workfair
20.01.08
at 11:54
at 11:54
tagged with:
Last week David Cameron unveiled the Tories' latest wheeze - the idea that those able to work but not doing so and claiming benefits should be forced into some form of "community work" to justify their benefits after a period. Two years on Job Seeker's Allowance is enough to prove someone either unemployable or simply lazy goes the line. In some quarters it was hailed, not doubt with the help of the party spin machine, as an end to the "something for nothing culture" that pervades the benefits system.
Now, set aside for the moment the debate about whether this is some form of slave labour, or a way of quietly abolishing the minimum wage (although this latter begs the question as to whether it is right that only the unemployed should be allowed to opt for jobs below the minimum wage or whether only community groups should be allowed to pay below the minimum wage). We do in fact already have a deep rooted "something for nothing culture" in this country and seventy per cent of us, those who live in houses they actually own, believe that they have an absolute right to this "something for nothing" and over the past decade or so of rising land values, pushing house prices through the roof, they have benefitted massively.
Indeed, most of us can probably point to people who, over the past few years, have seen their wealth in the form of property, the value of their home, increase by more than their annual income from working. Equally in the same measure, we can probably point to people who, because they weren't lucky enough to have got in on this rat race of home ownership, have seen their chances of ever doing so fade as the multiple of income they now have to pay increases beyond any prudent lender would allow them to borrow.
Of course there are many who would point out that this wealth only really exists on paper; that for as long as we need a place to live the current value of the spot we own is of little meaning, as everywhere else is rising or falling in similar proportions and if we want to move we'll still need to cash in what we have and perhaps pay even more for our next home. And that this paper value is only of any use to us when we reach our final resting place or, if we are sensible about it, when we decide we no longer need the property we bought when we wanted to get the kids into a good local school or be close to the fast rail line into work or whatever and "downsize" or "escape to the country", hopefully giving us a pot of cash in the process to make our final years more comfortable.
Some may even suggest that it has been an unquestionable benefit to the economy as people have cashed in through equity release schemes and re-mortgaging to supply them with cash which has kept the consumer demand in the economy going when other countries' economies may have suffered recession and stagnation. As we face a possible slide in property values of course some of these people may find out to their cost that funding their lifestyles from the value of their home was a bad idea and that the only people, longer term, to benefit, are the bankers who they will be paying for their profligacy for years to come.
But I do not want to focus on whether housing is a good or bad investment: clearly in many cases it is a good one as the market is currently structured, albeit an unorthodox sort of investment - you don't usually get to consume something that continues to rise in value. I want to show you that it is an inequitable investment, that it is "something for nothing" and that the least well off pay for home owners' prosperity in a very real way even if that prosperity is mostly "on paper" for most of the time.
LAND: A part of the earth's surface, considered as property. The theory that land is property subject to private ownership and control is the foundation of modern society, and is eminently worthy of the superstructure. 
Carried to its logical conclusion, it means that some have the right to prevent others from living; for the right to own implies the right exclusively to occupy, and in fact laws of trespass are enacted wherever property in land is recognised. It follows that if the whole area of terra firma is owned by A, B and C, there will be no place for D, E, F and G to be born, or, born as trespassers, to exist.
Devil's Dictionary, 1911, Ambrose Bierce
Carried to its logical conclusion, it means that some have the right to prevent others from living; for the right to own implies the right exclusively to occupy, and in fact laws of trespass are enacted wherever property in land is recognised. It follows that if the whole area of terra firma is owned by A, B and C, there will be no place for D, E, F and G to be born, or, born as trespassers, to exist.Devil's Dictionary, 1911, Ambrose Bierce
If we go back to first principles, to what philosophy seems to call the "state of nature", some of the most fundamental assumptions are still as valid today as they ever were. We only have one planet. So every living soul born on that planet has to share it with everyone else - there is, as yet, no escape from that. The corollary of that is that everyone born on this planet has a right to a share of the planet - an absolute right, a "birthright". Some things we are completely dependent on the planet to provide for life...we need a place to live; humans cannot wander all the time, we need to sleep and to sleep we need to stop wandering. Similarly we need air, water, sustenance and again, we know ultimately of no way of producing these artificially without involving the natural resources of the planet.
Now, in that state of nature, if there's nothing else, like society, to hold us dependent on one place for any of these requirements of life, we would all be able to spread out, and appropriate as much land as we need to sustain our own lives, as individuals or families without negatively affecting anyone else. This "free land" gives us freedom, independence and life. Even today, in "overcrowded" England, as many would have us believe, there's enough land area for us all, every man, woman and child of us, to have just over a half an acre each - globally there's about 5.5 acres each of land mass. Naturally, not all these acres are fertile and even if they were, subsistence farming does not create wealth. Human growth and ingenuity requires that we specialize and socialize, which will usually mean also urbanize. Until we invent Scotty's instant transporter we have to make do by fitting many more people into urban land simply so they can be close enough to the facilities they need, and we need them to have - such as workplaces, to make working there viable.
But why should any of this mean that we give up our birthright, our common and individual birthright, to share equitably in the wealth of the planet itself? After all, you, the home owner, need me, the tenant, to work at whatever it is I do to provide you and everyone else with goods and services the economy demands. I, to fulfill my potential and contribute to the fullest to society, am better off working at what I do than ever I would be tending half an acre of small-holding (especially if you have seen my attempts to grow a window box of herbs!). But where is that birthright? Well, it is in the value of the location on which your home, office, factory or whatever stands, and it is created by and belongs to all of us!
Not one solitary square inch of English soil remains unclaimed on which the landless citizen can legally lay his hand without paying a toll to somebody; 
in other words, without giving a part of his own labor or the product of his labor to one of the squatting and tabooing class in exchange for their permission (which they can withhold if they choose) merely to go on existing upon the ground which was originally common to all alike, and has been unjustly seized upon (through what particular process matters little) by the ancestors or predecessors of the present monopolists.
"Individualism and Socialism," Contemporary Review (1889), Charles Grant Allen
You see, even John Locke, arch-defender of private property, recognized that there were limits to the right to appropriate land - the stuff of nature that exists in a finite amount yet which we all need to survive. Robert Nozick coined the phrase the "Lockean Proviso" for the principle that however much you take and occupy for yourself equity demands that you leave "enough, and as good, in common...to others". A hundred and thirty years after Locke wrote his Second Treatise of Government, David Ricardo formulated his Law of Rent, and a few years later Johann Heinrich von Thunen demonstrated the practicalities of this using data from his family estates.
It would be too much here to explain all of these ideas in any detail, but what they all amount to is that as you get closer to the social, employment, commercial facilities that more people need access to the land value surrounding those facilities absorbs some of the wages of all who need to access those facilities and is reflected in higher land values. So you see, this is not a fight just between the thirty per cent who don't own their home and the seventy that do. Many of that seventy per cent are also affected by this accretion of wages to land values. Think of it this way - you may have to settle (and you may enjoy it!) for buying a property several miles away from your work place or the nearest high quality commercial centre because all the property closer is too expensive. All those land owners that you pass on the way to work are gaining from your and the many other people in the same situation unfulfilled need.
Even more galling is that if we all happen to have the same incomes - you having managed to grab your slice of land at some earlier stage when it was less popular and therefore cheaper - we are taxed at the same level on those incomes. In turn both of our sets of taxes are used to invest in even more facilities that contribute to those land values. The person owning property closer to the "action" is gaining from all of our taxes disproportionately from those living further away. Similarly, the person owning property closer to the action has no incentive at all to release that location for others who may need it more at different stages in their lives, because they are continuing to gain from it and from those for whom it may now be a more appropriate place to settle. They are, quite literally, getting something for nothing, on their part at least. Something from the needs and activities of all of us that could make as good or better use of that location.
If you are interested in exploring this further, I would recommend a recent book by a chap called Fred Harrison, called "Ricardo's Law: House Prices and the Great Tax Clawback Scam (Why Tony Blair's Project Failed)" in which he shows that all the arguments about Londoners and people in the south east subsidizing other areas of the country via the tax and regional grant system pales into insignificance when you realize that the overall effect of that spending is to make property values in the south east and London increase faster.
Harrison concludes, as I do, that the entire tax system should therefore be based on the values created by all of us but currently "enclosed" by land owners. A hundred and more years ago the American self-educated economist, Henry George, encapsulated this into his idea of a "single tax" - that all the rental value of unimproved land in any jurisdiction should be collected by the state, whose fiscal program should be strictly limited to the amount that can be collected this way. He preferred, as again do I, that the state would do very little but turn that money around and dole it out to everyone, equally, in the form of a Citizen's Income; if you like, a dividend from what we all invest by creating that land value in the first place - our common birthright. At the same time, our average tax bill per individual would be halved, our economy would grow by around a third and we'd have a much more equitable society.
"The value of land rises as population grows and national necessities increase, not in proportion to the application of capital and labour, but through the development of the community itself. You have a form of value, therefore, which is conveniently called 'site value,' entirely independent of buildings and improvements and of other things which non-owners and occupiers have done to increase its value - a source of value created by the community, which the community is entitled to appropriate to itself. …In almost every aspect of our social and industrial problem you are brought back sooner or later to that fundamental fact."
[Mr. H.H. Asquith, at Paisley, 7th June 1923]
"We hold, as we always have held, that, so far as practicable, local and national taxes which are necessary for public purposes should fall on the publicly-created value rather than on that which is the product of individual enterprise and industry. That does not involve a new or additional burden on taxation, but it would produce these two consequences - first of all, that we should cease to be imposing a burden upon successful enterprise and industry; and next, that the land would come more readily and cheaply into the best use for which it is fitted. These two things would be two potent promoters of industry and progress."
[Mr. H.H. Asquith, at Buxton, 1st June 1923]
23.07.08
at 13:57
at 13:57
tagged with:
Nick Clegg, upon his election as Lib Dem leader, said that he wanted to break what he called the "cosy consensus" between Labour and the Tories that has impoverished Britain's political discourse. With Labour now nicking policies on welfare from the Tories, and both vying to be "tough on the work-shy", now is surely the time to offer a radical alternative.
It is not just their approach to benefits that is backwards in vision, but the whole assumption that "full employment" is the thing we should be aiming for. Such a policy actually highlights even more starkly the difference between being independently wealthy on the one hand and having to work for the basics of life on the other. In an era in which more and more of our tasks can be automated or even exported we should be aiming more to live off the financial assets that past productivity has created.
Liberals have, for a century, harboured the secrets of changing all that. Shamefully, over the past quarter of a century we have dropped every one of those secrets from our policy platform, presumably so we could compete in that "cosy consensus". We are only just on the cusp of really rediscovering the oldest of these...
Three key policies in particular would end this cycle of dependency once and for all. A bold claim for sure, but why not? We have gone through sixty years of the welfare state and are still arguing about the outcomes of welfare, health, housing and education, just as Beveridge was trying to address in his report.
The Single Tax - the one policy we are slowly re-engaging with. Though we seem to be stuck on the idea that LVT is simply an alternative tax, we need to get beyond that and understand that it goes to the very core of our relationship with the planet. Land, economic land that is, "everything in the material universe not created by the application of labour and capital" (so basically the things of nature that we all have to share between the 6bn of us born here), is the third factor of production. David Ricardo pointed out nearly two hundred years ago now that land, especially where it is a monopoly, such as with a physical location or site in the built environment or, say, a section of EM Spectrum that can only be used by one wireless operator at a time, tends to absorb the surplus value created by the labour and capital expended around it that makes it a popular location. Ground rent is created where there is more than one potential occupier that could make good, productive use of a site. It creates a massive transfer of wealth from those who don't own a popular site to those who do, through no effort on the part of the owner of that site.
As a non-land example, the UK government has auctioned off the part of the EM spectrum that carries the new WiMax wireless network signals to a single enterprise, Freedom4 for the whole of the UK. They now hold a monopoly on something that is a gift of nature that anyone else wanting to develop WiMAX networks have to use. They can therefore charge more or less what they like for licenses to others to use that part of the spectrum whilst doing precisely nothing to develop the services that would run on it.
Creating so called "free land" by capturing the value of these natural assets for the common wealth rather than having to tax economically beneficial processes like work and trade is absolutely essential to achieve equity. And the best time to do it would be the bottom of a property cycle. Hint. Hint!!
Citizen's Income - this is the real challenge to the "cosy consensus" that has emerged in the past few days on welfare. It was, I believe, Lib Dem policy up until around 1991. At the top of the recent property cycle there would have been enough land tax (on residential locations alone, setting aside what might be available through commercial, industrial, central business disrict or agricultural locations, airspace, EM spectrum or other forms of economic land) available to pay a citizen's income of about £100 per week per adult and a proportion of that for children depending on age. Further reforms, for example on seignorage - the extraordinary "profit" that creating money as debt gives to the banks that is rightfully part of the common wealth (since the money they "create" is denominated in our national currency) - would enable us to pay for the current health or education budgets if we wanted to, or to add around another £1,000 to the adult Citizen's Income.
People seem to have a problem with the idea of giving everyone an unconditional and non-withdrawable payment like a Citizen's Income because, they say, it will entrench the work-shy in their bad habits, maybe even create more of them. But let's face it, if Joseph Rowntree's lot reckons you need £13,400 to live a basic but comfortable life in the UK, less than half that is hardly going to be comfortable. And it's not meant to be comfortable. It is meant to be hard enough to persuade anyone who wants anything more than the basics of life to do something to earn some additional money. Minimum wage would be scrapped so people would be free to choose to accept a job for whatever they like - just to be able to top up their citizen's income to whatever level they want, but crucially, it would not be withdrawn when people start earning, so there is every incentive for all that nearly ten per cent of the population trapped on various benefit systems to work, even if only a little.
Yes, in the light of campaigns by the tabloids against "benefits scroungers" and the "something for nothing culture" it will be a difficult alternative to sell, but we should be prepared to do it. Think of it the other way around - if we all contribute to the value of locations by our activities around them, why should the dividend from that only go to those who can't work, say? Why not to all of us. It creates a cushion to fall back on in hard times and the ability, even if only for a short while, to be more choosy about the work we accept. No longer do we have to accept the lowest job just to survive. Instead of only the very wealthy gaining financial independence by privatising the collection of land rents, everyone gains a measure of financial security from the common wealth we all contribute to creating.
You could then say that any additional "benefits" must be provided locally, through locally raised taxes and much more accountably than at present. The "parish rate" would have to be used to provide say a basic education for those who were not earning anything more than their Citizen's Income and A&E type health services. But remember, much of the illness in society is because of the sort of poverty that both the Single Tax and the Citizen's Income would eradicate. And not having to pay several taxes on incomes - employers' and employees' NI, income and capital gains taxes - would enable more people to save more of their incomes in productive financial assets for their old age reducing the reliance on a crumbling state pensions system. And, apart from say the armed forces, the troughs at Westminster could be emptied and everyone sent home (and James Purnell would have to find a real job, or discover how life is on the dole perhaps!)
Ownership for All - this third plank of Liberal "redistributive" policy came to the fore in the middle decades of the twentieth century, this is crucial to creating more financial independence for more people. I'm not talking about the sort of free for all sale of state companies as in the eighties, which became in effect a gambling opportunity for anyone who had a few quid stashed away - "Let's have a flutter on Sid" type thing. This is about creating structures in which the workers can share in the success of their employers by becoming part owners. Much more like, say, John Lewis, or, in the seventies, the National Freight Corporation. And things have moved on even since then. New corporate forms such as limited liability partnerships enable different types of partners entitled to different proportions of the profit, not just the providers of the capital.
Again, with the Citizen's Income behind them enabling people to turn down work that does not offer optimum returns to the worker, more and more employers would have to offer the sort of package of benefits that enables ordinary workers to build up a financial stake for the future. These financial assets are fairer than putting all your capital assets in the single basket of one's home, which is not really "net wealth" in any case. More liberal than both socialist style "common ownership" and ownership solely by the capitalist, such partnerships would generate real wealth that can produce an income when you no longer want to work for whatever reason.
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These three measures are, I believe, essential to a truly economic liberal platform. They share, equitably, the common wealth created by us all, and distribute more fairly the ownership of financial assets between those who provide capital and those who provide labour to an enterprise. They would reduce the cost of the basics of life by removing tariffs, subsidies and the private collection of rents and so instantly make people better off. They would leave a vanishingly small number of people genuinely unable to fend for themselves and the "parish rate" system would enable localities to support them while the work-shy would have a hard time surviving only on their Citizen's Income and those who are currently trapped on benefits have every incentive to take up even small amounts of work to top up their Citizen's Income.
It is time for such a revolution, for the Liberal Democrats and for the country. You don't have to be the first country on the planet to do this, but whoever does will instantly become the most liberal and economically just country on the planet and a magnet for international trade seeking to avoid damaging tariffs. We have gone sixty, a hundred, even, if herbert Spencer is to be believed a hundred and fifty years tinkering with redistributive policies involving moving incomes that people have worked to achieve around and still have not achieved the "greater good". The recent press coverage of the Welfare Green Paper shows that the politics of envy and "deserving and undeserving" are still alive and well. It is time to try these different strategies instead of "more of the same" attempts to be tough on the undefined undeserving.
And the biggest prize of all - it would enable us to get rid of vast swathes of bureaucracy and get those state employees into real productive work generating real additional wealth for the country instead of pushing other peoples' around the corridors of Whitehall.
08.01.08
at 19:00
at 19:00
tagged with:
This workfair business...can anyone answer me a question:
If there are jobs that need doing, someone should be employed to do them. Are people at the end of their two years on JSA simply being herded into compulsory minimum wage jobs then - in which case they may be miserable with the job they get but they would, by definition, no longer be on benefit? Or would they still be getting benefit rates, just being made to "do something" (anything?) to "earn" their benefits?
Obviously I don't like this idea. Citizens Income would solve all of this without any potential stigma that might be associated with a sort of "community service order" for benefits. To me it all just demonstrates that there aren't really any new ideas coming out of the Tories (or anyone else for that matter!) on welfare, just that "something must be done and this is something".
