putting people at the heart of economics of heart the at people putting Ignoring George Ignoring transport public Rescuing rails: the Back on Why Britain's politicians don'twant to know Monopoly from learn we can Test: What Community Britain? bestfor be it Could Parliament: A Hung since 1894 since

1227vol 117 SPRING 2010 contents

cover story features ignoring george: As we approach the uk 12 Parliament: Better off 16 On the right track General election, David Triggs explores why hung? Britain’s public transport has come off the Britain’s politicians continue to disregard the rails, John Howell shows how the adoption of John Loveless argues that a hung parliament solutions found in the works of Henry George. lvt could get it moving again. may be Britain’s best chance of progress. regulars 14 Monopoly’s hidden 20 Portrait history We interview the people working at the front news 4-5 line to change opinions. This issue: book Robin Smith discovers how an earlier version publisher Anthony Werner. letter from the publisher 3 of the property trading game was aimed at HGF n e w s 6-7 exposing economic injustice. media watch 8-9 Edward J Dodson’s cooperative individualist view 13 letters 18 reviews 18-19 Lars Rindsig’s view from the right 19 columnists

Edward J Dodson is Director of the us-based School of Cooperative Individualism and author of Discovery of First Principles. Lars Rindsig is Executive Editor of L&L.

2 No 1227 Spring 2010 www.HenryGeorgeFoundation.org 259194. no. 1960, Act Charities the under England in registered acharity and 00956714, no. England, in registered guarantee, by limited company a is Limited Britain Great of Foundation George Henry The environment. ahealthy and society prosperous and ajust for principles promoting and exploring ideas, cutting-edge in deals Foundation The UK. the throughout members and London in offices with group education public and tank think justice social and economic independent an is Foundation George Henry The Land above. address the at us contact Foundation George Henry the of Land To receive Learoyd Michael Distribution Chester David support Editorial Smith Robin Loveless, John Lipetz, John Howell, John Tommas Graves, ContributorsContributors Foundation George Henry Publisher Publisher Gibb Peter Editor Editor Consultant Consultant Rindsig Lars Editor Editor Executive Executive Triggs John Editor Editor e [email protected] ph W1A 3GY London, 6408, Box PO 1227No Vol 117 2010 Spring Land remains. uniqueness that And economy. political of issues core the on comment and analysis reports, its with perspective aunique offered has It 100 over years. for Land environment. the and community the individual, the resources—between our and sector public the life, private between sustainability of bridge the key building to the is this that demonstrate to used—and be should wealth ISSN 0023-7574ISSN paper. recycled post-consumer 100% Revive on Ltd Printer by ALocal printed and Foundation Land publishers. by the endorsed necessarily not are advertised services and Goods publishers. the of those necessarily not are expressed Views viewees. inter or by contributors made comments or omissions or errors any for accepted be will responsibility No holders. copyright the of sion permis written prior without prohibited is tion reproduc However articles. of reproduction the for approaches welcomes which Foundation, George Henry the to belongs publications Land other and this in Copyright economics. +44 (0) 800 048 8537 048 (0) 800 +44 & & & & Liberty Liberty Liberty is produced by the Henry George George Henry by the produced is Liberty has chronicled world events events world chronicled has aims to explore how our common common our how explore to aims —putting people at the heart of of heart the at people —putting Bart Dunlea, W.R. Elliott, W.R. Elliott, Dunlea, Bart & Liberty or support the work work the support or & Liberty

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www.LandandLiberty.net poverty is not inevitable—except where economic justice is absent. is justice economic where not inevitable—except is poverty not. of rent does collection but the likewise, do of labour products the and oflabour taxation The impossible. trade genuine free makes and goods traded of relative value internationally the distorts this All own. interests—their for commercial create to banks private allow governments back money they national that demonstrated, other.any recentAs like events havewere they commodities if as traded unethically are currencies and indistinguishable virtually Todaycurrency. not international need an moneyare credit and money. local in did They exports and imports both traded and sales their theof proceeds with debts their Theypaid credit. needed they merchant. international the to shopkeeper local the from trade or exchange is of course, specialisation, this to Critical or another. of one form specialists of professional services the as well as worker poorest of our support the needs enterprise such Each clothing. and food example—quality producing—for more value, yet add skills abundant and less finer with people Other places. private and public to and people’s to lives value adds application how its and society, in care and of skills simplest for the need pressing a shows observation Simple relate. others all which to earnings of adatum sets earn to able are they what because important, trade. and for earnings implications their understand and money and of land management for the responsibilities their by governments tois a discharge failure answer wrong? the short In So where we are going themselves. producing them a living earn cannot they since toobliged buysell, what people poor countries in are peoplecountries rich in produce. time At same countries the rich in those what afford toforbut purchase cannot themselves than toobliged are produce rather forcountries people countries rich in poor People in prevails. dependency insecure An countries. poor and rich both in for many normal have become debt and pauperism poverty, have prosperity. contrary not On the led to universal no andone,the wesystems harms but operate benefitparties toboth countries. rich less in living by people for us produced are that fuel and goods manufactured clothing, food, cheap the world and the throughout adopted saw and devised forefathers our that arrangements economic politico- the between link We the us. ignore with planet the share that of people majority vast the to available made be cannot fiddle. to continue of us most and pundits commentators, leaders, political but our galore crises and election ageneral with We faced are though. for us doubts such fire ofad great the during Rome burned while fiddle the Nero played that story the doubt about some apparently is there As Henry George pointed out the coexistence of progress and and of progress coexistence out the pointed George Henry As trade— in engage to money not need did merchants Traditionally most the are society in workers poorest the terms economic In brings individuals free and willing between trade Genuine and unsustainable are lifestyles fiddling our We that know henrygeorgefoundation@ Henry George Foundation George Henry Executive Chairman Executive googlemail.com David Triggs David publisher from the from letter 64. No 64. 3 news

news in brief... New London considers LVT

Resigned Registry The Land Registry plans to axe a total of 2,300 staff by the end of 2011. The cause of the dramatic cuts is the current recession, which has caused fewer property transactions and thus a decrease in income from registration fees. The Registry will also sell its London head office. While much more radical cuts were feared, but were prevented by union lobbyism, the move does not bode well for the quality and extent of the shared knowledge of uk land holdings.

NZ rules out land tax New Zealand’s National Party Government appears to have The small us coastal city of New London in promoting the lvt idea. ruled out the implementation of a land value Connecticut is currently debating replacing “Land value taxation would shift the burden tax, despite recommendations from its own building taxes with a new Land Value Tax. onto property owners letting their land lay Tax Working Group that it should introduce The city of roughly 25,000 inhabitants, was fallow, urging them to build or sell to someone such a tax. designated a ‘distressed municipality’ by the who will.” In a statement in February Prime Minister state in 1990, meaning about half its budget It would also encourage the restoration and John Key told the New Zealand parliament: comes from state aid. upkeep of New London’s historic buildings, “A land tax is effectively a lump sum tax on Attempts to redevelop the city’s waterfront which are often left to crumble, in fear of rising people who own the land at the time the tax sparked an epic battle with landowners assessments, he said. is introduced, would only fall on people who over who owned the land, leaving large Yet nearly half the committee recently hold their wealth in one particular form, and areas empty after plans to develop them fell opposed the pilot project, arguing that the top would create cashflow problems for many through. In the downtown area, nearly one in properties whose bills would increase from the landowners, especially those with lower three buildings is vacant. switch—mostly car dealerships and malls—are incomes.” “As it is, owners of thriving, productive already developed to their full potential. A major shake up of the New Zealand tax buildings pay more in property taxes than The city council has asked for more time system is still expected in the next budget, due absentee landlords with abandoned buildings,” and may consider starting the pilot in a on May 20th. says Art Costa, a member of the committee portion of the city’s downtown area. City farms to use abandoned land High Speed land boost

Plans for a high-speed rail link to the North from London, High Speed 2, are set to not only minimise travel times but also boost the prop- erty market. According to The Times, research by Savills shows that a one-minute reduction to a commuter rail journey adds £1,000 to the average value of a home. Since plans of High Speed 1, which links the Capital with the Channel Tunnel, were announced (see L&L 1224) the property market in the South East has picked up. Sarah City farmers from across Europe have been to allow them access to their derelict land. McGlinchey, of estate agents Bairstow Eves in visiting Bristol to find out more about a new The proposals have become part of the Ashford, Kent, tells The Times, “Interest from project in the city that will make unused land Government’s Food 2030 strategy and if buyers across Kent, as well as those in London, available for agriculture. The government successful the community land bank could be has been increasing steadily. Although the backed community land bank project was rolled out across the uk. market is a bit unpredictable right now, once started after there was a sharp rise in demand fcfcg chief executive Jeremy Iles said: things settle down I think that prices will start for land to be cultivated but not enough “The idea could help change attitudes to land to creep up—and probably eventually look allotments to go around. The Federation of City access, improve co-operation and respect at a more like somewhere like Sevenoaks.” Farms and Community Gardens (fcfcg), a local level and allow people to get to grips with High Speed 2 is expected to serve the Bristol-based charity, is attempting to solve the growing their own food. Midlands and the North West. Building work problem by appealing to landowners such as “We are working with the city council to on the new line is expected to start in 2017, Network Rail, the nhs and Bristol city council help develop the idea.” with the first trains running in 2026.

4 No 1227 Spring 2010 news

The UK Budget 2010 news in brief...

Sign on the dotted line A new petition to the Prime Minister calling for a tax on land values—TaxLess4More—was launched on the number10.gov.uk website shortly before the General Election was called. The petition is sponsored by the cross-party Coalition for Economic Justice. It was formally lodged by John Lipetz, Chair of the Coalition, of which the hgf is a founding member. While the petition is open only to those on the uk electoral roll (and signing is disabled for the duration of the election) it is also supported by a Facebook group where people from all over the world can back the idea—search for TaxLess4More on facebook.com.

RoofiesWokingham City Council is considering introducing a ‘roof levy’ on newly constructed houses. The measure, which is already in place in Milton Keynes (see L&L 1213), levies a flat fee calculated by the cost of infrastructure improvements divided by On the 24th March Alistair Darling, the uk yield £242bn, Corporation tax £42bn, vat the number of acres of land allocated to any Chancellor of the Exchequer, presented the £78bn, Excise duties £46bn, Council tax particular developer. In Wokingham the fee has Budget for 2010. L&L breaks down the figures. £26bn, Business rates £25bn and ‘Other’ taxes been calculated to equate to around 15 per cent Expenditure: According to hm Treasury (including capital taxes, stamp duty and of the planning gain. The revenue will help to figures, total uk government expenditure vehicle excise duties) £81bn.* pay for transport improvements and education for 2010/11 will be £704bn. Of this £229bn These figures show (a) that expenditure facilities and local health centres. will be spent on welfare and social services, on welfare far exceeds any other category - £122bn on health, £89bn on education, £43bn including health and education combined and Hong Kong ups land tax The 2010 on debt interest, £40bn on defence, £36bn on (b) that almost all the current taxes reduce the Hong Kong budget, which was announced in public order and safety, £27bn on housing reward that the people who provide labour February, increases duties on land transactions and environment, £22bn on transport, £20bn and capital are able to receive when they and the government also increases the supply on industry agriculture and employment produce and exchange. Some might think the of land in a bid to deflate a potential property and £74bn on ‘other’ (includes culture, public link between these two facts was blindingly bubble, the territory’s financial secretary John pensions, recreation and international aid). * obvious: (a) shows the extent of uk poverty Tsang has announced. Some land, which has Revenue:: Tax receipts for the year while (b) shows how the tax system prevents so traditionally been released for auction only are expected to be around £541bn leaving a many people and firms from thriving. after a developer indicates its willingness to deficit against expenditure of £163bn. Income pay a high reserve price, will, in the future, be tax and National Insurance are expected to (* Figures may not sum due to rounding) available on market terms.

expenditure £704 billion

tax receipts £541 billion

Direct welfare expenditure Production taxes

Indirect welfare expenditure Property taxes

All other expenditure

No 1227 Spring 2010 5 HGF news

Library group was his experiment of increasing the wage Lindvall will discuss what political science has handed out on passing ‘Go’ which led to a to say about the effects of political institutions report much extended game, before the property on the likelihood that democratic governments magnates squeezed out the other players. will be able to adopt significant policy changes, Report on the spring term 2010 Then we had Richard Hithersay on the relative to the status quo. Rosemary Attack subject “The Family and the Economy” in is likely to provide economic stimulation The Friday meetings were well attended with which he demonstrated how current fiscal of a rather different kind as she shares with some old members turning up, plus some very arrangements have a negative effect on family us a ‘Voice of Freedom’ based upon the life welcome newcomers with questions and points life. He encouraged us to remember our most and work of ‘pastoral poet’ and observer of of view. basic experiences of family, and led to the idea nineteenth century land enclosures, John On 28th January John Stewart taxed us with that a tax shift towards a more just system Clare. The title of Joseph Milne’s talk is the question “What is the Answer”, and some might bring about more happy families. ‘Henry George: The Ascent to the Good of the resulting conversation has appeared in “Was it really the Banks’ fault?” was the through Justice’ and if he is as challenging his latest book Prime Minister, now available subject chosen by Tommas Graves on 19th and stimulating as his recent talks have been, from Shepheard-Walwyn. March. With the help of recently available promises to be a treat. Peter Watson will We then had a fascinating presentation by statistics, he showed that the underlying explore George Cooper’s book The Origin of Mike Watts on the “National Trust—Not Just a problem was the distortion arising from the Financial Crises: Central banks, credit bubbles Pretty Place”, with a beautiful set of slides. The distribution of the extra gdp, caused by the and the efficient market fallacy. With his range of the work and how the Trust intends to “knowledge revolution”. Over the period 1960 success in establishing and running businesses develop were covered, and the enormous land to 2005, gdp per head had doubled, while in one the most competitive of markets holdings were described. The discussion ended the share to wages had increased by only (Hollywood film making) together with his on the note that we were fortunate indeed 15%, inviting the question “what happened to long time interest in economic matters Peter to be able to enjoy its work, albeit that the the rest?” At worst, the banks could only be has a wealth of useful experience to draw upon. estates had been formed without regard for the accused of jumping on the bandwagon. Jonathan Nicol will share his enthusiasm principles we hold dear. We are much indebted to Michael Learoyd and respect for the Anglo Saxons when he The next week we were delighted to for his unstinting work in setting up meetings explores what we might learn from them about welcome back Joseph Milne. His subject was and assisting each speaker. economic justice. “Natural Law and Ecology” which he admitted Tommas Graves The hgf Library Group meets Friday was a difficult task, but he set about it with afternoons 2.30–4.00 pm with an optional zeal. Referring back to Plato and Aquinas, he The meetings to come lunch at 1.00 pm. All Welcome. explained that both Natural and Law had a David Triggs meaning to the ancients which we have lost Another full programme has been arranged sight of, to the for the summer with an detriment of our interesting and diverse understanding, series of talks from both Education Report and that ecology new speakers and old would have been friends. We begin with At the first session, Peter Bowman presented encompassed by “all a celebration of John Chapter XVI of Social Problems on the subject things move from Stewart’s new political of “Public Debts and Indirect Taxation”, the Good to the novel ‘Prime Minister’ thus demonstrating that the current system Good”. and in addition to of public borrowing is dependent on the On February 26th, signing copies of his assumption that one generation may bequeath Michael Hawes took book John is charged to another its obligation to pay for its us through “The with reviewing what borrowings. Yet, this very assumption is the Meaning of Money he has learned as basis of the present-day system of land titles and how the Bank of his characters have and public debts. England continues struggled to address John Barnes followed with Chapter IX of to get it so wrong”, the economic crises Social Problems entitled “First Principles” a fraught subject of the day on both highlighting the need to remove the causes indeed, especially sides of the Atlantic which prevent the just distribution of wealth. as he brought in ocean. David Triggs’s That unjust distribution exists is based on the Quantitative Easing! postponed talk on denial of the principle, which George asserted It exposed the confusions that currently ‘The Wisdom of Henry George’ has been as “Nature gives wealth to labour and to surround ‘expert opinion’ on this subject and carried over from March. We look forward nothing but labour”. underlined the need for reformers to clarify to hearing from John Story about the facts Richard Hithersay presented the ‘Reduction their thinking. of life that face a professional who is charged to Inequity’ (from Property in Land), Henry Robin Smith took as his subject with managing financial assets for a living. George’s reply to the Duke of Argyll. George “Monopoly—the Game and Reality” on We shall be pleased to welcome Dr. Johannes had sent a copy of’ Progress and Poverty to the 5th March. He showed how its origin was Lindvall from the Department of Politics and Duke as a mark of esteem for the Duke’s own in Georgist thought, but later itself became International Relations, Oxford University work The Reign of Law. In return, the Duke monopolised, and how commercial interests for what is likely to be a stimulating talk and viciously attacked George’s ideas as a form corrupted its message. A fascinating insight discussion. Entitled ‘Reform Capacity’ Dr of villainy, stimulating a reply from George

6 No 1227 Spring 2010 HGF news

in which he set out his arguments and added economy provides the key to addressing the L&L Archives that he intended no impertinence but high economic crisis that threatens to condemn compliments for the Duke’s own work. the world to poverty and strife for generations Michael Learoyd presented various excerpts to come. Drawing upon both the key ideas The long overdue project to bind archive copies from L&L and other publications down the promoted by Henry George and fresh of the past twenty years’ editions of L&L has years. These had kept alive George’s idea that thinking, the course will seek to integrate just been completed. Tommas Graves took on securing equal natural rights for all men is frequently separated strands into a coherent the work a short time ago and thanks to his the true purpose of government, and Michael whole. It will consider the pivotal role that perseverance we now have a complete set of exhorted the Group to pursue and disseminate trade occupies in the bound editions from the study as much as possible. economy and how it 1894 to 2007. We are Tommas Graves illustrated what must be based on justice, also having rebound contemporary men had thought of Henry if everybody is to enjoy some other treasures, George by reading from addresses given at both producing and including a collection his funeral ceremony, which were received by using wealth in all its of essays and leaflets a huge audience with enthusiastic applause. various forms. It will about the Corn The tributes were a solemn statement of the show how the naturally Law reforms with a truth that the creation is full of bounty under benign effects of trade hand-written index, the stewardship of the intelligence of men, can be rendered malign, and a large volume but intended for distribution so that no one when governments fail of a collection of The should be in want. The effect was to leave one to exercise their proper Commonwealth, an in no doubt that the message of Henry George responsibilities for Australian journal of reinvigorates intelligence and provides a sure controlling the money the 1870s, inscribed in remedy to save mankind from the familiar supply, public revenue, the front “Lent to hgf miseries which prevail. expenditure and the 1944, J H Behrens”. Robin Smith presented chapter 5 of An responsible use of natural resources. Starting Anthology of Henry George’s Thought entitled on 14th May, the 10 session course will be held “Georgism versus Socialism.” The subject was at 11 Mandeville Place, from 6.40 pm to 8.10 New contact a contrast of Marx’s thinking about perfecting pm on Friday evenings. The course will be the world with George’s. The former was presented by David Triggs. details arguing for the proletarian state and the latter for the single tax. The discussion brought into On 1st April 2010 the main postal address for focus the sphere of government control versus Fresh start for The Foundation changed to: maximum freedom for the citizen. It would appear that under Marxism, much control is HGF website The Henry George Foundation needed whereas under Georgism government po Box 6408 is limited to merely administrative functions. Peter Graves from Channel Computing has London David Triggs was welcomed back for the been appointed as the new web manager for the w1a 3gy penultimate session, in which he took a fresh hgf website www.henrygeorgefoundation. United Kingdom approach to examining George’s thinking org. Peter was responsible for the initial set on the subject of money. He elaborated upon up of the website but will now also run the The new telephone number is: 0800 048 8537 George’s concerns that only government site on a regular basis. The website is currently The new address and telephone service (which should be allowed to issue money, whilst being restyled and prepared for a relaunch is free to uk callers) will save on Foundation commercial banks should be limited to the that should be ready by this summer. In the expenditure and enable mail to be delivered to lending of money and its storage and the future Peter hopes to include much more 11 Mandeville Place where the Foundation, by creating and exchange of credits. fresh content in the site and hgf members are courtesy of the School of Economic Science, In the final session of the term, Michael invited to submit any news, events, articles or houses its Library, holds most of its meetings Learoyd led a wide-ranging and lively other content they feel could be of interest to and courses, and carries out administrative discussion about money, exchange, value [email protected] functions—including the distribution and and related economic activity. A strong despatch of L&L. appreciation of George’s approach was Our Piccadilly address and old telephone evident and the need to find best ways of IU Conference number will remain operational for a understanding and expressing the scientific transitional period until the end of June 2010. precision of his thinking. The programme for the iu Conference (April Bart Dunlea 26th to 30th 2010) promises to provide an excellent opportunity to explore and promote the application of just economic principles New HGF Course in among delegates from around the world. The Foundation has been happy to cooperate with political economy the organisers and will provide speakers and chairmen for a number of sessions. This new course will show how an updated understanding of the principles of political

No 1227 Spring 2010 7 media watch

Legrain’s plea for LVT

As uk election campaigning got underway, the Tories, the business community and much of the press reacted with horror to Labour’s proposals to raise National Insurance. For their part the Labour government pointed out that the Conservatives would other benefits too. Go to: www.guardian.co.uk/ have to raise vat to pay for their “Taxing land values could also limit commentisfree/2010/mar/30/national- proposed reversal of the ni rise. What few property bubbles, which divert funds from insurance-rise-deficit commentators seemed prepared to point out productive investment in booms and then was the logical inference of both arguments—if cause terrible busts—without discouraging www.philippelegrain.com/tax-land-not- increases in ni and vat are such a bad idea development (unlike property taxes), mobility labour then obviously the taxes themselves are too. (unlike stamp duty) or investment (unlike Philippe Legrain, visiting fellow at the interest rate rises),” he said, before concluding: London School of Economics’ European “Replenishing Britain’s public finances will Institute and ex-chief economist at the pro- involve painful choices. But it is also a chance European pressure group, Britain in Europe, to make tax fairer and less harmful to growth. was one of the few to notice. Writing in Wise politicians should seize it.” Prospect magazine, The Financial Times and In the Prospect article, Legrain, who is The Guardian, he suggested other ways of better known in the media as an advocate of raising the extra revenue needed to plug the wider migration, outlines why lvt would be a terrifying £167bn hole in Britain’s budget. much fairer form of taxation. His suggestions included increasing taxes on “Whatever you think of the merits of carbon emissions and introducing reforms to capitalism, there is nothing intrinsically encourage people to retire later. But the bulk desirable about the initial distribution of of his argument was dedicated to a plea to all property rights in an economy. In most parties to introduce a tax on land values. countries history means the distribution of “Whereas taxing work is wasteful—less land is highly unequal,” he says. “Land in is produced and no tax is raised on the lost Britain is more unequally distributed than in Tell us about it! output—land is in fixed supply so a tax on Brazil: there 1% of the population owns 49% of it is less harmful (and impossible to avoid),” the land; here 0.3% per cent owns 69%. Seen, heard or read something he wrote in the ft article. “Shifting the tax “Britain’s biggest landowner, the Duke of in the general media that you feel burden from labour to land would therefore Buccleuch and Queensberry, owns 277,000 media watch should know about? boost economic growth, according to an oecd acres because he descends from a man who Let us know by emailing editor@ study.” seized vast swathes of Scotland. Far from being landandliberty.net or write to Media And Legrain, whose new book, Aftershock: taxed, he is rewarded with huge handouts from Watch, Land and Liberty, PO Box Reshaping the World Economy After the Crisis, the Common Agricultural Policy.” 6408, London, W1A 3GY, UK is out on May 6, was quick to point out the

8 No 1227 Spring 2010 media watch

Generation ‘Easy peasy’ Debt bombs Homeless budget in Greece

If anyone was looking for evidence of just how As the orchestrator of a so-called “phoney Those finding Greece’s current debt crisis much speculation in property has destroyed budget” released just before a general election, scary will have felt the need to hide behind an entire generation’s chances of getting nobody expected uk Chancellor Alistair the sofa while reading Professor Michael their hands on any, Tim Walker’s article in Darling to come out with anything truly Hudson’s article in the FT about the other the Independent “No place like home: The revolutionary. But there were a few media ‘debt bombs’ waiting to go off in Iceland Generation That Can’t Afford to Buy”, made analysts who were able to point out what he and the old communist countries in Eastern illuminating reading. Despite an apparent could have done, had he had been blessed with Europe. “Although most of these countries crash in house prices, the average age of a first a little more courage. are not in the eurozone, their debts are largely time buyer in the uk is now a very elderly 38 Larry Elliott, economics editor of The denominated in euros,” he says. “Some 87 per and the average deposit on a property is 64 Guardian, argued that enormous damage cent of Latvia’s debts are in euros or other per cent of the average income. This, claimed has been done to the British economy by foreign currencies, and are owed mainly to the article, was compared to just 16 per cent the destructive bubbles in the uk property Swedish banks, while Hungary and Romania 10 years ago. At the age of 30 and with no market and added: “The reason Britain has owe euro-debts mainly to Austrian banks” prospect of being able to afford a home, Tim destabilising bubbles in property is simple: Why are these nations in such dire straits? Walker described just how much easier it this is a small island with a large and growing Hudson, a professor of economics at the was for his parent’s generation when they population, tough planning regulations University of Missouri, suggests that: “There is were buying their first home. He said that limiting new housing developments and a tax growing recognition that the post-communist their mortgage: “Represented around double system that encourages owner-occupation.” economies were structured from the start to my baby boomer parents’ combined annual But Elliott admitted that reforming that tax benefit foreign interests, not local economies. income in 1980. If I wanted to buy the same system would be fraught with difficulties. For example, Latvian labour is taxed at house today, it would cost me 10 times mine. “Nobody has yet come up with a better more than 50 per cent (labour, employer, Even if I had a pregnant wife with comparable solution than that of David Lloyd George in his and social tax)—so high as to make it wages, it would still be well out of our reach. ‘people’s budget’ of 1909: a land valuation tax,” noncompetitive, while property taxes are less The same would be true of a studio flat in he said. than 1 per cent, providing an incentive towards north London, where I currently rent—or one “Darling needs to get the economy moving speculation. This skewed tax philosophy made in south London, for that matter. And I have a again; he needs to build-up its long-term the “Baltic tigers” and central Europe prime decent job, unlike a lot of other young people productive capacity; he needs to invest in a loan markets for Swedish and Austrian banks, in this economic climate.” long-term future, and he needs to tackle the even as domestic labour struggled to find well- Sadly for Tim, he wasn’t able to identify how two roadblocks to reform: the City and the paying work.” the damaging inflation in the property market housing market. All he has to contend with The solution he finally identifies is a familiar had been caused by a flawed British tax system are a record peacetime deficit, powerful vested one to regular readers of this publication: “In that promoted reckless property speculation. interests and deep-rooted cultural inertia. Easy addition to currency realignments to deal peasy.” with unaffordable debt, the solution for these Go to: www.independent.co.uk/life-style/ countries is a major shift of taxes from labour house-and-home/property/no-place-like- Go to: to land,” he says. “There is no just alternative. home-the-generation-who-cant-afford- www.guardian.co.uk/business/2010/ Otherwise, the age-old conflict between to-buy-1921781.html mar/22/budget-2010-rebalancing- creditors and debtors threatens to split Europe economy into opposing camps, with Iceland the dress rehearsal.”

No 1227 Spring 2010 9 cover story

Ignoring George Henry George’s ideas are fair, timely and reasoned. So why, asks David Triggs, do British politicians looking for votes continue to disregard them? it was Leo Tolstoy who said: “People do not the products of labour and capital (including land is not and cannot. argue with the teachings of Henry George; they trade), secondly in the collection as public On the right any attempt to collect public simply do not know it. The teaching of George revenue of all the value that the community revenue based on community created land is irresistibly convincing in its simplicity and creates by virtue of its existence and the values is frequently seen as hide-bound clearness. He who becomes acquainted with it protections and services it provides; and lastly socialism—they fail to see the difference cannot but agree.” in the handing back to government of the issue between land value and the value of buildings. Those of us who have seen the justice, and control of the nation’s money. On the left, failure to redistribute wealth by effectiveness and efficiency of Henry George’s You might expect the suggestion of such taking from the rich and giving to the poor, ideas are unlikely to differ from that opinion radical proposals to be met with astonishment, for example, by reducing direct or indirect and yet, today, 100 years after Tolstoy’s death, objections and debate. Instead they are usually taxes on producers or production, is frequently and 130 years after Progress and Poverty, met with silence or ignored. seen as giving way to wicked capitalists. How mainstream political parties continue to either Perhaps this is simply because most political the rich become rich or why the poor remain reject or, more frequently, ignore these ideas. commentators have become so transfixed on poor rarely features in such considerations and So was Tolstoy wrong? Look at the coverage the polarised left vs right nature of politics that emphasis is placed on alleviating the effects of of the current General Election in the uk and they simply can not make sense of where the poverty rather than addressing its cause. Land you’ll find that at least part of what he said ideas of George would fit in. value tax may seem a good idea to many on still rings very true. People really don’t For more than a century, many the left but often in addition to, rather than in argue with the teachings of Henry economic issues have been replacement of existing taxes. George; sadly they barely discuss depicted as a conflict between The left-right obstacle to understanding them at all. the interests of labour and the and adopting George’s ideas is increased by As politicians of all the major interests of capital. In this a general confusion in all quarters over the parties bicker about the country in recent years real nature of money and in particular when seemingly ever narrowing and in particular money is regarded as capital. For George the gap between what is left since the distinction was clear—capital is wealth used of their ideologies, advent to facilitate the production of more wealth, George’s ideas, once of New money is not wealth and thus cannot be lauded by the likes Labour, capital. All wealth is tangible and consists of of Churchill and whilst the material (land) modified by labour. Money Einstein, are policy is not tangible (though it may take tangible ignored. gap ‘forms’), it is subtle. It is a medium of exchange This between and its value does not arise from production publication’s the two (unlike credit) but from the obligation people Media Watch main parties are under to use it. Its value depends upon the section aims to has narrowed, the difficulty of getting it—its scarcity—and thus highlight the few dilemma has not the confidence that people have in those that occasions when such ideas substantially changed. control its supply. are brought out into the Balancing returns These misunderstandings are of course not open in the wider media. to the suppliers of generally acknowledged, possibly because the What’s interesting is that labour and the status of champions of both the left and right when this does happen, just suppliers of capital and those in between depends upon the well as Tolstoy predicted, nobody is still perceived as rehearsed arguments that each has advanced argues against them. When an the central issue. with conviction for generations. Despite the expert on the radio or television This underlying obvious failures of both doctrines to produce mentions the benefits of a land belief has poverty free societies, devotees of each value tax he or she is hardly ever obscured serious continue to declare their faith and insist that quizzed further and rarely asked to consideration neither has yet been fully implemented. explain more, let alone argued with. of George’s More pragmatic followers however have Usually the topic is changed and the most important begun to wonder if something important is conversation moves on. insight—the critical missing from their theories. Some are even This seems puzzling, especially when you importance of land. bold enough to declare that ‘the emperor has remember that the three main consequences Thinkers and activists of both the left and no clothes’. of George’s ideas would certainly be radical right have come to consider land as merely Those of us who believe, like Tolstoy did, enough to prompt further comment. They another asset or particular form of capital, that the ideas of Henry George are “irresistibly would result firstly in the cessation or reduction failing to acknowledge a fundamental reality— convincing” would love the opportunity for of all taxes levied on labour and capital and capital is man-made and can be reproduced, them to be debated and argued against because

10 No 1227 Spring 2010 cover story

we are emotion. people think and feel (it does not have to be confident Often, the emotions rational). that the that are appealed to, Henry George once said “I care not how reasoned relate to the perceived people vote—it is how people think that really arguments self interest of voters. matters.” But he also said that if you really wish in their favour They play on their fears, to change people’s minds you have to touch make so much aspirations and prejudices. their hearts and appeal to their innate sense of sense. The media are certainly fair play and justice. Here it seems, lies the real Such radical quick to show the effect challenge and opportunity today. L&L change is sure that each suggested to raise concerns economic policy David Triggs is Executive Chairman of the among the electorate. will have on the Henry George Foundation. It is likely to include interests of different concerns about categories of people people’s security and voters. of tenure in their They highlight homes and places the ‘winners’ and of employment and ‘losers’ in connection the problems of the to this or that tax or asset rich and income poor this or that benefit or households including the public service. Pressure ‘Devon pensioner’. Others might groups likewise comment ask: “Why bother to go to so much trouble to and persuade according to their particular right this particular wrong when there are so interest. Under such pressure it must be many other wrongs to put right first?” “Would difficult for any politician hoping to be such changes prevent the accumulation of large democratically elected to place justice private fortunes and prevent the patronage before expediency. And yet a love of of the arts?” “Would they lead to ever greater justice might be expected to be the concentrations of private fortunes extending emotion of primary concern to those further the divide between the rich and the charged with the government of poor in society?” “Would they lead to too much the nation. control in the hands of government? Would That justice may yet they lead to a lack of diversity in society, a dull arrive. History is replete with mediocrity with no heroes or villains?” examples of knowledge being These are all reasonable questions and rejected by those in authority George gives us the tools to be able to answer and the masses for years before them all with rational arguments. But reason being seen to be true and being may not be enough. made available for the benefit of Last year I approached a number of MPs mankind. Galileo and Wilberforce on both sides of the political divide to attempt come to mind along with John to discuss the ideas proposed by the Henry Snow (cholera being a waterborne George Foundation. The objections I was disease—not miasmic) and the given were hardly reasoned. One told me hazards of smoking, sunbathing and that the idea was interesting but he’d have environmental pollution. Often it no chance of getting it past his constituents seems the ignorance is held on to in 100 years but didn’t explain why. Another for years and then quite suddenly said he would be too wary of the unintended it is as if there is a change in mind unforeseen consequences of such a change. As and a step is taken. Like whipping the consequences he was talking about were cream—for some time nothing unforeseen by both of us it was difficult to seems to be happening and then the argue against them. change suddenly occurs. Reason, it seems, plays little part in modern I am inclined to think that politics and modern elections. Instead the the real problem for those wishing appeal that politicians and their publicists to promote the ideas of George lies in make to voters frequently has more to do with the prevailing culture that follows from how

No 1227 Spring 2010 11 opinion

Parliament: Better off hung? Some opinion polls have indicated that the coming election may result in a so called hung parliament, where neither of the main political parties have overall control. Here, John Loveless, argues that could be the best result for Britain is the coming election one of those rare like Engels’s The Condition of the Working emerge as a new political block to be reckoned occasions, with a first-past-the-post electoral Classes in Britain were still moving the hearts with and we have a better chance of true system, when we get a hung parliament? Many of many to advocate strenuous action to tripartite discussion instead of the dreadful of the recent polls are pointing that way. What remedy the pain of the blighted lives of the stalemate of the trench warfare between are the implications for us progressives who Britons depicted therein. But the House of capitalists and socialists, which has been the propose a third way that is neither socialist Lords is still unreformed 100 years after Lloyd stuff of politics for as long as most of us can nor capitalist—but Georgist? Could a hung George attacked it, like Jack did the Beanstalk remember. We must put flesh on the bones parliament turn out to be a good thing or will and almost bearded the giant in his castle. of the third way. Georgists have failed in the it again end by being discredited after a hiatus There is no certainty of success yet, but there past because they have not laid out a complete of a few months, with politicians unwilling or is a moment in time when progressives might agenda of policies for the community. L&L unable to work together in a show of national just lift the veil of secrecy and shine the light of unity to restore our bankrupted public truth into the minds of the mostly apathetic or Dr John Loveless is a Visiting Fellow at the finances? I think the crisis and the emergence deeply dyed red and blue majority of voters. Department of Civil Engineering at Bristol of a third party, which might be able to eclipse We must work intelligently to promote the University. one of the two main parties –not this time but third way. Let the greens and the true liberals next- gives us real cause for optimism. The last time the Liberals were as strong as they are today, it can be argued, was in 1909 when the magnificent Lloyd George and the young Winston went barnstorming through Britain, demanding the end of the oppression of the working classes by the rentiers and ushering in the famous 1909 People’s Budget, the titanic contest between the robber barons of the House of Lords and the disenfranchised dirt poor masses. Perhaps again we will soon see a similar meaningful assault on the still strong bastions of privilege by the long suffering wage slaves of Britain and then the rest of the capitalist world. Yet the disastrous ignorance of the great majority of wage slaves as to the true nature of their economic plight will, in all probability, enable the rentiers to continue to milk their bovine herds awhile longer. However, consider this: the advent of the internet and Wikipedia; the shameful behaviour of our political leaders—which must lead to a massive clean out of the stables; the parlous state of the public finances; the near collapse of the Western banks and the way the cost of it has been imposed on ordinary honest citizens, small shareholders and pensioners. If the voters don’t wake up to all this now, when will they ever wake up? Perhaps, our poor huddled middle classes might just lift their eyes from their treadmills this time, long enough for the light of enlightenment to dawn in their minds and enable them to see that there is a third way and that it is better. But it will never be easy. Compare the bleaker facts of the present situation. In 1909 “Progress and Poverty” was still being bought, read, discussed and understood by thousands in Britain. Books

12 No 1227 Spring 2010 edward j dodson’s cooperative individualist view

The terms ‘liberal’ and ‘conservative’ are widely used in our political discourse. We apply them without much conscious thought. Yet, many of us who might willingly describe ourselves with one of these two labels are ourselves unsure of what we have in common with others who do likewise. In a very general way, being liberal is thought to suggest approval of government intervention to promote an equality of A hung parliament is one in which no political treatment for all individuals under law. A liberal is also thought party has an outright majority of seats. The most to support the social objective of greater equality of opportunity recent elected hung parliament in the United in relation to personal wealth and income. A conservative, Kingdom was that which followed the February on the other hand, is thought to favour a far more narrow 1974 general election, which lasted until the interpretation of government’s responsibilities in the protection October election that year. Prior to that the last had of civil liberties or pursuit of equality objectives. In point of fact, been following the election of 1929. these seemingly clear distinctions tell us very little. Except for those individuals whose writing, statements Source: Wikipedia or actions puts them clearly outside the mainstream, there is considerable cross-over by so-called liberals and conservatives on many policy issues. Often, an individual’s ideological rhetoric conflicts markedly with the policy initiatives pursued when holding political office. There is a remarkably homogeneous value system holding a citizenry together, despite a nation’s tremendous diversity in ethnic, religious, and racial makeup. Despite a strong bias in favour of the propertied and a concentration of local and national power in the hands of a select number of families, native-born citizens tend to hold to the romantic notion that the playing field is, if not perfectly level, appropriately level. Not until the late nineteenth century did institutions come under direct attack by reformers and agitators. In the twentieth century an enlarged coalition that included enlightened industrialists and public officials, forged what has been called Liberalism in the United States and Social-Democracy or Democratic-Socialism elsewhere. The public in the United States was unwilling to consider nationalisation of land or industry as proposed by European proponents of Social-Democracy or Democratic-Socialism. Reformers clamoured for child labour laws, for government support of education, and for a whole range of programs thought unnecessary or intrusive by earlier generations and by contemporary Conservatives. Widespread unemployment in the 1930s opened the door to even more direct government intervention in the private affairs of individuals and businesses. The Second World War, the post-war anti-communist crusade, the civil rights movement, the rise of feminism and environmentalism, all contributed to the great enlargement of government enterprise and to the politics of Liberalism that has dominated the last half century. Liberalism functions on the basis of compromise and a blend of policy choices, which I suggest present a left-right paradigm rather different from what is generally embraced. Under liberalism, full equality of opportunity cannot be realised. The securing of liberty is, in fact, prevented under liberalism by the degree to which privilege (ie., sanctioned inequality) dominates sociopolitical arrangements. This venture into political philosophy asks the reader to think very differently about the characteristics of systems conventionally placed at the left or right. In the next issue of L&L, I will explain why I believe that only under cooperative individualism is the just society realised.

No 1227 Spring 2010 13 features

Monopoly’s Hidden History

It’s notorious for causing family squabbles, but, as Robin Smith discovered, an earlier version of the property trading game was dedicated to righting economic wrongs i’m sure we all understand the basic rules and of George’s ideas on the single tax and came a later 1924 modification by the same inventor the objective of the popular Monopoly game. up with the game explicitly to show how called Landlords and Prosperity. This version Buy as much land as you can before anyone these ideas would play out in real life. The differed in that it used tandem rules. Landlords else, develop it as far as possible with buildings, game was invented as an economic model. It rules, where rent is collected privately were yield the maximum rent to bankrupt all other was originally called Landlords to show the played followed by Prosperity rules where rent players and be the last player standing. effects of collecting economic rent for private is collected publicly, changing back and forth The original game was invented by a purposes. My colleagues and I at the Systemic depending on the game’s circumstances. After Quaker woman known as Elizabeth Magee Fiscal Reform Group made up our own game playing we were not too surprised but certainly back in 1904. Magee was an ardent from pieces of card and paper and played it interested in the outcome. It demonstrated an supporter one cold weekend at a house in Cambridge to economic model the lse would surely love to see what happened. Actually the game lay claim to. Landlords rules deliver a huge we played was wealth gap, economic collapse and makes for an exciting game. Prosperity rules are quite boring.

14 No 1227 Spring 2010 features

Everything just works out for all. The economy as in real life. This is mainly because in the The best return in the game comes from a is sustainable on the whole, everyone is game there is no real way to earn wages. And combination of the highest priced property, secure. Soon the players were demanding a rent is there from the start as a monopoly most frequently landed on property, and the switch back to Landlords rules or the pub. rent not an economic rent. But there are still most cost effective property to develop. This Later that week we went to a Cambridge some strong parallels. Wages come about from seems to be similarly related to the above conference on the crunch panelled by many moving around the board, collecting them monopoly rent situation in the game. In fact, long time economics professors, whose skill as you pass Go. Rent comes from monopoly the properties to go for first are the orange was in contemporary economic modelling. Dr ownership of ‘property’, rather than as in group on the board, not the dark blue as is Wrigley stood up at question time and asked real life by increases in population or better commonly thought. But where you land is “We have an economic model here you may be technology. There is also no real wealth in the really down to luck and only a interested in. It is simple. It demonstrates why game, even if you think about the houses built, little skill. If you don’t know we have recessions. Anyone can understand though collecting rent does allow one to the fixed strategy you are it. It was of huge popularity and political develop a property. Classical factors going to struggle. You controversy 100 years ago. Have you heard of production are highly could argue that real life of it, have you heard of Henry George?” The confused by the game. can be much like this. response was mockery. A shocking initial There is also a Some time later I decided to look more observation was that on bank. What is it’s role deeply at the game. Yet the history would the rule sheet the game in the game? It owns not have been so clear unless one Dr. Ralph objective is to bankrupt all the assets in money and Anspach, another economics professor and all other players as soon as property. Creates new interest free money inventor of the game Anti Monopoly, had possible. Yet on the same page we when it runs out. Collects all fines, fees and not been sued for trademark infringement can see a recommendation for players charges. Is the sole issuer of mortgages for by Parker Brothers in the ‘70s. As a result 8 years old and above. OK, its only a game... which it charges interest. Receives monopoly Anspach successfully defended Isn’t it? profits from distressed property sales. Does it himself all the way to the us The most fascinating observation for me is relate to a bank in the real economy? I think Supreme Court, in the process that of the most commonly used house rules. not. It seems to me that the bank in the game uncovering a truly shocking history These are private rules used to adapt the game more closely represents the state. If this is true of corporate fraud resulting in to your own liking. The most common is to I’m sure it would be a shock to tournament the monopolisation of the game increase wages. For example, more wages when players and the game’s producer, not to itself. What an irony. Anspach has passing Go, collecting fines from Free Parking, mention Austrian, neoclassical economists and documented the true history on his private trading, giving credit, agreements to Marxists. web site. He shows, evidently, how a not charge rents etc. The effect of increasing In the end, even taking account of the woman invented it, how for 25 years wages in any way is to extend the length of the anomalies in the game related to real life, I it became a widely played folk game game dramatically. The model becomes more would say it still does a better job than almost like chess, using home made boards, sustainable. The rule book strongly opposes anything else available academically. As for the adapted by Quakers into the eventual this and encourages rules that reduce wages Landlords game, that certainly presents a very trademark game, how the game idea by doing the opposite of the above, allowing good model indeed. I’ve been asked to develop was knowingly stolen from the public rents to accrue more quickly or by using a new a new game called Liberty. I did think about domain by Charles Darrow, sold by ‘Speed Die’. What then do you think happens this for a moment and realised this could be him to Parker Brothers, who then went when wages are cut and more goes to rent? You done quite easily by adapting regular Monopoly on to ‘vanish’ the copyright, how they guessed it. The game is much shorter due to rules to collect the rent for public purposes. then invented a bogus game history and earlier bankruptcy. This is common knowledge The outcome? I ended up with the original for the next 75 years covered all this up to players and is proven. Now, do both these Landlords rules via a circular route. This was with a host of tricks including laundering effects sound familiar in terms of the real not a surprise. deals, perjury, and subornation of perjury. economy? I’ll leave that thought with you, I’ll leave you with some quotes from former And how all this produced a billion dollars the Chancellor and those clever economics Monopoly tournament champions. Ask of monopoly profits for the company. This professors. yourself how true they are of real life behaviour continues today. A classic monopoly. A big question that came out of a talk today? So what of the popular Monopoly game delivered at an hgf meeting was around itself? First lets deal with terms. Property, the distribution of rents between plain land Q—What has the Monopoly game taught you? Wages, Money, Rent are all very poorly and the buildings. In the game most rent A—“I started playing when I was four. I defined by the game. I won’t explain further comes from improvements in houses and learned to count on it, learned to read on it, here, suffice to say that caution must be used. hotels. Hardly any from owning the land. and learned to lose on it, so it’s helped me to Then, can the game be related to the real This is probably due to the income being grow up.” economy as a model? From thinking about from monopoly rather than economic rent as Q—Do you feel bad bankrupting an opponent? it carefully, it cannot be related as clearly discussed earlier. Improving buildings requires A—“Not at all.” L&L as I had hoped, nor as clearly as Landlords you to earn rent a priori. The land is not that for a number of reasons, largely around the significant in the game. The opposite is true in Robin Smith is a social entrepreneur and Tory two main factors: Land and Labour. Or more real life. Councillor. He blogs at gco2e.blogspot.com precisely their returns in rent and wages. As for a property investment strategy, the These distributions can be seen clearly in the game is very different to real life where the game but not with the same cause and effect best yield comes from the most valuable land. Photos: © Erik Söderström (flickr/CC)

No 1227 Spring 2010 15 features

On the right track Most of its passengers would agree that the UK’s public transport infrastructure is underfunded and unfit for its purpose.John Howell explains how LVT could get it back on the rails again to anybody who has spent time in a crammed doubled. When the railway commuter train, there can be no doubt that is built and the stations our transport infrastructure is very much in opened, the land adjacent is demand. at least quadrupled in value. This is hardly a surprise considering that, In view of the difficulty of for an economy to develop fully, its various maintaining a public utility functions need to be linked by transport. like the London Passenger Healthy transport underpins a healthy Transport Board in a economy. satisfactory condition from Yet, paradoxically, in spite of its (only) the receipts of fares, indispensable role, most transport there is every reason, in the infrastructure is said to be unprofitable and interests of the public, why only kept alive by grudging subsidies from the Board should receive its public funds, rarely sufficient to enable it to appropriate share of the land meet demands. Can this be right? values it helps to create. The In 1900 the tube network under central earnings of a tube railway London was gradually being built. But despite (from fares alone), even under the obvious relief it would bring to the favourable circumstances, are overcrowded streets above, most schemes were not sufficient to provide the in financial straits. The partly constructed interest and the sinking fund Bakerloo line had gone bust, the District upon the capital invested.” Line was in difficulties and a proposed line to The only other early Hampstead had no investors. instance of increased land The problem then, as now, was that the values being systematically revenue from fares was mostly absorbed recaptured to finance capital by running costs, and left little to cover the costs was the Metropolitan immense initial capital outlay on tunnels, line in nw London. Before rolling stock and stations. Fortunately a rather 1900, because it used steam shady financier from Chicago—one Charles trains, it had been forced to Yerkes—managed to persuade American buy far more land than it investors there was money to be made out of needed for the tracks, and London’s commuters and by 1907 the lines sometimes made useful were completed. profits by selling this land American transport promoters like Yerkes later. had become adept at making their schemes pay By the 1920s it was by building well out beyond city boundaries, financing new line-building so as to make a killing on increased land prices by deliberately buying when housing sprang up around the passenger agricultural land to the north of London, Meanwhile, the idea of tapping enhanced stops. Yerkes, spotting the potential for this in and capitalising on its increased value when land values to pay for new transport links the undeveloped fields north of Hampstead, the lines were finished. Consequently, the had resurfaced, and Paul Channon, transport extended his North London Line out to them, Metropolitan Line was regarded by many as minister to Mrs Thatcher, declared: and doubtless it was the ensuing land deals the best in London. Sadly, Pick’s hope that “If there is to be new transport investment that enabled him to succeed where previous this model would be applied to the rest of the in London, the passengers who benefit from English tube entrepreneurs had not. network was not to be fulfilled. His evidence to it should meet its cost through the fares they The idea of raising the otherwise daunting the Barlow commission continued: pay, rather than be subsidised by taxpayers in initial capital cost of urban railways by tapping “This potentially valuable source of railway the rest of the country……and contributions into the increased land values they created finance was again not taken up. Profits from should also be forthcoming from property was clearly recognised by Frank Pick, vice- property development would only go to owners and developers who stand to gain from chairman of London Passenger Transport property developers. The benefit to railways the transport improvements.” Board—the public monopoly that had taken would be confined to the extra journeys of Consultants advising the government over running of London’s tubes, trams and those who travelled from the properties.” agreed “…any new line should be paid for buses in the 1930s. In evidence to the Barlow In 1989, the Jubilee Line needed extending by those who benefit including passengers, Commission (1939) he stated: to the East London where developers hoped to property developers, and landowners…. In “The moment an underground extension build Canary Wharf—a new financial centre to the case of the Jubilee Line Extension, we is projected, the value of the land is at least rival the City of London. understand that the Department of transport

16 No 1227 Spring 2010 features

has been advised the benefits which the line Of course lvt would have done just that. a lack of capital funding will haunt future would bring to the property developers are Just supposing the mechanism of lvt generations. likely to exceed by a considerable margin had been available to fund the jle, would its Also flawed is the developer’s ‘planning the cost of the line, and that a Government revenue have been sufficient? In Taken for a gain’ payments system, instituted when the contribution to funding would appear not to Ride (2001), Don Riley, a Southwark property JLE was built, because it misses the vital fact be needed.” owner, used his extensive local knowledge that new lines enhance values of all sites with to document the scale of development potential, even if they are not property rent and capital developed. Site owners who choose not to value increases that occurred develop still benefit from a transport upgrade once the jle was up and without having to contribute to it. running by 1999. Perhaps this explains why, even after He conservatively the boost from the jle, Southwark and estimated that, within a Bermondsey still have many underdeveloped 1000-yard radius of each new sites. By applying to sites, rather than the station on the line, values improvements on them, lvt stimulates rose by £1.3 billion, so for the development and discourages inactivity. ten stations along the line the Finally, it cannot be repeated too often overall gain was of the order that lvt is meant to replace other taxes, not of £13 billion—nearly four supplement them. lvt stops the land value times the total construction created by local transport improvements cost. Riley suggested that if leaking away to those who have not paid for that gain were annualised them. With revenue from this new source, into a 10% return, and taxes on labour and expertise could be phased taxed at 25%, it would yield out, allowing more jobs to be created, and the £325 million a year to the general level of earnings to rise. This would exchequer and pay off the also reduce capital and running costs of line cost in 10 years. transport networks and many more schemes In March 2004, a report would appear to offer ‘value for money’ than at commissioned by Transport present. Ventures such as London’s Crossrail, for London estimated the ‘jle the East Coast high speed link, and efficient uplift’ of land values was £2 freight services to take pressure off roads and billion around Canary Wharf cut pollution, would all become viable. station, and £800 million Railway or tube systems link commercial around Southwark station— and industrial hubs with their labour, raw figures of similar magnitude materials and markets. When improvements to Riley’s, who commented: reduce journey times or increase the volume of “I was impressed by the traffic, the productivity of labour and capital magnitude of the increase grows and this is immediately reflected in site in land values. It seemed values. The capital costs of building railways obvious that the Jubilee Line are so high that they can never be covered (Extension) could have been by receipts from passenger fares, which are constructed without the aid usually only enough to cover running costs of subsidies from taxpayers such as staff wages, fuel, cleaning, running who live in the deprived repairs etc. Canary Wharf’s developers knew that the regions of Humberside and Merseyside. I The resulting ‘funding gap’ is most accessibility provided by a proper tube line was particularly annoyed that rich financial naturally bridged by somehow recapturing the would earn them an extra £320million a year institutions in the City—20% of which were enhancement of site values. This upholds the in rents. They therefore willingly contributed foreign owned—would benefit from similar principle that transport improvements should £100 million to the line’s building costs, and as investment. The City was calling upon be paid for by those who benefit, and makes the part of the deal insisted that other developers taxpayers, to an important extent, to improve improvements self-funding. In those few parts whose sites benefited from the line were also the transport infrastructure for their benefit.” of the London underground where site values charged one-off ‘planning gain’ payments However, even in the Hampstead, were tapped, the demand for new lines was of about £20 per square foot when their Metropolitan and jle examples, the lvt responded to fairly quickly. Everywhere else, developments went ahead. principle was only partially followed. new schemes (eg Crossrail) have hung fire for Nevertheless, the bulk of the jle’s £3–4 Effectively in these cases site value increases decades through apparent lack of finance. L&L billion cost fell, as usual, on taxpayers were tapped on a ‘once-only’ basis which throughout the United Kingdom who felt no contributed only to the initial construction The above article is an edited extract from benefit. To the Treasury and London Transport costs. There was no provision for the major The Case for a New People's Budget, it appeared that the jle was adding to an recapitalisations that would sooner or later edited by Margaret Godden, published by existing large network, and that benefits to be needed to adapt to new technologies LibDems alter, 2010, available for £5 from landowners were not concentrated in such a or changed patterns of demand. Unless [email protected]. A second edition is due way as to form ‘an easily identifiable tax base.’ contributions from site values are on-going, soon.

No 1227 Spring 2010 17 letters reviews

into use, creating jobs made www.withouthotair.com. Taxation—a more rewarding by reductions of Making Sense Can I give a better step in the income tax. of Energy recommendation? W.R. Elliott right direction John Howell Executive member, Sustainable Energy— LibDems alter Without the hot air The cost of After its cool reception last by David JC MacKay autumn, Vince Cable’s Mansion uit, 2008, 384pp, p/b, inequality Tax (mt) was overwhelmingly Repackaging isbn: 978-0-9544529-3-3 adopted by the Liberal Democrats The Spirit Level: Why More at their annual conference in poverty David MacKay is a professor Equal Societies Almost Always March 2010. in the Department of Physics Do Better by Richard Wilkinson mt is to be an annual tax based Recent press items have at Cambridge University and and Kate Pickett on the market value of large highlighted some distressing and Chief Scientific Adviser to the Penguin, 2010, 368pp, p/b, single-family domestic properties. depressing figures that illustrate uk Department of Energy and isbn: 978-0-1410323-6-8 It would levy 2% of any value over the extent of poverty levels in Climate Change. the first £2 million. So the liability Britain. For example, 13% or 1.7 Professor MacKay looks at the After the biggest economic on a property worth £2.5 million million children are now living broad sweep of balancing supply crisis since the 1930s, people would be £10,000 pa. (2% of £0.5 in severe poverty, an increase with demand in the uk over a are angry with the bankers and million). of 260,000 since 2004; 20% of long period of time. He reduces disaffected with the political It’s proposed that the money Britons have no savings; 50% consumption and production class. What will be done to raised will be used to take make no provision for a pension. of energy to a common base of resolve matters? The ‘Spirit Level’ many on low incomes out of These three examples do nothing kilowatt hours per day per person provides timely evidence on tax altogether by increasing the more than confirm that the and reviews several ways of which actions can be considered personal income tax threshold to multimillions of pounds of state balancing the equation. and, hopefully, put into effect. £10,000, which would also reduce benefits (£100 billion a year on Of particular interest to The book shows statistically that the bills of those who did pay tax the nhs alone) handed out in an Georgists is the way he discusses developed nations do not improve by £700 pa. attempt to solve the problem have the energy available per unit wellbeing simply by more growth mt could be regarded as a done little or nothing to provide of land area for the common in gdp. The authors develop crude form of Land Value Tax a long-term solution; neither renewables and the limitation their case by showing that, in (lvt), since over two-thirds has all the humanity, sympathy, thereof. a range of developed countries of the value of any mansion is sacrifice and hard work provided A stimulating read of top where income inequalities are usually in the land that it sits by numerous charities. quality for all those interested more extreme, life expectancy on. Crude, however, because by How can this be? Why, with so in the energy supply this book is also lower, the percentage exempting the first £2 million of much effort and so much money is of international interest as the of infant deaths and teenage a property’s price, mt will only is the problem of poverty getting principles may be applied to any pregnancies are higher, obesity begin to collect a sizeable share worse? country is more common, educational of underlying land value in the As readers of this journal will As the title indicates performance is lower, and case of mansions well over the £2 know, the cause of poverty has many swipes are taken at the problems of violence, homicide million threshold. been well understood for over advertising and slogans of vested and imprisonment are greater. Nevertheless, by pairing mt 100 years. Yet everybody, from interests. Social mobility is shown to with proposals to reduce income politicians and social reformers I particularly enjoyed the way be significantly weaker in the uk tax, the Liberal Democrats have to the public themselves, appear he cuts through the jargon of the at last put into the political arena not to appreciate the simplicity units of energy consumption and the central Georgist principle of of the solution or be persuaded production which confuses so shifting taxes away from work to examine the causes of poverty much of the energy debate. and enterprise and onto the rather than meddle with effects. Those who are not underlying land value locked up If we are to make any progress mathematical and technical will in real estate. mt may not be lvt, against the spread of poverty be glad to know the necessary but it is a new and significant step and unemployment, perhaps we discussion is in a section at the in the right direction. should consider a new strategy. back which does not have to be mt would ease government The question for us might be: read to enjoy the rest of the book. debt by ‘liquefying’ some of can we take a lead from modern Topics covered, on the demand the vast sums of money locked marketing and public relations and side, include; population growth, into property values inflated re-package our product to achieve cars, aeroplanes, transport, by reckless bank lending in greater public awareness of where heating lighting, packaging etc recent years. It would curb taxation should be levied and the and on the supply side; coal, oil, future speculative inflation of benefits such a shift would provide? hydro, wind, nuclear, solar, tidal, property prices, and mansions biomass, heat pumps, energy currently held empty as ‘inflation Michael Hawes storage etc. hedges’ would be forced back Newark, England The book is available free at

18 No 1227 Spring 2010 lars rindsig’s view from and us, and the index of health the right and social problems considerably Prime Time worse compared to most other Prime Minister countries. The uk and the us are by John Stewart In Washington DC you’ll find a number of buildings used by among the most unequal and the Shepheard-Walwyn, 2010, 224pp, various branches and institutions of the federal government. Nordic countries and Japan the p/b, isbn: 978-0-8568327-4-1 Famously, the White House on 1600 Pennsylvania Avenue, least. This seminal work makes some distance away from the Capitol area which hosts the a strong case to establish the Many of those who have read Supreme Court, the Library of Congress and the United causal link between inequality John Stewart’s first two ‘economic’ States Capitol itself, of course, with its dome, which is about and health and social problems. novels will be eagerly anticipating as characteristic as the UK Houses of Parliament’s clock Further, it shows that people his third. The first book in tower. And like London’s Whitehall, Washington’s Capitol area need a feeling of self-worth this unofficial trilogy, Visitors, also requires a number of office buildings for officials and based on their contribution to described how visitors from outer public servants as well as parliamentarians. the wellbeing of others, rather space come on a trip to planet Because the American government is big (both in terms of than on their status in society— earth because they are grateful sheer head count as well as in the degree to which it busies depending on mutuality and for the knowledge of mankind’s itself with peoples’ lives) it needs a lot of office space. Three reciprocity rather than material master teachers, such as Jesus, ruddy big office blocks are located due south of the Capitol— self-interest. Buddha and Plato, but unlike Rayburn, Longworth and Cannon. They’re big, They house The authors describe the steep humanity have actually followed a lot of people who, being government employees do silly rise in inequality since the 1970s them. things. But like other people they come to work in the morning in both the uk and the us. They His second book, The President and go home in the afternoon. For that purpose the public show that the vast majority of the imagined the most powerful coffers have paid for a road network (which almost indubitably population are harmed by greater man on the planet experiencing facilitates buses and taxis) as well as a very conveniently inequality so that the benefits of an epiphany and learning from located underground Metrorail stop. And then there’s some more equality are not just gained his chauffeur of the teachings parking space. And then a bit of grass. To the west of the by the poorest. They indicate that of Henry George. A highlight grass: some parking space. And to the south: there’s some the route to greater equality can is the emergence of the three parking space. either be through the tax and questions: What is location value? As the Americans say: Hot diggety, mama, that’s a lot of benefits system or by lowering the Who creates it? To whom does it parking space. Now, keep in mind that this is the centre (both differences in gross income. belong? physically and metaphorically) of the perhaps most important They offer no single solution, Now the trilogy is complete city in the most important country in the world. Bubba, dat favouring more cooperative types with a new book called Prime gon’ be some dang expensive land. If, for no other reason, of organisations and employee Minister. The scene is set after simply because it’s next to a city centre railroad stop which, ownership. The book also a global financial crisis similar as we’ve seen, drives land prices up, up, up. And what’s touches on the need to develop a to the one that started in 2008. the best conceivable land use for the area that the planning sustainable economy. The strong John pulls out of his amazing hat authorities in Washington DC could come up with? Surface message is to find the means to his own solutions, and the tale is parking. Not a parking house, not underground parking below replace the current individualism, told with many twists and turns, office buildings. Just a lot of tarmac with white stripes on it. materialism and consumerism leading to the start of a new era in Well, and a bit of grass. by mutuality, reciprocity and economic management. Across from the government buildings, opposite the cooperation. A book publisher, Alexander train station, lies the head office of the Republican Party. Given such clear evidence from Collingwood, writes a letter to I don’t know if that’s significant, specifically. But this is: the authors of the serious effects the leader of the Opposition, land is scarce and should be used effectively and in a way of inequalities, we are faced with proposing a discussion and to that is best for the community surrounding it. That’s one a huge challenge on how to deal his surprise, this is responded to. reason land value taxation is a good idea—it makes it more with the many resulting health But the situation is so bad that a inefficient, more cumbersome and more expensive to not and social problems. We cannot coalition is formed, and the leader utilise well-located land to its greatest potential. But—then just leave it to the politicians who, of the Opposition becomes Prime there’s government. And government wrecks things because as the authors point out, have the Minister. it doesn’t dare allow people to decide for themselves and opportunity to do genuine good The principles are laid out because it doesn’t trust the market as a reliable mechanism but do not pursue egalitarian in beautifully set chapters, for expressing those decisions. Government at various levels policies until their survival is seen with objectors, dissidents and wants to zone, plan or whichever cryptonym is in vogue to to depend on it. So there must unforgettable answers. describe what’s really going on: government wants to decide be a concerted movement by the John has lit upon a new way of how land is used. And government does a poor job of it. The many committed organisations delivering a message derived from silly business seen around the Capitol is one example. There and individuals to raise public Henry George but brought right are many more. But really, isn’t it so much more poignant awareness of the need for change up to the present. when it’s as obvious as this? to re-establish a society based on The market doesn’t work when government is involved. equality and liberty. Tommas Graves But it works really rather well when people are involved. Government, whether at federal, national, regional or local John Lipetz level has no business interfering in how land is used. That privilege belongs to people and their community.

No 1227 Spring 2010 19 19 portrait

Publishing Progress As part of our continuing series of interviews, John Triggs talks to people who are working towards getting the ideas of Henry George and economic justice more widely understood and accepted. In this issue we meet Anthony Werner, managing director of book publishers Shepheard-Walwyn

among the barrage of television and radio the smaller publishers and booksellers programmes, magazines, text messages, blogs increasingly difficult. and Twitter updates, one ancient information "An independent book store will want medium is still working remarkably well to get a 35 per cent discount to sell a book on spec its message across—the humble book. but a chain like Waterstones is so large they Today, centuries after its emergence, and can demand a 40 per cent discount. Amazon despite the continuing development of new are able to demand a 52% discount," explains technologies, nothing has yet been invented to Anthony. "To compete with that and with compare with the pleasure, ease and usefulness the big publishing companies and their huge of reading a beautifully published book. advertising and publicity budgets is very That fact must come as some comfort difficult. It can be like pushing a very big rock to Anthony Werner, who has spent his life up a hill for very little financial reward." immersed in the world of books, firstly as But Anthony believes the technological an employee of Pergamon Press and Oxford revolution has also brought opportunities. "The University Press and later as a partner and internet is like an index in a book; it makes it chief executive of the small publishing very easy to find things that couldn't be found company Shepheard-Walwyn. before," he says. "The bookshops that survive The company was set up by Christopher will probably have to move out of the high taking Shepheard-Walwyn in 1972 and from its street to places where the rent is cheaper and on inception, began producing beautifully start their own websites so that the shop itself more of a produced books. only becomes a small part of their business. risk." Werner took over the company in 1979 There is also an opportunity for specialist However, he says, progress often can be and became interested in publishing books book publishers to sell their books on websites, made by approaching the problem from a on Henry George-inspired economics when that also become discussion forums for their new angle. "One of the books we are selling, he agreed to publish an early Fred Harrison subject." The Secret Life of Real Estate and Banking by book, The Power in the Land, in April 1983. This is exactly what Anthony hopes that Phillip J Anderson, explains how property Today, aged 70, he continues to publish books Shepheard-Walwyn's brand new economics investors can make money by playing the 18 by a wide range of authors writing about the website, www.ethicaleconomics.org.uk will do. year cycle of boom and bust in the housing injustice and folly of conventional economics. The site, which has only just been launched, market that other economists have missed Ironically, he is working in an industry features all the Shepheard-Walwyn economics because they have ignored the land question," increasingly being squeezed by the same flawed titles in one place but also includes a blog and he explains. "It is selling quite well and the economics his authors are protesting against. forums for comment on the titles. people buying it are investors with plenty of "Our economy is ruled by this absolute It is one part of Anthony's battle to draw the money interested in making more of it, but obsession with constant growth," he says. "That attention of the public to books that are, after if people wake up to the significance of what creates an economic pressure many companies all, not related to orthodox economic thinking Anderson is saying the land question may simply can't cope with." and can be harder to promote. creep back in to mainstream economics. The The publishing and bookselling industry is "If a bookshop is offered a book on long term gamble is that sometime, hopefully no exception. Not only is it facing enormous conventional economics by a known author, before I'm dead, there will be a recognition competition, with more than 200,000 they are likely to stock it because they know that modern economics is deeply flawed. When books published in the uk each year, but that economics professors are likely to that happens and people really start wanting to the emergence of two dominant players – recommend it to their students," he says. "Our know more, we've got a lot of interesting books Waterstones on the high street and Amazon job is more difficult because we are promoting to show them." on the internet – is making survival for a different idea so bookshops feel they are 27

757007 NEXT ISSUE out July 2010 USD 5 / CAD 5 / AUD 5.50 GBP 2.50 / EUR 3 / DKK 25 770023 L&L 1227 published 19/04/10 9