Use a land tax, and not a water cannon, to quell the riots

The riots and its causes are of course complex, but underneath the many social and individual issues lies a simple, yet subtle, economic truth. Because our economic system has no capacity to value our marginalised youth in the same fashion it has no method of valuing  nature and our natural assets except in a way that exploits them for private advantage of the privileged few.

In my view the problem is natural assets, namely access to land, natural resources and intellectual assets that are the essential bedrock of income creation and economic success for any young man or woman.

We live in a society that has created an economic and legal system that allows a very few (mostly old people), both in this country and abroad, to own all the natural assets that people need. This system has subtly evolved over many years and been adopted across the world as it benefits those with the greatest power to effect legal and economic change, while at the same time being complex enough to obfuscate any insight into its workings by the average ‘person in the street’.

Our country is one of great wealth, the majority of that wealth is tied up in the land, much of which is held far from the reaches of the taxman, in opaque ‘offshore’ financial vehicles, trusts and shell companies and laws have been lobbied for and adopted that give these asset owners very favourable tax terms or turns a blind eye to tax avoidance in illegal, semi legal and legal offshore financial services. An unthinking cabal of our wealthiest have found a way of taking their wealth out of our economy and creating a vast system of speculative ‘financial capital’ that for tax purposes belongs to no one, but is used by a financial service industry to invest in creating bubble and busts in the gifts of nature that should be shared by us all.  At present this financial capital is the chief cause in commodity food speculation that is starving millions, children are dying today of malnutrition just so an unthinking and uncaring elite can increase their wealth.

Our ‘neo classical’ economic system assists in the process by allowing economists to hide the role land,  natural and intellectual assets play in creating monopolies that extract the wealth created in our ‘real’ economy, and absorb the productive efforts of the majority. An upshot of such a system of monopolies is that it lowers the ‘margin of production’.

The "margin of production" is a key concept in economics and is fundamental to the creation of an underclass of people, who have no hope of ever being part of the productive economy. The upshot of which is since the start of our current depression we have seen youth unemployment in black areas, the areas of the riots, shoot up disproportionally with that of other socio-economic groups. This immigrant group has been the least successful in securing access to the ‘means of production’ and natural assets and as such is the most marginalised.

Google the ‘margin of production’  if you want its full explanation, but it is a concept that sets a floor on wages and thus the point at which people are able to leave dependency on state benefits. The rent of land is the key factor in setting the margin of production and at what point the poorest in society can earn a living wage. So high rents are the real cause of poverty and disaffection and what ultimately lead to riots.

Throughout history the relationship between earning and rents have been the determining factor in crime, unemployment and even riots.

When your only option for earning money is to become a wage slave serving others in a menial capacity that offers you no more advantage than stopping on state benefits that is the point that you become marginal and play no economically productive role in society. This is the true meaning of being marginalised and so all of your potential is wasted and so we see that manifested in self-harm, criminality and vengeance against a ‘rigged’ system.

A solution to the riots, and to conserving nature, is through a system that stops marginalising so many people and enshrines common ownership of all nature’s bounty. Everyone, and all of nature, should be valued, and feel valued. This can be achieved through common ownership of all of nature’s riches. The most efficient method for this will be a tax on the unimproved value of land, natural mineral wealth and nature’s other freely given assets, such as the electromagnetic spectrum.

If the government collected its revenue through such a system, after paying for our existing public services there would be a surplus that could be distributed as a citizen’s dividend to everyone equally; this would give everyone a very basic income and stop poverty.  (this is key to stopping poverty across the world and protecting nature – I would urge all to read Fred Harrison’s wonderful book on the subject– ‘The Silver Bullet’:  http://www.amazon.co.uk/Silver-Bullet-Fred-Harrison/dp/0904658104 or watch is film http://www.fredharrison.com/?p=230)

The advantages of such a system are huge:

• 1.       There would be no poverty trap so any work done would go untaxed and go straight to the worker, allowing them to experience an observed benefit to productive effort.

• 2.       Land in cities would be much cheaper (due to a tax on the monopoly portion of their value) to buy or rent and this would in turn increase the margin of production. Such an increase would expand opportunities to set up a business. At present land values are so high it is very difficult to get access to the natural resources and land needed to start productive businesses as so much of the profits are swallowed up in the ‘economic rent’ paid to access land and natural resources. Just think of the colossal ground rents of a corner shop in worst part of London and see how rents, piled one on top of another through the economic  supply chain cascade across society, hoovering up the productivity from the productive many to the monopolistic few.

• 3.       No more bad taxes; at the same time the rents of accessing opportunity are reduced so the taxes on work are removed, with income tax, national insurance contribution or VAT, opportunities will avails themselves to our poorest and jobs will be created in the most economically depressed areas. Lowering unemployment and creating lots of jobs for these disaffected young people.

Nature would benefit too as ‘natural’ land would be very expensive to develop as you would have to start paying tax on it, so marginal land would revert back to nature.