globalization

Let me make no bones about this: I am now of the opinion, and have been for some while, that the only true way to Liberty for all is by abolishing government entirely: traditionally termed "anarchism". I'm also not much good at gradualism: someone once said to me that gradualism is a recipe for ultimate failure, and I agree. Give me a revolutionary change; get it over and done with and let us enjoy our new way of life as quickly as possible.

This is because I am, in Hayek's terms as explained in his "Why I am not a conservative", a genuine liberal - one who is willing to take a leap forward into the unknown without first having to know absolutely the outcome; that I have an unshakeable optimism that humanity is so damned clever that it will find, co-operatively rather than coercively, ways of dealing with any problems such change throws up; that if the cause is important enough we will find along the way solutions to issues as they arise.

More importantly (and not merely because I am a recent convert to voluntarism) I feel that the best time for such revolutionary change for many generations is now. Not only that but if we do miss this present opportunity we could actually find ourselves being carried away from the direction of liberty, both nationally and globally and for a considerable time - a dark age. The way governments have been able to finance themselves and their bribes of "safety nets"- both in terms of welfare and physical security - thus far, through control and taxation of their citizens, is being challenged and undermined in ever more popularly accessible ways - whether through travel, virtualization or communication - which happen also to be the best tools for helping to spread the revolution.

For the state to maintain this control in the face of these ever widening vistas of freedom open to its citizens will require ever firmer crackdowns and monitoring of things like travel and communications, if only to try and "follow the money" to ensure that people are taxed "properly". When most international trade had to be done through intermediary companies it was relatively simple to have someone at Custom House Quay signing things in and out of the country, but when we can buy and sell things individual to individual around the globe that all arrive here in millions of small packages addressed direct to the individual involved in the trade it requires a great deal more effort to monitor. Just because electronic communications leave traces that make it possible to track them automatically does not mean we should do so. If the Royal Mail steamed open every letter or package we would be appalled - but of course if it did the whole thing would grind to a halt. In an era where we can potentially work online for anyone in the world and be paid in a location and currency of our choice, where do our taxes go?

But, where the printing press heralded the death-knell of clericalism and the steam engine of agrarian feudalism so mass communication and transport heralds the end of the need for representative government. And just as, even if the first stages of the reformation ushered in by the end of clericalism and industrial capitalism taking over from agrarian feudalism were painful for some they have both been beneficial for most in the longer term, so the wrench from a deeply entrenched statism will also likely affect some more positively than others, the pace of contemporary change and innovation is such that this could be one epochal change in which we are able to fix those problems in "real time" and spread them rapidly around the globe.

Now I am of course familiar with many arguments that most of you might want to throw at me about "positive liberty", and how collective action is essential for giving people opportunities the "market" could not give everyone: after all, I used to make such arguments as well. Let me start with what ought to be an obvious statement: there is nothing a state can do that individuals, sometimes acting together in some way other than through government, could not do, by way of creating these "positive liberty" opportunities.

Leave aside for a moment the obviously crucial issue of whether they would create such "positive liberty" opportunities in the absence of a government forcing them to do so; can you honestly think of any positive function the state currently provides that only a state could provide? Leave aside also, which is a part of the previous question, whether non-state non-coercive mechanisms could deliver such "positive liberties" as "efficiently" or "cost effectively" as the state alternative. I am merely trying to get your agreement at least that yes, we could have private education, we could have private health care, we could have private charitable welfare safety nets, we could have non-state constructed and owned transport systems and infrastructure, we could have non-state security guards, investigative services and arbitration services.

Assuming that you are with me so far then, that the state is not the only conceivable mechanism that could deliver such positive liberty opportunities we ought to look at what price we pay for having a state provide all these things. I don't mean the direct cost of these "positives" but any "negatives" having a state provide them brings; the "collateral damage" if you like.

And what an appropriate statist phrase that is, for we should start with the area in which that phrase resonates the most. It has been estimated that somewhere between 175 MILLION and 230 MILLION people have lost their lives over the past century in wars between and within states and in politically motivated atrocities, human rights abuses and recklessness about the consequences of political policy - things like the often forgotten million or two Germans that died having been ejected from Eastern European countries after WWII not caring where they were to go or how they were to get there alive. And that doesn't include all those killed, for example, through law enforcement where the "crimes" being enforced against do not or should not breach the "harm" principle beloved of liberals.

Then there is the direct cost of governments providing these "positive liberty" opportunities; the welfare state, redistribution and so on paid for largely out of taxes. Here in the UK we are approaching a point at which tax will take 50% of our national income. Despite decades of many governments trying to create a system that is fair and redistributive (what they like to call "progressive"), it is still the case that the least well off taxpayers tend to be paying a greater share of their income in taxes than anyone else. So whatever the benefits various political parties may have tried to bribe the electorate with, assuming that when liberals express concern about lack of these positive liberty opportunities they are mostly concerned about the least well off, we find that for much of the time the poor (especially the working poor) are paying the most, proportionately, for providing these services to their fellow less well off citizens. As it has been said when you rob Peter to pay Paul, you are sure of the support of Paul.

Indirect costs are just as important, though. When the state provides all these things it usually does so as an actual or a de facto monopoly. Yes, we have a small private education system, a small private health care market and so on (and even in both of them they are heavily regulated by government so don't offer an open choice), but essentially most of what the state provides is done by way of monopoly. Even if the state only finances and hires corporations actually to provide the service, as it does with much infrastructure, including all the so-called privatized utilities in the UK, the state either controls who gets the contracts or heavily regulates those who provide quasi-private services.

There is little incentive to do all this efficiently, except that at some point, and the tax-paying public are remarkably tolerant about this, we might vote them out if we think they are spending too much or not efficiently enough. There are few price mechanisms even to indicate if they are doing things efficiently and they end up inventing measures and league tables to approximate for some market mechanism. And they are frequently done on a massive scale, so that initiative is difficult and best practice spreads slowly and with deliberate politically controlled pace. The tax paying public are of course very tolerant because so long as they perceive that more people are paying more than them as individuals then they must be getting as good a deal as it is possible to get.

And finally, but crucially for me, there is the play-off, for liberals at least, with "negative liberty" that all this, and the rest of the state's interference in our lives, creates. Monopolistic services reduce choice. Regulatory burdens reduce entrepreneurialism both in the areas dominated by public provision but also throughout the economy - 80% of the sample of 25,000 small businesses surveyed recently in Oxfordshire said that their biggest headaches were regulatory burdens, especially keeping pace with what often seem like arbitrary change in regulation.

Tax, whichever way you cut it is an imposition on peoples' earnings and wealth. Even for those who feel that the democratic process means that the citizen is effectively agreeing to this as a price of their involvement in that society, in reality we always know that there are people who will not agree with the particular mix of taxes, the particular uses the money is put to and so on. For them, and this could be 49% of the voters, never mind the electorate, it remains an imposition.

In order to enforce this agreement of the bare majority (or the first past the post here in the UK of course - so it is most of the time not even a majority) the state must have the power to threaten people who do not wish to comply. This monopoly of the use of force must always be a challenge for the lover of Liberty. This monopoly is what gives the state the ability to impact on so many other arbitrary areas of our lives. Like any other monopoly it in inherently inefficient. As a monopoly wielded by one group of citizens over another and for which fierce political competition to control it exists, there is always a temptation to bid for that power by offering new restrictions on others, until you end up with the sort of bloated over-legislated state we see in the UK today, which, even with a willing government and citizenry will take many decades to dismantle.

So, for me, given all these costs of having a state monopolistic form of government, against the possibility that there are many other mechanisms for delivering the "positive liberty" type functions social liberals say makes that state essential, even if some of them are prepared to admit it might be a "necessary evil" it is they who must prove the negatives are worth those positives. Circular arguments, or arguments solely from previous authority, are not enough - "the state provides education because people look to the state to provide education, or because the state has 'always' provided education". If you want to be considered in the least bit liberal, for me, you need to have a robust cost-benefit narrative about the state that it is the most efficient, most equitable and, given those other negatives, least impacting on other aspects of life way of delivering these goods.

Is there anyone willing to give such a thing a go. I personally believe it is an impossible case to argue.

Earlier I spent a very pleasant, if slightly nerve-wracking, evening "chairing" the final "Meet the Author" session of my employer, Oxford Brookes University's, "Love and Justice Month". Our guest author, and an honorary graduate from the 2008 round of graduations, was Teresa Hayter, author of "Open Borders: The Case Against Immigration Controls".

Teresa is a long time campaigner against immigration controls and the asylum machismo that tabloid editors and leading politicians promulgate and revel in. She was a founder member of the Campaign to Close Campsfield (with which Lib Dem MP Evan Harris is often involved) way back in 1993 when I barely knew the place existed. Campsfield is one of the several Immigration Reception/Detention/Removal (whatever the phrase is this year) centers with which our government pursues its racist, authoritarian, violent and at times lethal "war on the foreign poor".

Towards the end of the discussion session after Teresa's inspiring talk one person asked what the practical political and social implications would be of a completely open borders policy. And it struck me; just what is a state without borders? After all, one view of the state is that it is the territorial monopoly of arbitration. And if you don't demarcate that territory somehow, beat the bounds, spray like a wandering dog-fox the limits of that monopoly, in what way are you a state at all?

Now, the free movement of people is one thing (and I agree, absolutely, with it), but it seems to me that it is just a visible and, to an extent, preventable - in the sense that you can turn people around; treat them like shit and send them home to God knows what - symptom of the new global world we live in.

As I have written many times before, the communication networks that now span the globe make our less visible borders much more porous. Whether it is forming alliances with like minded people in other countries (for good or ill), moving capital around the globe to take advantage of favourable tax regimes, trading with ever smaller units of production, gradually sidelining the mighty intermediary trans-national corporations in favour of dealing with individuals and smaller and medium sized enterprises in other countries.

And you know, it may sound obvious, but we need to remember, recognize for the first time for some, that the genie of globalization (whilst the definition of what that means might be in dispute) is well and truly out of the bottle. We no longer live in a world in which China is "over there somewhere" - a blob on a map that was never pink but about which we knew little - or in which someone in a shanty town in Mumbai cannot see live images of the once "mother country" and aspire to some different life. Or in which we can be oblivious to goings on in the "dark continent" between Dr Livingstone's occasional letters home. In which football competitions are between small towns and cities in one country or the players all from the local community.

Yet, for all our former national adventurous spirit, colonizing an empire on which the sun never set, here we sit, cowering on our rock off the edge of Europe besieged by the idea that everyone wants to come here and destroy our way of life or that our tax revenues are steadily going down the drain in some tax haven somewhere. Migration is a two way thing. For all that people do want to come here, we should be matching that with still pioneering people going out into the wider world. But our world seems to want to enforce some kind of permanence through its nation states - you belong to one or another, very occasionally a couple at the same time, which crystalizes both the desires and fears of migration.

Rather than people choosing to come here for a job for a few years and then heading off somewhere else, or even just "back home", our immigration controls make people choose between staying permanently or going permanently (unless, that is, you happen to come from a most favoured rich country). If we are truly in a globalized world we should be feeling a lot freer than, say, we were thirty years ago when my parents as ex-pats dragged me around various African countries, to do just that: a job here, a job there, a holiday somewhere else, some time back home; all the time maximizing the return from each of our skills.

And if we don't pick up that challenge, if we choose to turn our backs and pretend that old world of bi-monthly dispatches from the colonies is still how it is "out there", like a child hiding our eyes and believing that because we can't see others they can't see us, the alternative is very grim indeed; a war of all against all. And, like that child, it is a scary world out there - we don't know quite what would happen if we open up here, open up there.

I happened to be reading Hayek's postscript to the "Constitution of Liberty" too the other day in which he explains "Why I am not a conservative" and I probably for the first time realized the essential difference between liberal and conservative. Liberty demands a leap into the unknown. Authority, conservative or socialist, on the other hand demands a plan. Without that plan they cannot feel in control; without being damn sure, or as sure as they can be, about the outcome, they dare not proceed; true "progress" is stopped in its tracks. And it seems innate in our collective psyche - how many times have I been explaining what I think is a bright new idea to find the first question on everyone's lips is "where have they done this before" - and that's just amongst my "liberal" friends!

At an individual level, there is a vast industry in "life coaching"; trying to teach us to push our boundaries, leave our comfort zone, to trust that we can overcome whatever obstacles may fall into our path when we branch off into new experiences and journeys. We are told that's what makes us grow, to succeed; that without pain there is no gain, or that discomfort is what makes us stronger through dealing with it. But at the level of the state, of government, we do not heed that same advice.

Some, usually on what they call the "left", bleat on that libertarian policies would mean a "return" to a vicious, beggar everyone else "Victorian laissez-faire" world (which I keep reminding them in vain was precisely the system which prompted the early anarchists and libertarians to work against the state entrenched systemic inequity and monopolies they saw skewed the outcome of that laissez-faire) in which there would be no support for the poor and hapless. They need to learn to trust in humanity. We have been "schooled" for over a century now into a more or less consensus that we do need to help support some others who cannot help themselves. The authoritarian will say only the "state" can ensure that mutual assistance can be assured fairly. That if we take that state away, there would be no hospitals, no schools, or that they would be only exclusive, unavailable to many or even most of the population. But in doing so, that state is necessarily coercive, illiberal, and suffocating.

We need to free people up to care, not to subcontract caring to some state entity that at best has only a partial mandate. And we will choose, at times, not to care - or at least to prioritize caring for ourselves over others when we barely have enough for ourselves. We can only guess that, on balance, there will always be enough people choosing to care such that those who are less fortunate through no fault of their own are not left defenseless or destitute. It's not a plan and it's inherently difficult to manage, predict or measure but it is what liberty is about.

But the world is getting smaller all the time. If we do not free ourselves from that micro-managed planned outcome authority on our own, it may become inevitable anyway simply because the Cnut-like alternative is too horrible for even the statists to contemplate or when we peasants realize how horrible what they contemplate for us looks like. We may as well choose to trust in a positive vision of humanity rather than get more and more worked up about defending the status-quo until something gives, suddenly and explosively.

No wonder the Big Brother state is getting worried about all these pressures on it. Lots of powerful and wannabe powerful, or just self-important, people are threatened with being cut down to size; people who think they know better than the rest of us and want the opportunity to force their vision on the rest of us. Let us hope us serfs begin to get agitated!

I've been trying to get people to hear this for years now: that the huge advances already made in information and communication technology and in the speed and availability of travel are epoch changing. And there have been a few stories over the past weeks and even just in recent days that have confirmed for me that we are finally in the "last days" of the twentieth century in terms of the way we do so many things we have come to rely on.

Some may call what we are witnessing a Kondratiev Wave of immense proportions, asset bubbles, a global failure of risk management, the convergence of peoples now able to communicate instantly across the globe with half of the rest of the world's population, a concern about civil liberties and, in a much more interconnected world about how others see us and what they want to do to us if they don't like what they see.

And, as I have also said previously, this is an opportunity for far reaching liberalization of the world - remember Cobden's quote at the top of my page: "Peace will come to earth when the people have more to do with each other and governments less." Now we have the ability to have more to do with each other and need our governments less to do so for us we could realize that hope. Or, on the other hand, it could be an excuse for a slide into dark totalitarianism as governments seek desperately to hold onto the power to which they have become accustomed; and perhaps worse, seek to control the new global world in the same way and clash more fiercely with each other when they disagree.

Why do I say this now? What are the signals that we need to change things one way or another? Well, take a look at the Guardian's Corporate Tax Avoidance campaign for starters. This is something I predicted long ago - one of the most liberating things about the new world is that people can move, physically or just their economic interests, around the world almost instantly. This used to be the preserve of the very wealthy and well advised. But there's no reason nowadays why relatively modestly financially endowed people cannot do much the same. In response to the Guardian's campaign people have been screaming about the need to tighten up on this sort of thing - even St Vince has been at it.

This is dangerous, for it requires close co-operation between states into our personal affairs not seen before. Think of it - forty years ago each schedule in your UK tax return would have been dealt with by a different civil servant so no one person would know precisely your whole financial circumstances. Now we are asking whole countries to share data between them. It is economically counterproductive too. Tax competition is an important brake on state profligacy. It is right that one of the means of registering an objection to one country's over-taxing is to move your affairs, if the recipient country is willing, to somewhere that is not so profligate. The evidence of the last decade should be enough to show the multifarious, and nefarious, ways in which a determined state can take more tax whilst simpering that they are not raising headline rates. The common, international, policeman of tax competition seems to be able to do economically what governments are incapable of politically.

Similarly currencies - our 95-odd year flirtation with a monetary system invented effectively especially for the rich and powerful banks like J P Morgan and J D Rockerfeller looks to be collapsing. And rightly so. It cannot be right that banks are able to take on vast international liabilities in far huger volumes of a country's currency than that country can possibly guarantee, and yet we are seeing our politicians effectively writing what are potentially vast, bankrupting, blank cheques because of that system. Not only was this very system of money invested to benefit the rich and those with access to the largesse of governments but it is now being propped up, albeit in our name, essentially to the benefit of the same people and to the disbenefit of the vast majority.

And with "civil liberties" - this, to me is the crucial one, because it is a cause celebre for many, but may of those do not see, or if they do see don't want to embrace, the idea that civil liberties cover both social and economic aspects of our lives. For those who want on the one hand to fight for tougher tax enforcement against one group yet against, say an ID database or the widespread collection and sharing of personal data, they have a problem. That data is made even more necessary by their own wishes to see everyone tracked down so that they "pay their way", or don't get what they're not entitled to. And those pressures are set to become even stronger as the mechanisms that allow us, physically or virtually, to hide our affairs from governments become easier and more widely available.

Libertarians believe there is a solution. Most of us, not just libertarians, recognize there's something wrong with "monopoly". Where we differ is that libertarians tend to see the state as not just a monopoly itself but the mother of all monopolies. A true conglomerate of monopolies with a whole plethora of arbitrary power. Others believe that state monopoly can itself be controlled by the thing we call "democracy". But, as I said previously - show me an example where the problems we are now in are not already supposedly in the hands of a democratically elected body. A democratically elected body that gave in to Rockerfeller and Morgan nearly a century ago and forced us all to accept their monopoly solution say. A democratically elected body that thinks ID cards are necessary the more efficiently to transform the management of government. And so on.

On the other hand, to libertarians (or at least some of them) I would say that you need to realize that some of your often heart-felt policies cause quasi monopolistic structures - such as with the relatively recent, in libertarian history at least, fixation with an allodial system of ownership of the planet's natural resources - especially "land".

For me, there is no doubt in my mind that liberty is indivisible - you cannot have "social liberty" without also having "economic liberty" and those who seem to try to split the two are doomed to failure, or even worse - encouraging states into that dark descent to totalitarianism by continuing to grant them the monopolistic and arbitrary powers to prosecute one type of freedom. Equally, a more securely philosophically rooted understanding of sharing our earth would enable libertarians to promote a system that was both free and fair and equitable, without a monopolistic state. If these positions can be reconciled...I'll feel fine, as REM said!

For those of you highly skeptical of my prediction that the internet will cause the nation state as we know it to be unable to tax fairly incomes or transactions in goods and services and so cease to exist in its current form , here's a slightly different angle on it at Reason...

It seems to have finally dawned on the US government that whatever laws and regulations they pass, they will not be able to ban offshore internet gambling:

In other news this week about the internet and real life colliding, we also had Second Life being cited in a divorce case in the UK and a Japanese woman sued for murdering her husband's online persona.

Which are you going to be - more restrictions, ultimately futile; or building new mutual institutions to help deliver public goods in an era of a reduced ability to collect tax?

Following on the theme from my post this morning about how we could protect data about us held by agencies of the state by using a sort of a personal key and PIN like your bank's call centre has to validate with you before they can access your data, my mind wandered onto other uses for such a key.

It has been a recurring theme in this blog that the internet in particular and modern communications in general represent a great threat to the balance of power between states (and incidentally also global "intermediary" corporations) and their citizens. I say threat, but it's only a threat if you are in a position of power in a state or corporation seeking to continue to exert control over your citizens. Indeed, for the individual, it is the greatest potential opportunity, and the vehicle by which Richard Cobden's quote at the top of this blog's front page may become reality: "Peace will come to earth when the people have more to do with each other and governments less."

Many of our institutions - governments, trans-national corporations, even currency - evolved to deal with issues of trust between people who would likely never have personal contact with each other in ever more remote markets. When trading, you've got to be able to trust that you will be paid for example - one person's "IOU" is not as good a guarantee as piece of paper endorsed collectively by an entire state - a national currency.

But we have an ever increasing range of other innovations to help us trust each other; developments that are increasing quickly with the advance of the internet. We can access our credit files, we can buy digital certificates that help give others confidence to trade with us over the web because they guarantee we are who we say we are and so on. So why not shift these into the "real world".

Why do we actually need, say, a passport to travel across borders, issued by a nation state, when we could have just as secure a guarantee of who we are through some kind of personal digital certificate from an organization bearing the risk, with strong encryption embedded in it? The British government keeps trying to sweeten its totalitarian ID card scheme by telling us, amongst other things, that it will make proving our identity to others in all sorts of transactions much easier. But in fact the history of government involvement in protecting the source data of those identities is appalling, and, as the technology gets more pervasive it seems to be getting worse.

How much confidence can you have in a government issued identity mechanism when so much data has gone missing already? Those identities are, thanks to state incompetence, all but worthless. Of course that's why, partly at least, they want to take biometric data. But in computer security it is generally accepted that being able to produce "something you have" (say a credit card or internet digital certificate) and "something you know" - a password, PIN, or private digital encryption key is far better than ony one or other of these pieces of information on its own. So far as I can see the ID card system, or the passport, with or without a national identity register, does not fulfill both of these - only the former. It is inherently weaker than the commercially available alternatives.

So, why not replace the need for passports issued by a state with identity mechanisms authenticated by trusted corporate or social organizations for whom financial success or failure rests on people being able to trust the people they certify. So you could have a personal account with Thawte as the primary guarantor, for example, and that certificate could be counter-signed by a certificate from other organizations, such as governments, who want to "mark your card" as one of their citizens, granting you the protections normally written on a passport.

It's not easy to get some of these certification authorities to guarantee your bona fides. You need often as much verification as you do to get a passport with other trusted people verifying who you are and so on. But you would not need to give these data to the poroous security mechanisms of the state which has proved beyond any reasonable doubt that they cannot keep the information secure, nor does it offer the other benefit of a private contract - the ability to sue the ass off them if they damage your reputation or security by losing your data - or the corporate incentive of only being able to make a profit if you actually deliver on what people expect of you.

And you also get a choice of how strong you want the certification to be. If it's only guaranteeing small personal trades for example, you may only need to spend a few pounds and fill in a quick web form, validate your address and you're in business. If you want to travel overseas, or deal in bigger sums, or trade with distant counterparties, you may want stronger levels of guarantee and pay accordingly. It's a global standard pretty well too. So you'd have no problems using it to prove your identity in all sorts of applications - travel, trade, opening a bank account, starting a company, getting insurance, benefits, accessing what little data about you the state actually needs and so on - none of which would need to be on any single central database owned by a bunch of data-incontinents like the government is proving to be with the attendant dangers of losing all your data at once.

So, you see, we no longer even need governments to help us prove who we are. And in fact they appear to be singularly bad at doing so. The threat inherent in this is that the currently all powerful state needs to be able to do this, or it loses control of its citizens. And they are shit scared of that. If we are not mindful, in their lust to maintain that power they will get immensely more authoritarian and intrusive. The time is coming when we will no longer need them. We must do all we can to hasten that day before they get their claws in too deep into these emerging trust mechanisms.

Again, I'm starting a new post to respond to some very interesting comments by Tim Carpenter. My inept attempt at a Drupal template means it's almost possible to follow a thread of comments and especially given this is going to be another long response I think it deserves an airing on its own.

For anyone coming new to this debate, it follows on from my original "three point plan" for equity and economic justice and some clarifications and responses I gave yesterday to comments on that original by Tim Carpenter, Head of Policy at the Libertarian Party UK.

Tim, thanks for taking the time to respond. However I think we are, as a colleague used to say to me "talking past each one another". Paul Lockett has put it all a deal more eloquently than myself , and for that, and if I have caused any confusion, apologies.

I am a geo-libertarian (of the "geo-mutualist" variety if you will). The main thing you seem not to have appreciated is that in calling for the "Single Tax" I mean just that - the community/state can only take economic rent on the land resources within its jurisdiction and has no call on incomes or trade. As I understand it this is the "purist Georgist" position.

The ideal 'state' would be limited to collecting the rent and distributing it all as a dividend to citizens for the reasons Paul outlined. "Commonwealth" - you are right, it's lazy, I should put a space between "common" and "wealth"! Economic rent from the finite natural resources we all require to share is "common wealth" and should be collected as such and distributed as fully as possible whilst every other tax is a tariff.

Tim: "1. When I say who defines the value of your land, you say "why does anyone need to decide", yet immediately go on to talk about collecting the tax! Someone DOES decide the taxable value and that affects the actual value. Can you not see that?"

No, the market sets a location's value. It does it all the time at the moment. And it will continue to do so in an LVT system. Even in a "100% LVT" system. If a location is appreciating in value, buyers will be prepared to pay a premium over last year's rent bill and vice versa, in a falling market sellers will effectively have to be prepared to pay someone to take the rent bill off them. The following year's rent bill will reflect that premium or discount by going up or down respectively.

Tim: "2. As you should know, we aim to eradicate income tax., so the comparison does not hold."

See above - I'm a single taxer. No income tax here either. It is a tariff on employment and trade. Though I would say that if a local community decided mutually to have a local tax on incomes or sales to finance some mutually agreed local project it would be doing so in competition with neighbouring communities that perhaps were not or were charging a different rate or a different tax. Tax competition is good, in itself, isn't it? Also I am aware of some "single" taxers who would justify retaining some income tax at least temporarily in order to try to address the "embedded" historical advantages of monopoly ownership. I don't.

Tim: "The problem comes when some local area under the influence of whomsoever, adjusts taxation on land they wish to gain access to because a new development is coming. So, building a road, whack up the value of land next to it. Farmer has no CAPITAL to develop it, so has to sell it for a knock-down price because he HAS to sell to meet the tax bill. If this does not concentrate land into a few hands, I do no know what would. This is just one example of the potential risks."

This appears to be Churchill's "market gardener" bogey, or, to others, the "poor widow" bogey. If you look at it under the current system, that same farmer, in similar circumstances is perfectly able, regardless of the squalor growing around, to sit on that land, not paying anything and watch its value "ripen" until the value, created merely by excluding others from what they need to use, is so great it becomes irrational not to sell. That process is outright extortion.

In fact, under an LVT system, land values at the margin would tend to move much more incrementally in any case. In the absence of other restrictions - zoning, green belts etc (it is your policy to remove those restrictions once an LVT system proves practical isn't it?) - you would not get these large leaps in hope value. I would actually retain green belts and such like for a while after LVT was implemented so that it can have its greatest effect in turning existing urban land to its most efficient use before going for sprawl. But I am prepared to be convinced on that. After all, we know that at relatively low densities compared with what planning guidance seeks nowadays, it would take up less than three quarters of one per cent of the non urbanized land in England to build the three million new homes predicted to be necessary over the next twenty years.

But once a point of equilibrium was reached between supply and demand rents at the margins of production would move slowly and via the democratic influence of the market. If that market and the community that makes up its participants eventually get as far as that farmer's land and all that remains to bring it in from the margin to profitable development is to develop a road, the farmer will have had plenty of opportunity to see it coming long before the tax bill becomes an issue for him.

Tim: "3. Living costs - if you have CBI as described you would still keep the most expensive parts of the Welfare bureaucracy - the entire means-testing apparatus. Housing benefit would probably remain in all but name."

I disagree. But I don't think what you understand me to have described is what I think I have! ie, in particular, that I am not paying for CBI out of income taxes, but out of the community collected rent on economic land. Land at the margins tends as I said towards a nil value. More people will be able to own their home because they will not be borrowing twice as much as the value of the capital good (the building) in order to pay the land value in up front capital. Renting a basic home at the margins ought to be achievable out of the Citizens Income.

With so many pulled out of poverty anyway by not having punitive benefits withdrawal regimes that reduce the marginal value of doing even the smallest amount of paid work and by the reduced costs of living owing to tariff eradication and the better off keeping more of their own money, the capacity of private charity or local mutualism to assist the much smaller number of people that would be needing top up hand outs above their CBI would be much increased.

Tim: "4. Income. You need to clarify here - are you saying that COMPANIES have 40% more or that wage earners do? Be under no illusions, if you have CBI, income tax will be enormous. I worked out once that if we went for CBI with no other tax changes but a cull of QANGOs, income tax would need to be about 64% flat from the very first penny (IT is currently £140bln, 7k x 50m = £350bln pa). A HUGE disincentive to working especially at the lower end. Result: black economy, unproductive citizens, more companies shutting down and a growth in imports (and do not say "cheap imports make us richer" because that only holds if we are simultaneously exporting a greater amount of higher value exports)."

I hope you'll agree that that objection is moot given I am not talking about income taxes at all. My calculation of the CBI cost at £5200 pa for adults and a decreasing proportion for under-18s to 20% for 2 year olds is around £285bn. £245bn if only the adults. I reckon there was about £200bn a year's worth of economic rent in residential land alone at the recent peak of the market. I don't think it is beyond belief that there's another £85bn in commercial, industrial, retail and, possibly, agricultural economic rents.

Tim: "5. Movement to low tax areas: A company will consider workforce supply as a prime consideration, not just rental costs. If that were not the case, expensive London would be empty. People pay top dollar for London rents because of a massive pool of labour - they can gain access to many cheap or more chance of snaring the best. To think LVT would make a company move out to a depressed area? Those places are already cheap. Why doesn't it happen now? Limited skilled labour pool. As you say the Government does it now and did it in the past (remember the Hillman Imp?) and it creates quasi-soviets. If LVT has an influence, it might IMHO move a few companies, deter some from even setting up where they need to and the rest of the companies will be bled paying higher rates just to keep near the labour pool they require. In the case of London, the move will be to New York or Hong Kong and we all lose out."

There are so many issues in this paragraph I can only assume again that I have failed adequately to have explained my position. At the moment businesses pay rents, yes? In an LVT system they will still pay rents. The only difference is that whereas currently the entire rent, that which accrues to both the building and the site or location goes to the current landowner, ie it is enclosed, privatized. Under an LVT system, the same rent is due (assuming they were paying the market rent originally), only the portion of it that accrues to the location goes to the community and that attributable to the building to the building owner. There's no corporation taxes, no more employee taxes. There's no increasing of rent or rates; there's no bleeding anyone. Except those, as landowners, who have bled the rest of us for centuries.

Areas of low land value will also be areas in which it is cheaper for employees to live (lower LVT for them too). For a business operating at the edge of profit it would seem to me to be quite an attractive move. But one that remains in London because their key skills are there is not penalised by that. Indeed, if sufficient other businesses do it who do not need to be in London for optimal profitability do move, costs will also likely fall for those left behind, increasing their profit, distributable to capital and labour.

I think there is, in particular, one form of LVT that could have a significant effect in this regard...the auctioning of air-space, via "landing slots" at airports. Making more efficient use of regional airports would draw business into those areas. I'm likely to propose this to our regional conference this autumn as part of an "anti third runway at Heathrow" motion. Interesting choices of examples though - Hong Kong of course is famous for having state owned land - everything except the Anglican Cathedral is leasehold and that has been used to raise revenue in a form of LVT and keep income taxes low. Modern valuation tracking and billing systems would make that far more efficient and not prone to some of the problems Hong Kong suffered by having too infrequent valuations.

In China before Mao took over, I understand that Chiang Kai Chek's regime looked into LVT as a way of staving off the rise of Mao's totalitarian collectivism. And in the former Soviet Union, Gorbachev I believe looked into LVT as a way of capturing the value of natural resources and in not implementing it allowed the so called "oligarchs" (really "kleptocrats" in my opinion) to enclose the revenue from that vast pool of common wealth.

I'm getting a bit tired here! I'm going to call it quite at this point and maybe think some more about the issue of mutualism. I think Paul answered the point about the "state as landlord" objections quite satisfactorily and there's no need for me to repeat it. But for fairness, other readers can read Tim's further points in the comments on the previous post.

Tim: "p.s. your page has a script that my browser asks me to kill due to risk of resource hogging."

Yes - I only notice this on older machines or slower network connections - I never experience the problem at home or at work. I think it must have been an advertising panel I have just removed, but if others still experience the problem let me know and I'll have another look.

In my last post I set out what I considered to be the three necessary reforms to create a more equitable society - Land Value Tax (or "The Single Tax"), Citizen's Income and Ownership for All.

In the comments, Tim Carpenter, Head of Policy at the Libertarian Party UK had several objections that I would like to address:

Tim: "LVT can seem fine and dandy at the first off, but over time who decides the future value of your land?"

Why does anyone need to decide the future value of your land? In any case, even if that were necessary the market does that anyway even at present - what people pay for a property reflects their view of what it's worth into the future - they are, literally paying up front, to the previous owner, the rent for a number of years into the future. I agree there are issues with a "100% Land Tax" where the community attempts to collect 100% of the rent (as I and other geo-libertarians would advocate). This would make the capital land value tend toward zero and how would you know whether it's moving up or down over time? Well, the answer I believe is that it would trade at a discount or premium reflecting the buyer's and seller's view of whether the "passing rent" (ie the LVT bill) was set too high or too low.

Tim: "It is fraught with risks, opportunities for corruption and chaos. If you think compulsory purchase was bad..."

As I understand it several of the big RICS member firms have discussed this and have proposed a valuation regime that they would be comfortable bidding for and would expect to be able to handle things like appeals. The Oxfordshire pilot study showed that on average there was only a need to value about one site in ten - ie that that many nearby sites would share the same land value. And there are developing ever more sophisticated data and models for modelling things like "landvaluescape" and how it changes in reaction to things like new infrastructure.

I only don't believe it is as daunting a task as taxing incomes in the multitude of ways we currently do.

Tim: "If CBI is only half what is needed to live on, then surely we will still need welfare."

The Joseph Rowntree report I mentioned included a lot of things that go much further than the "basics needed to survive" (and the headline figure of £13,400 was "pre-tax". Not that I claim that would halve the bill. However the removal of the deadweight loss created by the other taxes that would be repealed, and the ending of subsidies, particularly on agricultural land and other tariffs on the necessities of life would make them cheaper. Two ways to be wealthier - have more money or make everything you need cheaper. As Frank Gallagher in "Shameless" says "Make poverty history; cheaper drugs now!"

Tim: "Removing the minimum wage is fine but be under no illusion, the CBI will be factored into that wage (or lack of)."

But, first, they would also be factoring in the lack of payroll taxes and income taxes - they'd have nearly 40% more in their "wage bill" to play with in many cases. Second, the CBI has two purposes in my mind - one of them is to give people enough to survive, just, day to day, but the intentional beneficial effect of that is that people have a cushion that empowers them to say "no" to a coercive deal from an employer. If the marginal benefit from working x hours for y pay is not worth it and you know you can survive until you get another, hopefully better, offer, this changes the balance of power between employer and employee. And, because it is the same for all workers, and not just the ones currently stuck in the benefits trap, the employers are more likely to have to listen and produce decent remuneration. Though I do concede that there would be hundreds of thousands of currently civil servants in the job market to depress wages...:)

Tim: "It will be no solution to poverty AFAICT and your assertion that it would eradicate x y or x is not explained. I think parish provision is an interesting one, but frankly, look at places like S Wales and you will find that parishes will have little or no wealth creation so no money to spend on their army of dependants - central funding will be needed in precisely the places where people say it causes problems of unconditionality - for once the parish is spending other peoples' money the problems are right back with you again."

However, the LVT is more likely to move economic activity to areas where companies, and employees, and therefore also companies as employers, will pay less tax, which is turn will raise the economic activity in poorer areas and tend to level out regional disparities of economic activity. It cannot be any worse than the current situation where some regional economies make up more than half of their regional GDP from state handouts and subsidies to individuals and businesses.

Tim: "As another person has mentioned, the mutualist company can occur NOW. What is to change here? The fact that it does not happen now should either make you ask what stops it legally/financially or regulatory OR that it is actually a factor of how humans are socially, in that it takes certain individuals the gumption to kick start a company (and that is NEVER to be underetimated) and once they do so, why would they then let a whole load of strangers take just as much out of it as he/she does?"

I certainly don't underestimate the setting up of a company. I have been an employer for precisely one month in my life and it was a bloody nightmare. But it would certainly be less troublesome if I was not burdened with all those damn tax calculations! But again, I refer the honorable gentleman to the answer I gave a moment ago - the "cushion" that empowers the employee to say "no" a bit more; to hold out for a better share of the total returns to a business. This of course goes to the core of mutualism as I see it, as opposed to the anarcho-capitalist type of libertarianism. Mutualists believe that the current capitalist system is lop-sided, "toxic" and that it is itself a coercive and damagingly hierarchical system. Empowering labour to hold out for a better deal, making use of new corporate forms like limited liability partnerships and so on, will accelerate this change.

...and finally...

Tim: "Monetary reform and changes to fiat issuance will not happen by itself. The problem is coming up with something to replace it that actually works. I have seen many attempts and none appear to work or are just a cover operation for hatstand ideas like "social credit"."

As I think I said in response to another comment, I'm actually quite agnostic about how monetary reform should happen and what direction it should take. Personally I like the Hayek idea of fully privatised commercially competing currencies. I am told that the legislation actually already exists to allow commercial "complementary" currencies run by corporations. Air miles, Nectar and Kit-Kash are but early examples.

But consider this - if you collect 100% land rent and the capital value of land falls towards zero, the structure of the money system is bound to change - a large proportion of our broad money is lent into existence to pay for land in the form of mortgages. At the very least banks are going to need to have to adjust to that.

Actually I believe the real question is what lengths states will go to to prevent what I see as inevitable change if we allowed it. I haven't played there for a long time, and the hype about it seems to have died down a lot, but "Second Life" and "Kiva" are but a glimpse of what might be to come.

...well, perhaps not quite but this is interesting, if blindingly obvious in a sort of a "why didn't we think of that" way:

I hadn't counted on VAT being amongst the first to be threatened, but here it is. It's not going to help buying cakes from Tesco yet because it will only work if it is actually imported, I suspect (no getting away with simply operating from a warehouse in every town that happens to be owned by a Channel Island company I would think).

But people, liberal minded political types especially, need to wake up to this double threat - to recognize that revenue collection will be more difficult in future if based on moveable assets, incomes and trade, and to recognize that addressing that means going one of two ways - the more equitable land tax, or the more authoritarian crackdown on trade and "cross-border" earnings.  The ability to move money and income and so on overseas is moving fast and getting ever easier for the ordinary person - you no longer need to be super-rich to go offshore.  We need to act fast to counteract its effects on future tax revenues.

It has been estimated that Fannie Mae and Freddie Mac between them underwrite debt of some $5,000,000,000,000 and that US losses from the current credit crunch could amount to $1,600,000,000,000.

The entire external debt obligations of the world's 40 odd Highly Indebted Poor Countries (HIPCs) is some $300,000,000,000 - that's about 6% of Fannie and Freddie's problems. So any bailout of the US mortgage system is going to amount almost certainly to more money than would write off all that, mainly African, debt (were that the best way to proceed, which I believe it is, with conditions).

By contrast the EU has today decided to support the idea of giving the surplus it has made on the Common Agricultural Policy as a result of rising food crop prices (so it has been subsidising less) to "African farmers". That's about €1,000,000,000 - or one three-thousandth of Fannie and Freddie's problems and two hundredths of Africa's problems.

But where did they get that money from, how did it arise? Robbing those very African farmers by denying them access to our markets and subsidising dumping on theirs. Tariffs are pure evil, aren't they?

So, whenever anyone says to you that it's difficult to find the finance for debt relief in the poorest countries, you'll now know that is total bollocks.  Just think of the scale of the US mortgage debt and what such sums could do for the 600 million or so poorest on the planet.

There's this extraordinary debate going on (well actually the comments are closed) on ConservativeHome about a piece by a chappie called Tony Makara who is advocating a protectionist trade policy the likes of which has not been seen in the UK for a generation:

Anthony Makara: Britain imports too much

Over the last weeks I've read much about the subject of welfare reform. The arguments about incapacity benefit and workfare. However all these strategies for welfare reform fail to answer one fundamental question. How are we going to get people into work? I believe all the proposed plans for welfare reform will fail because they do not tell us how we are to create the one million plus jobs needed to end welfare dependency. This is because the British economy no longer produces the jobs that the unemployed need. Lets face it, a person is either in work or they are on benefit, it really is that simple, the answer to unemployment is to create jobs. [From ConservativeHome's Platform: Anthony Makara: Britain imports too much]

The outrage in the comments is interesting. We all know the Tories made a seismic shift in the mid-late seventies in embracing what they liked to call "free trade". Of course, without radical tariff eradication and resolute policing of monopoly and cartel, there is no truly free trade. But what is interesting is that this was the debate over which Winston Churchill first left the Tories at the turn of the twentieth century and joined the free trade Liberals.

You see, for forty years, free trade was a policy of the "left" (indeed much longer if we go back to the Radicals and the Corn Laws debates), a key plank of trying to increase the returns to labour and in reducing the cost of necessities to make the average working person better off, either through higher wages or through lower prices (they have the same effects). It was Philip Snowden, the Labour chancellor of the exchequer, who wrote in a foreword to a new edition of Henry George's book of the same name "Protection or Free Trade" that...

"Each new generation has in a large measure to re-learn the truths which its ancestors established by discussion and practical experience. Free Traders have been so confident in the fundamental soundness of their faith and in the security of the system, that they have neglected to keep the rising generation well grounded in the principles of the faith."

He was writing in response to the Tories' re-adoption of a protectionist stance in the face of the beginnings of the Great Depression.

I have no doubt that most Tories today believe in something called "free trade". I don't believe that most of them actually realise how far away we are from it and what steps will be necessary to get there. But I am sure myself that if we get there, we will all benefit. As Snowden also wrote, "Protection is the foster-mother of monopoly, and monopoly in all its forms...is the robbery of the community for the benefit of private interests" (you can see why Tories would like the idea!).

It is worth mentioning that the Lib Dems have a consultation paper out on the UK Response to Globalization. Go respond - we must resist any attempts at introducing protectionist policies.