Tax Policy, Welfare Policy, Monetary policy, Transport Policy, Spending policy, Environmental Policy, Generational Equity, Housing and Land Use Policy, Regional Policy, Protection or Free Trade

On 1st August 1908 the Old Age Pensions Act completed its parliamentary stages, the first step in the development of the modern benefits and welfare system by Asquith's Liberal government and the culmination of several decades of debate and lobbying for some provision to be made for the "deserving" poor in their old age. An alternative to the Poor Laws. On 1st January 1909 half a million or so people over 70 years old became entitled to a 5 shillings a week non-contributory payment administered via the Post Office.

It was not universal; only 5% of people lived beyond 70 in any case - and most were women. It was kept deliberately quite low in order to encourage as many as possible to make their own savings arrangements to top it up.

The BBC has a useful little comparison of then and now pensions arrangements, and you can read the whole act here.

According to an article I dug up last year Lord Roseberry described the Act as the most important piece of legislation since the Great Reform Act of 1832.

I'll refrain from a rant about how it's been a hundred years of mostly Tory and Labour government since and we still have 20% of pensioners living in poverty and dependent on additional means tested benefits and how we can solve this by continuing the legacy of liberal economic reforms those pioneers started. Let's just enjoy the birthday shall we?

Hat tip to US Georgist tax researcher "Taxpayer" who highlights that Fred Harrison has made a seven or so minute introduction/video advert for his book "Ricardo's Law: House Prices and the Great Tax Clawback Scam"

If you want to understand a bit about just how unfair a tax system based on incomes is, have a watch, and hopefully buy the book - it goes into a lot more detail and will leave you I am sure convinced of the place of LVT.

Anyone who knows about the controversy surrounding Lloyd George's 1909 budget will know that the House of Lords fought tooth and nail to prevent the most important fiscal measures in that budget - Georgist Land Value Taxes - from being implemented. They fought so hard, and were prepared to give up so much, that they emasculated their own power by accepting the first Parliament Act, rescinding their historic rights to overturn anything the elected chamber sent to them - most especially finance bills, in return for their aristocratic land wealth remaining immune as far as possible to the tax collector's predations.

For those of us who still harbour ambitions to complete Lloyd George's work in this area, the past few weeks, and in particular the furore about Inheritance Tax have been very depressing. For we have been witnessing the fight to repeal one of the few measures of land taxation L-G was able to get passed.

The landed interests of his day, represented by the Lords and the Tories, did not want land taxed on disposal, they refused to participate in registering all land to make annual land tax feasible, but they could not resist, ultimately, the calls for a more general taxation on passing an estate down the generations. Though it aimed at all accumulated wealth passed down, it was aimed at land wealth, and the landowners felt that they might get away with it by selling more liquid wealth on death to pay the taxes and keeping their privileged position as landowners.

Now the landed wealth of the country is spread more widely, and the calls to abolish even this small remaining part of the People's Budget are being made in the name of the much wider community of landowners, owner-occupiers. And so they are much more popular calls - many want to hope that they will one day be "accidental property millionaires". And even a Labour government is prepared, as they have shown today, to accept those calls and try to take the family home out of Inheritance Tax for good.

But the arguments made by Lloyd George and Winston Churchill and others around 1909 explaining why land was a good asset to tax - better, say, than incomes or shareholdings - are just as relevant today, notwithstanding that far more of us today, indeed a substantial majority of the population, have some interest in land holdings. The nature of land value and where it arises from has not changed just because more of us own some of it. It is still, as Churchill pointed out a wealth born out of monopoly and restriction of others needs and desires.

We must rework those great speeches to fit with an economy in which land ownership is more widespread and in which, as the past few weeks have shown, those millions of new landowners go through life utterly unaware and uneducated about where the value of their home comes from, who creates that value and how, and, as a result, sincerely believe that it's theirs to keep, merely the result of their good fortune in buying a home when prices were lower than they are today.

We will never produce a just and equitable society without recognizing "land" in its more general economic sense as a factor of production that is the birthright of us all and is the sink in which excess unearned profit collects - depressing the returns to both labour and capital. All the attempts today of Chancellor Darling to close loopholes and attack income abroad and so on are merely making the system more complicated, and his attempts to exclude the family home from Inheritance Tax the complete opposite of the philosophy of his Labour forebears.

We would, of course, prefer not to wait till someone dies to tax their land value, preferring instead to replace taxes on healthy economic activities such as work and investment in productive industry with annual land taxes, but we should also not be effectively repealing the few opportunities we have of capturing land value without replacing them with better ones. 

Technorati Tags: debt money, fiat money, monetary reform, Rothbard

It's 47 minutes long, but one of the most important lessons you will ever learn, IMHO (NB - some good quotes in this from our Liberal forebears Reginald McKenna, Josiah Stamp, McKenzie King - all feature in our "pantheon" of Liberal economists):

And, lest you believe all this to be the province of eco-socialists, this one from the Mises Institute, in tribute to Murray Rothbard's work on money, attributing the same causes to inflation but advocating a completely different solution:

And now read how the modern central banker does it...he doesn't even bother to turn the printing presses, he makes us pay for his monetary expansion policies:

Ex-Governor George says Bank deliberately fuelled consumer boom

By Jane Padgham

Published: 21 March 2007

The Bank of England deliberately stoked the consumer boom that has led to record house prices and personal debt in order to avert a recession, the former Bank Governor Eddie George admitted yesterday.

Lord George said he and his colleagues on the Monetary Policy Committee "did not have much of a choice" as they battled to prevent the UK being dragged into a worldwide economic slump by slashing interest rates. And he said his legacy to the current MPC was to "sort out" the problems he had caused.

Lord George, who headed the Bank for a decade from 1993, revealed to MPs on the Treasury Select Committee that he knew the approach was not sustainable. "In the environment of global economic weakness at the beginning of this decade... external demand was declining and related to that, business investment was declining," he said. "We only had two alternative ways of sustaining demand and keeping the economy moving forward - one was public spending and the other was consumption.

"We knew that we were having to stimulate consumer spending. We knew we had pushed it up to levels which couldn't possibly be sustained into the medium and long term. But for the time being, if we had not done that, the UK economy would have gone into recession just as the United States did."

He said he was "very conscious" that stimulating consumer demand could give rise to problems in the future. "My legacy to the MPC, if you like, has been 'sort that out'," he said. Under Lord George's governorship, rates were slashed from 6 per cent in 2001 to 3.5 per cent in 2003, pushing house price inflation above 25 per cent and high street spending growth to its highest since the late-Eighties boom.

Spot what is wrong with this...

Adam Smith Institute Blog:

Taxing times

By Dr Madsen Pirie in: Tax & Economy •

I had a piece in the Telegraph business section on Wednesday, comparing Gordon Brown's tax policy with the maxims set down by his illustrious fellow-countryman, Adam Smith. Smith had said that people should pay taxes in proportion to income, that they should be certain rather than arbitrary, that they should fall due when they could conveniently be paid, and that they shouldn't cost too much to administer. I suggested that few would give the Chancellor four marks out of four, given his stealth taxes and his steady tax increases.

Much of my article was of steps which could be taken to simplify taxes in Britain, starting with the harmonization of income tax and national insurance. I also suggested that capital taxes could be harmonized, and put in line with income tax as well as with each other, absorbing the much-disliked death tax. The complex system of tax credits put in place by the Chancellor could and perhaps should be replaced by a simpler negative income tax. Out could go all the tax exemptions, allowances and tax credits accumulated over the years like junk in a store-room.  read more »

The Office of Fair Trading today announced that it was to conduct a review of the UK's house-building sector. One of the aspects of the market it will be looking at is:

how land that is suitable for development is brought through the
planning process...and...how land with planning approval is
converted into new homes.  read more »

In one of those odd coincidences, Land Value Taxer colleague Tony Vickers was last week having a few problems adding an article to the 1909 website and eventually he forwarded a quote he had just discovered to me by email to put it into an article.

I hadn't thought that the opportunity would come around so soon to do so, but it transpires that Ming Campbell is today giving a speech at a Joseph Rowntree Foundation conference in which he will announce housing proposals, including:  read more »

I've been doing some research on the details of the 1909 budget and how it was promoted and received. And one of the most fantastic resources I've found, which anyone interested in the debate between "economic liberalism" and "social liberalism" ought to have a look at is the Project Gutenburg online edition of Winston Churchill's "Liberalism and the Social Problem".  read more »

Let's face it, the 2012 Olympic Games, as far as the main site in east London is concerned anyway, are less about a now once a century chance to host the paramount global sporting event - no longer the amateur affair it was when London last hosted them of course - than they are about regeneration of an area of inner city that should never have been allowed to remain run down and uncared for for as long as it has.

And, because such regenerative development rests on the willingness of deep-pocketed capital to see the opportunity, dig deep and purchase land to develop, they need encouragement, often publicly funded encouragement that their investment will be a worthwhile one. And so the greatest asset in the Olympic village will not be a stadium or a veoldrome but Stratford City Station, part of the multi-billion pound development of the Channel Tunnel high speed rail link.  read more »

Following on from the Barker reviews into housing supply and planning, a new quango (actually they call it a think-tank I believe but it's government funded so I'll call it what it is, another quango), the National Housing and Planning Advice Unit, arrives on the scene today with a manifesto for failure, or so it would seem. Its report, highlighted in the Guardian article - Britain faces 20-year house boom that will split nation - and similarly in the Telegraph, omits any mention of land values. And if it doesn't get to grips with the land question, it is bound to fail.