Tuesday, 26 March 2013

Here's a nice simple diagram to explain the general idea...

Which originally appeared somewhere on this site:

18 comments:

Richard Allan said...

I don't buy this. I would have:

Capitalism: Rent goes to parasites
Communism: Wages and Interest go to parasites
Socialism: Interest and most wages go to parasites

with the rest (including everything under Georgism) going to producers. That is, the rent goes to the community, the wages go to the worker, and the interest goes to the saver.

Mark Wadsworth said...

RA, don't be so fussy. And they are using "interest" in the special Georgist meaning, which is "return on REAL capital" and not "return to FINANCIAL capital" (even though in a perfect world they would be much the same thing).

Lola said...

Combine that chart with the Nolan Chart and it looks bang on the money.

Mark Wadsworth said...

L, yup, the purist LVTers call themselves "Geo-Libertarians".

Ralph Musgrave said...

Socialism – You have two cows – you give one to your neighbour.
Communism – You have two cows – the Government takes both and gives you the milk.
Fasicsm – You have two cows – the government takes both and sells you the milk.
Nazism – You have two cows - the govermen takes both and shoots you.
Capitalism – You have two cows 0 you sell one and buy a bull.
Trade Unionism - You have two cows – they take both from you, shoot one, milk the other and throw the milk away.
Moral? Don’t have anything to do with cows.

Mark Wadsworth said...

Home-Owner-Ism: everybody has to pay income tax and the money is given to people who already own cows to enable them to buy more cows.

Pablo said...

... and Georgism?

Mark Wadsworth said...

Pablo, that's easy.

Anybody can own as many cows as they like and pay no income tax on the value of milk they produce.

The more cows you own, the more land you have to rent from the community, and everybody gets a small share of the rent which everybody pays.

So the average farmer pays nothing he pays a bit of rent for his land and gets a pro rata share of everybody else's rent, and whoever is best at running a cow herd ends up doing do and people who are good at other stuff do something else, and then they freely exchange their own output etc.

Kj said...

Georgism: you have two cows, you pay the rental value on their pasture. You milk them and so on. Quite boring.

Mark Wadsworth said...

Kj, that's the only bit that worries me about Georgism.

Everything would be so terribly pleasant, well paying jobs for those who want them; citizen's income for those who don't; less crime; cleaner streets; more social cohesion; more equal incomes etc.

Pablo said...

We'd still have the occasional natural disaster to liven things up a bit.

Lola said...

Pablo - and the private life of Paris Hilton...

Kj said...

Bansturbators seem to be here to stay as well.

Mark Wadsworth said...

P, I suppose so. Nothing like shared hardship to strengthen society.

L, she's off the radar a bit nowadays. Shame really.

Kj, but what are they going to ban? There is a revenue maximising rate for tobacco duty or alcohol duty, and following Georgist logic, you set the rate at the revenue maximising level (i.e. a bit lower than it is now in the UK and a lot lower in Norway) and that is the end of that.

Bayard said...

"And they are using "interest" in the special Georgist meaning,"

If it means "return on capital", why not say "return on capital", not use a word which means something almost entirely different?

Mark Wadsworth said...

B, I dunno. That was HG's word for it, and he painstakingly distinguished it from the everyday meaning.

But ultimately it is much the same thing (if you ignore interest earned from money lent to buy land or usury - which are "rent").

Bayard said...

The problem is that most people understand "interest" to be just that, rent on money. I suppose what HG is talking about is how the Shariah banks operate (Now that Lloyds offer a Shariah-compliant account, I'm tempted to open one - the bastards aren't going to give me any interest anyway, so I might as well prevent them getting any interest on my money, either) - they don't charge interest, instead they buy a bit of your business and take some of the profit. Dunno what they call it either, dividends?

Mark Wadsworth said...

B, exactly, I don't know why HG went out of his way to change the meaning of the word and I prefer to use "interest" to mean return on nominal cash loans and "profits" or "return on capital" to mean "profits" or "return on capital". Call it "dividends" or "profit share" or whatever you like.