THE CRIME OF POVERTY: the solution: economic justice.

The problem

When we see people sleeping in cardboard boxes in the centre of London, when young men sit on the steps of underground stations endlessly repeating the words, "Any spare change, please, any spare change?"; and when old ladies are bludgeoned to death for their pension money, then the results of poverty are all too horribly apparent.

Undoubtedly, there is a moral as well as an economic dimension to the tragedy. Drugs are used as an escape from the emptiness of lives with no purpose, with no prospect of work and with no future which has any sign of hope in it. Of course, this is a negative response to the problem, but it is an increasingly sizeable response, and is one which is largely funded by crime. It is a dangerous addition to the rising tide of burglaries, car break-ins, shoplifting and other forms of petty theft that are sweeping the country and which, in part at least, can be blamed on poverty. Furthermore, the gap between rich and poor has widened over the last few decades.

A general problem

Poverty, of course, is not confined to Britain and other developed countries. In many parts of the world, great numbers of people actually die of poverty. Understanding the causes of their poverty gives important clues to the causes and cure of Britain's poverty.

Lives of hunter-gatherers in the past, and in the few hunter-gatherer societies which still exist, may have been "nasty, brutish and short", but there was not a great gap between rich and poor. That gap appeared soon after the rise of agriculture. Land is essential for everybody, and (as Mark Twain put it), "they ain't making it no more". But some people soon contrived to get control of the useful land, which meant that those who were not so lucky were utterly dependent on those who had land. Hence the huge gulf between Pharaoh and the people who built his pyramids; between the feudal lord and his vassals; between landlords and peasants in the modern Third World, and - ultimately - between rich and poor in modern Britain too.

Of course, in modern Britain the most valuable land is not agricultural land. It is usually land in the middle of cities. People who own that land often become fabulously wealthy - not because of anything they do, but because other people want to use it. If one group of people gets something for nothing, then others will get nothing for something.

Towards a cure

So what can be done about it? There is no way of dividing the land in Britain so that everybody gets a fair share. But what can be done is to ensure that everybody gets a fair share of the value of the land.

This can be done by first assessing the value of every parcel of privately-held land in the country. That assessment will not count the value of all the things which people put on the land, such as buildings and crops. It will take account of all the planning rules which affect its use. Because land values are constantly changing, it will need to be revised frequently - probably at least once a year. Once the assessment is complete, a tax will be levied on the basis of the valuation. At first it will be small, but as time goes on it will increase.

Unfortunately no official figures exist to show-how much of our GDP today is really land values, but unofficial figures suggest that it is in the region of 20 to 30 per cent. Certainly it is a huge sum. This is not obvious from taxation statistics, because much land value is hidden in the profits of businesses which own their sites. For example, McDonald's make more money from their property than from selling hamburgers.

Getting rid of bad taxes

When land values are collected in taxation, it will be possible to reduce, and in some cases abolish, existing taxes. These taxes fall as a burden on everybody, but particularly on the poor. Some of them - like VAT and import duties - make things which people want to buy more expensive. Some - like Income tax and National Insurance (a tax for all practical purposes) - fall either on the worker or on the costs of production. In either case they make it difficult for the employer to offer jobs, and therefore lead to unemployment - a major cause of poverty.

The effect of shifting the tax burden on to the value of land will also be to bring land which is today left idle for speculative reasons into productive use. This will happen because the land value tax will be related to the market value of the land, not to the use which the owner makes of it. The owner of idle land will not wish to go on paying LVT for property from which he derives no current benefit, and therefore will probably either put it to good use himself, or dispose of it to somebody who is prepared to do so. When the land is used productively, this will necessarily produce an increased demand for workers.

And so Land Value Taxation will deliver a "double whammy" to poverty.