A string of problems follow. It becomes impossible to carry out economic activity on marginal locations, which leads to an undue concentration of populations in those places most favoured by the advantages of geography. Wages, which would naturally be a share of production, becomes a cost, and marginal labour is unable to produce enough to cover those costs. This leads to unemployment and imposes a burden on government, which has to sustain costly systems of welfare to alleviate the resulting poverty. But the underlying chain of cause and effect is not appreciated because both micro- and macroeconomic theory ignores land, which is mistakenly regarded as "capital"; the latter is a term so misused as to compound the confusion, since it is usually taken to include finance for credit, money, shares and bonds, as well as physical capital. It is this confusion that has left governments world-wide unable to achieve a state of stable and universal prosperity in their jurisdictions. They don't understand what they are dealing with.
Although the book is written using technical terms unfamiliar to those who have not studied the subject in an academic context, the general reader can skip these and still gain a useful overview of Hodgkinson's narrative, which concludes by putting the case for the use of public revenue in terms familiar to mainstream economists. In this, it is timely; for over a century, advocacy of land value taxation has depended virtually on a single text, 'Progress and Poverty' by Henry George, and subsequent editions and condensings. The arguments presented by Henry George, who was writing in the 1870s, cut no ice with people who have been taught to the contemporary economic paradigm. In the light of this new book, however, which is published by Shepherd-Walwyn and costs £20 (£30 from Amazon), advocates of LVT might ponder the need to think of a new name for themselves.
Summary of 'A New Model of the Economy'
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