The second part of Georgist Economic Philosophy
By GRAHAM HART
Member of the Bannerad system
|CONTENTS of Part 1|
|1. Human Rights||6. Misappropriated Rent|
|2. The Land||7. Natural Public Revenue|
|3. Wealth||8. Involuntary Unemployment|
|4. Rental Value of Land||9. Wealth Producers|
|5. Exclusive Occupation||10. Full Employment Restored|
Picture by courtesy of
Geonomics (USA and UK)
|CONTENTS of Part 2|
|11. Monopoly and Speculation||16. Australian Land for Australians|
|12. Site Revenue Collection||17. Encourage Land Use--Discourage Speculation|
|13. Freedom of Information||18. Australia--Populate or Perish|
|14. Banking and Money in a Prosperous Economy||19. Democratic Elections|
|15. Three-Year Phasing-in Period||20. Proportional Representation|
|CONTENTS of Part 3|
|21. Governments Should Consult the People||27. Transitional Hardship|
|22. By-Elections||28. The Public Service|
|23. "Taxation--the Power to Destroy"||29. Protective Tariffs|
|24. Taxation Must be Abolished||30. Artificial Wage Fixing|
|25. The Family--the Central Unit of Society||31. Economic Recovery|
|26. Site Rent Revenue--Potential||32. Social Justice and Responsibility|
Farmers who own large areas of low-value land are motivated primarily to become efficient producers of rural products. They would be much better off paying rent instead of taxes, especially if they have had to mortgage to acquire enough land to become a viable operator and are caught up in the spurious interest racket.
The terms "monopolist" and "speculator" refer to the professionals, but can even these be blamed for doing what the law allows, and when vicious penalties are imposed on productive effort? These penalties can be avoided by speculative investment.
12. Site Revenue Collection
Fortunately, in Australia, the machinery for site revenue collection already exists, in Municipal Government, which ought to act as agent of the State, which in law owns the land. Land titles are held in "fee simple" subject to the prior right of the Crown.
Revenue required for Municipal, State and Australian Government purposes ought to be apportioned by a consultative structure of these three levels of government, with budget co-ordination by all spheres.
The formula for disbursement should take into consideration the needs of national, regional, and resources development, also Australian defence, not only of people, but of the basic resources upon which, primarily, their welfare depends. The Loan Council (which no longer would be needed) operates, to an extent, on such a basis. The reason is that people working on farms, mines and indeed, in all remote basic resource industries, create land values in the cities.
The need for Federal revenue would be reduced enormously except for effective defence--which is almost non-existent at the present time.
With no taxing responsibilities, nor the right to interfere with production and trade, Federal Government would be confined, in a free economy, to defence, the prevention of epidemic disease, to interstate communications, and other limited national responsibilities.
The Commonwealth Government would be under direction of the States, which would control the purse strings; not as tat present, dictating to the States and duplicating many of their functions. It should, however, exercise a co-ordinating influence.
13. Freedom of Information
The "rental" due from every land-titleholder or leaseholder would be publicly displayed in Municipal Offices, so that all people, by comparison with others, and with the right of appeal, would ensure that they were justly treated.
There will be no need of secrecy in the transaction of government business when rent is taken for public revenue, wages and prices are determined by market forces, and all monopolies are abolished. Public expenditure in particular areas will cause rents to rise, but the increase will accrue to the treasury and equality willbe maintained.
Inflation would then be impossible. Customers would not deal with banks that depleted their reserves. Banks would have to be honest to compete.
Private banks, issuing their own soundly-backed currency and credit, functioned for many years. This system was destroyed by land price booms and subsequent depressions. "Big Brother" intervened to save the people's savings, but substituted inflation, rather than removing the cause.
When rent is taken for public revenue, land price (capitalised rent) ultimately will disappear; likewise land booms and depressions. Government, which could not inflate the currency or pledge the credit of future generations, would have to live within its income.
15. Three-year Phasing-in Period
Implementation should be phased in over three years. In the first year public revenue could be based on land price which would make an immediate impact on the unearned incomes of non-producing land speculators as such, causing land prices to fall. But in the following year public revenue should be based on annual rental value (use value), which would not be affected by being diverted to its real owners, the people. Because land price, the people's enemy, eventually would disappear, it could not therefore be the base for public revenue collection.
16. Australian Land for Australians
When the value of imports exceeds the value of exports (described as an unfavourable balance of trade), the Australian dollar is weaker than the currency of Australia's overseas customers, conditions are ideal for foreigners to invest in Australian real estate, joining the ranks of the home market speculators, and forcing land prices even higher
This practice is encouraged by governments, because temporarily it reduces the unfavourable balance but thereafter this would increase as profits were transferred to foreign countries.
Multi-millionaire foreign investors have little knowledge of Australian industries, and usually play safe by buying up select residential areas with river or ocean views, central sites, and areas ripe for development, as advised by Australian land agents.
The ownership of the land of Australia is gradually but quite noticeably passing to Japanese and Asian investors who have funds available in stronger currency.
A century ago Ireland lost half its population because English investors who claimed ownership of the Irish people's country, and rack-rented the people into such an impoverished condition that emigration to America and Australia, which at that time had cheap land, was the only solution. The land-hungry Australian masses are facing the same problem today, but where can they go? Land monopoly is now a world-wide problem.
Population increase causes land prices to rise (under present fiscal conditions), so land monopolists would benefit most from an influx of desirable migrants, and at the same time, the monopolists deprive governments of the funds needed to support a balanced immigration policy.
It is impossible, under the present tax structure, to persuade Australians to bring more children into a world in which such hardships are imposed on the family.
Also, because of the declining birth-rate we are developing an ageing populations, with more people of pensionable age, and less people in the productive workforce to support them.
Australia's vast open spaces, richly endowed with natural resources, will remain a temptation to aggressor nations, unless Australian government encourage progressive development and free exchange of wealth with other countries. Cordell Hull, one-time American Secretary of State, said: "If goods do not pass frontiers, armies will." Economic warfare, whether engaged in by tariffs, quotas, embargoes, sanctions or by any other infernal devices, must cease. This is possibly only be a complete change in the method of raising public revenue. Australia is in a unique position to set an example to the Nations of the World.
To discourage natural population increase in this country, when all factors are taken into consideration, can only be described as national sabotage.
19. Democratic Elections
It is doubly galling to discover that, despite vociferous shouting about our democratic system of government, Australia in fact does not have a democratic electoral system, except in the Senate, and in Tasmania, and in Municipal Government in New South Wales [written in 1987].
Our two-party system of government gives electors two choices, which has degenerated into competitive election promises, which, if honoured, will be at the taxpayers' expense. Fortunately, most political promises are broken.
Electors have a choice of voting for right-wing Conservative policies, or left-wing Labor policies. Both support the redistribution of incomes by taxation, with handouts to the idle poor and the idle rich. The handouts constitute a denial of the right of private property. Any fundamental difference between the Coalition and Labor is, at times, hard to distinguish. In fact, there is common agreement on many things, including the denial of the right of common property in the rental value of land, which is the public estate. The denial is in reverse of the natural order.
In single-member electorates more than 40% of voters usually fail to elect a candidate to represent them, and therefore are effectively disenfranchised--their votes have no value.
20. Proportional Representation
Under Proportional Representation with multi-member electorates, only about 10% of the people (in an 11-member electorate) can be disenfranchised. The greatest advantage of proportional representation is that many shades of opinion gain representation. Independent free-thinking people representing minorities will also have a voice in public affairs, and Statesmen and Stateswomen will begin to emerge in public life.
Under the two-party system it is fatal to get out of step with the hierarchy. Unfortunately this is an inevitable condition, which precludes the best and mot able people from a political career. Proportional Representation will not create miracles, but it will return power to the people if they are prepared to think.
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(Copied from September 1987 booklet, put on WWW 3 January 1997; last revised 18 July 97)
DOC. 32: URL = http://www.multiline.com.au/~georgist/econ2.htm