Killer Arguments Against LVT, Not (423)

Somewhere in this thread (BenJamin' and others on top form!) is the standard fare argument along the following lines:

Under the current system with high taxation of incomes and output and light taxation of land, you at least have the knowledge that once you've paid off the mortgage, then you won't lose your home even if you lose your job.

That's clearly a non-argument in real life:
- it ignores people paying rent or paying off a mortgage, who are expected to pay income tax for the unemployed home-owner;
- it is a dwindingly small number of people;
- it ignore the fact that although that person might be 'safe' in his home, he still has to eat and heat;
- we also have welfare systems that can deal with unemployment (like giving time limited LVT exemptions to people who've lost their job);
- the risk of losing your job is of course much higher under a system that taxes incomes and output;
- and so on.

But let's look at the more fundamental issue.

The point is, when people organise themselves and agree rules of behaviour, there is a Laffer Curve of Liberty, and we ought to organise our rules to maximise liberty (or minimise impositions thereon). With some things, it's a straight line 0% to 100% (like banning drugs or prostitution, that is a straight reduction in some people's liberty without enhancing anybody else's), but usually it is not a straight line from 0% to 100% and there are trade offs.

To give an extreme example, most would agree that banning slavery increases overall liberty; the flip side is that it reduces the liberty of people to own slaves. On a more mundane level, there are speed limits in residential areas, which reduce the liberty of motorists but protect the liberty of pedestrians and residents.

For sure, taxation reduces some people's liberty and increases others' liberty. A net transfer of liberty is a reduction in overall liberty (like transferring liberty from slaves to slave owners). The key is to reduce the net transfer/overall burden as far as possible in total e.g. by spreading it as equitably as possible.

Let's go back to the Faux Libertarians' parable about splitting the restaurant bill. If the total bill is split equally, regardless what anybody ate, that's a Poll Tax* (authoritarian hard right); if we split the bill so that higher earners pay more, regardless of how much they ate, that's income tax (socialist). Both of those encourage over-eating, are objectively unfair and reduce the liberty of those paying for more than the cost of their own meal.

(* Baffles me why so many Homeys think that a Poll Tax is somehow better than LVT. Try substituting Poll Tax for LVT in the original argument: "Under the current system with [a high Poll Tax], you at least have the knowledge that once you've paid off the mortgage, then you won't lose your home even if you lose your job." That's clearly bollocks.)

What's wrong with everybody just paying for their own meal (Georgist)? That's land value tax, and doesn't impose on anybody's liberty. The greedy people will complain that they are worse off than they were under a Poll Tax; the low earners will complain that they are worse off than under income tax. Tough, past wrongs don't justify future wrongs.

It gets worse, of course. With a restaurant, it is the owner and his employees doing the cooking, so they expect to be paid (or else they wouldn't do it), however the bill is split. Land values are created by everybody and nobody, so by default ought to be shared between everybody equally (unlike earned income, which ought be retained by the earners), but under current rules, a minority own most of the land value (Pareto's 80/20 split).

So basically, income tax payers (residents) are paying for the meals to be cooked (obeying common rules and restrictions and thereby creating the land value in the first place) instead of being paid to do so. This does not even entitle them to a meal (land), they have to pay extra (rent or mortgage) if they want some food (somewhere to live).

And land owners (collectively) on the on the other hand are charging people for the cost of the meals, even though they did not provide ingredients or cook them. For sure, most people 'paid for' their land, but that is a transfer between past and present landowners, and is no consolation to the landless (considerably more than half of people alive and most of those not yet born).

This looks like a massive transfer of liberty from the landless to landowners, and as such is a reduction in overall liberty.

Getting back to the topic, that small loss of liberty for a few middle-aged homeowners who've paid off the mortgage and then lose their jobs would be but a drop in the ocean compared to the massive increase in liberty for most other people.

Socialism / Not Socialism

We (or maybe just me?) got ourselves into a long discussion on an earlier post that rather lost its way.  So I thought I'd try to make a bit clearer the point I was trying to make.  First of all I would expect that all of you know about the Nolan Chart? (I accept that it is a simplification).

 

 

Top = Liberty and Personal Responsibility

 

 

Bottom = Slavery and Personal Irresponsibility 

 

Now, the key point today is that I maintain the left v right is passé.  It's old hat.  What we really need to be talking about is top v bottom.  I do not consider myself either left or right.  All the evidence tells me that the left - aka socialism - does not work.  In fact cannot work.  And similarly the Right 'conservative' does not work. And in fact cannot work.

 

If you look at the history of conservatism in the UK it is exemplified by its ability to gain power by accepting the changes made by the Left.  It has 'conserved' things that were not previously thought of as Right wing or conservative.  And it tends to be authoritarian. Witness the way Osborne handed Draconian and arbitrary power to HMRC or the constant attempts to 'control' the internet. Finally by definition Toryism grew out of land ownership - i.e. rent seeking.

 

On the left the constant failures of economic rationing by bureaucrats, and because of the skewed incentives of those bureaucrats, will tend to lead to more and more regulationism and less and less economic freedom. The left defined itself by mis-defining 'capitalism'. It looked horizontally across the Nolan Chart.  It should have been looking upwards. It decided that on the evidence of that horizontal view markets were not good enough and that central planning by wise bureaucrats was much better. Keynes did not look up either.

 

In short both left and right will tend to trend downwards over time to the bottom. They will both end up as totalitarian regimes. (Witness Corbyn's threat to requisition houses).

 

The chart implies something else.  Without both economic and personal liberty there can be no Liberty.  Property rights (including sound money which is a form of property right) are fundamental to liberty. And this is why the Left can never embrace liberty.

 

But given that the Nation State is a Good Idea what is the least worst way of paying for it that does not erode liberty and economic freedom and uses the least possible coercion?  Enter Georgism.

 

To my mind Georgism achieves two things.  One, It raises tax income in an equitable and efficient way and two, if done properly increases liberty by removing the ability of the few rent seekers to suck the wealth away from the productive in 'economic rent'.  I see no contradiction between Georgism and Liberty. But then I am not an anarcho libertarian.

 

There is a lot more than can be said about this, but I wanted to be as brief as possible and to promote discussion.

 

So what do you think?

Just you carry on saying that Jean Claude, just say it again. I dare you. I double dare you.

Here

Listen son.  Since 1914 we have three times spent blood and treasure saving 'Europe' from itself.  Just why do we need to do that again?  Eh?  Just tell me why?  In any event us getting out will liberate European nations (once again) from the empire builders and grotty little strutting functionaries like you.

I've got your number son, and I know where you live.  If (when) it all goes pear shaped I'll be popping round to see you with three big mates to have a quiet word about your likely fairly short future.  Just you see if I won't.

Update

Some good graphs here.