Should Labour ditch Brown?

Saturday, 26 July 2008 06:01

Following Labour's defeat at the Glasgow East by-election, there is naturally talk about whether to replace him. The problem for the party is that nothing any government can do will prevent the coming recession, and Labour is bound to get the blame. Now it is not exactly true to say that they caused the present economic problems. What they are to blame for is never having put in place the necessary measures to minimise the effects of the land-based economic cycle, of which land value taxation would have been a key measure soon after they were elected in 1997. But then, why should they have done?
Accepted economic theory does not accept the analysis that the Campaign and others like it take for granted - that if the rent of land is not collected and used as the main source of public revenue, then the economy will suffer from these cycles, which will be hugely amplified due to the destabilising effect of the banking system as it interacts with the land market.

In engineering terms, this interaction introduces a positive feedback loop into the economic system, and positive feedback lead to instability and oscillations of increasing intensity. Such effects are well known in, for instance, electronics and measure are taken to reduce them by deliberately adding negative feedback. LVT functions as just such a negative feedback loop.
In the circumstances, Britain can expect a Conservative government after the next general election. They will not be able to do anything to deal with the problem any more than Labour can. All three political parties take for granted the same economic theories as Labour and the Liberal Democrats. If the economy improves, then it will be almost entirely due to events they will have done nothing to bring about. The difficulty for the next government, and indeed for everyone, is that there is no reason to expect the economy to recover to its high point as it was in 2007. The times of cheap energy are over, or soon will be. According to the theory put forward by some advocates of LVT, the economy runs on an 18 year cycle. Fred Harrison, for instance, accurately forecast both the recession of 1992 and the coming one of 2010, and on those grounds alone his analysis deserves careful consideration. But according to that schedule, the economy should be coming out of recession around 2015, when the world economic landscape will be very different.

Whatever the circumstances, they will be infinitely more difficult to adapt to than if the right LVT system is put in place, but are any UK politicians or academics or think-tankers listening?

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