Against Obamanomics: Warnings from British Liberal Democrats

It started out as a desk-cleaning exercise on Christmas Day. We opened a catalog of Henry George materials.

Half a day later (from a still messy desk) we were sending an email to Neale Upstone at the Cambridge (UK) City Council, advising him of our newfound interest in Henry George.

Councillor Upstone replied with links to a movement. A new coalition based upon Georgist principles of Land Value economics has just released news (as of midnight GMT) that a dozen “think-tanks, charities and political pressure groups” will be advocating a Georgist resolution to the latest economic meltdown.

“History shows that economic bailouts will not provide a long-term solution,” says Robin Smith of the Systemic Fiscal Reform Group think-tank, “because Land, which is at the heart of the matter, has been obscured from political, media and academic scrutiny.”

Following the Land Value analysis of 19th-Century American populist economist Henry George, the new coalition wants “to shift tax off enterprise and labour onto a form of annual Land Value Taxation,” says the chairman of the coalition, John Lipetz.

The new Coalition for Economic Justice (CEJ) will try to get a national debate going in the UK. But the issues they are raising sound relevant to anyone seeking critical tools of analysis for the early contours of Obamanomics.

Councillor Upstone puts the case plainly. Against the emerging outlines of a Keynsian Green New Deal (GND) he argues in favor of a Georgist Systemic Fiscal Reform (SFR).

The Georgist approach is appealing as a quick study, because it connects with our common-sense insight that real-estate speculation is the giant culprit of our global economic meltdown. What the SFR movement adds to this insight is the Georgist claim that land speculation is the foundational cause of many bad effects besides the cycles of land value crashes.

Henry George learned his economics by watching San Francisco. He seems to be calling out from beyond the grave: California did it again!

So if you like the idea of change and want to think a little harder about what it could look like, here’s the press release from the Georgist SFR movement:

EMBARGO 00:01 27th December 2008

In an unprecedented move to advocate an original solution to the current economic crisis, twelve think-tanks, charities and political pressure groups have joined forces. The new cross-party group, called the Coalition for Economic Justice (CEJ), has argued for the reduction of existing taxes to be replaced by an annual Land Value Tax in order to prevent future crises and alleviate the current one.

The Coalition issued in a statement: “The current economic crisis highlights, yet again, the inadequacies of the current economic system which is unstable and deeply flawed. Events are clearly demonstrating that the speculative rise in land prices is a common feature of the repeated economic booms and busts. In order to address this problem we call for a new approach that delivers both economic justice and prosperity for all. This solution must be based upon the annual collection of land value for public purposes”.
Matthew Elliott, Chief Executive of the TaxPayers’ Alliance commented: “I look forward to learning more about the campaign as it develops in the New Year. I very much hope that the coalition manages to generate a national debate on taxation, particularly now we are in recession.”

The Chair of the CEJ, John Lipetz explains that “in response to the financial crisis, a group of charities, think-tanks, political factions and pressure groups from right across the political spectrum have for the first time sat down together to agree the best way to cure the current crisis, and prevent future ones. This is to shift tax off enterprise and labour onto a form of annual Land Value Taxation. We invite others sharing our concern to join us.”

Robin Smith of the think-tank Systemic Fiscal Reform Group says “It is clear that enterprise is once again taking the hit, particularly hard working small businesses, from this latest debt-fuelled land boom. History shows that economic bailouts will not provide a long-term solution because Land, which is at the heart of the matter, has been obscured from political, media and academic scrutiny. The founders of the CEJ are calling for new thinking around economic reform and it represents a real movement towards progress and prosperity for all.”

Heather Wetzel of the Professional Land Reform Group adds: “If we are to establish economic stability, encourage sustainable growth and end poverty it is necessary to look for new solutions. An annual Land Value Tax on all land will prevent future land price speculation, enable modest interest rates on business investment and provide income for both essential infrastructure investment and for the reduction of taxes on individuals and trade.”

Organisations involved in the CEJ are:

Labour Land Campaign (LLC)
Liberal Democrat Action for Land Taxation and Economic Reform (ALTER)
Social Liberalist Party (SLP)
Systemic Fiscal Reform Group (SFRG)
School of Economic Science (SES)
Land is Free (LF)
Henry George Foundation (HGF)
Land Value Taxation Campaign (LVTC)
Professional Land Reform Group (PLRG)
Christian Council for Monetary Justice (CCMJ)
Global Justice Movement (GJM)
The 1909 Group





Information about Land Value Tax



Chairman – John Lipetz

Labour Land Campaign (LLP) – Dave Wetzel

Liberal Democrat Action for Land Taxation and Economic Reform (ALTER) – Tony Vickers & Chris Glover

Social Liberalist Party (SLP) – Anton Howes

Systemic Fiscal Reform Group (SFRG) – Robin Smith

School of Economic Science (SES) – Peter Bowman

Henry George Foundation (HGF) – David Triggs

Land Value Taxation Campaign (LVTC) – Henry Law

Professional Land Reform Group (PLRG) – Heather Wetzel

Land is Free (LF) – Tommas Graves

Christian Council for Monetary Justice (CCMJ) – Peter Challen

Global Justice Movement (GJM) – Peter Challen

The 1909 Group – Jock Coats

Excerpt from article on local taxation by Dr Roy Douglas from the Land is Free website:

Such a tax, when designed for the special needs of local government, is known as Site Value Rating, or SVR. To apply SVR, the value of all sites in the local authority area would first be assessed. Professional va
s assure us that this would be a simple and cheap operation. A tax, or rate, would then be levied on the basis of that valuation, just as the old rating system used to levy a tax, or rate, on the basis of the total value of a property (i.e., site plus “improvements”). As site values vary over time, periodic (perhaps annual) reassessment would be necessary.

The principle behind SVR is that each occupier will pay for the benefit he receives from what he has not created, but will not be penalised for what he has done to make the property he owns more valuable. One of the arguments in favour of Local Income Tax (which, as we have seen. is really flawed) is that it will fall most heavily on the people most able to bear it. As wealthy people usually live on valuable sites, while poor people live on less valuable sites, SVR will do exactly that.

But will there be hard cases, such as elderly people on small incomes, whose site values are high? Yes, indeed, SVR, like any other kind of taxation, may involve hard cases, unless Parliament makes careful provision to avoid those hardcases. But the possibility of such hard cases arising provides a challenge to the legislators to avoid them. It does not provide an excuse for failing to deal with the general problem.

From the left side of the Atlantic, check out the work of Renegade Economist Fred Harrison, a Yank of the Georgist persuasion.

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