2013/01/04 Minutes Economics Working Group

2013/01/04 Minutes Economics Working Group

Fred Harrison
40 years advocating LVT to no avail – futile; examined all the social issues globally – will not be solved until the land/rent issue is addressed; establish strategy for action not focused on symptoms but root causes. Language (LVT) was working against the cause; need to rethink methodology of social change; changes to eradicate pathologies which cause disruption; occupy (global) is the single hopeful initiative to effect change today although there are problems within occupy. LVT is no longer acceptable language; right of the public to collect the rents of land; by resocialising the rents we eliminate the tax on wages; the current system perpetuates poverty, housing shortages etc. No need to tax wages; effecting structural change without violence; but there is no way to negotiate change in the way revenues are collected and there is the prospect of violence; throughout history rulers have accepted revolution and war rather than concede to the change (to socialise rents); people in power will not negotiate on rents from the commons derived from nature and society; they add value to the way of life expressed in terms of economic rent; assigned to contributions from nature and society; privatisation of the rents is the root cause of social ills; occupy could become a “has been” rather than achieve change like many movements before if it continues to fail to address the root cause; danger of addressing symptoms not root cause; power is vested with the beneficiaries of the current rental system; not discussed in economics teaching (only in agriculture is it discussed and only superficially); need remoulding the language of economics; the notion of sharing the bounty of the land has been exorcised from the debate; housing problem expressed as an issue of bricks and mortar not land; progressive movements fail because we won’t talk about land and rents; doctrines are developed instead as coping mechanisms; after the enclosures, there was an initial fight back but the people lost; how do you cope with the detachment from land/ we develop coping mechanisms – dogmas: capitalism, socialism etc.; revolution will give us communism – in 20th century which failed; other coping mechanisms – religious etc. – none of them deal with the issue of land; they don’t confront the power structure; Karl Marx made fleeting reference to the exploitation of capitalists by the landlords; in the communist manifesto “socialise land ownership” but has been obscured by the emphasis on socialising the means of production; Occupy came from nowhere; no status or positions of power that attract NGOs etc. which offer palliatives rather than cures; occupy not beholden to anyone; registered disaffection felt by everyone; first slogan 1% against the 99% ,we are the 99% etc. was unhelpful – lost cause; rent seekers laughed all the way to the bank; 65% against the 100% – people drawing the income from the land are destroying themselves; 65% versus the 35% to engage the media to give them something to talk about; journalists “you don’t know what the answer is”; the rent seekers were relieved because occupy wasn’t pinning them against the wall; popular theme “even middle classes suffered stagnant wages” but a house bought 30 years ago for £50K has multiplied tenfold (£500K); entitled to value of improvements of say £50K but where did the rest come from? Like a car loses value, property is a wasting asset; baby boomers were getting back in rising house prices what they paid in taxes; the more expensive the house the more extraordinary gain; when property is booming their capital gain exceeds a lifetime of tax payments; 65% concealed within the 99%; pocketing a capital gain making it impossible to provide affordable housing; concept of LVT is philosophically and tactically stupid – gift to the enemy; defeating ourselves; reforms of economic social and environmental agenda impossible until we recapture the language; taxing land values repels people – like prodding them with an electric prod. Concept of land value is the prime problem. Land value is the capitalised rent based on the interest; tax indicates that you own the land; you are more a steward owing a duty to the rest of the community; conceding land value loses the moral case; what happened to the argument that the whole of the rental income should be shared for the community? LVT is a gift to the exploiters; Carlos Slim and Bill Gates (the two richest individuals in the world) pocketing rents from the electromagnetic spectrum because absence of doctrine to share the rents Need a new language to communicate the reality – hard work to develop that language; next generation shouldn’t waste their life; “100 new property millionaires created every day last year” – Telegraph; hailed as good news but the reality is the reverse; on a mission to help younger campaigners – Martin Adams – Sharing the Earth; establish priorities; LBoI needed to understand the terminology; but unless we can mobilise around the single issue which will automatically create the incentives to effect the changes we desire, harnessing working with nature and society, we will not solve these problems; if we can’t do this – I’ll go back to fishing.
Discussion (Fred’s responses in italics) Sort out our priorities; you are invited; proposition – lots of authors within EWG not self promoting; occupy is an alliance of language and activity; direct action – acknowledgement from BoE director; we lose out in the lobbying game; occupy is not afraid to use the cattle prod – we struggle for wealth for all; heard all the voices but need to get rid of the bullshit; 40 years testing the (LVT) proposition; see if it stands up to the test; agendas will not be fulfilled without addressing this; it’s not all about land values – inflation makes money worth less; student grant £3000 pa. years ago was sufficient; male/female issues – half a dozen systems in play – it isn’t just rent; you can grow vegetables and survive; themap.org.uk to see what other things are going on; civilisation is a complex organism within which people exploit whatever avenues suit them;rents backing the currency would deal with inflation; you will not get to sort the monetary system without dealing with the rents; it contaminates the rest; put it to the test; but would want to test your propositions too; culture corrupts where the rents used to create civilisation are captured for private gain; its the rents time and again; many have come to occupy saying “I’ve got the one basic solution”; LVT or whatever one calls it – sympathetic to the idea; what is regressive no-one likes; dangle the alternative; large complex systems; do not accept LVT is a sufficient condition to eradicate tax shelters/ equalise incomes; main gripe about LVT advocates – fuzzy about implementation; former deputy governors of BoE acknowledge a need; how do we get there? Steps to implement; one of many problems – eg. housing is a pressing issue and needs to be addressed; need to solve immediate problems until the structure is changed; valid to talk about solutions to the housing market etc. but we have 150 years of experience trying to solve problems without an enduring solution; 50,000 people in E&W die prematurely because of the lack of a fair system where people live full lives; babies born in Blackpool today die 14 years prematurely compared to in Kensington; analysis tracking back; specify the act of parliament to solve the problems; why is the system unbalanced in spite of all the efforts? – it is becoming more unbalanced; specific implementation – if a government committed to it; Vince Cable at best proposes a mansion tax but say the Lib Dems committed to collecting the rents from land and got sufficient support, transformation begins once – it becomes a viable proposition; no land hoarding no urban sprawl – sensibly it would take c. 5 years; 1 year for legislation, 2 years for valuation, comes in year 4; would like to see a spreadsheet of the plan; rent language LVT; all about language of the tongue; civilisation not complex – simple continuity and expansion of the single human multiplying; needs to be brought back to simple; rent meanings, render; if you give someone something, they are not wanting to give it you back; away from the concept of sharing; LVT over complicated term; life is a gift; rent is being beholden to others; Attended your TCU LVT talk last year; language is the problem; key – how do we get them to give up their power; problem in communication; budgeting problem to show how people will be better off; professor in US crunched the numbers – published – average American would be better in the first year and beyond; need to get the message across; improved productivity; smarter language – find a new conceptual framework; pay for the services you receive – location amenities etc. crystallised in rent; pay to the people providing the services; rigorous language; multi-owners absentee landlords – separate land and property values; landlord in Belize – rents to paid offshore reduced by rents payable to the public purse – reduce what is payable to the landlord; local authorities renting out to council tenants; paying to the council – where’s the problem? Occupy doing wrong? – not much the wiser how could LVT could be understood comparing to other system; what counts as land; comparison with land and labour; response to Peter’s question; testing of the proposition; invite audience to validate a test; proposition of land value would lead to the resolution of other the issues; prove your claims – Prof Nick Tideman crunched the numbers which are included in the another book, Losses of Nations; understand that if we’re really going to change the world this has to be addressed; in a couple of years, welfare state will be written off as a failed experiment; 1910 and 1931 LVT was rejected by the politicians; the rent seekers are the ones to benefit; we are chasing our tails; need to burrow into it to formulate strategies for social change – it’s about psychology; broken down into its constituents; tied into economic growth but from environment perspective – need to assess what the environment will sustain; where does value come from? Foreigners buying UK property; capital addressed; practicalities are of concern; people buy properties for flow of services; services need to be paid for; environment – the just price – humans have paid for everything they’ve taken our of nature with their labour; social universe needs to respect the services we get from nature; we don’t pay nature why? – emissions on unconstrained basis because owners of coal seams seek to exploit the value; refuse to pay for clean technology; they created a system for abusing nature; clean ways of dealing with waste would have been developed if the were made to pay plus direct control was exercised through planning system and regulation; retain physical controls; Andy needs more time – we need a workshop on a game of chess – ideas put forward and rebuttal/explanation; what is value per se – occupy is instinctively anti authoritarian – help us understand; you need to live in a squat; value definitions land, labour, currency etc. 1971 Nixon off the gold standard – dollar; 6000 families who own half of England; political contribution – recovered knowledge of Homer Hoyt – business cycle conforms to the real estate; primary driver is not the Duke of Westminster but the homeowners seeking to gain from rising prices.
Discussion was curtailed as we ran out of time. It was agreed that following the next two LVT sessions in January, we needed a workshop to get to grips with the detail of LVT implementation – Fred agreed to participate subject to availability. Thanks to Fred Harrison for an interesting and lively debate.

 

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