THE QUESTION FOR OUR TIMES

Affordable education

How do we fund better schools?

Affordable infrastructure

How do we keep freeways free? How do we extend the rail system? How do we build bridges and conserve water? How do we decentralise?

Affordable housing

How do we keep a lid on escalating land prices (and therefore mortgages?) How do we make overseas investors in our real estate pay their fair share?

Affordable public health

Where’s the money to come from for better hospitals and preventative medicine?

Affordable social welfare

Is a universal basic income achievable?

Affordable defence and public security

How can defence and crime-fighting be funded adequately?

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These questions are constantly argued quite intelligently, but they often end where the debate ought to begin. The terribly inadequate alternatives amount to: “There’s simply inadequate public funds for these tasks, so we must either cut administrative costs and introduce efficiencies, or else increase taxation.”

Few people call for the necessary revenue reform that will raise adequate funding for all our necessary requirements whilst significantly reducing costs and prices.

What’s changed that we used to be able to fund our necessary governance with a far smaller population? How did our forebears build roads, dams, railways, schools and public libraries?

We did it from taxes on property values–more properly, rents not taxes, because they can’t be passed on in prices like taxes–and we did it best from taxes (rents) on vacant land because that didn’t penalise you for improving your property.

However, since the peak of the Kondratieff Wave in 1972, it became increasingly fashionable for governments to move away from a reliance on increasing property values for revenues to be increased. As governments gradually moved out of capturing the economic rents from land, private interests moved in to capitalise privatised rents into increasingly higher and higher land prices. Banks have become the beneficiaries at a great cost to society. The phenomenon has generated several property booms and several busts that have become more and more alarming.  Mortgages, debt and credit have grown concomitantly with these escalating land prices.

But no one is listening to the alarms. The question has become how can we do more with less? And it’s a quite stupid question.

The real question is how can we quickly return to greater reliance on land-based revenues instead of the welter of taxes that has brought economies to their knees and helped inflate land price bubbles?

Unfortunately, as we go further down the gurgler, very few are asking this critical question; only Georgists.