Tuesday, 10 February 2015

Ed Balls, Syriza vaguely talk sense: shock

From City AM:

To those who say that Labour is anti-markets, Balls replies: “We have shown a huge understanding of how the markets work. Markets are really powerful in driving incentives but you need to write the rules of the game. Without them you get a lack of investment, collusion and a lack of competition.”

His first sentence is an outright lie, the middle sentence is correct and that last sentence sounds borderline Georgist, if only he realised landowners' role in the economy.

“Markets alone won’t deliver long-term infrastructure, or stability for the energy industry or vocational learning. Markets can not fund a basic science base. But a proper plan must understand the dynamism of a market economy and ensure that government plays its proper role in assisting that.”

Good list! That's what good government is all about, no more, no less.

(Yes, we know that he was quite senior in the last Labour government which got it wrong on both sides: two much intervention where it was not needed; not enough intervention where it was needed; and f- all 'investment' in roads, electricty generation or proper education. And we also know that, John Major aside, each UK government has been worse than its predecessor, so whether Labour or the Tories get in this year, they will be worse than the current Tory-Lib Dem coalition, but hey…)
-----------------------
From the BBC:

It is not just the poor who voted for Syriza but the middle classes as well. [Home] owners in Athens's leafy, northern suburbs were enticed with the promised abolition of a hated annual levy on [homes].

Known as "Enfia", the tax was introduced in 2011 as an emergency measure but made permanent under the previous government. Instead, there will be a tax on luxury homes and large second [homes].


Fair play, their Enfia was a lot less than our Council Tax but it was more like a Poll Tax. If they make it more proportional to land values, then that must be a good thing. We'll see.

10 comments:

The Stigler said...

What's wrong with 2nd homes or large homes? This is part of the problem with how some people see the Mansion Tax - not as a tax on unearned gains but as a way of getting their money on that of "the rich", regardless of whether they got there through skill or risk taking. It'll mean that a lot of people will just sell the summer house, maybe buy a place in Cyprus instead or put one house in the wife's name.

Bayard said...

"how some people see the Mansion Tax - not as a tax on unearned gains but as a way of getting their money on that of "the rich",

Considering that is the main idea behind the Mansion Tax, that's hardly surprising. The clue is in the name.

DBC Reed said...

As I said previously ,the Enfia did tax undeveloped land .I remember mentioning it because I typed underveloped land and also made some remark that taxing land is not a good idea when the market's declining.TS agreed I seem to remember .LVT should be some kind of land value inflation tax,in the first instance (as was the argument, to be honest, before Henry George plagiarised JS Mill's from here-on land tax and mucked it up).The biggest opponents of this are hard line George-ish land taxers, who come across as some kind of false flag operation to make LVT pure and impossible)

Lola said...

"Markets alone won’t deliver long-term infrastructure, or stability for the energy industry or vocational learning. Markets can not fund a basic science base. But a proper plan must understand the dynamism of a market economy and ensure that government plays its proper role in assisting that.”
Well, partly. Infrastructure, possibly, but it depends what you mean by 'infrastructure'. Mobile telephony is infrastructure and AFAIAA it was all delivered by private investment. Vocational learning was provided by the industries to which the vocation applied. It has been nationalised over time. Basic science has been funded by the market for yonks. Lots of stuff done at the Russell Group unis has been effectively privately funded form endowments. Oh God. The 'proper plan' meme. Nooooo. It's trying to make 'proper plans' on the scale he proposes that gets us into these sorts of messes.

Bayard said...

"but it depends what you mean by 'infrastructure'"

Well, the country's rail network was built with private capital, plus most of our docks and ports. Canals, too, don't they count as infrastructure? How about land reclamation and drainage? AFAICS, apart from military stuff and a few roads, the state provided sod all infrastructure before the end of the C19th.

I think politicians keep themselves deliberately ignorant of history, as it provides too much evidence that upsets their pet theories.

Mark Wadsworth said...

L: " it depends what you mean by 'infrastructure'. Mobile telephony is infrastructure and AFAIAA it was all delivered by private investment."

B: "the country's rail network was built with private capital"

Aha. That exactly illustrates the point which I have been making for years.

1. Roads, railways and airports require lots of land (and 'noise pollution rights'), ownership of which is fragmented, therefore they cannot arise spontaneously because each landowner - however small his bit - can hold the road builder to ransom.

So they are only built if the government forces it through with compulsory purchase orders.

It is quite true that the railway companies paid for the rails, bridges and stations etc with private capital. But they still needed the government to pass acts of Parliament giving them the right to build their railways over 'other peoples' land'.

So effectively they got the land for cost price (zero) rather than full ransom price, which would have made each and every railway completely uneconomic.

2. Satellites and mobile phone stuff does not require land (apart from the relay masts). So all a telcom company needs is the promise from the government that the government will prevent - using force - anybody else from using the same freqencies.

So the government auctioned off these rights, the private companies paid for the rights and got on with the satellites and towers paid for with private money. And an excellent job they did too.

Mark Wadsworth said...

TS; "What's wrong with 2nd homes or large homes?"

Absolutely nothing. But in terms of making a tax proportional to land values owned by an individual, you get a slightly better result by just taxing large homes and second homes than by having a Poll Tax on all homes.

(Clearly, best of all is tax all land values at the same rate with an exempt base amount or personal allowance or Citizen's Income or whatever. But don't make the best the enemy of the good.)

Lola said...

MW. I really do see what you're getting at but I think that there are issues with the analysis.
I grant you absolutely that railways need land and Acts of Parliament to nullify the 'ransom strip' issue. But the compensation for the landowners will be at 'market price'. It is still private capital that has been raised to fund all this.
Roads is a bit more complicated because the evolved nature of most of the network

Bayard said...

Mark, so what you are saying is that the mobile phone companies couldn't have done it without the government preventing other people using "their" frequencies and the railway companies couldn't have done it without the government preventing other people holding them to ransom. In neither case did the government put any capital into the projects, which was rather my point.

Mark Wadsworth said...

L:"But the compensation for the landowners will be at 'market price'."

Most of it will be ag land, in which case the current use market price is a lot less than the ransom price for other uses.

B: "what you are saying is... "

That's exactly what I'm saying.

"In neither case did the government put any capital into the projects"

Exactly. But simply saying this without the caveat is something which the Faux Libs trot out endlessly.

This is actually the ideal division of roles between government and private sector.