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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.


Fighting the 1930s arguments all over again

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Some commentators are suggesting that next week's budget of retrenchment results from a re-run of the argument that arose in the 1930s. Introducing an article in the Financial Times on 17 June under the heading “Once again we must ask ”Who Governs?”, Lord Skidelsky, emeritus professor of political economy at the University of Warwick, wrote.

”In one sense, next week's emergency Budget is simply the logical working out of an intellectual theorem. The implicit premise of the coming retrenchment is that market economies are always at, or rapidly return to, full employment. It follows that a stimulus, whether fiscal or monetary, cannot improve on the existing situation. All that increased government spending does is to withdraw money from the private sector; all that printing money does is to cause inflation.

"These propositions are a re-run of the famous "Treasury view" of 1929. By contrast, Keynes argued that demand can fall short of supply, and that when this happened, government vice turned into virtue. In a slump, governments should increase, not reduce, their deficits to make up for the deficit in private spending. Any attempt by government to increase its saving (in other words, to balance its budget) would only worsen the slump. This was his "paradox of thrift". The current stampede to thrift shows that the re-conversion to Keynes in the wake of the financial collapse of 2008 was only skin-deep: the first story remains deeply lodged in the minds of economists and politicians.”

Both views wrong?

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What is the Chancellor to do?

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Faced with a huge deficit and the need to act quickly, what should the Chancellor do? Of course we do not like the present tax system, which is a major cause of all the present problems. Cuts are part of the solution. But there is no gain if those who lose their jobs then spend months unproductively on the dole, and it could – probably will - lead to social unrest. The real problem, the one that has brought this dire situation about, is that we have taxed that which we ought not to have taxed, and left untaxed that which we ought to have taxed. But even within the limitations of the present tax system, there are things a Chancellor can do to help, and things that will make matters worse.
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What free market?

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Vacant buildings According to free market theory, if supply exceeds demand, then prices fall to market-clearing levels. As it obviously is not happening in this town in a prosperous part of the south of England, there must be something wrong with the theory.

Read more about the story here
 

Why can't the journalists shut up?

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It says little for the press that with the coalition less than twenty-four hours old, commentators have already rushed to pass judgement. Why not shut up and wait and see what happens before passing judgement? It is not as if we have lost a government  of the wise and good. It was obvious as early as 1993 that Labour was always going to be a disaster, though the extent of it surprised me. It is a paradox that conservatives have, historically, often been more effective at delivering overdue radical change than the radicals, and not just in Britain. I have no great expectations but this coalition may, against the odds, deliver a pleasant surprise.
 

Which voting system?

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One of the effects of the British election result is that it has called into question the country's "first past the post" electoral system. The problem is to find a better one. The three main parties reflect, in a rough and ready sort of way, the threefold division of the economic process and those who take part in it. There are those who own the land, those who run businesses and are the owners of physical capital, and those with nothing to offer apart from their labour. But with first-past-the-post elections, the smallest party is squeezed out and so, for most of the past century, the business interest aligned itself with the landowning interest, leading to a political structure which does not reflect economic reality.
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Which part of a house is unaffordable?

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roof bricks drainsIs it the roof, the bricks or the drains?

"Unaffordable housing" The term still keeps cropping up. Which part of a house is not affordable? The roof? The bricks? The drains? The roofing tiles? The plumbing system? The amount builders have to be paid to put it all together?

Go into any builders' merchant and check the prices. They are all very affordable. It costs, at most, £100k to build a decent house. Which is very affordable when spread over 40 years - £50 a week. So what is going on to make houses unaffordable? I have asked this question many times over the past 30 years. Usually, the response is a yawn, so the resulting problems, are in a sense a richly deserved reward.

Too many have stood aside, not watched what is going on in the world and failed to try and make sense of it. Hence the talk about "unaffordable house prices" Anyone who uses the phrase "unaffordable house prices" without further explanation is guilty of extreme mental laziness. Which is most of us, and now we are living with the consequences of our neglect. This of course includes the Nationwide Building Society, which would do everyone a good turn if they scrapped their so-called House Price Index and replaced it with a housing land price index.


 

Land isn't a primary factor of production any more

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From a discussion group...

"Land isn't a primary factor in a knowledge based, high technology economy. It's a primary factor in an agricultural economy. You are a few hundred years behind the times."

Why does this idea keep popping up?

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