Newsletter
No. 9 - April 2006
Links
to other Newsletters can be found here.
CONTENTS
1. Editorial
2. Climate change means our present way of
working must change radically
3. Carbon Trading or Green Taxes?
4. Book Review: The Citizen's
Stake: Exploring
the future of universal asset policies
5. Book Review: Wheels
of Fortune: Self-funding
Infrastructure and the Free Market Case for a Land
Tax
6. Journal Review: International Journal
of Green Economics, Vol. 1,
Nos. 1/2
7. Shorts
(1) Eric Britton & Wikipedia
(2) Conall
Boyle
(3) Walt
Patterson
(4) American Monetary
Institute
(5) "The Impact of Inequality: How
to make societies healthier"
(6) Roy Morrison
(7) New Links
1. EDITORIAL
It is "as though a man had been seeking to
build a substantial house by working spasmodically
on odd portions of the structure on quite isolated
plans, fashioning minute details of some upper parts,
when he has not set up, nor indeed even planned out,
the substructure which is their sole possible foundation
and stay: his very best efforts being thus necessarily
rendered abortive by the fact that, while he is hammering
at this portion of it or that, he possesses no clearly
thought-out plan of the structure as a whole".
In the early 20th century the distinguished civil servant
Sir Robert Morant was commenting on the British approach
to government reform. A hundred years later, as we contemplate our
present government's failure to develop "joined-up
government", should we be content to murmur "plus ça
change"?
Was Morant consciously echoing Copernicus who, 400
years earlier in On the Revolution of the Heavenly
Spheres, had said of the Ptolemaic system of astronomy, "It
is as though, in his pictures, an artist were to bring
together hands, feet, head and other limbs from quite
different models, each part being admirably drawn in
itself but without any common relation to a single body"?
If so, Morant may have hoped that his insight, like Copernicus',
would lead to a paradigm shift.
Thoughts on these lines occurred to me as I read through
the material for this newsletter. Climate change; the
way most of us have to work; increasing land values,
house prices and transport failures; whether - and, if
so, how - citizens should be allowed their share of the
value of common resources; how to bring rational political
analysis to bear on critical problems that lie outside
the boundaries of conventional economics - all these
raise the question: should we develop separate schemes
to deal with each issue that arises, or should
we prefer solutions that can develop over the next half-century
into a mutually reinforcing and coherent new pattern
of self-governance for the peoples of the world?
2. CLIMATE CHANGE means our present way of working
must change radically.
Chapter 3 of Future
Work concluded that "As the industrial-age
way of organising work as employment has become ever
more deeply engrained in the structures of industrialised
and industrialising societies, it has turned work
into a form of activity which is dependent, remotely
controlled, and instrumental.
"Work in the post-industrial
age will have to develop in a positively different
direction. It will have to become more autonomous,
more self-controlled, and more directly related
to the needs and purposes of those who are doing the
work. As we reach the end of the employment age,
it is becoming urgent to think out how to reverse
some of the main features of employment as a way
of organising work."
In the 20 years since Future Work was written, the
need to reduce carbon emissions has made it all the
more urgent to change how we work.
Browsing recently, I found Francis Kinsman reporting
in The Telecommuters (John Wiley, 1987, ISBN 0
471 91789 3, pages 9-10) that, as far back as 1975,
the USA could have saved 75 million barrels of oil and
completely eliminated the need to import oil from abroad,
if just one eighth of urban commuting had been replaced
by telecommuting.
A conclusion (page 117) of Teleworking Explained (John
Wiley, 1993, ISBN 0 471 93975 7) was that "if the
commute didn't already exist, only the maddest of
mad economists would invent it". The authors
estimated that the energy spent on commuting in UK, Europe
and USA was "equivalent to lifting a third of Mt
Everest and carting it 15 miles, and repeating the exercise
on five days of every week of every year".
Telecommuting is only one of the ways more of us
could work in or near our homes. Meeting more
of the needs of our own households and local communities
than we do now offers many other ways.
3. CARBON TRADING OR GREEN TAXES?
This question is now surfacing in mainstream politics
in the UK. My article on "Fairer Distribution of
Common Resources: the pros and cons of carbon trading" in "It's
Simpol", Simultaneous Policy News, Winter 2005/06,
noted some of the practical difficulties of rationing
and trading schemes. It concluded that people who care
for the world's future should consider whether an
alternative policy, based on national and international
developments in tax and public spending, might be preferable
and more effective.
For the text of the article, click here.
For the whole newsletter, click
here.
4. THE CITIZEN'S STAKE
Will Paxton and Stuart White with Dominic
Maxwell (eds), THE CITIZEN'S STAKE:
Exploring the future of universal asset based policies,
The Policy Press, University of Bristol, 2006, 212pp, £15.99
(paperback).
Two of the three editors and two other contributors
to this book are from the Institute
of Public Policy Research, which describes itself
as "the UK's leading progressive think tank".
In 2000 it conceived the Child Trust Fund announced in
2005 by the present government. New Labour has followed
up other IPPR policy research findings too. The book
is important for that reason, as well as for its own
merits.
Starting from Thomas Paine's idea that a modest stake
in the value of society's resources could help people
to become "useful and profitable citizens",
the book discusses:
- possible ways of financing a citizen's stake ,
including a reformed inheritance tax and stakeholder
trusts to reclaim the value of common assets like land
and the environment and other natural resources; and
- questions about how people should be allowed
to spend their citizen's stake : should they
be unrestricted in what they use it for? Or should
its spending be limited to such activities as training
or providing care? What principles should govern
any restrictions designed to ensure its being used
responsibly?
The book was launched at an IPPR event on 19th April to
discuss questions like:
- Can and should asset-based policies like the
Child Trust Fund become a “fourth pillar" of
the welfare state?
- Can they form the basis for a more egalitarian form
of market economy?
- Can asset-based policies be paid for from taxes
on inheritances, or "common assets" like
land value?
- How can and should the state promote the responsible
use of universal capital grants?
- How might asset-based
welfare improve the work-life balance and support
carers?
For further details or information about any
follow-up, please contact Ruth Eldridge
or phone 020 7470 6105.
I find this book very interesting. Its proposal to
distribute a share in the value of common resources to
citizens as a capital asset differs from the proposal
I have preferred - to distribute a share in the annual
value of common resources as a basic citizen's income.
My feeling is that the second of those two proposals
will prove simpler and easier for citizens to understand
and accept, and simpler and easier and less costly
for the government to administer; and that introducing
a citizen's stake partly as capital and partly as income
would be unnecessarily confusing. But I have no doubt
that we will hear more about the idea of a citizen's
stake in the coming years.
5. WHEELS OF FORTUNE
Fred Harrison, WHEELS OF FORTUNE: Self-funding
Infrastructure and the Free Market Case for a Land
Tax, The Institute of Economic Affairs,
2006, 187pp, £12.50 (paperback).
The Institute of Economic Affairs' mission -
in contrast with IPPR's - is "to improve understanding
of the fundamental institutions of a free society with
particular reference to the role of markets [my italics
- JR] in solving economic and social problems".
Well-known
associates and supporters of IEA have included Friedrich
Hayek, Samuel Brittan, Patrick Minford, Alan Walters
and Brian Griffiths. Its researches contributed to
the policies of the Thatcher Conservative government
in the 1980s.
Fred Harrison's previous book - see my newsletter
of July 2005 - convincingly explained that
the root cause of the economic and social problems
of housing in Britain - house price rises vastly
outstripping rises in wages and salaries and consumer
prices - can be traced to the fact that wages and
salaries and consumer prices are taxed and the value
of land is not.
Wheels of Fortune now
convincingly explains why our failure to provide
efficient and financially viable transport infrastructures is
also due largely to the failure to tax land values.
Increases in neighbouring land values created by building
roads, railways, and airports - and, in the past, canals
- have not been captured to finance the capital investment
needed to build them. "Infrastructure projects
almost always bring about an increase in the value of
adjoining land. ...[The London Underground Jubilee
Line is given as an illustration - JR] ... When such
projects are publicly funded, this represents a substantial
transfer of wealth from taxpayers to local property owners" (page
20).
Wheels of Fortune, like its predecessor, makes
it clear that the "pathology" of our present
tax system inevitably generates economic inefficiency
and injustice - not just affecting housing in the first
book and transport in this one, but throughout the whole
economy. "Taxes on wages and savings are regressive
tools for transferring money from people at the bottom
end of the income scales (who tend not to own land) to
people in the middle and higher income brackets (who
tend to own land). This is the process of transforming
earned income into windfall wealth via investment in
infrastructure" (page 57).
In my view this book is a must-read for anyone
concerned with economic efficiency and economic justice.
But I do have one important reservation.
Readers may notice an apparent contradiction.
The early chapters present arguments for raising investment
finance for each transport infrastructure project
separately, through its own private sector scheme
to tap the prospective increases it will generate in
local land values.
The message of later chapters is a different and more
universal one: we need a revenue-neutral reform of
the whole tax system.
On the one hand, we need to
tax the financial benefits which property owners everywhere
get from the value of their land - which is due not to
their own enterprise but to the various activities and
demands of society, including the investment of taxpayers'
money in transport infrastructure.
On the other hand,
we also need to reduce by the same amount of money
the tax burden now imposed by economically and socially
damaging taxes on incomes and capital.
That would have a doubly beneficial effect on the
efficiency and justice of the economy right across
the board, first by charging a proper price for the
financial benefits enjoyed by landowners from the publicly
created value of their land, and second by reducing
the negative effects of existing 'deadweight' taxes
on the rewards people get from contributing to the
common wealth.
To me, that simpler and more universal approach
seems obviously preferable to a proliferation of separate
private sector schemes dealing only with transport
infrastructure and ignoring the other reasons for taxing
land values. For one thing it would be more transparent,
making it easier for citizens to understand the basis
on which priorities were being decided.
It would involve the initial investment finance for
public projects continuing to come from taxpayers through
the systems of public revenue collection and public spending.
But it would also involve developing more competent
and realistic methods of
- appraising the economic and social merits of competing
projects than the present Treasury methods that Harrison
rightly criticises,
- attracting private sector participation in their
financing,
- and managing them through to their completion and
operation.
Click
here to read the pdf of the publication.
6. JOURNAL REVIEW: International
Journal of Green Economics, Vol. 1, Nos. 1/2, Miriam
Kennet and Volker Heinemann (Eds), Inderscience,
2006, 224 pp.
This new academic journal will be of interest to many
readers of this newsletter. Coming from the recently
established Institute
of Green Economics, it "attempts to develop
a progressive alternative to conventional economics with
the aim of achieving a more sustainable and equitable
society ... - a solution-based, real-world, problem-solving
economics that speaks the language of other different
viewpoints", and reconnects economics with the more
human and natural and social sciences.
A short review can't do justice to this volume, which
contains 17 contributions from 14 contributors including
the two editors. Apart from the editors' substantial
contributions introducing the journal and discussing
the scope and aims and philosophical underpinning of
Green Economics, the following are four points about the
need to transcend the boundaries of conventional economics that
caught my eye.
(1) Victor Anderson's "Turning
Economics Inside Out" draws attention to some
of the ways, such as climate change, in which the economic
system is now affecting environment and natural
resources,
and some of the ways, such as marriage breakdown, insecurity
of employment, labour mobility, stress, and work-life
imbalance, in which it is affecting personal, family
and social life. It now invades the culture and psychology
of consumers and their aesthetic, symbolic, experiential
and psychological wants - for example in the marketing
of products like food, clothing, and cars, and in the
use of marketing tools like the 'pester power' of
children.
Uncertainty about the outcomes of rapid
technological development - information and communication
technologies, biotechnology, nanotechnology - and growing
debate about the relevance of ethics to economic behaviour are
other 'externalities' of economic activity (as conventionally
understood) that are now rebounding to affect the economic
system itself.
Those and other key issues of our time arise "in
a 'ring' just outside the boundary drawn by conventional
economics". In other words, "the boundary
drawn around economics by conventional economists is
drawn in exactly the wrong place" for helping
us to understand and deal with those issues.
(2) Mary Mellor describes "Ecofeminist
Political Economy" as providing "an analysis
of the current destructive relationship between humanity
and non-human nature through an understanding of women's
position at the boundaries of economic systems. From
this perspective women, or rather women's work and lives,
like the natural world, are externalised and exploited
by the valued economy...that values human activities
in money or prestige terms".
She describes "the increasingly recognised insight
that the money system has its own independent dynamic" as "central
to an analysis of money issue and circulation as a possible
transformative space for a feminist and green economics".
She emphasises that what is important is that money
has come to dominate modern economic systems with patterns
of exclusion - a question not just of gender equality
and environmental damage, but of right to livelihood
and economic democracy.
The money-valued economy is
parasitical on important aspects of human and natural
existence, and its failure to acknowledge them as its
true resource base means that they are exploited and
damaged.
(3) Chit Chong puts forward "Restoring
the Rights of Future Generations" as one of
the ethical principles on which politics, economics
and justice in the 21st century should be based. We,
who live today, are stealing and destroying resources
which rightly belong to people of future generations.
The concept of Sustainable Development is not enough.
Restorative Development is needed.
This is clearly far outside the boundaries within
which conventional economics can offer responsible
guidance. Conventional economics teaches the principle
of 'discounted cash flow' - that getting money now
is worth more than getting the same amount of money
in the future, and that therefore it is economic to
convert real resources into money as fast as possible.
The discounted cash flow principle will have to
be turned upside down, to favour investment that benefits
future generations. But, as Chit Chong rightly
concludes, we will have to look beyond the dogmas of
conventional economics for this, to legal and political
and educational competence.
(4) Derek Wall's largely
favourable review of Amartya Sen's "Development as Freedom", describes
it as a progressive, radical version of market-based
economics. Sen is, of course, widely respected
for his concern with poverty, capacity-building and related
aspects of development, and is regarded as an exceptionally
enlightened Nobel-prize-winning economist.
But Wall also points out that "what
Sen ignores is as important as what he includes.
He sees markets as natural and universal, implying
that the economic alternative to markets is heavy-handed
state oppression. The notion that markets are just
one economic mechanism among many lies outside his
thought. The ecological effects of markets that tend
to lead to ever-increasing production and consumption
is also absent".
So
is awareness that "the 'free' market often requires
violent processes of enclosure" to steal communally
managed resources and turn them into private property.
Conclusion: for all his merits, Sen appears to remain
a prisoner of the limited discourse and concepts of
conventional economics.
7. SHORTS
(1) Eric Britton & Wikipedia - Eric
Britton, a distinguished pioneer of internet research
and communication on sustainable development, commends
the free encyclopedia Wikipedia for those purposes. I
have found it useful myself. He suggests we should also
see it as a possible means of spreading the word, while
respecting its code as an open encyclopedia. His own
contributions include articles on Carsharing and Jane
Jacobs (and yours truly).
(2) Conall
Boyle - Congratulations to Conall Boyle (63)
on his M.Phil. His thesis was on on lotteries, "Who
gets the prize: the case for random distribution
in non-market allocation".
We hope it gets published. The case deserves to be seriously
considered. To download it, click here.
(3) Walt
Patterson - After a 15-year break from writing
about nuclear power, Walt Patterson reminds us why
it was so widely agreed that no more nuclear power
stations should be built in Britain. To download
his article on "Nuclear Amnesia",
published in the April 2006 issue of the Chatham House
monthly "The World Today", click here.
(4) American Monetary
Institute - The agenda for the AMI's 2006
Annual Conference on 21-24 September in Chicago will
include discussion of a draft reform bill - the American
Monetary Act - and strategies for mobilising support
for it in Congress. For Stephen Zarlenga's
announcement of the conference programme and other
details,
click here.
(5) "The Impact of Inequality:
How to make societies healthier" - Our thanks
to consultant psychiatrist Sebastian
Kraemer who has drawn this book to our attention.
Written by Richard G Wilkinson, it reports that if
Britain changed from being one of the most unequal
of European countries to being among the most equal,
average life expectancy would increase, homicide
rates and levels of violence would fall, people would
trust each other more, and community life would be revitalised.
This is clearly an important book - from many points
of view. For details click here,
and then on paperback book.
(6) Roy Morrison
has
sent details of his new book "Tax Pollution,
Not Income: A New Prosperity in An Ecological
Age", No 1 in a new series on "Directions
for a New Millennium" . It "answers perhaps
the fundamental question that American democracy
must address in the 21st century". Details from Writers
Publishing Cooperative.
(7) New Links
Recent additions to the Links
page include the
Global Basic Income Foundation and the U.S.
Basic Income Guarantee Network.
James
Robertson
27th
April 2006
The Old Bakehouse, Cholsey
Oxon OX10 9NU, UK
Tel: +44 (0)1491 652346
e-mail: james@jamesrobertson.com
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