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The LVTC blog, by Henry Law

The comments in the LVTC Blog are a personal view of our Hon. Secretary Henry Law and do not necessarily reflect the official policy of the Campaign.

This is a place for personal observations and comments on politics, economics, current affairs, on-going discussions on the potential for LVT to remedy some of the current ills, and the impact on Society of any of the above. 

Please read and enjoy, and feel free to respond to Henry if you have any thing you would like to add.

Wealthy sending their wealth offshore

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This is an oft-heard complaint at the moment but what does it mean? What exactly has moved offshore? Truckloads of their money, in bundles of £50 notes? Containers filled with furniture? Houses, dismantled and put onto low-loaders?

None of the above of course. And that is the trouble with economics as presently discussed and commented on. It does not look at actual physical objects and the real movements and transformations they undergo. The subject is so abstracted that we have all been able to lose sight of these underlying realities.

What free market?

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This site is right in the middle of Brighton. It has been vacant since 1986, for most of that time with planning consent for development. A few months ago it was occupied by squatters who turned it into a garden. The owners promptly woke up, applied for a Court Order and got the squatters evicted. Then they applied a scorched-earth tactic and got a few truckloads of chalk dumped on the site.

This is the unacceptable face of the British property "industry". Not very industrious, is it?

Railways debate erupts again

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The McNulty committee has produced a 350 page report on whether Britain's railways give value for money and how things might be improved. Proposed changes to fares have naturally received the most attention and comment. Matters are, however, more subtle. The railways have suffered from a series of bad technical and engineering decisions since the mid-1950s, in part due to political interference. This is one reason why costs are high and capacity is squeezed. A fundamental mistake is the near-universal replacement of locomotive-hauled stock with unit trains such as the ones above. Of fixed length, extra vehicles cannot be added to cater for extra traffic at peak periods. This is one of the main reasons for the complicated structure of fares which are meant to tailor a variable demand to a fixed supply. Until about 1970, the railways had traditionally kept a pool of older vehicles in reserve, which would be brought out at peak periods, but modern methods of railway operation, and modern types of rolling stock rule, out this option. It is a point that McNulty has failed to spot.

There is a need for politicians and commentators to familiarise themselves more closely with the technical aspects of railways and their operation. It is essential if good policy decisions are to be made. Unfortunately, those who understand the technicalities of railways tend to be dismissed in pejorative terms.

An important issue that is also passing unnoticed is the external value that railways generate in helping to sustain land values. On this view, outfits such as the Institute of Economic Affairs argue that subsidies for railways should be abolished. The IEA is utterly wrong. Railways generate wealth which cannot be captured through the charges it makes to those who use them. This value is generally described as "externalised value" or "externalised benefit".

Commentators who do not understand externalised costs and benefits are not worth taking seriously. Unfortunately, they represent a widespread view.


Spat with Tax Justice Network again

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Our relationship with the Tax Justice Network (TJN) is not what it ought to be. One might have thought that they would be foremost in leading a clamour for our promotion of land rent for public revenue. Instead, the approval is grudging. The most TJN will concede is to see it as "part of a comprehensive system of taxation".

But if LVT is part of a comprehensive tax system, which other taxes should be kept and why?

No win for UK

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A win for the Alternative Vote (Yes) could have opened the door to other political groupings that could present other ways of looking at the world than the received ones. So in the long run it might have helped change things for the better. With the two party system entrenched for a least a generation, political discourse will remain locked down whilst both groupings collude in sustaining the false and illusory left/right dichotomy.

The country has passed up the opportunity to dig itself out of its intractable mess. Why? There are allegations of dirty tricks, such as the suggestion that a Yes vote would let in the BNP, and it is true that PR systems have put extremist parties into parliaments in countries in continental Europe. But the AV is not a proportional system of that kind and the allegation was absurd.

Another suggestion is that it was a vote against the LibDems and coalition governments in general. The party has certainly not covered itself in glory and the government is perhaps not a good advertisement for coalitions. If that is the case, then the No vote can be taken as a vote against the possibility of coalitions in the future.

For the LVT movement, it cannot be an encouraging result as there is insufficient space within which the idea could be inserted. The two party system leaves LVT in the wilderness. Moreover, any party that proposed LVT would find the policy hard to sell to the public.

The lesson for the LVT movement is that we ourselves need to be fully informed about what this tax reform actually means and what its effects will be, before we try to spread the message to a wider audience, which must necessarily include practising politicians.

From the bigger perspective, however, it seems that the British public has thrown away the opportunity for much-needed reform by using the referendum as a chance to kick a party and its leader whom it feels have let them down. That is not a good result.

Liberals' well-deserved battering at polls

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The Liberals' battering at yesterday's election should give LVT supporters no pleasure, but it is well-deserved. Given the first serious taste of government since the end of World War One, they failed utterly to present the party's distinctive philosophy. LVT, together with free trade, was an important component of that. Even today, two members of the cabinet claim to be LVT advocates, but not one word have they uttered on the subject since they came into the government. This is the more shameful since LVT is an essential ingredient in any programme of economic recovery.

It seems as if the Liberals lost their soul when they merged with the Socialist-lite Social Democratic Party in the 1980s, but this would probably never have happened if members of the party had not, long before, forgotten what the Liberal Party actually stood for. Over the decades from 1950 onwards, its intellectual quality degenerated as it turned into little more than a party of compromise occupying the soft centre of politics in the middle ground between left and right.

This is not a safe place to be, as it is a requirement that the occupants have no political principles. Without firm principles, any politician is liable to be blown in any direction, depending on the strength of the wind. This is what we have seen.

What are LVT supporters to make of this? The first conclusion is that, in the absence of an improbable break-through, an effective switch to land-rent collection will not happen in Britain for at least two decades. We should therefore stop rushing around and spending time and energy explaining to the Treasury and other officials how it would function. They are not interested and neither is any conceivable government. Nobody in power wants, or has the courage, to upset the huge home-ownerist interest, let alone the banks and the old landowning classes. Even if they had, their understanding is so weak that they could easily be talked out of the policy we advocate.

What we can do, however, is to lose no opportunity for pointing at the inefficiency of the present tax system and the real harm that it does. Above all, we need to work at spreading an understanding of the economic theories out of which the concept of land rent as public revenue arises.

Alternative vote - yes or no?

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If there are three factors of production, land, labour and capital, one might logically expect three political parties reflecting these three interests.

Over simplifying wildly, one could say that in the nineteenth century, before labour got the vote to any significant extent, there were two main parties reflecting the interests of land and capital.

Once labour got the vote, the UK saw the rise of a working class party, stiffened by a few middle class intellectuals. But the voting system still leaves only room for two major parties. That is the arithmetic of first past the post, born out by historical experience. Under a constituency, first-past-the-post system a third party will normally be all but wiped-out until it gets around 30% of the national vote. The rise of the Labour Party pushed the owners of capital and owners of land together into the one Conservative party - a situation which does not reflect economic reality, the two interest groups being in a natural state of conflict.

The process was aggravated because workers' parties everywhere were strongly influenced by Marx who put capitalists and landowners in the same group, and also in reality the landowners become important owners of capital even though functionally different. So the business interest was scared off and joined up with the landowning interest even though it made little sense. Thus we see the Conservatives are opposed to the abolition of upwards-only rent revision clauses even though retailers are amongst the main victims.

A win for the Alternative Vote (Yes) could open the door to other political groupings that could present other ways of looking at the world than the received ones. So in the long run it could help change things for the better. With the two party system, political discourse is locked down since both collude in sustaining the false and illusory left/right dichotomy.

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