Pensioners show us how it's done.

From The Express:

OLDER voters are considering withholding support from the Tories if Chancellor Rishi Sunak ditches the Government's pledge to hike the state pension in line with average earnings, a survey warns today...

In a series of interviews last month, Mr Sunak refused to say whether the Triple Lock guarantee would be honoured this year.

“The Triple Lock is the government’s policy but I very much recognise people’s concerns,” he said in response to concerns about the potential cost. I think they are completely legitimate and fair concerns to raise. We want to make sure the decisions we make and the systems we have are fair, both for pensioners and for taxpayers,” the Chancellor added.

Whatever the rights and wrongs of an issue, the lesson is that if you want something, you just have to vote for it ('green' measures, Brexit, high pensions etc). Voter turnout among pensioners is very high, with corresponding results, so all parties have to be at least as 'generous' as the others.

And if you want the government to collect taxes from land values instead of from wages and ouput, just vote for it. If you're in Scotland, vote for the Scottish Greens; if you're in Yorkshire, vote for the Yorkshire Party and everywhere else, you have to get on the ballot paper for Young People's Party (we are still waiting to hear from El Comm on the name change).

Land Value Tax in Baden-Württemberg

I took part in an online talk/discussion about the introduction of Land Value Tax in B-W on Saturday, led by one of the hardcore Georgists driving it.

The whole process was as slow and painful as you can imagine. They set up an official lobby group in 2012 and spent years getting various existing organisations on board. They explained to the hard left "Die Linke" party that this would reduce inequality; they explained to the Green Party that it is a tax on use of natural resources; they told the NIMBY and nature preservation groups that this would discourage urban sprawl; they told the tenants' organisation that their landlords would bear the tax; they told the construction industry that it would not be a tax on development etc.

The background is that Germany has a very low level Council Tax called 'Grundsteuer'. The average bill per home is less than £400 a year. It's so low, there's not even a monthly instalment option, you just get a bill and you pay it, like you pay the gas bill or your home insurance. It has all the flaws of Council Tax. It bears little relation to the land value; there is no regional variation in final bills (so it's regresssive); it's based on valuations that are fifty years out of date, which is actually irrelevant as each local council can set its own tax rate (as a pro mille figure); proceeds are collected and spent locally etc.

For some reason, the German Constitutional Court (who have a say in these matters - they got rid of Wealth Tax because housing was taxed at lower rates than proper wealth, why not just include housing at market value, the same as everything else?) had decided that Grundsteuer was unconstitutional (not clear why) and the Federal Government had to come up with a fiscally neutral alternative. They came up with a complete fudge of a law that said each State can make up its own rules on some sort of replacement tax on land and buildings. So the lobby group fought hard for eight years, contacting endless politicians and attending hearings at federal, state and local level.

Some states went Home-Owner-Ist and have a flat rate per dwelling (more or less). Bavaria completely missed the point and decided that the tax should be a fixed amount of a few cents for each square metre of interior floor area. Some States base the tax on the total value (which is a step in the right direction, but makes valuations trickier and discourages development). Only in one state did they make any headway - B-W will introduce a low level LVT, payable by the owner/landlord in 2025. B-W is a very wealthy state in the south-west corner (Porsche and Mercedes are based there), which bizarrely enough is run by a Green-Conservative coalition. It had been solid majority Conservative for decades before that. Nordrhein-Westfalen is still prevaricating and could go either way. 

Inevitably, there was the usual Home-Owner-Ist bleating, even though the effective rate will be less than 5% of the site premium. Poor Widows in Mansions and so on. Which is weird, because the annual tax on a mansion near Stuttgart will only go up from £600 to £1,000 or something. People in flats in the periphery will see their annual bills go down from £500 to £300.

The presenter admitted that taken in isolation, the whole exercise had been pretty pointless and replacing Grundsteuer with an LVT of 5% would have precious little effect on anything. But at least they had their foot in the door. He said that it would be great if they could bump up the LVT and reduce VAT in tandem. (He explained that VAT rates are set nationally, so I'm not sure why he picked on VAT as the next on the hitlist).

I pointed out that the next tax to replace must be Grunderwerbsteuer, which is like Stamp Duty. It is a State-level tax (like SDLT in England and Northern Ireland; LBTT in Scotland and LTT in Wales). Each State can set its own flat rate (between 4% and 6.5%, no tiered rates as in the UK) and keeps its own revenues. That's pretty steep, and total revenues are slightly more than the total revenues from Grundsteuer (EUR 16 billion against EUR 13 billion). He agreed, and agreed that this would help get the construction industry on board, but that tax didn't appear to be next on his 'to replace' list (and wasn't up for debate anyway).

That's all really. It reinforced my view that the only way to persuade a government to replace taxes with LVT is via the ballot box. It doesn't matter if 95% of people hate the idea (rightly or wrongly) or simply don't understand the point. If you can get 5% of people voting for a Georgist party, the Big Two will adjust their policies to claw those votes back again. Which is another reason for a Georgist party to be doggedly centrist/apolitical. If it positions itself as hard left, the Tories won't care how many votes it gets; if it positions itself as neoliberal, the Labour party won't care.

YPP's proposals - how to deal with the corona virus crisis

Joint effort by TBH and me, cross-posted from here.
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Our proposals would achieve various things which the government's do not:
- keeping households afloat;
- helping businesses stay in shape during the lock down;
- minimising the cost to the government/the taxpayer;
- recognising that rental values have - temporarily - collapsed.

David Ricardo came up with his famous law of rent in 1809, and it remains one of the most important and firmly accepted principles in economics. The law states that rental values are equal to the economic advantage of using one site over the marginal (rent free) site for the same purpose. In other words, the economic surplus from using one site over the cheapest available.

In this time of national lock down, the "economic advantage" of using one site over another falls to negligible amounts. Imagine you need to rent somewhere for the next three months- would you price central London over rural Devon? Normally, the market does - by a factor of many multiples. Today - we doubt it.

This brings us on to the Governments response to COVID 19- specifically the Job Retention Scheme (aka 'furlough scheme'), but we can include the business loans and a few other policies with the same analysis. For an initial period of 3 months, if an employee is furloughed, the employer must continue to pay the full salary (liable to PAYE as normal) and the government will later reimburse employers 80% of the salaries of furloughed workers (up to a cap of £2,500 per month) (from Taxation.co.uk).

The government initially said it expected 10% of businesses to take this scheme up, but recent figures suggest that more than nine million employees (about one-third of all employees) will be furloughed (from the BBC).

The monthly cost of a furloughed worker on an average salary (say £2,500 per month) can be estimated as follows (from Listentotaxman.com)
Employer pays £2,500 plus £244 Employer's NIC (unchanged)
HMRC receives £740 PAYE
HMRC then later refunds £2,000
Net cost to HMRC £1,260.
Net cost to employer £744
Net income of employee £2,004

Multiplied by nine million furloughed workers is a net cost to HMRC of £11 billion per month.

The scheme does not cover the self-employed, although the government has said that something similar will be introduced, this will add another £1 billion or £2 billion to the cost. HMRC also expect that there will be significant fraud and error involved (from The Guardian) which will increase the cost further.

So the Government (i.e. current and future taxpayers) is diverting massive sums of cash that could be used in other ways to ensure that affected workers can cope through the crisis. Lovely - except when you look at where most of this largesse will go. For most households, their single largest payment (after taxes of course) is to their landlord or bank in the form of rent or mortgage payments. The payments were negotiated and contracted according to Ricardo's famous law - that is - they reflected the economic surplus available at that time.

But the economic surplus has largely collapsed; and true rental values (or notional house prices based thereon) have also collapsed. So, of all the money being used by the government to keep furloughed workers going will end up in the pocket of landlords and banks, based on the fiction that the economic surplus and hence rental values have not collapsed, however temporarily.

So we are paying surpluses that don't exist to groups that in their role as rent collectors produce nothing. Are we mad? That is above the problems and fraud risks associated with the scheme.

The government has therefore come up with the wrong answer to the wrong question.

The question is not "How do we maintain landlords' and banks' unearned income?". The correct  question is "how much do people really need to live on as a bare minimum during the lock down period, assuming they have no rent or mortgage to pay?". There's no right or wrong answer, the lowest defensible figure is approx. £75/week per adult, just enough for food, utilities, broadband and mobile phone (there are arguments for higher amounts such as £100/week). People do not need extra for clothes, entertainment or holidays at the moment, for obvious reasons. People who smoke or drink will just have to cut back or dip into their savings.

Our proposals answer the right question - making sure funds are directed to where they are needed most in an efficient and simple way and at the lowest cost to the government (i.e. current and future taxpayers)

For the duration of the crisis:
• Suspend the enforceability of rent payments by all tenants: residential, commercial and retail  (except those largely unaffected by the lock down - such as supermarkets);
• Suspend interest charges on all mortgages: commercial, residential and buy to let, except for those businesses largely unaffected by the lock down such as supermarkets. (As a quid pro quo, any deposit or savings accounts currently paying interest will become non-interest bearing.);
• Allow mortgage borrowers to defer mortgage repayments if they wish;
• Offer a UBI of £75 per week to every legally resident adult in the country who is not already receiving welfare payments or a state pension in excess of that;
• The claims process should be as simple and automated as possible. All claimants should have to do is provide their National Insurance number and bank details. Payments can start almost immediately;
• To minimise the number of claims, the quid pro quo of claiming is that a claimant foregoes the income tax free personal allowance and the National Insurance exempt threshold, so would be paying approx. £75/week more in income tax and NIC. So the lucky majority still in paid employment have no incentive to claim, meaning that HMRC and/or DWP can process the neediest claimants first;
• The same general principle applies to Child Benefit and Child Tax Credit. HMRC pay a total of £30 billion a year for 12.7 million children (from HMRC Annual Report 2018-19). These could be replaced with a flat £45/week for each child (there is no reason for long-term unemployed parents to receive more than the short-term unemployed or furloughed parents);
• A family of four would therefore have a basic income of £240/week, which is surely enough for the basic necessities.

The total cost of YPP's proposal would be less than half the total cost of the furlough scheme, it  would cover the self-employed and it would place a much smaller drag on the economy. The saving to the taxpayer is broadly speaking equal and opposite to the fall in income that landlords and banks will have to bear in the interim. The homes they own and the stock of outstanding mortgages will still be there in a few months time - people's businesses and jobs might not!

The other important question is "how do we ensure that businesses survive the crisis?"

People need jobs to go back to once this is all over. Many businesses will run out of cash to pay salaries long before HMRC start paying out the furlough refunds. Those businesses will fold through no fault of their own, which will set off a chain reaction. It is madness to expect employers to pay the £744 a month cost of a furloughed employee (workings above) for nothing in return, which is the best case scenario assuming HMRC can implement the scheme very quickly.

We will just have to give employers the flexibility to put employees on temporary leave or ask them to cut their hours (with a corresponding salary reduction) with the guarantee that the old terms and conditions will be reinstated once the lock down is relaxed or lifted. This would be similar to Maternity or Paternity Leave. Yes, this will mean a fall in income for many, but there will always be the £75/week per adult and £45/week per child to keep them going.

Businesses would also be exempt from payment of rent or mortgages for the time being (see above). Instead of waiving Business Rates for a year for small businesses, there should be a general waiver of all Business Rates (except for businesses still allowed to trade as normal, such as supermarkets) for the months that the lock down continues. Large businesses are just as much at risk and provide as many jobs as small ones. Under YPP's proposals, businesses would just go into hibernation for a few months and can hopefully pick up where they left off afterwards.

YPP's New Year Message

I'd be grateful if you could take a few minutes to read it.

Thanks. I'm not doing this for fun.

Lewisham East by-election result and YPP (London) meet-up tomorrow

1. Watch out for the Lewisham East by-election results tomorrow, with a bit of luck our candidate Thomas Hall won't come last (which would be a first for us!). Honourable mention to Richard G who has delivered thousands of our leaflets over the past couple of weeks.

2. We'll be at the Brewmaster nr Leicester Sq tube, exit 1, turn left and left again, from 5.00 onward for an hour or two to celebrate/commiserate the by-election result. We'll put a yellow leaflet on the table so you recognise us.

YPP (London) meet up, Friday 4 May

1. It looks like nice enough weather for a Friday meet-up tomorrow.

2. We'll be at The Brewmaster nr Leicester Square from 5.20 until 6.30 or so, if you think you'll turn up later than 6.30, please get in touch gmwadsworth@gmail.com or 07954 59 07 44.

Leicester Square Tube Exit 1, turn left and left again into the alleyway (St Martin's Court). We put a yellow YPP leaflet on the table so that you can find us.

3. Topic (light hearted). I missed the deadline for getting on the ballot paper for the local elections yesterday, so it was the usual toss-up between voting for UKIP or Green. I would have voted UKIP this time but they weren't on the ballot paper either, so I voted Green. For whom did everybody else vote?

YPP (London) meet-up, tomorrow Friday 3 November

We'll be at The Brewmaster nr Leicester Square tube station from 5.20 or so onwards - if you think you'll turn up later than 6.30, please get in touch gmwadsworth@gmail.com or 07954 59 07 44.

Leicester Square Tube Exit 1, turn left and left again into the alleyway (St Martin's Court). We put a yellow YPP leaflet on the table so that you can find us.

Topics: this week's reader's letters.

Dress warm!

Reader's Letter Of The Day

The Evening Standard published three scathing letters on the subject of the proposed reduction in Stamp Duty Land Tax "to help hard-pressed first time buyers get on the property ladder", including mine:

There is no doubt about it, a stamp duty cut will feed directly into higher prices, as a seller can increase the price by the amount of the stamp duty reduction, leaving the first time buyer no better off. Exactly the same has happened with Help to Buy, which the large builders have admitted is the main reason for their recent profitability.

Rather than pumping ever more money into the private land market, we would be better served if Help to Buy was scrapped and stamp duty and regressive Council Tax were replaced with a flat Land Value Tax, which is both progressive and efficient.

Mark Wadsworth, Young People's Party

YPP (London) meet-up, tomorrow Friday 29 September

We'll be at The Brewmaster nr Leicester Square tube station from 5.20 or so onwards - if you think you'll turn up later than 6.30, please get in touch gmwadsworth@gmail.com or 07954 59 07 44.

Leicester Square Tube Exit 1, turn left and left again into the alleyway (St Martin's Court). We put a yellow YPP leaflet on the table so that you can find us.

YPP (London) meet-up, tomorrow Friday 15 September

We'll be at The Brewmaster nr Leicester Square tube station from 5.20 or so onwards - if you think you'll turn up later than 6.30, please get in touch gmwadsworth@gmail.com or 07954 59 07 44.

Leicester Square Tube Exit 1, turn left and left again into the alleyway (St Martin's Court). We put a yellow YPP leaflet on the table so that you can find us.

Reader's Letter Of The Day

From today's Evening Standard:

You have recently highlighted the issue of 'modern slavery' but this is only the tip of the iceberg.

In economic and historic terms, a slave owner is usually a landowner who takes the bulk of the value which slaves create, leaving them just enough to live on. In those terms, there are tens of millions of economic slaves in this country - all those whose rent or mortgage bills leaves them just enough to live on.

Although nominally free, if tenants or mortgage borrowers move to a higher wage area to get a better paying job, they will find that the bulk of their extra wages is taken in higher rents or mortgage repayments. So landlords and banks act are scarcely better than slave owners - they contribute nothing to the process of wealth creation but collect a large chunk of it anyway.

Mark Wadsworth
Young People's Party

YPP (London) meet-up, tomorrow Friday 8 September

We'll be at The Brewmaster nr Leicester Square tube station from 5.20 or so onwards - if you think you'll turn up later than 6.30, please get in touch gmwadsworth@gmail.com or 07954 59 07 44.

Leicester Square Tube Exit 1, turn left and left again into the alleyway (St Martin's Court). We put a yellow YPP leaflet on the table so that you can find us.

Reader's Letter Of The Day

From today's Times:

A NEW PARTY

Sir, We do not want a new centrist party that is a compromise between socialism and neoliberalism (“Now is the moment to launch a new party”, Comment, June 23, and letters, June 24). We want a party that thinks outside the box. It could be Georgist, which has a clear set of principles, or the thoughtful manifesto of the Young People’s Party (UK), as set out on their website.

Richard Ling

This is the sort of reaction I expected...

The Sunderland Echo covered a Press Assocation write-up about YPP. It was a bit of a hatchet job and the fox hunting bit was taken completely out of context, but hey, all publicity is good publicity:

From the comments:

Tobster:

That's why the voting age should be raised to 21 or they bring back the property criterion. The latter means that only those who own property and therefore have a stake in society are allowed to vote.

Psychlops:

So as a renter, who couldn't afford to buy property... I'm to be denied a vote?

As a renter I don't have a stake in society?

Gee, thanks...

YPP manifesto - new draft

The old version is (or was) here, I think we ought to tie it all in better from the start, once you understand the basic principles all the detailed policies fall into place. As usual with me, it all seems so simple and obvious when I was drafting it in my head over the past few weeks but once I try and write it down, it gets really long-winded, so I need your help to whittle it down.
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Most political parties (and most voters) assume that in the natural order of things the world is divided into nation-states and that each nation-state has a 'government' and base their election campaigns/policies/voting decisions on what the government should be doing. So political parties have a rag-bag of inconsistent policies based on little more than buying enough votes to get into power and their snouts in the trough while keeping their real financial backers happy.

This is the wrong question: the proper question is, "Why do we have nation-states and governments in the first place?". Once you have thought this through, the question as to what governments should (or should not) be doing in any particular detailed policy area (from taxation to the NHS, Trident or  immigration) more or less answers itself.

Most people know why we have nation-states and governments if they think about it for a few minutes, it was a gradual progression from scattered hunter-gatherer families with every family fighting for itself via tribes and more settled farmers to full blown nation-states with governments. Sadly, some nation-states are dictatorships, theocracies or kleptocracies, but the Western/European style democratic, liberal, free-trade model works the best.

These are all merely ways in which society organises itself and the advantages of smaller groups merging to become larger groups are obvious. A nation-state is big and strong enough to defend its own borders and within its own borders, governments carry out the role of policeman in a literal sense, they are there to protect life and property (by punishing criminals), thus freeing everybody else to get on with their lives. In an ideal world, this increases everybody's personal liberty.

There is an upper limit to the size of a nation-state, which is all the people who identify as members of that nation, so multi-ethnic empires always collapse after a few centuries.

The reason for this is also obvious if you think about it.

A. Within the borders of one country, everybody speaks the same language, uses the same currency, has the same rules and customs, which makes socialising ad trading so much easier. People prefer dealing with people who follow the same rules as they do. As far as international trade is concerned, most civilised countries have a legal system which allows a wronged party to sue in the other country for non-delivery or non-payment which facilitates trade.

B. More subtly, each nation-state has to have rules on how you are allowed to behave. This is fine as long as these increase people's overall liberties, which is obviously the case with punishments for murderers and thieves. Once it gets more detailed, there is always a balance to be struck. So a 20 mph speed limit in residential areas enhances the safety of road users and keeps noise disturbance down but from the point of view of the motorist this is a burden and a reduction in personal freedom. Overall, this is a gain for society and so it's a good rule. Imposing a 20 mph speed limit on motorways would clearly a loss to society. Some detailed rules, like the ban on people smoking in their own vehicles, merely place a burden on a minority while benefitting nobody whatsoever.

Unfortunately, people tend to be most aware of those rules which restrict their personal freedoms (not those which benefit them). However, as long as they know that people who are benefitting from these restrictions are fellow nationals (or immigrants who will respect those standards of behaviour), most people will put up with it, however grudgingly. If individuals break these rules, then we expect them to be punished. This is called 'social cohesion'. Where it breaks down is when larger groups in a country have a different national identity and merrily flout the rules imposed on natives or try and impose their alien rules on the host society.

So there are clear benefits to having nation-states and 'governments'.

The next question is: "How do we measure the benefits in £ terms and who benefits most?", having answered that, how (and whether) 'governments' should raise money (taxation) and how they should spend it are obvious. Under the established political system it is all back-to-front. Politicians first decide how they would like to spend money (buying votes or subsidising their financial backers and businesses which will give them cozy consultancy jobs when the leave office) and then try and finance this by raising taxes, or to keep pensioners (who'll never have to repay it) happy, by running deficits.

That's easy. Superficially, almost everybody is safer and better off and can produce more/earn more in an industrialised/civilised society, that's the whole rationale.

But in £ terms, the biggest winners in civilised societies are those who can derive income from things which would have no value in a society of hunter-gatherer bands or small tribes of settled farmers. The former has no concept of land-ownership and the latter no concept of individual landownership (it belongs to the whole tribe) and neither system has patents/copyrights or other privileges which preventing 'outsiders' from carrying out certain activities/professions.

Land/location is the easiest to understand and measure in £ terms. Land-ownership and nation-states are synonymous, you cannot have one without the other. And as the estate agents say, land value is all about "Location, location, location". Quite simply, the more 'civilised society' you have in an area (more people, hence better opportunities to socialise and trade, more job opportunities, more leisure and spending opportunities and more potential customers, which then means more transport infrastructure, water, gas and electricity on tap, better broadband and mobile phone reception etc), the higher the rental value of land.

So there is a vast difference between the rental value of farmland and land in the middle of nowhere and in town and city centres and there is a vast difference between rents in high wages areas and in high unemployment areas. The rental value of a shop in Bond Street in London is hundreds of thousands times as much as  the rental value of a Scottish grouse moor or a sheep farm on a hillside in Wales, simply because the benefits of the UK (as a nation-state) are very focussed in certain relatively small areas.

While people's innate skills are pretty much the same wherever they are from, they can increase their productivity/earnings (and quality of life) by moving to an area with lots of 'civilised society' i.e. towns an cities and especially London. Most of the extra they get by doing so goes into higher rents, leaving them little better off in £ terms. All tenants and newcomers are paying extra simply to be near other tenants and people who are paying (or have paid) extra to live there and the landowners are cashing in. Who or what causes or creates that extra value as measured by rents? The answer is, "Everybody in the UK (or in any neighbouring country) who abides by the common rules".

So to whom does this extra value/rent belong? Either everybody or nobody and certainly not a privileged few who have a government-guaranteed title to that land. But because in most countries - and certainly in the UK - certain militarily powerful leaders/invaders declared themselves simultaneously to be 'the govenment' and owners of the land, they rigged the system to make themselves sole collectors of rent and taxes and it has stayed that way for centuries.

There are plenty of other sources of naturally arising 'rent'. Radio spectrum is just there as a free gift of nature, but any frequency only has value to a business if the government is there to prevent anybody else from using it. Rain falls from the sky and is stored by rocks and soil, it costs a few pence per cubic metre to purify it, the government (or recently privatised water companies using stet-granted access rights) builds vast pipe and sewerage systems. The value of mains water and a sewerage system (without which towns and cities could not exist) vastly exceeds that cost (if water and sewerage charges doubled, you'd pay it).

And there are plenty of other examples of rents arising by the actions of the government. This is in the public sector itself, like all the council oficials, quangocrats and senior civil servants on six figure salaries with gold-plated pensions, or pretty much anywhere where public and private sector overlap. A patent is ultimately just the government protecting a business from new competition; the statutory requirement for companies to have their accounts audited is a free lunch for 'auditors'; Legal Aid might be a good thing in and of itself but it is a free lunch for barristers; restricting the number of taxi permits, while giving them extra rights (using bus lanes, parking outside stations and preventing other drivers from picking up fares on the street) is a free lunch for taxi licence holders, and so on.

A free lunch for one group of insiders (from land-owners to taxi licence holders) is not just a transfer of wealth (legalised theft) or a zero-sum game (redistribution upwards), it is a huge drag on the economy.

So how should a government deal with 'rents'?

Simple - depending on circumstances, some combination of measures which get rid of rules which protect certain groups of insiders; dismantling barriers to entry; shutting the revolving door between politicans/civil servants and private sector businesses they have favoured while in government; price caps on sources of rental income; providing a low-cost alternative and taxing the rents themselves instead of taxing productive economic activity (and using the proceeds to spend on things which increase rental values, which is what most government spending does).

Simple examples are radio spectrum, most governments auction off the licences periodically which is a like a voluntary tax; and most governments either run the water and sewerage themselves or impose price caps on privatised water/sewage companies.

Land rents (and mortgages) are the largest chunk of rents and the largest state-sponsored transfer of wealth from younger generations to older generations, landowners and banks. They are, in £ terms, about one-third of people's after-tax disposable incomes or businesses' after-tax profits (and by implication, about one-third of the whole economy), so let's focus on those.

For most of the twentieth century the UK (like most western and civilised countries) had a combination of measures which prevented too much land rent ending up in private hands, thus benefitting 'everybody else' (the people who created or caused the rents to arise in the first place). These measures were:
- price caps. These took two forms, a) rent controls and tenant protection and b) house prices were controlled indirectly because building societies would only lend a low multiple of buyers' incomes. If a couple can only borrow twice their annual income, then the average house price will not be much more than twice an average couple's annual income (about £80,000 - £100,000 in today's money);
- there was no implicit guarantee that the goverment would bail out building societies which lent recklessly, which is a kind of subsidy to higher house prices;
- higher recurring taxes on housing (Domestic Rates) and higher tax rates on rental income than on employment income;
- offering a low-cost alternative, i.e. council housing, which has always produced a modest profit (in cash terms) for local councils. The fact that councils were not charging the full location rent was an equal and opposite benefit to their tenants.
- reducing barriers to entry. Getting planning was much simpler, so smaller developments were more viable, so there were lots of small building companies and more new construction than today (although not that much more, most of the extra construction was council housing). Getting planning permission nowadays is so expensive and onerous that only large developers can ever get anything off the ground. This has led to consolidation, so half a dozen large companies own all the land banks (enough for about ten years' output) and they can drip feed new developments onto the market to maintain their profit margins. As we saw in 2008 or so, if demand drops slightly, they simply lay off all their sub-contractors and put all their developments on hold until prices recover.

The landowners' lobby constantly points out that rent controls have the effect of reducing the quality and quantity of accommodation available to rent. This is largely true, but so what? The wider benefits vastly outweighed this - a rapid increase in owner-occupation levels (and the nigh eradication of the landlord class); plenty of social housing for those who couldn't qualify for a mortgage; a small and stable financial sector hence no financial crises; and a much greater equality of disposable income (after housing costs) between younger and older generations.

These general principles apply to all forms of rent and rent seeking.

Having decided the best way for a 'government' to raise revenue is to from the value of (land) rents and other state-granted privileges (to the extent that those privileges can't simply be scrapped), the question on what the 'government' should do and how it should spend money is obvious.

On the one hand, a government acts as a (mutually owned) service provider, executive branch of society or glorified landlord, so will do things and spend money on things if those things enhance rental values by more than the cost, thus generating a 'profit'; on the other hand, the government is duty bound to return those 'profits' as equally as possible to each and every one of its 'owners', being every citizen/voter/resident in the country. Remember - one way of returning those 'profits' is to reduce taxes on employment and output; people and businesses who add the most real value should be paying less, not more, into the general pot.

YPP is actually broadly happy with a lot of the spending side, our welfare and pensions system is largely universal (although pensioners, a quarter of whom had a 'free' university education now benefit from the pensions Triple Lock; while millenials face high tuition fees and are persecuted when claiming unemployment benefit); and everybody has the right to use the NHS or send their children to a state school 'for free'.

YPP is not so happy with all the spending which benefits insider in the public and private sectors, and especially unhappy with collecting taxes from workers and non-protected businesses merely in order to prop up rents and house prices. The most extreme example of this is Help to Buy, of course.

In a way, most forms of spending fall into various categories, good and bad.

For example, spending on state education. On the good side:
- is a universal benefit/entitlement, which levels the playing field and increases equality of opportunity;
- helps the economy by providing a better educated future workforce;
- it caps private school fees by being a low-cost state-provided alternative;
- even if you opt out and pay to send children to a private school, they will be far better off than if all the other children had never been to school;
- it enhances social cohesion if children go to school with other children of both genders and from all walks of life, rich and poor, good and bad alike.

On the bad side:
- the state sector is prone to producer capture, teachers will teach what they want to teach and to enforce the establishment view on their pupils;
- the education sector will always hold out for more spending and protect their privileges. They can go on strike for more money but will fine parents who take their chidren on holiday during term-time;
- there is rent seeking by the upper echelons. New graduate teachers are paid quite badly, the trick it to scramble up the ladder, get out of the classroom and get a much better paid job in the bureacratic heirarchy;
- if state education achieves its main aim and produces a more productive work-force, a large part of the growth in the economy merely goes into higher rents;
- there are plenty of good state schools. But these simply push up rental values and selling prices in their catchment areas, so as usual, the landowners are the big winners and this dismantles the 'universal benefit' aspect; only higher earners can afford to move to those areas and hence get their children into the best state schools.

++ Four hours later, I have to stop to have a break and eat something, to be continued once I've had time to think this through, clarify etc ++

General Election 2017 - call for candidates

If anybody is willing to stand as a YPP candidate in their constituency and has a few hours to spare to get all the signatures and form filling done, please get in touch.

YPP has £1,000 in the kitty which we will divide up between people willing to stand and use to pay towards their £500 deposits (which has to be paid in cash in advance).

We have previously gone to the bother and expense of getting leaflets approved, printed and taken to the Post Office. This costs another £1,500 - £2,000 per constituency and doesn't seem to make any difference.

Reader's Letter Of The Day

From yesterday's Evening Standard:

Chris Roberts dismisses Rohan Silva's piece on housing costs by saying that "there are plenty of cheaper places to live than London" which misses the point.

Of course there are plenty of towns where the cost of living is £10,000 a year lower but in those towns wages are also £10,000 a year less. Any apparent saving in rent would be matched by a fall in wages.

To put it another way, half of all UK graduates move to London, attracted by the higher wages and better job opportunities, but landlords have simply increased their rents to soak up those extra earnings. Most of the official growth in the London economy ends up in the pockets of landlords or those who sell up and move away.

Younger people like Rohan Silva are caught between a rock and a hard place, and lucky Baby Boomers who bought their homes for a song 20 or more years ago should be thanking their lucky stars, not sneering at people who will have it so much harder.

Mark Wadsworth, Young People's Party

I'd call that a pretty good result :-)

I stood for YPP in the local elections yesterday.

I stood in a much larger ward for the county council elections last year and got 21 votes, despite doing leaflets (0.5%); this time round I got 37 votes (2%) and that was without doing any campaigning or leafletting whatsoever.

All I did was stick up a yellow poster with the YPP logo in my front window (handily, we live on the high street so quite a few people must have seen it).

George Monbiot talks sense: Shock

Spotted by MBK in The Guardian:

So where do we look for the idea that can make hope more powerful than fear? Not to the Labour party. If Ed Miliband cannot bring himself even to oppose a bill which retrospectively denies compensation to cheated jobseekers, the most we can expect from him is a low-alcohol conservatism of the kind that doused all aspiration under Tony Blair.

Last week I ran a small online poll, asking people to nominate inspiring, transfiguring ideas. The two mentioned most often were land value taxation and a basic income. As it happens, both are championed by the Green party.(1) On this and other measures, its policies are by a long way more progressive than Labour's.

I discussed land value taxation in a recent column. A basic income (also known as a citizen's income) gives everyone, rich and poor, without means-testing or conditions, a guaranteed sum every week. It replaces some but not all benefits (there would, for instance, be extra payments for pensioners and people with disabilities). It banishes the fear and insecurity now stalking the poorer half of the population. Economic survival becomes a right, not a privilege.

A basic income removes the stigma of benefits while also breaking open what politicians call the welfare trap. Because taking work would not reduce your entitlement to social security, there would be no disincentive to find a job – all the money you earn is extra income. The poor are not forced by desperation into the arms of unscrupulous employers: people will work if conditions are good and pay fair, but will refuse to be treated like mules. It redresses the wild imbalance in bargaining power that the current system exacerbates. It could do more than any other measure to dislodge the emotional legacy of serfdom. It would be financed by progressive taxation – in fact it meshes well with land value tax.(2)

1) And YPP of course, although for slightly different reasons.

2) As I said in the comments:

Yup, LVT and CI is an intellectually coherent match.

The gimmick being that people in the middle pay neither tax nor receive benefits as the two sides net off to zero. So it's like feudalism on its head, instead of The One Per Cent collecting all the rent, interest and tax and people in the middle paying for it, the bottom half receive a small net payment from the people willing and able to occupy the best locations.

Self-awareness

From the Pirate Party UK Forum:

Calabamat: Has anyone heard of the Young People's Party? They're running a candidate in the Corby by-election.

Plooterman: No never heard of them. Interesting set of policies. They seemed to have picked a strange party name (yes I appreciate this comment is coming from a member of the Pirate Party)...