention is to name a particular problem, then to show how it might be dealt with under site value taxation.

The consequences of not recognising natural law are growing. The heavy burden of land prices and the increasing gap between rich and poor are problems that will have to be dealt with.

Please note; Signed Articles must be considered personal views of the contributors, and not necessarily the views of Landisfree.

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SA65. Housing Crisis? What Housing Crisis? by Mark Wadsworth

It would be foolish to describe the current situation in the UK housing market as a “crisis,” as  this suggests some unforeseen events which suddenly come to a head and which the government has to deal with urgently.

Far from it, the state of the housing market is the inevitable result of quite deliberate changes in UK government policy over the last thirty years or so, which we are feeling the full impact of now.

Government policies

If we go back to the period between 1945 and the 1980s, what is remarkable is the rate at which owner-occupation levels increased. The share of owner-occupier households rose from 30% to 60%; the proportion of social tenants increased from 20% to 30% and – in a development which has received much less attention – the share of households renting privately fell from 50% to 10%.

The spread of owner-occupation is often perceived to have created a more equitable distribution of wealth, but as we will see, this trend did not happen by accident: it was the direct result of policies which were intended to reduce the concentration of wealth – it was the effect and not the cause.

And although the 18-year boom bust cycle was not completely suppressed, the house price bubbles in the early 1950s and early 1970s and even the late 1980s were relatively short lived affairs and bank lending/mortgage borrowing was never allowed to reach dangerous levels, so none of these earlier bubbles resulted in the massive banking ”crisis” which has persisted since 2008.

So what was the government doing during that earlier period? Why did this lead to a more equitable distribution of wealth? How was the house price and banking boom-bust cycle dampened? Why did the level of owner-occupation grow so rapidly (even before the last short term boost of the 1980s council house sell-offs)?

There was an overall package of policies as follows:

1. Since 1918, the government had been controlling rents through a variety of rent acts. Landlords could not collect all of the location value, so by definition it went to those people actually living and working in an area who could enjoy ‘for free’ the location value they helped create because of the discount from what the unregulated rent would be.

2. If the regulated rent is only half the unregulated rent, then clearly, the amount which landlords are prepared to offer to buy a home is only half what it otherwise would be, making it much easier for first time buyers to compete. Buy-to-let lending was virtually unheard of, and until 2000 or thereabouts, banks required larger deposits from landlords and charged them higher interest rates compared to owner-occupiers.

3. Rent controls are a blunt tool, so the government also increased the stock of social housing, which made it available relatively easily and at very affordable rents. Historically, social housing has always made a slight profit in cash terms for the government; even though the rents were less than private sector rents, the rents collected were more than enough to pay interest and running costs. And until the council house sell-offs, there was no need for Housing Benefit, another huge saving to the taxpayer.

4. To prevent credit bubbles arising and to prevent first-time buyers entering into a borrowing arms race (and bidding land prices back up to their unregulated value), there were mortgage restrictions. Buyers were expected to pay larger deposits and mortgages were effectively capped at twice the main borrower’s income – until the 1980s, the average loan-to-income multiple was only two.

5. Clearly, neither rent controls nor mortgage restrictions would prevent homes in the more expensive areas being sold to the cash rich for their unregulated value, so we had Schedule A taxation of notional rental income (until 1964) and Domestic Rates (until 1989) which were highly progressive – the tax on the most valuable homes was a hundred times as much as on the cheapest.

6. Until the 1970s, we were building 250,000 – 300,000 homes per year. For the reasons explained, these were not snapped up by landlords, they were sold to owner-occupiers who paid much less for them than in today’s unregulated market.

7. Also worth a mention is that rental income was taxed at higher rates than earned income.

There was some watering down of this package even in the 1970s, but Thatcher and then Blair-Brown completely dismantled every bit of it in the 1980s and 1990s.

  • Rents have been rising faster than wages since the 1988 Housing Act ended rent controls and reduced security for tenants.
  • Rental income is now taxed at half the rate applying to earned income (no National Insurance). [I would now add: There have been some recent changes to Stamp Duty Land Tax and deductibility of mortgage interest which have partly reversed the tax advantages]
  • There has also been a cultural shift by banks, which now view buy-to-let landlords as a better credit risk than first-time buyers. [this was probably triggered by a change to s21 of the AHA 1988 in 1996 or thereabouts, which allowed “no fault evictions”] So landlords have flooded back into the market, because they can borrow more, pay more and leverage up the equity in the homes they already own. As a result, the number of households renting privately has doubled since the early 1990s – from an all time low of 9% back up to 18%.
  • Broadly speaking, people will take out a mortgage if the monthly cost is not significantly higher than the equivalent rent, but if rents are allowed to double, and then the amount which people are prepared to pay for a home will double. Add to that the interest subsidies which the government offer banks (Funding for lending, Help to buy) and inevitably house prices will double.
  • Banks will lend people as much as they are willing to borrow – the average loan-to-income ratio for new mortgages today is nearly three-and-a-half time, and 15% of borrowers owe four-and-a-half times their income.
  • So not only does the vendor make a big windfall gain compared to what he paid for his home under the old system, the banks are collecting a much larger share of location values (disguised as mortgage interest) than they did until the early 1990s.
  • Domestic Rates was replaced by the short-lived Poll Tax and then the Council Tax, which is basically a Poll Tax but dressed up a bit, so more valuable homes can be sold for much higher prices, because the new Council Tax bill was only a small fraction of the old Domestic Rates bill.
  • For crude political reasons, Thatcher and Blair sold off the nicest third of social housing, much of which is now being rented out again, often to Housing Benefit claimants.
  • NIMBYism is the order of the day, so we now have a larger population, but new construction dropped by half in the 1970s and has stayed low ever since (an average of 150,000 new homes per year).

So it is any surprise that those born in 1970 or later are more or less shut out of owner-occupation; they are doomed to either pay ever rising rents or take out a crippling mortgage which will take them decades to pay off, as against the ten years which was normal thirty or forty years ago?

Most sickening of all is that the Baby Boomers have conveniently forgotten all this;, they genuinely believe that they are somehow morally superior because they ‘rolled up their sleeves and paid off the mortgage’. They are blind to the fact that they could buy their first home for a price that was only half the regulated price, and they did not even pay off their mortgages out of taxed income – their interest payments were subsidized via a scheme called Mortgage Interest Relief at Source (MIRAS), so a large chunk was paid out of untaxed income.

The unearned capital gains they think they have earned are merely the direct result of the abolition of all the old regulations designed to redistribute the location value in an equitable fashion. The wealth that they have accumulated was handed to them on a plate; they bought at a time when the government kept rents and house prices low and are selling at a time when the government has allowed rents and house prices to skyrocket.

Speaking on behalf of the Young People’s Party, reintroducing the old system of rent and mortgage caps, building more social housing etc would be a good step forwards, but in terms of ensuring an even fairer distribution of location values and hence wealth, there is an even better policy – which is to reduce taxes on earnings and output and to increase taxes on location values instead.

Calculations suggest that if we moved half the tax burden off earnings and output and onto land values, young working households would be £10,000 a year better off. Such a tax system could easily be run in conjunction with rent and mortgage caps, so this is not an either-or choice.

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SA64. Making Use of History by Roy Douglas

To celebrate the 100th article in LANDISFREE  we ask our chair to write a special essay.

Is history a mere chronicle of events or are there patterns in history? If the second view is correct, then a study of those patterns may not only help us understand how things happened in the past, but may also give us some idea as to how things are likely to happen in the future. If, furthermore, the future is not completely predetermined, it is possible that people may intervene and give future events a twist in the direction they wish them to take. In other words, history – properly understood – is not just a record of the past, but can also be a profoundly important guide for the future.

Many historians have sought to see patterns in history, often to fit their own ideologies. To pagans in the 4th and 5th Centuries, the decline of the Roman Empire was due to Romans forsaking the old gods and turning to Christianity. The gods therefore abandoned the Empire. This view was denied by another man living through the same events. St Augustine of Hippo saw all history as a working out of the purpose of the Christian God and argued that the Christians were a force of preservation, not a force of destruction. Marxists have a view of history radically different from both. To them, the development of feudalism, capitalism and socialism, and the fate of empires, derive, not from intervention by any kind of divinity, but from struggles between social classes.

“Georgeists” – the followers of the 19th Century economist Henry George – have long argued that economics is a “science”. In their view, an understanding of the nature and interactions of land, labour and capital[1] is of great value in understanding

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[1] As in the natural sciences, words are (or should be!) given precise definitions in economics, which are not always the same as the meanings they hold in ordinary speech,

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economic patterns and events. In particular, they lay emphasis on the importance of fluctuating values of “land”. By the word “land”, they mean all natural resources, which they distinguish from the things which people have added to “land”, like houses or factories or fertilisers or machinery or mine workings.

Fine! But how far does that take us? Consider a modern example. The Georgeist writer Fred Harrison produced impressive evidence for the view that there were forces at work in the economies of Britain and other countries in the late 20th and early 21st Centuries which made the development of a slump late in the first decade of the present century predictable.[2] What is particularly striking about his work is that he

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[2] Fred Harrison, Boom, Bust: house prices, banking and the depression of 2010. Shepheard-Walwyn, London, 2005.

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was not being “wise after the event”. The book in which he analysed earlier events and foretold the slump was published several years before the slump occurred. At one stage, it appears, action could probably have been taken which would have averted the slump, but – as time went on, and the necessary action was not taken – that slump became inevitable.

What is no less impressive, perhaps alarming, about this particular study is failure by all the “experts” to predict that slump .Both the Prime Minister of the day and the Leader of the Opposition made confident predictions that all would be well, not long before the slump happened. Bankers and estate agents got their fingers badly burned because they had not anticipated the slump. Why did the “experts” get it wrong? Because they did not look at the developing situation in the light of the Georgeist interpretation of economics, and, specifically, the fluctuations in land values. They failed to realise that the boom through which they were living did not derive in the main from better productivity but from speculation based on land values. Furthermore, a great many of the speculators had no idea that they were really speculating on land values!

What is the lesson for the future? As Winston Churchill once said in a different context, the use of recriminations about the past is to enforce greater efficiency in the future. There are currently similar forces at work which, unless controlled in time by appropriate economic policies, will lead to another slump in the future. If we seek to persuade the people who operate economic policy to act differently in order to avert the future slump, we must try to mobilise all possible evidence to show them why that view is correct. There is plenty of room for further research into past slumps, to analyse still more closely the forces which brought them about, which should give useful clues as to how to avoid future disasters.

The boom-slump cycle is but one of many problems which are susceptible of historical study in the light of the Georgeist analysis. An even wider and more general problem is the one which was studied by Henry George himself in his first and most famous book, Progress and Poverty[3]. Writing in the last quarter of the 19th Century, George

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[3] Progress and Poverty has appeared in many editions and in many languages since its first publication in 1879, and is still in print

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observed the enormous technological progress which had occurred in the previous hundred years. If anybody living at the beginning of the period had foreseen that progress, he would have considered it almost axiomatic that poverty would disappear. And yet poverty didn’t disappear. In George’s view, a study of the mechanism which allowed poverty to develop and persist in the past could throw great light on how to eliminate poverty in the future.

More than a century on, the problem of poverty is still unsolved. Poverty, real poverty, still exists in Britain and in most of the wealthy, advanced countries of Europe and North America. In other parts of the world, poverty is far more extreme and far more widespread.

It is not a bad idea to start by studying something of history to understand how poverty came into existence. Poverty is a very ancient phenomenon – much older than capitalism or even feudalism. So the ultimate cause of poverty is also likely to be ancient. Some clues as to where to start in our investigations may come from the observation that the most intense poverty is not to be found, as one might expect, in places particularly short of natural resources, like hot or cold deserts or barren mountain areas, but rather in places which seem particularly favoured by nature, like warm countries where it is possible to collect two or even three harvests in a year, or places with large quantities of useful minerals.

It is also worth noting that the societies with intense and widespread poverty tend to be societies where a few people are extremely wealthy. In some parts of the modern world that is evident enough; but it is also apparent in ancient societies – but not in the very oldest societies of all, for which we need to look to archaeology. To take but one example, as far as we can infer from their remains, Egyptians living before the time of the pharaohs did not experience particular poverty, and at that time there were no individuals with particular wealth. The big change took place later, when some individuals were provided with pyramids or luxuriously-appointed tombs, while a great many other people who lived in poverty were compelled to work very hard to generate those delights for the lucky few.

The change seems to have something to do with the development of settled societies. In earliest times, hunter-gatherers could wander anywhere in search of food, clothing and shelter, and there was no way in which some people could become immensely richer than others. With the advent of settlement, land was apportioned to particular individuals. At first, no doubt, when communities were small, care was taken to ensure that everybody got enough land for his ordinary requirements. But as time went on, and communities got bigger, some people found ways of getting much more land than others. Nobody can live without access to land and its products, and so those people with a lot of land were in a much stronger economic position than those with little or no land.

This points to a very important area of historical study, with immense practical relevance. If we can understand the mechanism by which some people got a monopoly of big areas of land, while others were more or less landless, we are getting close to an understanding of the deep roots of poverty. A lot of historical studies of ways in which people in different societies at different times managed to get control of lots of land to the exclusion of most others, many of whom were left in dire poverty, would seem to provide a useful step. It will not, of course, provide an immediate cure for poverty, but it should point our minds in the appropriate direction.

We have said something about booms and slumps, and something about poverty. There are many other matters with economic components where a historical approach influenced by the ideas of Georgeists could provide useful hints about how things might be improved in future.

Consider a few of the modern problems linked with housing. Half a century ago, it was much easier than it is today for a young couple with a moderate income to acquire a home of their own. Why? The simple answer is that house prices have gone through the roof. But what element of the price of a house has risen so much? Costs of labour and building materials have, of course, risen, but at a similar rate to prices of everything else. What has gone up disproportionately, most particularly in popular urban areas, is the price of the land on which the building stands. How, why and when this happened is an important field of historical study which could throw useful light on how matters might be improved in future.

Or consider another aspect of the “housing problem”. People talk about a “housing shortage” – yet there are a lot of empty houses. There are also many under-occupied houses – where one or two people are the owners of a property which could easily accommodate a lot more people. At the same time, pressure is generated for development of housing in “green belt” or other rural land. This problem also calls for historical studies to point to modern solutions.

Another kind of modern problem also invites historical study. Agriculture has undergone some astonishing changes in the last eighty or ninety years. Between the wars, much agricultural land lay derelict, unused. In the war period, there was desperate pressure to bring every available acre into use or food production. Since the war there have been huge changes in farming practice. Great lengths of hedgerows have vanished, huge fields have appeared. Farm labourers have become fewer and fewer and in many parts of the country small farmers have virtually disappeared. Is all this the inevitable result of “progress”, or are there other factors at work? People speak of the desirability of “efficiency” in agricultural production, but what do they mean by the word “efficiency”? Do they mean that agriculture should yield the maximum per pound spent on it, or do they mean that it should yield the maximum per acre? If they mean the former, then big farms of monocultures with few labourers are probably inevitable, while if they mean the latter, the picture is very different. In many parts of the country, there is plenty of room for varied production on small farms with considerable numbers of farm workers. Again, there is a need for a close historical study of what has happened in the past.

A study of history in the light of Georgeist thinking should help In a direction which has not received very much recent attention, but could prove important in the future. Many people tend to assume that, because there have been great improvements in human comfort (at least for those who have avoided the worst poverty) in the past few centuries, that process will go on for ever, and certainly that it will not be put into reverse.

Yet the historian reminds us that there have been many occasions in the past when “progress” – whatever we mean by that word – has been set into reverse. For most people living in Britain, and for most people living in the Mediterranean world, life was probably a lot more comfortable and secure in the second century AD than it was for people of the same social group living in the fifth century, or at any point in the next thousand years. There are plenty of other examples of societies going into decline. In ancient Egypt, and in the history of China and many other places, there were several occasions on which everything seemed to go into decline. A study of what went wrong, and why, in these various places might help us avoid similar calamities in future. Maybe the occasions of decline had something to do with the ownership of land.

Quite a lot has been written about the history of the Georgeist movement itself, from Henry George jr.’s biography of his father onwards.[4] What has not received enough

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[4] See, for example, Henry George jr., The life of Henry George, Heinemann 1900, etc.; Roy Douglas, Land, people and politics, Allison and Busby, London, 1976; E. P. Lawrence, Henry George in the British Isles, East Lansing, Mich., 1957; John Saville, Henry George and the British Labour movement; a select bibliography with comments. Bulletin for the study of Labour History, 5 (1962), 18-26; F.M.L. Tompson, Land and politics in England in the 19th Century. Transactions of the Royal Historical Society 5s, 15 (1965), 23-44, and innumerable articles, and references in other works.

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attention is a consideration of how George’s ideas relate to an understanding of other historical events. Fred Harrison’s book mentioned above is a recent example of the potential value of that kind of study; but – if George’s analysis is correct – it should inform most kinds of historical study. Karl Marx’s views have undoubtedly influenced how people – and by no means exclusively avowed Marxists – look at history, and what factors seem to them important in their studies.

If schools of history can be developed which encourage scholars to look at past events at least partly in the light of the Georgeist analysis, this will not only add an extra dimension to academic studies. It will also colour the way in which leaders of thought and leaders of action come to look at the contemporary problems with which they are faced, and the remedies which they propose for defects in the workings of society. The real value of history is not just the many fascinating things it tells us about the past, but the many useful hints it gives us about what should be done in the future.

 

 

 

 

 

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SA63. The Fairhope Single Tax Colony – from their website

History of Fairhope and the Single Tax Corporation

Members of the single tax club in Des Moines, Iowa, decided in 1894 that they wanted to do more than just discuss the single tax theory. They wanted to build an actual community that would employ, as best they could, single tax principles. Still meeting in Iowa, they formulated their plans, wrote a constitution, and began seeking a site. Upon passage of the constitution one of the founding members said he believed there was a fair hope that the experiment would succeed. Thus the name for the utopian demonstration community: Fairhope. Continue reading

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SA62. A Huge Extra Resource, by Ed Dodson

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Ed has very kindly given us access to the fruit of the last twenty years work. Click on this link to get to thirteen slide presentations, each of about thirty slides. The second link below will take you to a vast trove of quotations about land, by author and by country.

http://www.cooperative-individualism.org/dodson-edward_state-of-the-us-economy-2017-jan.htm

STATE OF THE U.S. ECONOMY AND SOCIETY

Continue reading

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SA61. Foundations of Earth Sharing Why It Matters: By Lawrence Bosek

Many notable people support sharing as part of the roots for peaceful sustainability.

Sharing is a virtuous fundamental principle taught among civilized cultures. Parents often teach their children to share among siblings and schools typically utilize shared resources. Sharing is inherent as well as learned and therefore is integrated into society at differing levels.

“We must learn to live together as brothers or perish together as fools.”
—Martin Luther King, Jr. Continue reading

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SA60. How to Restore Economic Growth, by Fred Foldvary, Ph.D.

None of the candidates for office are discussing what would really make the economy grow.|

The candidates for office in 2016 have been discussing ideas about promoting economic growth, as the US economy has had a sluggish recovery since the recession ended in 2009. The Federal Reserve has pushed interest rates down to historically low levels, and that policy may have prevented even worse outcomes, but artificially low interest rates fueled previous asset bubbles and has fueled an artificial rise of land values and stock market prices. What has been missing is an analysis of what causes economic growth.

Growth and development originates in the desire of individuals to improve their condition. That desire induces people to work and to invest in capital goods and skills. The incentive to engage in this progress gets blocked by the artificial costs imposed by government. Moreover, where government artificially boosts growth from subsidies, the result is often a waste of resources. We can witness this happening now in China, where years of promoting construction has resulted in excessive real estate malinvestments, which, as this has stopped, the downturn in China now infects the global economy. Continue reading

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SA59. The Meaning of Work, by Joseph Milne

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Letter from the Editor – Land and Liberty – issue 1238 Winter 2016/17

It is extraordinary how modern economics and politics never discuss the meaning of work. Yet if there is one argument above any other that ought to persuade anyone that George’s remedy is worth applying, it is that it would change the status and meaning of work. In the closing chapters of Progress and Poverty George writes:

The fact is that the work which improves the condition of mankind, the work which extends knowledge and increases power, and enriches literature, and elevates thought, is not done to secure a living. It is not the work of slaves, driven to their task either by the lash of a master or by animal necessities. It is the work of men who perform it for its own sake, and not that they may get more to eat or drink, or wear, or display. In a state of society where want was abolished, work of this sort would be enormously increased. (Book X, Chapter 4)

For most people today work remains driven by “animal necessities”. A recent survey shows that the average rent for a home in the UK is now 60% of income. At the same time wages are being driven down by zero-hour contracts which circumvent practically all employment legislation by defining the person as a ‘worker’ or as ‘self-employed’ rather than an ‘employee’. Most zero-hour contracts are in the hotel and catering industry, supermarkets, health care, public services, and not-for-profit organisations. Continue reading

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SA 58. THE FUNCTION OF ECONOMICS, by Leon Maclaren

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End of Term Lecture 23rd July, 1952.

Ladies and Gentlemen,

Is any study simpler than economics? A child could grasp it . Our difficulties arise·; stream and flow from the superstitions and  prejudices with which we surround it.

The Divine Wisdom which inspires all life and form makes this branch of learning easy to follow. Were this not true, we could despair of human progress .A knowledge of economics is essential to good government; and as men are best governed who govern themselves , a:. general knowledge of economics is necessary to good government  .

A voter who votes in ignorance forges the chains which bind him .All who  conduct business in ignorance inflict the injustices they suffer and are confounded by the confusion they cause. If the know­ledge necessary to good government were vouchsafed only  to a few, uniquely gifted to follow it, there would be no end to injustice and confusion. But this is not so.

The book of economics lies open before us .Its language is simple and its message clear. We may read it, not in any library , but in our daily lives and in our essential relations v1ith nature and each other. Let us look at it together .Lend me your imaginations so that our sight may be insight and our seeing understanding. Continue reading

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