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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.

Piketty has got it wrong

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"Capital in the Twenty-First Century" by the French economist Thomas Piketty, is now coming to wider public attention following its publication last year. According to Wikipedia, "The central thesis of the book is that inequality is not an accident, but rather a feature of capitalism and that these excesses of capitalism can only be reversed through state intervention.

The book thus warns that unless capitalism is reformed, the very democratic order will be threatened. The trend towards higher inequality was reversed between 1930 and 1975 due to the two world wars, the Great Depression and a debt-fueled recession, which destroyed much wealth, particularly that owned by the elite. These events prompted the governments to undertake steps towards redistributing income and the fast economic growth meant that inherited wealth had its importance reduced.

Picketty suggests that the world is returning towards 'patrimonial capitalism', in which much of the economy is dominated by inherited wealth and that their power is increasing, creating an oligarchy." To reverse the trend, Piketty proposes a global wealth tax and a top rate of income tax of 80%. From our own perspective, rooted in the ideas of Henry George, we recognise the trend but do not accept either the analysis nor the proposed remedy.

The deficiencies with Piketty's analysis begin with definitions. What exactly are Capital and Capitalism? Which features of Capitalism are causing the problems that he is concerned about? And if wealth is to be the subject of a tax, how is it even to be defined?


A long sorry tale - UK economy since 1945

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Article in FT by Samuel Brittan. A potted history that reflects no credit on the politicians involved, nor on the officials who advise them, nor on the academic world that propagates the theories on which their policies are founded and justified.

Britain's dysfunctional housing market but don't mention LVT

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There is something profoundly wrong with our housing system: demand and prices continue to rise yet supply does not, largely due to the development process. In this article, published today for the London School of Economics, Toby Lloyd argues that any serious attempt to address the housing crisis must include measures to change the land market, allowing those who want to build to buy land at a low cost.

It is a concise but penetrating analysis and the author comes up with a few proposals. LVT is not one of them. Since Toby Lloyd, director of Shelter, knows all about LVT, would it be paranoid to suggest that he might have been told not to mention it? There is something fishy about Shelter, which has never spoken for LVT even though the people there must by now be aware that LVT is an essential component of any solution.

Crap on stilts

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I was recently asked if crap on stilts is wealth? It may be, but only if someone wants it. Putting the crap on stilts is a work of  human labour, which is part of the qualification for falling into the category "wealth", but the product must still satisfy someone's desire. As crap is good fertiliser, this is the case, so yes, it probably is.

Crap was at one time the subject of a major industry. Sea-bird crap from Chile, known as guano is rich in nitrogen, phosphorus and potassium. It was widely used as a fertiliser in the late nineteenth century. As supplies seemed likely to run out, scientists searched for ways of producing artificial alternatives, and the result, in 1907, the German chemist Haber developed a process which used ammonia, a readily available inorganic chemical. This proved very handy as it made it easier to manufacture nitric acid, an essential raw material for explosives, just in time for the First World War. Potassium and phosphorus are, however, elements less easily replaced; phosphorus in the form of phosphate rock is not particularly common and with increasing consumption, there is concern about future shortages.

To return to the original question: crap in its natural state is not wealth until someone shifts their arse and starts to shovel it off the ground. It is wealth once it has been loaded onto trucks and is on its way to its final destination as fertiliser. If you own the land where the guano is sitting, you are wealthy because you can charge other people for shovelling the shit which is there and thus have a claim on the wealth they have produced through their work.


Pope Francis sloppy on economics

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Evangelii Gaudium, the Pope's first major publication, is an "exhortation" rather than an encyclical, so it does not carry the same weight. Which is just as well. The economic analysis is sloppy. It contains nothing of interest and offers no direction. Even Leo XIII's Rerum Novarum is better, for all its shortcomings. Why didn't the Pope go back to the previous body Catholic Social Teaching and build on what has been said there? Benedict created a fresh starting point with Caritas in Veritate. That needs to be developed. It seems unlikely that this will happen under the current regime. The present pontificate has not been characterised by intellectual rigour, which is surprising considering that the Pope is a Jesuit, an order with a tradition of academic solidity.

Royal Mail privatisation or property giveaway?

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Royal Mail had a large sorting office slap in the centre of Brighton. The building was put up in the 1930s and the work inside went on day and night. In the days when the mail went by rail, it was a good location, a couple of hundred yards from the station. But for those who lived nearby, it was a bad neighbour, since it generated a huge volume of traffic, often carelessly driven. In the late 1980s, it was modernised with new sorting equipment, but soon after, the sorting process was moved to a new centre at Gatwick. The building was then reduced to the status of a distribution centre and most of the property was virtually unused. A prime development site, it could have been sold and the operation moved to a shed in an industrial estate on the edge of town. But it languished, rising steadily in value until the latest crash. The same story can be told all over the country, but the potential for cashing in was always there. Now that Royal Mail has been privatised, the profit will no doubt be taken.

The public sector utilities have shown themselves to be as addicted to land hoarding as the house builders with their land banks. As with British Rail, what was being flogged off as part of Royal Mail was a massive property portfolio. This has been the subject of a study by law firm Clifford Chance. We now know that this particular item of family silver has been disposed of to the in-crowd in the City for a fraction of its real value. The taxpayer has been the loser yet again.

A thought for St Andrews' Day

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The Campaign does not have a view on Scottish independence. One of the factors behind this movement must surely be the sense that wealth is being sucked out of Scotland into the centre of power and government, which means London. This is occurring through the tax system by government, and through the extraction of rental value by the financial system. The same problems are experienced in the peripheral locations of any country. Land value taxation addresses this because taxation is then directly related to geographical advantage, or lack of it.

There would be no point in Scotland, or Cornwall, or anywhere else, becoming independent if most if it is still owned by the same handful of people and companies and the financial flows continue unchanged. A little bit more of the flow will be towards Edinburgh rather than London, but it will make no difference in principle and most people in Scotland will gain nothing apart from a good feeling which will eventually turn to a sense of disappointment and betrayal.

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