Tuesday, 18 October 2016

Killer Arguments Against LVT, Not (406)

Emailed in by Physiocrat, from the comments in an article on FT Adviser headed "The pound’s longer, sharper Brexit shock":

Paris azawak said:

@ Physiocrat @ RiskAdjustedReturn

I have attempted to follow this bizarre thread in which Physiocrat puts forward an ultra-liberalist hypothesis in which all taxes would be abolished overnight except for a simple land tax…


This is his first Big Mistake, as Mike W points out in the comments:

I only require that the 'last great project of political economy' (actual phrase which caused the problem), itself conforms to Popper's dictum of 'piecemeal' observable, testable, one bit at a time, implementation. With no bloody revolution or bloody reactionary counter thrust.

But let's read the rest of the drivel anyway, just for fun:

… Would this not simply result in a return to the known ills of completely unbridled capitalism:

(i) the brutal, irresponsible chaos of disproportionately concentrated wealth into the hands of an increasingly small number (a proliferation of Murdochs, Gates, post-soviet oligarchs, etc, behaving like capricious feudal barons as the rest struggle as vassals once did);

(ii) an immediate widening of the disparity between rich and poor (ie the rich get richer and richer, the poor get poorer and fall behind, are excluded, abusively "exploited", resulting in a surge in social decay and moral injustice (refer Dickens) which costs far more to cure than to prevent (exclusion, poverty, declining health, homelessness, poor education, exclusion, discrimination, delinquent behaviour, crime, &c);

(iii) the decline of infrastructures (especially less "profitable" ones) that taxes pay for in response to specific needs and situations as they evolve and in accordance with government policy as they develop according to evolving democratic majority choices in the interest of the common good.

No company or person enjoys paying taxes.

However, what taxpayers get in return for their fleeting contribute is a very great deal more in return than the sums they contribute since they benefit from the vast heritage or legacy of all that has been constructed and developed by decade upon decade of taxpayers (heath sector, educational sector, law and order, transport and communications, government and public buildings ... the list is endless).

The only possible way to levy tax fairly in order to maintain and develop the vast EU wide infrastructures that make the existence of dynamic, modern and efficient trade, services and consumer markets possible is good governance, fair regulation and taxation based on means-testing.

A land tax is haphazard by comparison and relatively easy to distort and circumnavigate (eg as pointed out, foreign companies such as Google generate unprecedented wealth without owning physical land in the markets they derive profits from through a virtual, immediate and monopolistic electronic Platform).

For the same reason, VAT is relatively unfair since it is a flat tax on consumption regardless of means. The poor pay the same VAT as the rich for the product.

Tax should be levied on income/revenue and not exclusively on land ownership as suggested, because

(a) land value varies constantly according to market fluctuation and is impossible to estimate exactly

(b) in an imperfect world [income tax] is:
(i) means-tested;
(ii) proportionate and therefore sustainable;
(iii) supportive of the market whose infrastructure has made its generation possible;
(iv) adaptable according to specific and ever-evolving governmental policies aimed to protect society in the interest of the common good, and so as to avoid the higher social and Financial cost of exclusion and social decay;
(v) ethical, civilizing and therefore progressive,

A land tax would be regressive and mark a return to the Dark Age:

Indeed, history teaches us that in the middle ages, land taxes concentrated power and wealth into increasingly power dynasties who possessed entire fiefdoms and kingdoms; charity was dispensed patronisingly and randomly according to whim or the success of petitioning peasants and vassals.

Not much means-testing there. Just medieval madness, machiavellan machination and civil strife all round (refer Shakespeare).

RiskAdjustedReturn is entirely correct above, it seems to me when he state in a post above that:
"Someone has to pay for the infrastructure that makes the building viable for habitation."


Well that settles it then, doesn't it?

10 comments:

Lola said...

Link?

Mike W said...

Speechless.

But Lola may have the most issues with its version of Feudal History.See what you have gone and done! As I said, LVT the last great, untried project.

Lola said...

Mike W. No. He's right there. Rent was THE game up to oooo about 1670 ish. It was all about getting as much land and rents as you could. Witness Hampton Court or the Hapsburgs palace in Vienna both of which I have seen recently. But even they could not extract morea than was available hence the need for the Courts to move about the country.

But. As MW and I have contended the real issue was magna carta that was really about the privatisation of land taxes. the liberty bit was a tag on.

Once you get the industrial revolution the fact that all profits return to rents becomes blindingly obvious and the great unwashed (among whom I include myself) get a bit uppity about that. Thems and other extractive elites.

Mind you, the Church in theory at least was a sort of welfare state up until possibly 1914 ish? (not at all sure about that).

Bayard said...

Did anyone give him a good kicking?

Mark Wadsworth said...

L, Phys sent me the link and I have added.

MW, LVT is not untried, it is the oldest kind of tax and there are loads of real life examples from this country and elsewhere in the past and present and it always 'works' far better than you can imagine.

Worst case, we do UK 20th C style Georgism Lite, which was a resounding success in the narrower sense of low house prices and rents, milder recessions, more equality and more stable banks. The rest of the tax system was still shit though.

L, ta, and agreed.

B, I don't know, I daren't look at how many backed up this specious nonsense. Link now added.

Mike W said...

'MW, LVT is not untried, it is the oldest kind of tax and there are loads of real life examples from this country and elsewhere in the past and present and it always 'works' far better than you can imagine'


I am on the side of the angels and I can imagine a quite a lot Mark,and I never said 'untried' ever, anywhere.I only require that the 'last great project of political economy' (actual phrase which caused the problem), itself conforms to Popper's dictum of 'piecemeal' observable, testable, one bit at a time, implimentation. With no bloody revolution or bloody reactionary counter thrust.

But you and Lola make a rather pedantic point that I need to put right from our discussion groups perspective. Someone (not you)here once commented before that we do not need history and we can drop Henry George and just call it LVT.Which is where you now seen to fall. Detached, just a technical term like MMT is not Keynes, Chartalism or all its historical actors. I did not say anything at the time as I thought it utterly trivial. But I should make clear I reject this advice, and I should have said so. By LVT I specifically do mean Henry George's ideas contained in 'Poverty and Progress' (1870) and argued in his lifetime 1839-1897. I do mean a 'socialist enterprise' based in American, framed on Republicanism and Irish activism and on New York trade unionism (and incorporating the Lockian idea that land is not confiscated from title holders), with the idea of making free markets work for Labour. Why? Because George was the greatest economist of the modern age who nobody has ever heard of. He is lost. His disappearance from modern economic history is as important as the LVT story itself.As you know.So I am not impressed with Lola's and your contention here. It is what Marx said on Henry George. 'But this is just Ricardo'. And do doubt that Ricardo would say, 'But this is just the Physiocrats'. So please be clear re-read what I took to Liverpool last month, the source of this unrest - I took Henry George and LVT.In the hope they could be interested: the lost/last great project' as I tagged it.This bundle is what I was 'selling' chaps.Not detached accounting jargon.

To be fair to you, my pedentry above is a little longer than yours, but can we drop pedantry and agree on the 'Georgist Paradigm' for what we all mean in future.Even the quote from your beloved Milton Freedman is actually; 'the old Henry George tax'.

I think your 'LVT lite' a brilliant policy bundle and one that Labour should steal in totality, now, today, ASAP. As I said before.

Mark Wadsworth said...

MW, sorry my misunderstanding, ta for explanation.

Re piecemeal, yes of course, that is where the KLN is holed under the waterline right from the start. Even an enthusiast like me thinks it would be best to shift a few percent of the tax burden from output to land each year, maybe over a ten or fifteen year period until we have full on LVT and little else. If at any stage all these ghastly side effects kick in (which they clearly won't) then we can stop.

Derek said...
This comment has been removed by the author.
Derek said...

Whoah, no need for anyone to dis Physiocracy! To paraphrase C A R Hoare, "Here is an economics so far ahead of its time, that it was not only an improvement on its predecessors, but also on nearly all its successors".

Mike W said...

Derek, Did not mean to 'dis Physiocracy'.I only wanted recapture HG's life and work and disappearance, for the 'coming' left as a package.Can I give you some more ammunition to shoot, as I will have to look up, C A R Hoare next.
I think the great Steve Keen would agree with you on the above.And for all I know, say my project is horse shit. (1)Have you seen his latest piece on Energy and the Physiocrats? (2) Have you any thoughts as to why Keen jumps from Adam Smith to Physiocrats when he discusses land in Debunking Economics and seems to have no place for Henry George even in his broad list of the hetrodox at the end?