I just noticed this on he BBC feed - Suffolk police have been carrying out an operation targeting "illegal activity" on the roads of the county. More than two dozen officers were involved and out of 200 stops they fined a few people for this and that - speeding, not wearing a seatbelt and so on. But they breathalyzed 134 drivers and every test was negative.

I wonder what else they were stopped for? Do we have "random" stops now in the UK? If there was nothing else to charge them with, dangerous driving or whatever, why were they stopped? Just so they could try breathing for a few seconds? Why are innocent people being harrassed in this way?

I’ve long been wanting to try and address an issue which appears to be a fairly significant point of conflict between various people who would otherwise all call themselves libertarians. A post by our good Devil and the comments that follow it provide a good opportunity. Some there and elsewhere in libertarian groups would even suggest that those of us who subscribe to the opinion that land values are somehow not legitimate private property cannot really be libertarians at all. On the contrary, some would say even that we are crypto-communists for wanting to rob people of the yields from their landed property.

Yet it seems to have been a matter of controversy throughout the history of anarchist and libertarian thought, and both sides even invoke John Locke as the supreme expositor of property rights in support of our arguments.

But let’s start from where we generally speaking agree. We all, I think, would agree that monopoly is inimical to the free markets we would want to see. I suspect we would all subscribe to the idea that we are entitled to self-ownership, and that to a very great extent, self-ownership means the right to own the fruits of our own labour. And I think most of us would subscribe to what Herbert Spencer described as “the fullest liberty to do as [we] will compatible with the possession of like liberty by every other [person].”

I feel most of us also acknowledge that there are some problems in the historical distribution and acquisition of land and recognize that much vested interest has been created through violence or state intervention - either forcibly taking land off others as in many of the enclosures or through grant of title over others’ claims by the state favouring individuals or great families.

But that’s about where agreement ends insofar as land is concerned. It seems that most libertarians view land as a free market in which people are free to participate or not to the extent they wish - to own, to rent, whatever suits them at their time of life or financial circumstances. To use the fruits of their labour to buy up more than they can use for their own needs as an investment and charge others to use it if it has such a value. And that anything that impedes that is theft just as taking away your chattels or other property would be. In fact, I think they also feel that since, as they see it, we are inexorably moving away from dependence on land (most of us no longer have to till the soil for sustenance) the importance of land itself is diminishing and it becomes an ever more free market.

So, before getting into discussion of possible remedies, I want to set out why I think there needs to be remedies to the “land question” as many of us would call it. I believe that property in land breaches the three main tenets of libertarianism I mentioned above: it is monopolistic and therefore not a free market; it exacts a toll on the fruits of others’ labour; and as a result it denies people Spencer’s “fullest liberty…”.

First, some definitions, because I think people get quite confused about just what we mean by “land”. “Land” in the economic sense is not just the earth, the ground we walk on, the soil we till. It is the third factor of production; everything in the material universe not originally created by the application of labour and capital; resources in their “natural state”.

But more than just that, when we are talking about “the ground we walk on” we are really talking about its “location” as much as its extent. A million acres in the Dry Valleys region of Antarctica may, for all we know, have no material value whatever. The few acres of Chelsea Barracks was worth £970 million last year. Similarly, we may yet have no use, and therefore put no value on, one part of the electromagnetic spectrum, but have many competing businesses dependent on technologies that use another particular, finite, location on the spectrum. So we usually mean “land in a particular location”.

Land as monopoly. When Winston Churchill made his “speeches by the yard” on the land question in gathering popular support for Lloyd-George’s land taxing 1909 “People’s Budget” there were of course very much fewer people who owned their own homes than do nowadays. But he was also expressing the views of some anarchists, such as Benjamin Tucker, Leo Tolstoy and Proudhon, as well as Liberals such as Spencer and later Henry George, that the land monopoly was one of the greatest barriers to free markets.

Many today feel that land, especially in the form of property in housing, is much less of a monopoly if at all. After all, in a world where nearly 70% of households live in the home they own, how can it be the monopoly problem of grasping landlordism that it was at the turn of the 20^th century? But the problem of land monopoly has not gone away. In fact, because it is less obvious I would suggest it is more insidious. Every location is in effect a monopoly of its own. A monopoly of the various circumstances, services, links and other infrastructure that make it unique. If you have the only house for sale in a particular school catchment area, the only house within a reasonable distance of a transport link that will allow people to get to the nearest good employment opportunities, or any number of other factors, you have a monopoly.

By and large we can only have one occupier occupying any particular plot - okay, we can build upwards and fit more people on the same plot, but that itself is exploiting the monopoly power of that plot.

Some will say that a monopoly is not necessarily the worst thing that could befall us, after all, if someone owns all the shares in a company that too is a monopoly - you just invest in another one. If someone is the only doctor in the community they have a monopoly, but someone could start another surgery. But we all have to live somewhere. So far as I am aware, pace Patri Friedman’s “seasteading” project, we have yet to find a way of living that does not involve some contact with land - even boats have to moor somewhere once in a while.

So land is a monopoly quite unlike being the only person able to own and admire that genuine unique Picasso. Yes, others may want it, but it does not alter their ability to live by not having it.

Incidentally, it is this monopolistic quality of locations that means it is so easy to bid them up into a bubble, such as we’ve seen recently. All that needs to happen, in our debt-based money system is that the banks have got to be prepared to lend to someone more than the next bidder for the one desirable location in the area. Yes, this can encourage others to cash in and create more opportunities in an area but we remain in a quasi-monopolistic system. Those of us, which includes most libertarians I suspect and certainly all Austrians, who regard the fiat and debt-based money system as the root of all problems should be extremely worried about this monopolistic ability to talk up the price of any individual location - it is, or has been these past few years, the prime factor in enabling the creation of mountains of debt-based money.

Land exacting an unjust toll on others’ labour. If you happen not to be able to borrow enough to get you a home in the optimum location for your work, or your kids’ school, or near enough for relatives to look after the kids when you go out to work or a whole host of other reasons, you may find a place further away, but more of your labour is going to be spent circumventing those more optimal locations.

Or if you have a business, a shop say, and cannot manage to pay the rent for the optimal “pitch” where most people will pass your shop display and be tempted in, you’re still likely to have to employ the same minimal number of employees to get the work done as someone in the higher rent location, but your takings will be lower. If you look at the structure of retail rents in the UK for example you will find that landlords try and capture this difference explicitly - they try and charge a premium based on ever more complex formula for guessing what a business can make in that location.

This illustrates David Ricardo’s so called “Law of Rent” in which he discovered that rent will rise at any particular location to capture the difference between productivity at the lowest priced location relative to the one in question. The huge land values usually found nearest the most lucrative business districts of communities and cities arise directly because people who cannot afford to occupy them have to work harder to avoid those locations.

In its simplest form this is best seen just by having to spend a fortune on your season ticket, an hour on the train to work and so on. Churchill again used to tell a story about the tolls of London Bridge and the landlords of Southwark. Most people in Southwark worked in the City of London as relatively low paid workers. It was the cheapest area they could get within reasonable travel distance of work, their means of sustenance. The parish elders responsible for enacting the poor law support in the parish of Southwark noticed that though most of the community were gainfully employed over the river, they still had to hand out a lot of dole to give them an acceptable quality of life.

London Bridge at the time had a toll, and so the parish petitioned to have the toll removed so that the workers would at least have to spend less getting to and from work. They succeeded in their aim. For a while the dole required fell, but then they noticed it rose again nearly to the former levels. What had happened? The landlords of Southwark had also noted that the workers would have a few extra pennies in their pockets and put up their rents to capture it.

With developments in transport methods and so on of course it is easier nowadays to get further to work and so on, so the gradient if you like at which landlords closer to the centre of things can cash in on others’ inability to rent their locations is lower, but it exists all the same. At some point, on the outer fringes of any settlement, there will always be those locations which are only just “marginally productive’ in which the residents can only just get to work or their other needs and maintain a reasonable standard of living. Ricardo’s Law of Rent says that inside those locations rent will rise to capture the bulk of the difference between the costs of those living further out and those living closer to the centres of economic activity.

Land impinging on others’ “like freedom”. Both of these previous factors combined clearly affect those excluded from the better locations freedom to enjoy the fruits of their labour. This is where Locke comes in. Robert Nozick coined the phrase most often quoted here - the idea of the “Lockean Proviso”.

Locke had said, in his Second Treatise, that it was legitimate to appropriate as much land as one wanted, so long as one left enough, of similar quality, amenity and so on, for everyone else. He also said that we own the earth “in common” with everyone else (note - common, does not mean “collective”). If we are to have self-ownership everyone born (who has to make do with this our only planet on which to eke out a life) must have a common birthright to claim a place to do so. You cannot own the fruits of your labour if someone is always taking some of them off you just to have a place to sleep at night.

That may have been easy in the New World, where there seemed as if there were vast, perhaps unlimited, tracts of currently unoccupied land just there for the taking. But in a more sophisticated economy, one not based solely on one’s agrarian abilities (and let’s face it we all benefit from that agglomeration of humanity into bigger, more specialised, settlements), more and more people will want to settle in the same area both to contribute to and benefit from the economic activity that human civilization affords. At that point, when Locke’s Proviso is breached, and there cannot be “enough and as good left over for everyone else”, land starts to have the two qualities already mentioned - of a monopolistic, zero-sum, market and of exacting a toll on others labour. At that point it begins to have a rental value. The rental value reflects the extent to which Locke’s Proviso has in fact been breached - the higher the rent the more people could make “as good” use of a particular location and the fewer “as good” locations are available.

So that “rent” is not something the current owner “earns”, except by the purest luck of being there before anyone else, so much as something that all the other potential owners of that monopolistic location create; what they have to pay to avoid the previously occupied location.

I’ve already gone on too long in this piece to be able to go into the possible remedies to this situation. All I wanted to show in this though is the problems land in particular as a type of property creates. Problems which all are inimical to the principles of markets and freedoms that libertarians are supposed to stand for.

If the monopoly factor were not of itself enough to make a libertarian think twice about treating land, location, as a species of property worthy of different treatment from other chattels and goods, the fact that it gets its value not by any of the labour the first appropriator expends on it but because of the costs others expend having to avoid it, and the consequent limits on the freedoms of others to do as they please and enjoy the full fruits of their own labour ought to convince them.

As I said in a comment on the Devil’s blog earlier, some libertarians feel that you can’t be a good libertarian if you believe the land market needs some type of reform, I have to say that I find it difficult to see how one could be a good libertarian without acknowledging that land needs some kind of reform because the effects private ownership of rental value of locations are so opposed to the basic free market and self-ownership tenets of our philosophy.

No doubt I will return some time to try to convince you about the best remedies to these problems.

Money is not wealth. Wealth only exists in real things that people produce and you consume, or more properly take pleasure in owning. Unless you are a very sad person whose pleasure is in counting and admiring a pile of bits of crinkly notes, money is only valuable insofar as it allows the person who has it to buy things, goods or services that add to their store of wealth.

For most people, money is just a unit of accounting that tells them they have sold their labour (or something else) for a certain amount of wealth’s worth that they can use later to buy some real wealth. It gets over the problem of so called “coincidence of demand” – that at the time you sell your labour or goods you may not in that instant want something the person buying it from you has to offer.

In a world of uncertainty, it is prudent, if we are able to, most of the time at least, to hold a little bit of money in reserve so that we can eke it out and survive if for some reason we are unable to get more of it before we need to pay our bills, buy more food and otherwise fulfil the basic needs of life. That’s just what prudent companies do to ensure they can pay you every month and buy things to sell before you come along to buy them.

But really “saving”, putting something away for that ever-looming “rainy day”, is where money (“cash”) falls down as an asset class. And in doing so it does immense damage to us all – our financial fortunes, our environment, our society.

In the context of establishing our idea of a “Community Finance Partnership” a friend and I have been reading up on various community finance networks that sprung up at the time of the Great Depression. And I believe I have finally had an epiphany in my understanding of “usury”.

Many of the groups and systems I have been looking at, formed during the Depression to help make up for the lack of circulating currency which was making a bad situation worse, worked on the understanding that charging or paying interest was itself the major problem that had led to the “credit crunch” of the time.

Interest bearing cash tries to turn money from being a means of exchange and unit of account into something fundamentally different – a store of value. It encourages the hoarding of cash balances, which are then not available to be spent in the real productive economy.

The charging of interest on loans means that the borrower has to acquire more money than they borrowed in order to pay off the principal and the interest. We have a tiny amount of non-interest bearing “money” in our system. In the UK, prior at least to the recent troubles, this amounted to only about £50bn – in the form of issued notes and coins. All the other purchasing power in our accounts was created as interest bearing debt and so over 97% of our purchasing power needs repaying at some point, with interest.

The JAK bank in Sweden, which has its origins in a similar Depression-era Danish venture, calculates that up to between 30% and 40% of everything we spend goes on paying this embedded interest committed to by all the borrowers in the supply chain of the goods and services we are purchasing and have been created in the past. This represents a huge transfer of wealth from those who have little, to those who own the financial institutions that create this debt-based purchasing power.

In such a system also, inflation is virtually guaranteed, as it helps those in debt (most often governments telling us they are acting in our name) reduce the value of their debt by reducing the purchasing power of those who hold current purchasing power unencumbered by debt. This is a transfer of wealth from those prudent enough to operate within their means to those who don’t.

It is a vicious cycle at the centre of our economic lives that allows the rich and powerful, including states and bankers, to manipulate our purchasing power for their ends rather than ours. If we did not have to finance this 30-40% embedded interest then, not only would our purchasing power hold its value better, but we’d have 30-40% more of it, for the same amount of labour sold, with which to purchase real wealth and get closer to financial independence.

Money is a human creation, and the way it operates can be changed by human intervention. If we do not change it now, in the process of rebuilding the financial system that has just crashed, we are doomed, absolutely inevitably, to repeat this crisis in the future. And we should not be afraid to demand such change. After all, it affects the vast majority of us negatively at the moment and only benefits a tiny minority. It is a test of our democracy if you like that we must rebuild the system in a way that works for the majority rather than against the majoroity.

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?

The emotional outpourings of grief and anger at the case of Baby P (as evinced on this Lib Dem Voice thread for example - h/t Alix too!) are to be expected. It is truly a galling case with a litany of failures on the part of those supposed to protect the vulnerable and unutterable cruelty by those who should have been closest to the child.

This was to have been a rant that leaving things up to "the authorities" is a recipe for disaster. I was going to say that these sort of incidents are mercifully rare. So I looked around for some statistics (a PDF file) to back up my assertion and I found that, whilst we are still talking about small numbers (child homicides have hovered between about 60 and 100 a year for a long time)what is clear is that there *ought* to be a story like Baby P's every month or so somewhere. There is, it would appear, about one death a month of a child under one by its parents under the category of "acts of cruelty" (as opposed, I suppose, to whole family suicide incidents or throwing them off an hotel balcony). There's about one other of a child between one and four, again by parents, and about half as much again over all a month by strangers or less closely related family.

So, the big question for me out of this now becomes less "what happened to Baby P", so much as "why don't we have this horrific outrage a couple of times a month?" Of course the fact Baby P had been seen more than sixty times makes the failure all the greater, and it may be that these other couple of dozen cases a year are completely below the radar of the relevant child protection agencies.

But that on its own begs the question "why"? Even if they are not known to local authorities, these deaths represent a failure of the system simply because they have never come to anyone's attention before it's too late. A failure just as egregious as that of Haringey. Perhaps more so - for we know that people go to all sorts of lengths to conceal the sickest secrets - just think of Joseph Fritzl, as if you could forget.

So, is Haringey a victim of its own previous failings - making a death under their watch a more significant failing? Or is the real symptom of systemic failure the fact that this sort of thing is not all over the media twice a month elsewhere?

Over the years the government's regional governance strategy has been a complete and utter shambles. The Regional Development Agencies are QUANGOs unaccountable to anyone other than within what was then the Department of Local Government, Transport and the Regions. Then a layer of pseudo accountability was added in the form of not directly elected Regional Assemblies(most members were at least appointed by local authorities to which they had themselves been elected). Their attempt to give the regions more "autonomy" by setting up directly elected assemblies foundered at the first attempt in the North East referendum. And justifiably - there was very little additional power being devolved to them and to all intents and purposes they appeared to be designed to accrete more power from lower level tiers of government like counties and districts.

So when they abandoned that idea they decided to replace the half-democratic Regional Assemblies with a minister and parliamentary select committee for each region. So what a surprise to see the results of yesterday's Commons' debate on the establishment of the regional committees. Yup, you guessed it, they have somehow contrived to make a practically undemocratic system somewhat less democratic and accountable.

The government has decided that, unlike with local government or even the half-bakedelected Regional Assemblies, they are going to keep a majority on every committee, irrespective of the proportion of MPs each party holds at Westminster for each individual region. Not only that, but they will allow the importing of MPs from other regions whose constituency responsibilities have nothing to do with the region they are going to be deliberating about.

So, a region in which the party of government holds the fewest number of Westminster seats will have a committee with a majority of members from the governing party scrutinizing the decisions and plans of a minister from that governing party which that region rejected when given the chance.

Democracy eh? Dontcha just love it! Here's the story from the Lib Dem newsfeed:

The Liberal Democrats yesterday accused the Government of abusing the opportunity to provide decent regional accountability by imposing its parliamentary majority on new regional Select Committees, even in areas where they have the fewest MPs. Shadow Leader of the House, Simon Hughes MP, challenged the proposed make up of the new committees in a House of Commons debate, as MPs voted in their favour yesterday. The need for the Committees to reflect voting patterns was, he said, a "central obligation" of devolution and something the Government had "failed to grasp". Simon illustrated the problems with the proposal by highlighting the situation in the south-west region...(read more)

You know who you are. Those liberals (in particular) who always claim that "libertarian free markets" will result in a corporate plutocracy, or that the current turmoil in world financial markets (yes, it's still going on you know!) is a result of "libertarian free markets". Here, especially for you (but of interest to others I hope too), is a brilliant explanation of how this mutualist understands that free markets benefit people, not corporations.

CORPORATIONS VERSUS THE MARKET; OR, WHIP CONFLATION NOW

by RODERICK LONG - LEAD ESSAY - November 10th, 2008

Defenders of the free market are often accused of being apologists for big business and shills for the corporate elite. Is this a fair charge? No and yes. Emphatically no—because corporate power and the free market are actually antithetical; genuine competition is big business’s worst nightmare. But also, in all too many cases, yes —because although liberty and plutocracy cannot coexist, simultaneous advocacy of both is all too possible.

Read the rest...

The End is Nigh Originally uploaded by Martin~

Or, why I am really a "geo-mutualist" and why I think you should be too!

The revolution has begun. In fact it's been building for at least twenty years. When history looks back it will not probably be able to identify a particular date, but it could do worse than choose Christmas Day 1990, the day a humble academic computing geek communicated with his server in something nobody had really heard of called "hyper text". Finally there was something useful to do with the "internet" that would eventually draw in users from well outside of the ivory towers and military research facilities that developed it. Users in every corner of the world; users of every age and race; users of every background.

And what will history say about this revolution? Will it be seen as a great leap in human freedoms, capable of finally fulfilling Cobden's vision that "peace will come to earth when the people have more to do with each other and governments less"? Or perhaps that it heralded an era of unprecedented interference in our lives by governments?

Actually, I think it is a one way bet; that eventually it will be a revolution in human freedoms, in co-operation and in innovation. Such are the players in this brave new world; hackers working to bust the Great Firewall of China and liberate a fifth of the world's population for example; Kenyans being the first to be able to make payments quickly and simply by mobile phone; privacy technologists working to keep us one level of information security ahead of the law; game players investing ever more realistic virtual worlds; their individuality and very lack of co-ordination in many cases makes it inevitable.

What politicians can do, however, is either to make the transition long and painful, or to smooth its passage for the "good of mankind" so to speak. We can choose to stick by the state and try and keep it working just as its citizens are less and less tied to it, which will inevitably lead to more and more monitoring and restrictions; or we can choose to look at how to build alternative civic institutions and mechanisms to fulfill our needs in an era when the state has much less power to intervene at least without the force that is endemic in state action becoming more and more obvious to the point of rebellion against it.

So what is the great weapon of mass destruction that is going to bring low the state as we know it? Why, tax, of course. I'll let you into a little secret: in order to function a state needs to be able to tax: in order to tax it needs to have the ability to track transactions or peoples' wealth and changes therein. And from the taxpayer's point of view, there is every incentive to try to minimize their tax liability. Up until now, or very recently, it has been only the global super-rich who have had the means and sufficient incentive to take advantage of loopholes and allowances that enable them to choose the lowest tax jurisdiction in which to crystalize out their tax liability.

But thanks to the global and interpersonal nature of this most recent communications revolution we are on the cusp of mechanisms being easily available to the big majority of people that will enable us to minimize our "financial footsteps". When most of us only ever relate to the majority of our money through pixels on a screen or numbers on a bank statement - a small minority of trade now relies on real metal or crinkly coloured paper currency - what does it matter what those pixels are called; pounds, dollars, euro, yen? What about a completely new, essentially fictitious currency perhaps, like the "Linden Dollars" of "Second Life"?

Add e-Bay and Tesco to Second Life for example and one could imagine a world in which most of your financial transactions are conducted entirely in cyberspace, in virtual worlds that know no territorial boundaries or tax regimes (or at least that could be relocated into a sympathetic tax jurisdiction quickly if necessary), but with delivery of goods and services in the physical world. That's not to say giants like Tesco and e-Bay would necessarily be best, or would necessarily even survive the upheaval.

Those widespread international (and local) interpersonal (and business-to-business) mechanisms for sophisticated modern-day barter are now within reach and threaten the very raison d'etre of many of our longest standing institutions - banking and currency, transnational corporations built in an era when intermediaries were necessary to trade with far off lands, and ultimately the basis on which the state is founded - its monopoly of taxation. At the same time we can form non-geographic communities of genuinely voluntary co-operation in which we can build trust relationships, quasi-legal ways of dealing with disputes and so on that make trade possible with people a few short years ago we would have never had a hope of even communicating with.

So, which side are you going to be on - freedom and co-operation or ever more intrusion, regulation and restriction? And how long have we got?

Some of these technologies fall into the category of "overestimated penetration at 2 years, underestimated at 10 years." I think the state will be lucky if it has another decade of relatively easily collected taxes based on productivity, sales and incomes. If people want the state to be able to function beyond that, without increasingly authoritarian intrusion into our economic lives, we need to be looking now at how to make it pay its way through user fees for any value for money services we want it to provide. And as soon as it does of course it must also open itself to competition - else it's a monopoly again whose only rationale is to use its discretionary power to rip off the very people who both fund and use its services.

Unsurprisingly any of the various forms of land value tax will do to start with and would be especially beneficial implemented soon, near the bottom of the crash in land values currently underway. The present situation in financial markets offers an ideal opportunity for new means of trading without the sort of money so invidiously inflated and deflated by the banking cartels. Again, these alternatives could operate either on a local scale or in an international, or non-geographic trading community. Land has the singular benefit of being immoveable. You can't virtualize land as easily as you can income - for we all still need to have a base somewhere.

There's another major reason for helping this process away from the power of and dependency on nation states rather than fighting it - the state is expensive. The sort of redistributive measures required to ensure that everyone gets a fair crack at opportunity - the level playing field - are getting more and more expensive. Our interventions into the affordable housing market for example, in the form of subsidy, will continue to rise when land values rise, subsidizing the already-haves in the name of assisting the have-nots. Far better to try to ensure the fairest of level playing fields for all than trying to play uphill on a steepening playing field.

So, when you find me criticizing the state and its acolytes, it's less about what has gone on in times past - I would say times of missed opportunity for sure - but more on how we will be able to live in future, a future I think is pretty inevitable, in which the very idea of a state with the power to tax fairly will be severely compromised. The elephant in the room needs to be dealt with, and dealt with soon. Will it be freedom, or more desperate attempts to maintain the ailing state structures? You choose!

Since this is about to become a full blown party debate in the Lib Dems, it might be worth highlighting that an online debate has begun today at the Economist.