THE PLUTOCRACY’S SUCKERS?

Georgism has a long pedigree. It was alive and well in biblical times: “The land shall not be sold forever, for the land is Mine; and you are but strangers and sojourners with Me” (Leviticus 25:23).

In terms of disposable income, Thorold Rogers’ “Six Centuries of Work and Wages” tells us British prosperity achieved a peak in the 1490s that it has been unable to match ever since, when the humble labourer with a family of five still had 65% of his salary left after providing for food, clothing and shelter.

But the lords of the land, having begun to throw off their feudal responsibilities to the King as early as Magna Carta, were now certainly winning the day.

Richard Cobden documented the process in an 1845 parliamentary debate on the Corn Laws:

“I warn ministers, and I warn landlords and the aristocracy of this country, against forcing on the attention of the middle and industrial classes, the subject of taxation ….. If you were to bring forward the history of taxation in this country for the last 150 years, you will find as black a record against the landowners as even in the Corn Law itself.

I warn them against ripping up the subject of taxation. If they want another league at the death of this one – if they want another organisation and a motive – then let them force the middle and industrial classes to understand how they have been cheated, robbed and bamboozled …..

For a period of 150 years after the conquest, the whole of the revenue of the country was derived from the land. During the next 150 years it yielded nineteen-twentieths of the revenue. For the next century down to the reign of Richard III it was nine-tenths. During the next 70 years to the time of Mary it fell to about three-fourths. From this time to the end of the Commonwealth, land appeared to have yielded one-half the revenue. Down to the reign of Anne it was one-fourth. In the reign of George III it was one-sixth. For the first thirty years of his reign the land yielded one-seventh of the revenue. From 1793 to 1816 (during the period of the land tax), land contributed one ninth. From which time to the present one twenty-fifth only of the revenue of the revenue had been derived directly from land.

Thus, the land, which anciently paid the whole of taxation, paid now only a fraction, or one twenty-fifth, notwithstanding the immense increase that had taken place in the value of the rentals. The people had fared better under despotic monarchs than when the powers of the state had fallen into the hands of a landed oligarchy who had first exempted themselves from taxation, and next claimed compensation for themselves by a corn law for their heavy and peculiar burdens.”

 

Meanwhile, The French Revolution singularly failed to apply l’impote unique the Physiocrats had urged upon Louis XVI.

Similarly, in 1907, Georgism/landism/the Single Tax/the Feu/the Quit Rent was urged upon Russian Prime Minister Peter Arcadievich Stolypin by Leo Tolstoy as the most equitable way to appease an increasingly angry citizenry. Stolypin failed to do so, was assassinated, and the communist revolution resulted.

Back in Britain two years later the people took to the street to celebrate “The People’s Budget” which was to incorporate a national land tax. The lords of the land thought this was a bad idea and broke tradition to block the budget, preferring to wage WWI than support a land tax.

So wars continue to be fought over territory and resources, because of the failure to apply Georgism.

But despite the rationale behind Georgism and its long history, we continue to sweep it under the carpet, as so admirably once explained by Dr FWG Foat.

Why? Aren’t we better than suckers for the plutocracy?

Tolstoy understood that a revolution without a proper economic base is no revolution at all

Leo Tolstoy 1848

LEO TOLSTOY & HENRY GEORGE

 

– by Victor Lebrun

Victor Lebrun was a personal friend and Secretary to Leo Tolstoy. This is a translation of his article published in the July 1956 issue of the French periodical, Contre-Courant, and reprinted in the July-September 1956 issue of the French Georgist magazine Terre et Liberte. Its historical interest, in view of the establishment of Communism in Russia in 1917, needs no emphasis.


In giving his extreme and sympathetic attention to other thinkers and writers, the great Tolstoy differed essentially from his colleagues – the geniuses of all countries and all centuries. But nothing shows the complete honesty and surprising liberty of his spirit more than his attitude towards Henry George.

Conversion to Georgism

It was at the beginning of 1885 that he happened to lay his hands on the books of the great American sociologist. By then the moral and social doctrine of the thinker had been solidly and definitely established. Man’s supreme and unique duty was to perfect himself morally and not to co-operate with the wrong. Thus the social problem would be automatically solved when the majority has understood the true meaning of pure Christianity and when it has learned to abstain from all crimes which are frequently and commonly committed. All reasoning about the precise nature of the citizens’ rights, about laws, about the organisation of governmental compulsion for their protection is anathema to the great thinker.

But…hardly had Tolstoy had a glance at Social Problems and Progress and Poverty and he was completely captivated by George’s outstanding exposition. His strict daily routine is broken.

‘This morning I read George instead of writing’,Tolstoy confesses in a letter to his wife. Two days later he adds: ‘I read my George’. (He says ‘my’. He never said this of any other author). ‘This is a very important book. This is a step forward of equal importance to the liberation of our serfs. This is the liberation of the earth from private ownership.’

‘Their point of view in this matter is the control of men. And it is necessary to read George, who defined the problem with precision and definitively. After this there is no more debating, one has to take resolutely one side or the other. Personally I demand much more than he does: but his project is the first step of the ladder which I would like to climb.’

And the thinker does not hesitate any longer. From this encounter on he resolutely and enthusiastically takes George’s side, and to his last breath for a quarter of a century, he makes every effort without relaxation to make his discovery known. He publishes articles on George: he writes introductions to the remarkable translations of his works.

Letters to Stolypin

The correspondence of the Georgist Tolstoy with the Prime Minister of the time is also astonishing. Here the summits of the two camps clash, the two leading theories, those who ‘think right’ and the honest ones.

In 1907 the people were exasperated. The peasant revolt was in full swing. And the Minister made his soldiers fire at the crowds, hanged peasants almost daily, imprisoned and deported them by the thousands. The gallows had been named after him ‘Stolypin’s necktie’. Tolstoy suffered terribly from the crimes and the hatred he saw growing on both sides. Finally he lost his patience. On the 26th July, 1907, he sent word to the Prime Minister:

‘Peter Arcadievich, I write to you under the impulse of my best feelings towards the son of my friend.

‘You are on the wrong road. You have two possibilities in front of you: the one is to continue not only to take part in but direct all the deportations, forced labour, executions, and not having achieved your aim, leave behind you a sordid memory. Or, doing the opposite, advance the peoples of Europe by helping to destroy the old, enormous injustice of the appropriation of the soil. In the latter way you would truly accomplish a great and good task, and you would appease the people through the most efficient of processes by giving satisfaction to their most loyal demands.

‘This would stop these horrible crimes which are perpetrated on the side of the revolutionaries as well as on the side of the Government.
– Leo Tolstoy’

It is after three months that the Minister decides to reply:

‘Leo Nicolaievich, don’t think that I have not given my attention to your letter. I couldn’t answer it because it touched me where it hurt. You consider to be wrong what I consider to be for the welfare of Russia…

‘I don’t deny the doctrine of Henry George but believe that the Single Tax could in time (sic) help in the struggle against the big estates. At present I don’t see any reason why we should, here in Russia, chase the owners from their lands, which they cultivate better than the peasants. Quite the contrary, I see the necessity of making it possible for the peasants to acquire a piece of land of their own…

‘How could I do anything else than what I consider to be right. And you write to me that I am on the road of bad repute, of cruel actions, and above all of sin. Believe me that, feeling the possibility of approaching death, one cannot avoid thinking of these questions, and my road seems straight to me. I understand that it is completely in vain that I write this letter.

‘Accept my apologies.
Yours, Stolypin.’

This is the Prime Minister’s answer. And he goes on with his countless crimes.

On the 28th January, 1908, Tolstoy loses patience:

‘Peter Arcadievich, why? Why are you losing yourself in going on with your erroneous action which can only lead to aggravation of the general situation and of your position in it? Courageous, honest and noble man, and I know you as such, should not persist with his errors, but should recognise them and direct his forces to correct their consequences…

‘Your two errors: the violent struggle against the irresistible force of the people, and the consolidation of the ownership of land can be corrected by a simple, clear and achievable reform. It has to be recognised that the territory of the country is the equal property of the entire population, and a land tax has to be established which would correspond exactly to the privilege enjoyed by each site. This rent would replace entirely all taxes.

‘Only this measure can appease the people … Only this measure can dispose of the horrible repression which those who revolt have to suffer …I repeat that I write this to you wishing you the best and loving you …

– Leo Tolstoy.’

This second letter remained unanswered, but the terrible agony of the horrible regime remained.

Some time later the Prime Minister was assassinated by a revolutionary, and in 1918 the communists gained power. The hoarders of territory refused to pay the nation the economic rent. Now everything was taken from them. None escaped punishment.

It is terrifying to re-live this era, to re-read this correspondence.

The Economy of the Future

In thanking George for a present of his works, the master asks the intermediary to tell him that he is ‘enchanted by the clarity, the mastery and conclusions of his expositions; that George was the first who had put down solid foundations for the economy of the future, and that his name would always be remembered with gratitude by mankind.’

Tolstoy wrote to his wife – at the time of George’s death: ‘Henry George is dead, it is strange to say but his death surprised me like the death of a very close friend. The newspapers announce his passing and do not even speak of his books, which are so remarkable and of such great importance.’

A fragment of Tolstoy’s introduction to “Social Problems” shows to what degree he appreciated his works. The great master wrote:

‘Henry George said: “To those who have never studied the subject, it will seem ridiculous to propose as the greatest and most far-reaching of all reforms a mere fiscal change. But whoever has followed the train of thought through which in preceding chapters I have endeavoured to lead, will see that in this simple proposition is involved the greatest of social revolutions – a revolution compared with which that which destroyed ancient monarchy in France, or that which destroyed chattel slavery in our Southern States were nothing”.

‘And see, this is just the enormous importance of the big and real reform proposed by George that has not been understood in the world until now.’ Tolstoy continues:

‘George’s idea which changes the way of living of the people, to the advantage of the big majority – at present downtrodden and silent, and to the detriment of the ruling minority–this idea is expressed so convincingly and effectively and above all so simply that it is impossible not to understand it. For this reason, there is only one way to fight against it, to falsify it and to keep silent about it. Both are practised with such pains that it is difficult to induce people to read George’s books attentively and to deepen his doctrine. In the whole world, among the majority of intellectuals the ideas of George continue to be misinterpreted, and the indifference towards them appears to grow.

‘But a precise, and consequently fertile thought, cannot be destroyed. However one tries to strangle it, it remains more alive than all the other doctrines which are vague and devoid of meaning and behind which one tries to force it. Sooner or later truth will pierce the veil by which it is hidden, and will throw light over the world.

Such is the thought of Henry George’.

Other Letters

To TM Bondaref, who had written from Siberia asking for information about the ‘Single Tax’:
‘This is Henry George’s plan:

The advantage and convenience of using land is not everywhere the same; there will always be many applicants for land that is fertile, well situated, or near a populous place; and the better and more profitable the land, the more people will wish to have it. All such land should, therefore, be valued according to its advantages: the more profitable – dearer; the less profitable – cheaper. Land for which there are few applicants should not be valued at all, but allotted gratuitously to those who wish to work it themselves.

With such a valuation of the land – here in the Toula Government, for instance – good arable land might be estimated at about 5 or 6 roubles the desyatina; kitchen-gardens in the villages, at about 10 roubles the desyatina; meadows that are fertilized by spring floods at about 16 roubles, and so on. In towns the valuation would be 100 to 500 roubles the desyatina, and in crowded parts of Moscow or Petersburg, or at the landing-places of navigable rivers, it would amount to several thousands or even tens of thousands of roubles the desyatina.

When all the land in the country has been valued in this way, Henry George proposes that a law should be made by which, after a certain date in a certain year, the land should no longer belong to any one individual, but to the whole nation – the whole people; and that everyone holding land should, therefore, pay to the nation (that is, to the whole people) the yearly value at which it has been assessed. This payment should be used to meet all public or national expenses, and should replace all other rates, taxes, or customs dues.

The result of this would be that a landed proprietor who now holds, say, 2,000 desyatina, might continue to hold them if he liked, but he would have to pay to the treasury – here in the Toula Government, for instance (as his hodling would include both meadow- land and homestead) 12,000 or 15,000 roubles a year; and, as no large landowners could stand such a pay- ment, they would all abandon their land. But it would mean that a Toula peasant, in the same district, would pay a couple of roubles per desyatina less than he pays now, and could have plenty of available land nearby, which he would take up at 5 or 6 roubles per desyatina. Besides, he would have no other rates or taxes to pay, and would be able to buy all the things he requires, foreign or Russian, free of dutv. In towns, the owners of houses and manufactories might continue to own them, but would have to pay to the public treasury the amount of the assessment on their land.

The advantages of such an arrangement would be:

1. That no one will be unable to get land for use.

2. That there will be no idle people owning land and making others work for them in return for permission to use that land.

3. That land will be in the possession of those who use it, and not of those who do not use it.

4. That as the land will be available for people who wish to work on it, they will cease to enslave themselves as hands in factories and works, or as servants in towns, and will settle in the country districts.

5. That there will be no more inspectors and collectors of taxes in mills, factories, refineries and workshops, but there will only be collectors of the tax on land which cannot be stolen, and from which a tax can be most easily collected.

6. (And chiefly) That the non-workers will he saved from the sin of exploiting other people’s labour (in doing which they are often not the guilty parties, for they have from childhood been educated in idleness, and do not know how to work), and from the yet greater sin of all kinds of shuffling and lying to justify themselves in committing that sin; and the workers will be saved from the temptation and sin of envying, condemning and being exasperated with the non-workers, so that one cause of separation among men will be destroyed.’

To a German Propagandist of Henry George’s Views [1897]:

‘It is with particular pleasure that I hasten to answer your letter, and say that I have known of Henry George since the appearance of his Social Problems. I read that book and was struck by the justice of his main thought – by the exceptional manner (unparalleled in scientific literature), clear, popular and forcible, in which he stated his cause – and especially by (what is also exceptional in scientific literature) the Christian spirit that permeates the whole work. After reading it I went back to his earlier Progress and Poverty, and still more deeply appreciated the importance of its author’s activity.

You ask what I think of Henry George’s activity, and of his Single Tax system. My opinion is the following:

Humanity constantly advances: on the one hand clearing its consciousness and conscience, and on the other hand rearranging its modes of life to suit this changing consciousness. Thus, at each period of the life of humanity, the double process goes on: the clearing up of conscience, and the incorporation into life of what has been made clear to conscience.

At the end of the eighteenth century and the commencement of the nineteenth, a clearing up of conscience took place in Christendom with reference to the labouring classes – who lived under various forms of slavery – and this was followed by a corresponding readjustment of the forms of social life, to suit this clearer consciousness: namely, the abolition of slavery, and the organization of free wage-labour in its place. At the present time an enlightenment of men’s consciences is going on in relation to the way land is used; and soon, it seems to me, a practical application of this new consciousness must follow.

And in this process (the enlightenment of conscience as to the utilization of land, and the practical application of that new consciousness), which is one of the chief problems of our time, the leader and organizer of the movement was and is Henry George. In this lies his immense, his pre-eminent, importance. He has helped by his excellent books, both to clear men’s minds and consciences on this question, and to place it on a practical footing.

But in relation to the abolition of the shameful right to own landed estates, something is occurring similar to what happened (within our own recollection) with reference to the abolition of serfdom. The Government and the governing classes – knowing that their position and privileges are bound up with the land question – pretend that they are preoccupied with the welfare of the people, organizing savings banks for workmen, factory inspection, income taxes, even eight-hours working days – and carefully ignore the land question, or even, aided by compliant science, which will demonstrate anything they like, declare that the expropriation of the land is useless, harmful, and impossible.

Just the same thing occurs, as occurred in connection with slavery. At the end of the eighteenth and the beginning of the nineteenth centuries, men had long felt that slavery was a terrible anachronism, revolting to the human soul; but pseudo-religion and pseudo- science demonstrated that slavery was not wrong, that it was necessary, or at least that it was premature to abolish it. The same thing is now being repeated with reference to landed property. As before, pseudo- religion and pseudo-science demonstrate that there is nothing wrong in the private ownership of landed estates, and that there is no need to abolish the present system.

One would think it would be plain to every educated man of our time that an exclusive control of land by people who do not work on it, but who prevent hundreds and thousands of poor families from using it, is a thing as plainly bad and shameful as it was to own slaves; yet we see educated, refined aristocrats – English, Austrian, Prussian, and Russian – making use of this cruel and shameful right, and not only not feeling ashamed, but feeling proud of it.

Religion blesses such possessions, and the science of political economy demonstrates that the present state of things is the one that should exist for the greatest benefit of mankind.

The service rendered by Henry George is that he has not only mastered the sophistries with which religion and science try to justify private ownership of land, and simplified the question to the uttermost, so that it is impossible not to admit the wrongfulness of land-ownership – unless one simply stops one’s ears – but he was also the first to show how the question can be practically solved. He first gave a clear and direct reply to the excuses, used by the enemies of every reform, to the effect that the demands of progress are unpractical and inapplicable dreams.

Henry George’s plan destroys that excuse, by putting the question in such a form that a committee might be assembled tomorrow to discuss the project and to convert it into law. In Russia, for instance, the discussion of land purchase, or of nationalizing the land without compensation, could begin tomorrow; and the project might – after undergoing various vicissitudes – be carried into operation, as occurred thirty-three years ago* with the project for the emancipation of the serfs.

The need of altering the present system has been explained, and the possibility of the change has been shown (there may be alterations and amendments of the Single Tax system, but its fundamental idea is practicable); and, therefore, it will be impossible for people not to do what their reason demands. It is only necessary that this thought should become public opinion; and in order that it may become public opinion it must be spread abroad and explained – Which is just what you are doing, and is a work with which I sympathize with my whole soul, and in which I wish you success.’

* The Emancipation of the Serfs in Russia was decreed in 1861, and was accomplished during the following few years.

Tolstoy, Leo, Essays and Letters, Oxford University Press, 1911, Chapter XVI Letters on Henry George, pp 213 – 238

THE BIG SELL-OUT

OK, “THE AGE” MAY NOT HAVE PUBLISHED MY LETTER THIS WEEK, BUT I CAN

Dear Editor,

It’s sickening to see the two major parties compete to sell Australians out as they kow-tow to foreign interests in connection with our natural resources. As Julia Gillard accedes to the requirements of the big miners, Tony Abbott says she’s still not providing them enough super profits at our expense. We’re clearly being diddled and sold down the creek, and Bob Brown and the Greens are the only people left representing us on this extremely important principle.

To see former unionist and purported future Australian Prime Minister Bill Shorten argue that Julia Gillard needs to accommodate international miners with the leeway she has granted in comparison with the recommendations of Ken Henry’s panel misses a critical point:  Bill, you should have learnt by now it’s workers who create mining companies’ wealth, not vice versa.  If the big boys want to walk away if we demand a fair return for using our natural resources, let them. We’ll find local companies to resume their leases at a market rent of at least 40% on their net profit before depreciation, amortisation and tax.

– Bryan Kavanagh

 

WHEN ACADEMICS FAIL US

A BLAST FROM THE PAST MAKES A POINT

Radio interview with Maurice Fabrikant on ABC Radio 774

Maurice Fabrikant, then President of Tax Reform Australia was invited onto Melbourne ABC 774 Radio’s  “Drive” Program on 20 August 1998 by Terry Laidler, ‘to explain the ideas of Henry George’.

On arrival, Maurice observes that academic, and former editor of Australian Tax Forum, Rick Krever, is also present in the studio.  Laidler, a bright interviewer, former priest, and now also an academic himself, may have become a little uncomfortable at the thought of interviewing a Georgist on his own, so it seems Krever has been brought along to ‘ride shotgun’, so that Laidler can better present himself as the ‘impartial’ interviewer. This interview is typical of the “good cop, bad cop” approach.

Henry George wrote his magnum opus Progress and Poverty after he had been given the sinecure position, Inspector of Gas Meters. That does not deter Krever from turning George into an uneducated gas meter-reader. The interview is a classic!  Look for all the usual diversions [from Laidler], and ad hominems [from Krever], that Georgists have come to expect in radio interviews. Remember, these men are not simpletons; they are both academics!

[INTRODUCTIONS …]

TERRY LAIDLER (TL):   …but I think what the Henry George League, and Maurie Fabrikant here representing it, is arguing is that the system which we know is a good one – you pay for what you take from the public domain and appropriate it to yourself – can be applied across the board.

RICK KREVER (RK):  Yeah, I always point it out, there’s certainly a long held, a lot of support for it over a long period, indeed Henry George came up with the theory in 1879, so it’s more than 100 years old now, and, well, it was a period when there was a lot of economic turmoil around the world. Karl Marx was writing “Das Kapital”, the movements towards income tax for the first time in a lot of developed countries, and faced with a lot of depressions and a lot of fluctuations in the market, a lot of Utopian economists – although Henry George wasn’t actually an economist, he was a gas meter reader, self-taught, who left school before he was 14, left school at 13, got on sailing ships, went to Canada to, trying to remember back to my history, but he went to Canada to go to the gold rush, missed the gold rush, got there too late, went back to California, got a job as a gas meter reader for the state government and starting reading, literally started reading economics, and came up with this theory which is….

TL:  Just because it’s an old idea doesn’t mean that it’s a bad idea.

RK:  No, no, no – but I’m just saying, just to understand, to put it in context, it was a time when people were looking for, …obvious, simple solutions ….that is, the world was really complex, so people look for an answer, there was half a dozen at the time, his has lasted longer….

TL:  But the simplicity argument with taxation has come back again – we’re been told this version of a consumption tax that we’re looking at in Australia at the moment is a better one because it’s simple. I can think of a whole lot of other consumption tax regimes you could have but one of the criteria you use to assess it is simplicity, and that’s what’s appealing with what Maurie’s arguing

RK:  Well, I think everyone agrees you want a simple tax – complex taxes cost the community money, they cost taxpayers money, they cost the government a lot to administer them. The difference between this proposal and others is it’s unique – that is, we get rid of everything, we have one tax, that solves all the problems, and I guess one of the reasons it never sort of caught on – two reasons it never caught on – One, the world’s a little too complex for simple solutions, so that it can’t apply to all sorts of modern commerce and modern transactions, and it also doesn’t work very well as it turns out, if you have an international economy. That is, you could possibly do it, indeed Hong Kong sort of did it for a little while, with a lot of reliance on land taxes in Hong Kong as the main source of revenue, but in terms of international trade it’s hard to do.

TL:  It’s not just a land tax you’re arguing for, is it, as I understand it, Maurie?

MAURIE FABRIKANT (MF) [at last !]:  … Natural resources, Terry – whatever is not man-made and to which some exclusive access has been granted to an individual or to a corporation – well, that individual or corporation has to compensate the rest of the community because …

TL:  So you don’t have any problem with a pollution tax? If I’m going to burn something and emit it into the atmosphere, I’m using up, in a real sense, the clean air, so you’d have no problem with that sort of tax?

MF:  Except that I believe that it would be very, very difficult to measure

TL:  A carbon tax – people are talking about it all around the world at the moment?

MF:  Yeah, well, what are the details, Terry?

TL:  Substantially, you pay on the basis of the amount of carbon dioxide you emit.

MF:  How is that measured?

TL:  Well, in millimoles – I don’t know.

RK:  It happens in a lot of countries, actually. And what they do, they simply say, “How much petrol produces how much carbon dioxide, so you tax at the input levy – you tax natural gas, petrol, coal and so forth.

MF:  Does that mean that I would be taxed more if I performed vigorous physical exercise because I’m going to exhale more carbon dioxide in a 24 hour period?

TL:  Well, I don’t know – I don’t think they could do that, could they?

MF:  Well, why would there be an exemption on my exhalations but no exemption on the use of a motor car?

TL:  Because I think, relative to the amount of carbon dioxide a car puts out, you’re pretty – now you won’t like this – you’re pretty insignificant, Maurie!

…………………

[Pay-As-You-Earn distraction on the timing of tax collection]

………………..

TL:  Do you have a view on this, Maurie, or are you so committed to the fact that an income tax is wrong that you won’t even have a view on which way you’re  going to collect it if you have one?

MF:  Terry, I believe that it’s incontestable that as you increase the rate of income tax you reduce the rate of employment. Now, if we’re really serious in trying to reduce unemployment, then we must reduce taxes on labour. Now, I don’t see any way over that.

TL:  OK, so the way you collect it is incidental, the tax itself is the problem.

MF:  Exactly!

RK:  It’s interesting, though, if you look at the empirical evidence, the United States had it’s period of highest employment – the top rate was just over 90% – and that, historically, most countries that rely more on income tax …. have …. higher rates of employment, so I don’t know if you’d  want to start drawing those conclusions.

TL:  The empirical evidence is against you, Maurie.

MF:  Well, I’m not even sure that’s true. It may well be that the maximum marginal rate is very very high, but the rates for the average person may be quite low. Until we know what the details are, I don’t think the generalisation Rick made is necessarily accurate.

…………………….

[Equity query]

…………………….

TL:  I think the equity argument, as it applies to taxation, Rick, typically means a theory which says, “Those who have access to more wealth contribute more to the common good.” That’s  basically how the phrase is used  in the taxation system, isn’t it?

RK:  Yeah, “ability to pay” is the catchword.

TL:  You say it’s wrong, of course, Maurie. You say that the generation of wealth is something we should encourage – it’s the use of resources when it’s inequitably distributed that’s accounted for in your taxation system.

MF:  I’m not sure that I followed all of that, Terry, but I would like to say that just because somebody earns a large income doesn’t necessarily mean that they have a great ability to pay because they may have some very, very heavy expenses. Now, regrettably, the personal income tax system does not allow most people to claim for highly legitimate expenses, so basically personal income taxes are based on gross income, which is grossly unfair.

TL:  Here’s an idea that came in an email the other day from a guy who – I can’t think of his name  – suggesting that, to the extent that there was an argument for a consumption tax to combat the Black Economy, there was a much simpler solution. He was suggesting that money have a “Use By Date” – that, in fact, a note was only current for 5 years, and that, every 5 years, you can see your “Use By Date” on your money, and every 5 years it had to be traded in at a bank for another note of an equal value, and that  way – at least every 5 years – any money that retained any value would move through the banking system and so there’d be no Black Market.

RK:  There isn’t much of a cash economy any more, really. We talk about this as being the cash economy but people don’t use cash, Terry – I mean, I never use cash… I have little cards that I stick in machines, and buy everything with cards.

TL:  You mightn’t, but I think there’d be a few trades in which you might find there’s cash changes hands.

RK:  Yeah, sure, sure, you might pay with cash but then it goes into somebody’s bank account.

TL:  Right, but it’s got to go into their bank account as something, doesn’t it?

RK:  No, no – our tax system doesn’t look at that at all, in fact the empirical evidence again – I hate to bring that up – the empirical evidence is that goods and services tax don’t touch the cash economy. They in fact lead to a huge blowout in the cash economy – that’s what’s happened elsewhere.

…………………

[query about a bank debits tax]

…………………

TL:  Is it just too simple? Could you combine the two ideas – the idea of money with a use-by date and only a banks’ transactions tax to make sure that all value that passed around in the community got taxed?

MF:  Terry, I can’t quite cope with this use-by date business. OK, if I’ve got a coin which is going to be absolutely useless to me tomorrow, OK, I go to a bank and I trade it in on a different coin. How the hell does that help anybody?

TL:  Well, I suppose you’d then have to put in place some taxation system on bank transactions.

MF:  We already have that.

RK:  There’s a movement in Queensland, a strong one similar to site value as a single answer – they say the only tax we have is taxing bank transactions. Unfortunately, it ignores the fact that you’d don’t have to move money through an Australian bank so that we wouldn’t actually be taxing anybody but, yeah, it’s another Utopian tax, as they call them. Come up with the …..

TL:  So you’re a “Repair Restore & Refine the current system” man, Rick?

RK:  Well, I think that’s right. I think that the more tax bases you have, the less damage there is if you got it wrong.

TL:  And, Maurie, you are still absolutely committed to basically some sort of natural resource rental taxation?

MF:  Terry, we can look at every country in the world – most of them derive most of their income from taxes on labour or taxes on exchange, and all of these countries are heading downhill.

………………..

[Program closes shortly thereafter]

If he was lucky, Maurie Fabrikant may have been permitted two minutes on Laidler’s program. The purported reason for the interview, remember, was to get the President of Tax Reform Australia to explain the benefits of the ideas of Henry George!

The tactic was classical. That’s how you work for the status quo.

You will unfortunately always be able to find any number of ignorant academics who will divert, obfuscate and deride, rather than discuss how Henry George’s ideas would make the plutocracy pay their fair share, stop bubbles and recessions, reduce land prices, and reduce all those taxes that tear societies apart … as is happening now in Greece, Ireland, Spain, Portugal, Italy … and across the USA.

Fortunately for Australia, Ken Henry’s panel reviewing Australia’s Future Tax System has considered with greater intellectual rigour than most academics the positive implications of land and resource rents .

 

Ch. 16 “Social Problems” by Henry George (1883) STILL APPLIES TO PUBLIC DEBT!

PUBLIC DEBT AND INDIRECT TAXATION

Governments of the world, please note these wise words concerning why we refuse to be shackled to “public debt”.

We are, however, happy to pay our fair share of all proper government expenses. This will be found to be based upon the value of the land and resources we use or take, not upon what we earn or make.

THe US needs no further “public debt”, Barak Obama!

GETTING OUR BEARINGS

MAPPING THE TRUTH

I’ve always been amazed that early map makers were able to make such accurate charts. Sure there were errors. Amongst several other things, in his 1570 map of the world Abraham Ortlelius had attached the great south land of Australia to Antarctica.

But cartographers sought the truth, always progressing their science with the passing of the years.

By the end of the first decade of the 21st century, we like to believe we are at the leading edge in all fields of study, but it aint so.

We’ve particularly retrogressed in the study of economics, because the plutocracy wants it that way. Some will say there are parallels in the areas of pharmacology, civics and government, but we’re patently in the throes of seeing modern economics exposed for the fraud it is.

In 1879 Henry George’s “Progress and Poverty” spelled out in detail the deceit undertaken by privileged interests in siphoning off the economic rent arising from the existence of the populace at large.

Although rent is as a surplus generated in the production process from nature, after deduction of costs and normal profits, the plutocrats didn’t want people to see things as shown in “Progress and Poverty”.  So, in a state of apoplexy at the favourable reception capital and the working classes gave to George’s exposition, the plutocracy bribed top economists to turn the science of economics into an arcane art form that would take people off the scent.

Mason Gaffney documented this chicanery in Neo-classical Economics as a Stratagem against Henry George in “The Corruption of Economics” (with Fred Harrison, Shepheard-Walwyn Ltd., London, 1994). It describes how the perpetrators airbrushed land in with capital, and classical economics morphed into the faux mathematics of neo-classical economics. There was no longer a clear distinction between nature (‘land’ in the lexicon of economics) and those articles fashioned from nature by workers into capital.

It’s unsurprising, then, that the Georgist School was over-represented amongst heterodox economists who were able to forecast the financial collapse.

Those who forecast the global financial collapse who weren’t Georgist by inclination were influenced either by study of the credit or property markets, both of which are proxies for the land price and tax pathologies of which Henry George wrote.

Since the GFC, formerly fainthearted economists, the likes of Joseph Stiglitz and James K Galbraith, have started to speak out about the manner in which economics has been doctored by removal of the land market from all studies. That’s a heartening development, because we need to discover and map the quantum of natural resource rent and its potential to remove the damage wrought by taxation on production and employment.

Unless we wish to remain in a limbo of financial collapse, Australians should take a peep at the map produced by Ken Henry’s panel for “Australia’s Future Tax System”.

Like Abraham Ortelius’ map of the world, the Henry review isn’t perfect, it can be improved upon, but it’s not founded upon the grand lie regarding land and resources upon which modern economics is now based.

 

MOVING THE GOALPOSTS: A PARADIGM SHIFT

PARADIGM SHIFT OCCURRING?

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Hegemony :  “Political and economic control exercised by a dominant class, and its success in projecting its own way of seeing the world, human and social relationships as ‘common sense’ and part of the natural order by those who are, in fact, subordinated to it.” Fontana Dictionary of Modern Thought

______________

.

So here we are.  And it’s not a pretty picture, is it? All the graft, corruption, theft, fraud, bubbles in land prices, resource depletion, debt and warmongering coming home to roost: all of it perfectly legal and institutionally sanctioned.

Then there’s the second level of social disintegration: the massive amount of poverty-induced crime stemming, as a spin-off, from the abovementioned ‘legalised’ robbery: petty theft; violence; drug-related and other anti-social behaviours.

We do bother to lock up perpetrators for these misdemeanors because there are laws against such petty social crimes, and we feel a little safer when these people are off the streets; in America particularly.

But we’re unprepared to revisit first principles, and there are no laws against the plutocracy siphoning off the people’s rent. It is they who should be behind bars and their lock-up keys sent moonward.

And so it is that the people’s right to their rent doesn’t head up any Bill of Rights.  We’re constantly assured by proponents we don’t need any Bill of Rights which bothers to account for the economic rent owed to the community.

It all went wrong when the powers that be somehow managed to convince us we ought to dispense with the idea of a quit rent from time immemorial payable both for the occupation of leasehold or freehold land. Revenue must come from taxes upon us, they said – and we were foolish enough to believe them.

The first man who, having enclosed a piece of ground, bethought himself of saying, “This is mine”, and found people simple enough to believe him, was the real founder of civil society. From how many crimes, wars and murders, from how many horrors and misfortunes, might not anyone have saved mankind by pulling up the stakes, filling in the ditch, and crying to his fellows, “Beware of listening to this imposter; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody.” Jean Jacques Rousseau (1712-1778) “Social Contract”

The legal system has become hopelessly enmeshed and complicit. With some notable exceptions*, it acceded to this monumental corruption. The churches went for it in a big way, too, because it reduced or exempted charges on their lands, and the study of economics fell in with this  grand play by hiding the reality of economic rent from rigorous analysis.

We fell for this – the world’s greatest con trick – hook, line and sinker, even seeing to it that any charges remaining on land or real estate (now incorrectly deemed to be ‘private property’) fell at the closest level of government, so we can simply pop down to the Town Hall and complain about them. This usually gets the support of big money and leads to such results as the property tax ceiling which wrecked California (commonly known as Proposition 13).

Mario Cuomo is about to try his hand at wrecking New York State by the same means, and Congressman Silver wants to do likewise for the city of New York. I’m sure they’ll succeed, because gross stupidity rules at this particular time in history.

Don’t fret, however …. be not solicitous, folks!  There’s good news. Charles Hugh Smith says we should relax and go with the flow, a necessary major paradigm shift is upon us, and I believe he may be right.

Tom Shadyac’s pretty relaxed about this enormous transformation, too.

I’d like to think we’re about to have the next of the “Great Religious Awakenings” Mason Gaffney believes may be underway.  The churches certainly need it, because they’ve forgotten their preferential option for the poor by having sold out to wealthy benefactors.

Seen in this light, the depression shouldn’t frighten us at all. Sit back, fasten up, and enjoy the ride, folks …. we’re in the early stages of a sorely needed paradigm shift.

_____________

*

The earth, therefore, and all things therein, are the general property of all mankind, from the immediate gift of the creator
….there is no foundation in nature or in natural law why a set of words upon parchment should convey the dominion of land.
William Blackstone (1723-1780) “Commentaries”

I find it very difficult to disagree with the principles of Henry George …. I believe in the taxation of land
values only.
Justice Louis Brandeis (US Supreme Court)

ECONOMIC RENT

In a society taxing labour, capital, thrift and industry, the concept of the economic rent of our natural resources can be difficult to get your head around .

Frank de Jong of EarthSharing Canada does a great job in explaining it in this interview.

The reaction of the two interviewers is typical.  Thanks to Frank’s clear exposition, they become receptive.  They see the cleverness and importance of the principle, but also foresee the political hurdles, first, educating people to the idea, then withstanding attacks from those vested interests holding monopoly ‘rights’ over economic rent.

THE ICELANDIC OPTION

AN ICELANDIC IRELAND?

David McWilliams has just provided a fine analysis of Ireland’s financial plight.
I commented on it:-

David says: “… we are being excluded from the bond market not because we might default on bank debt but because we won’t!”

That’s incredible, isn’t it?

When will the big boys learn that for Ireland and Greece to succeed financially, they must select the route chosen by Iceland?

For the sake of the world financial collapses we are about to experience (yes, including the so-called “strong” Australian economy) the term “the Icelandic option” should immediately graduate into common usage.

Of course, all countries can’t default on their international debt yet, but I agree with David McWilliams that it’s time Ireland and Greece chose to do so.

This would resolve the uncertainty, hanging like the sword of Damocles over Ireland and Greece, in the same manner Michael Hudson observes it’s been resolved for millennia. It’s only bank handmaidens Enda Kenny and George Papandreou that stand in the way.

Ireland and Greece must select the Icelandic option, because debt that can’t be repaid, won’t be repaid, no matter how the banks might try to tell us otherwise as they seek to shackle us, for decades, to their sins.

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