Intro
Why all the reforms in the world may prevent us from getting wealthier. Having read Henry George, I am having my doubts about the ability to easily bring long-term prosperity for us serfs.
I can remove taxes and bureaucracy. This will give some short-term benefit as goods are cheaper and your life isn’t impinged to the same extent.
However, wages don’t quite work to market forces in quite the way everything else does. Without concerted organisation, wages are kept down regardless of scarcity. Unions were able to rebalance things until the eighties, but globalisation has destroyed their bargaining power to improve wages for the poorest, and consequently cull the idle rich.
And when it comes to buying long-term assets, there will be more spare money around and competition for better houses and land will mean that even more money will go to the owners of the assets, either by sale, or, especially by letting. More of the wealth we produce will be funnelled into the few that own the land.
There is one possible saving grace in this, and that is in a government where spending is within tax take and a hard currency does not keep inflating the price of assets, this may be stymied somewhat, but I’m not convinced. People will push themselves to buy as much as they can afford. I know a lot on here don’t, but the majority do, and it’s the landowner that benefits. And although achieving net zero immigration would help, that won’t solve the problem on its own.
The attempt with these rules isn’t so much to deprive the rich of their land in a jealous rage but to allow resources to be taken from the ground – including food far more cheaply, and especially children to be able to afford to buy a new build house with say a ten-year mortgage tops. I’m thinking that, with land cost negligible, modern factory-made steel frame, panel walls, with a bathroom & kitchen etc a house should cost around £60k. Either way, the equivalent of two people taking a year to build it. Life is then so much better for our descendants, allowing them to afford education, health and savings; standing on their own two feet and not indentured to the government with student loans, or to the banks.
The Idea
The value from the land is all but removed
The wealth of the land would be a resource for the people of this land. Wealth generated from it transferred equally to all adults.
By wealth, I’m thinking, oil, gas, minerals, maybe farmland too? The land rights would be sold at auction, the winner either paying an annual charge, which is cheaper to administer, or by royalty, which I think adds too many complications. We already do something similar for oil fields.
Henry George would have used a similar tax on all undeveloped land to pay for public services. That is the last thing that should happen. It would be frittered away for little return. As a public resource it should be given to all adults. Any government spending needs to be taken off us in plain sight (not hidden in duties etc) so we feel the pain and hold them to account for how they spend it.
Will this lead to people having an easy life for doing nothing – maybe; but a lot already get their lives paid for by the state. I think if stuff was cheap, then more stuff would be produced and offered. People working would still be better off, and an equilibrium would soon be reached. It would still be possible for the likes of Musk, or Bezos to become amazingly wealthy, but inheritors would struggle to earn an income other than by continued labour/ingenuity.
Does all this work?
If Emile Wolfe still haunts our pages? I feel he could either savage or praise this. He mentioned a tax similar to Henry George a few months ago.
Am I calling for socialism via the back door with all the usual problems? Are we better off with people having a hold on land that is almost impossible to prise off? Do they lose it too easily if they’re not good enough custodians anyway? I’m not convinced of this – but maybe it is still better than what I am proposing?
How does it affect our property rights? I feel it makes all land the ultimate property of the state – but then again if they want to use your land for a railway line, they already do anyway. Does it affect inheritance? Maybe inheriting your parents’ home will be neither here nor there if your own life is already set up. For the average person inheritance is now a way to pass a family’s stake in the UK land bank to their children as that is the only way most can afford to buy their own property.
How does management of the land get affected in this? And is that even important? Maybe land being left alone in some places would be a good thing?
How does it affect farmers – already dealt with in generalisations. This needs to be an important part that needs to work. Productive soil has to be managed or it goes, so should this be treated like domestic property? Again how does inheritance work?
If the land has little to no value then how would my preferred method of wealth tax for defence, and maybe the very slimmed down Civil Service work?
If land had little value, does that make infrastructure projects morre viable – that would be a plus – especially if private enterprise could build them.
Also, how does this affect domestic housing and say factories & offices. How do you price those away from the cost of the land? And how do you determine who will take possession of the land to build on/use at a profit – by auction, but where does the money go? And to purchase when reselling – again, auction?
Another circle that would need squaring
People losing their one asset of value that they have saved and sacrificed to build up
Another major problem is that most people’s wealth is entirely in the house they live in. It is an investment as much as a place to live. Destroying land values will destroy the investment of all but the wealthiest. This is the last thing that would be fair to those that have saved and sacrificed to build up that nest egg, and survived being fleeced by governments for that effort up to now.
Conclusion
As you can see, I am at sea with this, I have concepts but no clear answers on how to implement it. My gut feeling is that individuals gaining income from something for nothing is inherently wrong and bad for both the long-term economy, and bad for the people. Yes, that does also mean people getting their cut of the wealth of the land for nothing. Even if I am wrong, I am normally clear in my head on these things.
Also, yes assets can change in value, but a standard three-bed detached shouldn’t be costing several times the build price in hours worked.
Maybe a hard currency would make everything rebalance after all? It seems absolutely central to so much.
It needs a lot of thinking through!
© Jerry Mandarin 2023
