tisdag 27 mars 2007

Abolition of slave trade bicentenary


Jufureh slavery mural
Originally uploaded by lidbit.

It does no harm that the detailed horrors of the slave trade have been given an airing. I had not been aware that Britain was the dominant power in this trafficking as this uncomfortable fact is normally glossed over.

I suspect that it is a factor in the enfeeblement of the British upper classes, and in particular, the low esteem they hold for craft, manual and engineering skills. From the eighteenth century on, the English ideal was that of the country gentlemen, living off other people's labour, on the principle that it was better to keep your hands clean, sit in an ivory tower and contemplate, with hunting, shooting and fishing to prevent complete stagnation. I came across it at university, when students who were studying science and engineering were held in contempt. Nowadays, the idea persists in the ambition to make money by shifting it around rather than actually producing anything. So that is just one way in which we are still paying the price.

Another is the poorly integrated and discontented descendants of the slaves, who inhabit poor inner-city areas. There is talk about paying compensation, but from whom and to whom? Wishing in any way to play down the suffering, it is worth remembering that the heyday of the British slave trade, in the middle of the eighteenth century, was also the time when the English were forced into wage-slavery through being driven off the land by the Enclosure Acts. This, together with the Scottish land clearances, is an injustice which not only continues to this day. It is the root cause of many of the problems which we have to live with in Britain and is the same injustice which now afflicts the descendants of slaves who now live here. Most British were, and still are, victims. It is the aftermath of land enclosure which keeps so much of our population in persistent poverty.

So if there is restitution to be made, perhaps the most effective way of doing it would be to restore the land to everbody.

lördag 24 mars 2007

Railway re-nationalised


This is not America!
Originally uploaded by LHOON.

Estonia privatised its railways a few years ago but as it has not worked they have been renationalised.

So now they can be modernised with a contribution from the EU.

Local Government Funding Reform - ignorance or cowardice?

The Lyons Inquiry into local government finance, which reported last week, is probably the most thorough since the Layfield Inquiry which reported in 1976. Submissions were made to Layfield, putting forward the case for land value taxation (LVT) but the final report argued that LVT was incompatible with the operation of the Development Land Tax (which was repealed a couple of years later). This cleared the way for LVT but the mental blockage remained.

And now another Inquiry has produced its report. LVT advocates have made their submissions, and were invited to give oral evidence. And this is what Lyons has to say on the subject.
====================================
Chapter 6 (funding reform):-

Taxation of economic rent
6.42 Most economists would agree that there is a strong case for levying taxes on land. Land is in fairly fixed supply, and much of its value will therefore be what economists call ‘economic rent’, which can be taxed without altering the incentives to use the land. The fact that much of the value of land is the result not of the actions of the owner, but the activity and investment of the wider community – for example, by providing transport connections, desirable schools or accessible markets – makes the case for such taxation even stronger. Taxing only the value of the land, not the use to which it is put, or the buildings and other improvements constructed on it, could also ensure that there is no distortion created by the tax system between the types of activity that might be undertaken on the land.

6.43 Land value taxes have been proposed on a number of occasions in the past, perhaps most notably in the Budget of 1909, because of these advantages. A number of groups, from the Land Value Taxation Campaign to the British Retail Consortium, supported the idea of a land value tax in their submissions to the Inquiry. For example, the BRC argued that:

Land Value Tax (LVT) has a number of advantages. These include not distorting behaviour in the same way as taxes on income and profits do, LVT’s potential effectiveness in incentivising the efficient use of land (as all land would incur a charge even when it was not being used for productive activity) and taxing land values could also enable local governments to profit from some of the increase in value as a result of a prosperous local economy.

6.44 There are also some arguments in favour of taxing the property built on the land, as well as its basic value as land. In general, taxes should be applied to as broad a base as possible in order to reduce the tax rate needed, and thus the potential distortions created. Taxing the value of improvements as well as land values can help to expand the size of the property tax base, and a number of land value taxes used around the world actually levy a tax on improvements for this reason. On the negative side, however, the taxation of the value of property as well as the land value could distort activity by discouraging investment in development and improvements.

[footnote Economic rent is a complex economic concept and definitions vary. Broadly speaking it means the difference between the return made by a factor of production (i.e. land, labour or capital) and the return necessary to keep the factor in its current occupation.]

Chapter 8 (reform of the Business Rate):-

8.15 Chapter 6 showed that other stakeholders have called for the replacement of business rates with tax on land values. As noted there, land value taxes have some clear theoretical advantages. Nevertheless, given that business rates already have some of the attributes of a land value tax, strong arguments would be needed to support a wholesale change. A consideration against the principles of a land value tax can help to suggest areas for reform and suggests that reform, rather than replacement, is the most pragmatic approach.

8.16 One significant difference between business rates and pure land value taxes are that business rates are a tax on property as well as land. As noted in Chapter 6, the taxation of property can have some distorting features, but it increases the width of the tax base, which enables a lower tax rate to be charged (and in practice many land value taxes in other countries include at least an element of tax on property for precisely this reason). Another difference is that business rates are a tax on current use value, rather than the optimum use of the land, which potentially means that they do not provide the same incentives for underused property or land to be redeveloped for another use. To change this would be a substantial alteration in the principles of business rates as they currently stand.
====================================

Thus, paragraph 8.15 indicates that Lyons regards LVT as something of a Gold Standard against which any other taxes should be judged. But later on in Chapter 8, Lyons discusses the possibility of taxing agricultural land and brownfield sites and identifies the problems in implementing this under the present Business Rate system. He doesn't notice that under an LVT system, brownfield land would be taxed at its current permitted use value, thereby dealing with the problem. Nor, incidentally, does he discuss the distorting effect on land use caused by having land in different uses taxed at different rates. Nor again, does he mention the role LVT could have as a replacement for planning (section 106) agreements and as an alternative to the Planning Gain Supplement, which will repeat the mistakes of earlier failed legislation. Nor, under the discussion on Business Improvement Districts, does he appreciate that LVT is a simple, effective and fair mechanism for recouping the cost of infrastructure and local initiatives, as these are reflected in enhanced land values.

The point Lyons makes about taxing buildings as a way of enlarging the tax base is plain wrong, as the tax base is reduced due to the loss in tax base from underused and hence undervalued sites; in any case, people are concerned about the total bill.

In other words, Lyons accepts the case for LVT, can find no substantial argument against it and then walks away. Stupidity, moral cowardice, or what? Since many of the recommendations made by Lyons are flagged "in the longer term", why did he not include LVT amongst them?

Consult and ignore - abortion law petition

I am strongly against abortion, not for "religious" reasons but for the consequences. I have seen all of this with friends.

(1) The father becomes distraught immediately

(2) The mother becomes distraught and in some cases is permanently traumatised. Sometimes they can't look at a child of the age their own would have been without the dreadful feeling of what might have been. And it gets worse if they get past childbearing age without having had one of their own. And worse still into old age when they miss the child they might have had and are lonely and unloved.

(3) A friend of mine stupidly got his partner pregnant and abortion was a thought that crossed his mind. I encouraged him to look forward to having the child, which he would enjoy, and now his three-year-old daughter is his favourite companion.

More generally, it promotes callousness amongst the medical staff involved, and within society as a whole, and when we get old there will be nobody to look after us apart from Filipinos, not that I have anything against them. So there will be increasing pressure for euthanasia when people are no longer viable economic units. And all this has come from a mistaken and misguided notion of individual "rights" which is wrecking society. We will all pay for this "progressive" legislation.

Britain has the most liberal abortion laws in Europe - up to 24 weeks, an age at which premature babies have been kept alive and survived. In France, abortion after 12 weeks is allowed only if two doctors say a woman's health is endangered or the foetus has a serious abnormality; in Sweden, abortion is provided free and on demand until week 18. After that, a woman must secure special permission from a medical board; Denmark has abortion on demand for the first 12 weeks. After that, there are limits and terminations are few after 16 weeks; Britain's laws are also more liberal than restrictive abortion regimes in New Zealand and Australia, where the ability to obtain an abortion depends on different state laws. The only major Western country where abortion is more easily available, in some places, than in Britain is the U.S. But then in the U.S they kill more people by judicial murder than any country in the world apart from China, so that is not so surprising.

Sign the petition to repeal the abortion law

These are the words of the petition.

"We the undersigned petition that the 1967 Abortion Act be revoked. The act of abortion destroys the lives of thousands of women every day, not to mention the innocent children, and is reprehensible in all circumstances."

I don't agree with "in all circumstances", nor the attention-grabbing title "abortion is murder", but I think it is worth supporting in that it draws attention to the issue and its need for reform. Of course it will have no concrete effect but it will remind the self-styled "liberal" establishment that there are other views around.

fredag 23 mars 2007

Image of failure


How rail privatisation failed.
Originally uploaded by seadipper.

This picture sums up the failure of Britain's railway privatisation. This was Eastleigh works, which was developed as a railway workshop from the 1890s. It was a real centre of tradition, skill and excellence, and remained so throughout the period of railway nationalisation. It was also, of course, a valuable training and employment opportunity for local people.

What happened? On privatisation, it was sold to the managers as a management buy-out and became Wessex Traincare. Their main interest was to sell the company on to the highest bidder. The eventual purchaser was the French conglomerate Alstom, which hoped to sell a fleet of new trains to South West Trains and use the works for maintenance. But in the event, Alstom's engineering resources were consumed by getting Richard Branson's tilting trains built and running, and so they were unable to give sufficient attention to ironing out the teething troubles in the 30 "Juniper" electric trains which they built for use by South West Trains.

And so SWT bought its new fleet of trains from Siemens instead, and the German company built a maintenance depot of its own near Southampton. Which meant it had no need for Eastleigh.

But all need not have been lost. Railway workshops do not need to confine their activities to train repair and construction. They have a broad skills base and can turn to a variety of light and medium engineering tasks. Eastleigh, with its proximity to Southampton, is especially well placed for this. But it didn't happen and so the works closed in March 2006.

The present use of the site illustrates another failure too. It is now used to store modern and perfectly serviceable carriages which the train companies do not want to use so that they can save money. Meanwhile, the trains are grossly overcrowded.

Council Tax reform damp squib

After deliberating for some three years about how to pay for local government services, the committee headed by Sir Michael Lyons has come up with nothing better than.

1 Reform of the Council Tax so that people in more valuable houses pay a larger share of the cost;

2 Possibly allowing local councils to set part of the business rate and;

3 Increasing the savings limit so that more pensioners can claim Council Tax benefit.

"In the medium term the Government should:

" * revalue council tax to update the tax base and improve fairness;

" * at the same time, reform council tax by adding new bands to reduce bills for those in the lowest value properties, paid for by increased bills for those in higher value properties paying more - there should be no increase in average council tax bills as a result of this;

" * consider assigning a fixed proportion of income tax to local government;

" * find ways to improve the incentives within the grant system; and

" * consider introducing the power to levy a tourist tax if local government makes a strong case based on local public support - this would be appropriate only in some areas.

Interestingly, in its discussion of the principles of a good tax system, Lyons comments most favourably on property taxes in general and in levying a tax on the rental value of land in particular, amongst other things because people are mobile but property is fixed. Lyons then dismisses LVT, saying that buildings should be taxed as well to "widen the tax base", whilst conceding that this is a discouragement to improvements.

This has blanketed it in a nonsensical fog of irrelevant comment, because under a property tax system which is based on land plus buildings in their existing condition, the tax base is actually reduced as vacant and under-developed sites are assessed at a reduced or zero value.

Having pointed the way, then, to a genuine and overdue reform, Lyons runs off purposefully in the opposite direction. Presumably he was assuming that no government will bite the bullet and remain resolute in the face of the tiny vested interest which will howl about having its privileges withdrawn. However, Lyons' own proposals will result in some people receiving much larger bills than they have been accustomed to for the past twenty years, and they are not going to stay silent. So the Lyons policy will not be put into effect unless the government is willing to face-down the opposition. For much the same amount of political effort, therefore, we could have had genuine land value taxation.

As an example of the superiority of LVT over the alternatives, consider the proposed tourist tax. This additional levy will of course only be worthwhile in popular tourist destinations, and as an entirely new tax it will have to be set up with all the administrative costs that go with it. Tourism is already taxed through VAT, but apart from that, the popularity of tourist destinations is reflected in the amount hotels can charge for rooms, and in the prosperity of service providers like restaurants and entertainments. This is in turn reflected in rents and property prices, and the economic benefit of being a place that tourists like to visit is ultimately manifested in land values. Thus a land value tax will automatically collect the value that tourists bring to a place.

Which is worse? Not to see the point about land or to see the point and then ignore the implications? And why was budget day chosen for unveiling this report which had been awaited with eagerness for so long?

Read about the report of the Lyons Enquiry

onsdag 21 mars 2007

Where is the Chancellor's common sense?

Income tax is a lousy tax, as it contradicts all the established maxims of taxation, such as those formulated by Adam Smith. It is immensely complicated and more harmful than is normally recognised. It can be shown that it is responsible for a raft of economic ills, and the idea that it is related to ability to pay is an absurd fiction. As the American millionairess Leona Helmsley famously said, "Only the little people pay taxes." And by reducing the standard rate of tax but leaving the allowances unchanged, Gordon Brown is certainly making sure that the poorest bear the brunt. Is this plain cynicism, as a bid for the votes of those who are slightly better paid, who could swing election results?

The effect will be to hold down the underclass still further, as the higher tax makes work less worth-while and helps to drive people with few skills out of the employment market altogether, as they cannot afford to go to work.

Nevertheless, if we are going to have this tax, it should at least be structured so as to keep it as simple as possible. Abolishing the 20p tax band makes sense because it simplifies the system. But why did he not simply raise the threshold instead of reducing the standard rate by 2p?

People on low wages should not be paying income tax, and the threshold should certainly not be less than anyone would earn if they worked a 40 hour week on the statutory minimum wage; this would give a threshold of around £10,000. This would mean having a much higher standard rate, but the advantage would be that a lot of people on low pay would drop out of the tax net altogether, reducing employment costs and thereby promoting employment of the very people who presently find difficulting in obtaining work.

Isle of Man tax haven


P3150027
Originally uploaded by jim_buchan.

Once again the old story surfaces, of tax havens causing a loss in revenue that should go to the British exchequer. This time it is the Isle of Man that has come under fire. (Observer business 18 March)

If the Isle of Man were subject to the mainland UK tax regime, its economy would be like that of outlying regions such as Cornwall, with high unemployment, which would lead it to suck in funds from the exchequer and probably the EU as well, far in excess of what is "lost".

If the chancellor does not want to lose revenue, he and his advisers need only to bear in main that people and capital are mobile, but land is not; it cannot be hidden or removed to a tax haven. Taxation of people and capital is the problem. The system is inevitably full of loopholes. Attempts to close them result in ever-increasing complexity and the process is ultimately futile.

The remedy for tax avoidance and evasion is in the hands of our own government.

tisdag 20 mars 2007

What did Adam Smith do to deserve this?



Adam Smith, who has his portrait on the latest £20 notes, has got a bad name due to being misrepresented by people who claim to be advocates of his views, notably the "Adam Smith" Institute.

The £20 note illustrates the division of labour, which he cited using the example of pin manufacturing in Birmingham in the second half of the eighteenth century. One workman made the wire, another cut it into pin-sized lengths, another put the head on, another the point, and so on. Unfortunately, over the past 25 years the concept has been taken to a lunatic extreme and applied to complex organisations providing a sophisticated range of services, such as the National Health Service and the railways, which could not have been conceived of in Smith's day. This is, for instance, a major factor in MRSA in hospital wards with their contracted-out cleaning and catering, the ever-increasing cost of running the railways and the spread of "targets", which is a consequence of trying to pretend that these services are provided in a market context.

It is significant that most of his really important observations are entirely ignored, such as his views on taxation. He formulated what are known as the "Maxims of Taxation". These are

I. The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. The expence of government to the individuals of a great nation is like the expence of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation. Every tax, it must be observed once for all, which falls finally upon one only of the three sorts of revenue above mentioned, is necessarily unequal in so far as it does not affect the other two. In the following examination of different taxes I shall seldom take much further notice of this sort of inequality, but shall, in most cases, confine my observations to that inequality which is occasioned by a particular tax falling unequally even upon that particular sort of private revenue which is affected by it.

II. The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person. Where it is otherwise, every person subject to the tax is put more or less in the power of the tax-gathered, who can either aggravate the tax upon any obnoxious contributor, or extort, by the terror of such aggravation, some present or perquisite to himself. The uncertainty of taxation encourages the insolence and favours the corruption of an order of men who are naturally unpopular, even where they are neither insolent nor corrupt. The certainty of what each individual ought to pay is, in taxation, a matter of so great importance that a very considerable degree of inequality, it appears, I believe, from the experience of all nations, is not near so great an evil as a very small degree of uncertainty.

III. Every tax ought to be levied at the time, or in the manner, in which it is most likely to be convenient for the contributor to pay it. A tax upon the rent of land or of houses, payable at the same term at which such rents are usually paid, is levied at the time when it is most likely to be convenient for the contributor to pay; or, when he is most likely to have wherewithal to pay. Taxes upon such consumable goods as are articles of luxury are all finally paid by the consumer, and generally in a manner that is very convenient for him. He pays them by little and little, as he has occasion to buy the goods. As he is at liberty, too, either to buy, or not to buy, as he pleases, it must be his own fault if he ever suffers any considerable inconveniency from such taxes.

IV. Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible over and above what it brings into the public treasury of the state. A tax may either take out or keep out of the pockets of the people a great deal more than it brings into the public treasury, in the four following ways. First, the levying of it may require a great number of officers, whose salaries may eat up the greater part of the produce of the tax, and whose perquisites may impose another additional tax upon the people. Secondly, it may obstruct the industry the people, and discourage them from applying to certain branches of business which might give maintenance and unemployment to great multitudes. While it obliges the people to pay, it may thus diminish, or perhaps destroy, some of the funds which might enable them more easily to do so. Thirdly, by the forfeitures and other penalties which those unfortunate individuals incur who attempt unsuccessfully to evade the tax, it may frequently ruin them, and thereby put an end to the benefit which the community might have received from the employment of their capitals. An injudicious tax offers a great temptation to smuggling. But the penalties of smuggling must rise in proportion to the temptation. The law, contrary to all the ordinary principles of justice, first creates the temptation, and then punishes those who yield to it; and it commonly enhances the punishment, too, in proportion to the very circumstance which ought certainly to alleviate it, the temptation to commit the crime. Fourthly, by subjecting the people to the frequent visits and the odious examination of the tax-gatherers, it may expose them to much unnecessary trouble, vexation, and oppression; and though vexation is not, strictly speaking, expence, it is certainly equivalent to the expence at which every man would be willing to redeem himself from it. It is in some one or other of these four different ways that taxes are frequently so much more burdensome to the people than they are beneficial to the sovereign.

Since our present taxes fail on all counts, it is a pity that those who have brought Smith's ideas to people's attention have so neglected his views on taxation, especially his comments on the taxation of land...

"Ground-rents seem, in this respect, a more proper subject of peculiar taxation than even the ordinary rent of land. The ordinary rent of land is, in many cases, owing partly at least to the attention and good management of the landlord. A very heavy tax might discourage too, much this attention and good management. Ground-rents, so far as they exceed the ordinary rent of land, are altogether owing to the good government of the sovereign, which, by protecting the industry either of the whole people, or of the inhabitants of some particular place, enables them to pay so much more than its real value for the ground which they build their houses upon; or to make to its owner so much more than compensation for the loss which he might sustain by this use of it. Nothing can be more reasonable than that a fund which owes its existence to the good government of the state should be taxed peculiarly, or should contribute something more than the greater part of other funds, towards the support of that government."

torsdag 15 mars 2007

Olympic Games cost runaway

There seems no limit to the nonsense that is being spouted about the Olympics.

The whole idea of competitive sport is dubious - it is no accident that, historically, the most totalitarian regimes are the ones that have devoted the most resources to competitive sports. Competitive sports as we know them today are a nineteeth century invention founded on the then contemporary notions of social Darwinism. But matters subsequently became worse still. In the twentieth century, it metamorphosed into a branch of the mass entertainment industry, and the whole thing fits well, too, with the contemporary cult of the celebrity. It provides lots of opportunities for companies to promote their products and so has become big business.

Governments are in favour of big sports events because they keep the newpapers full of stuff that diverts people's attention from their own inadequacies and failure to deal with fundamental issues like management of the economy. It was only to be expected that a shallow unprincipled government like New Labour would be keen on securing the Olympics in what is a classic "bread and circuses" strategy.

The idea that the Olympics will somehow encourage us and our children to become fitter is nonsense. People do not become fit and maintain their fitness by engaging in competitive sports but by pursuing healthy lifestyles which include, as a matter of routine, a substantial amount of physical activity. There is something horrible, indeed, abusive, about picking on young children and holding out to them the idea that they might become champions if only they train sufficiently.

Unfortunately but predictably, costs are already spiralling out of control, and isn't it strange how the money is somehow found, when we are told that there isn't any for all sorts of necessary investment.

The latest bit of piffle is about the regeneration the Olympics will bring to east London. If the area needs new infrastructure, why doesn't the government just put it there. Either way, landowners will make a packet from the taxpayers' investment.

måndag 12 mars 2007

Language teaching for British children could be compulsory from the age of seven

We British are notoriously amongst the worst linguists in the world. It does not help that we are an island and are less likely to make a casual trip abroad than someone living in say, Luxembourg. Nor does the fact that English is so widely spoken. Go to Germany and adress someone in German with an English accent, and they will politely reply in perfectly good English. It takes a lot of effort to get them to conduct a conversation in German especially if one speaks it badly, and there is never the opportunity to improve.

So this is good new especially when it will help break down our insularity. But who will teach these foreign languages and what languages should be taught?

In the past, French was the first language that most people were taught, presumably on the assumption that France was the foreign country they were most likely to visit. But that is no longer so. One never knows what foreign language one might need to know. Spanish? Russia? Arabic? Chinese? Swahili?

So perhaps the best choice would be a well-structured language, which means a classical language. Through this, children would learn how languages are put together, thereby enabling them to learn a particular language later on, according to their needs.

How about Latin?

Hear the news in Latin (with a Finnish accent)

Land bonzanza as government caves in on Green Belt protection


"The forthcoming government white paper on planning will relax rural protection rules, which protects the countryside from urban sprawl, says an article in today's Guardian

"The Queen, British Aerospace and BP will make billions of pounds from developing the greenbelt under proposals to meet government housing targets. Research by the Guardian and the Campaign to Protect Rural England shows at least 10,000 acres of greenbelt land are likely to be sacrificed to build some of the biggest developments in Britain in the past 30 years. In addition, speculators have bought large areas of greenbelt land.

"BP stands to make nearly £10bn if its advanced plans to build 20,000 houses on 3,700 acres of greenbelt land that it owns in Hertfordshire are accepted. The Crown Estate, which manages property owned by the Queen, could make up to £500m from the development of 6,000 homes near the A1 (M), while Arlington Securities, the former property arm of British Aerospace, hopes to make £3bn from the sale of some of its greenbelt land at Hatfield. Six Oxfordshire landowners, including Thames Water, Magdalen and Brasenose colleges, are lobbying planners to release thousands of acres of their greenbelt. Thames and Magdalen stand to make more than £300m if their plans for up to 8,500 houses are approved..."

The government plans to capture some of this added value through the Planning Gain Supplement, but if it tries to capture more than a trivial proportion of it, a lot of the development will not happen. Whether it is really needed is another matter, as, at the same time, the drift away from the north continues, and people of working age are leaving the south-west, with their homes being snapped up by retired people and for use for holidays. We can also be certain that even when all the new housing is built, it will do nothing to solve the apparent shortage in those places with the most jobs and the best transport links. It is a blueprint for social and environmental disaster.

What are needed are policies
(1) to distribute economic activity more evenly over the country as a whole
(2) to ensure that the best use is made of existing developed land and buildings
(3) to capture ALL land value, not just a little bit of that released by planning consents.

Making poverty history


Adam Smith
Originally uploaded by surfstyle.

Masden Pirie of the Adam Smith Institute was interviewed on the BBC news and current affairs programme "The World this Weekend" today.

He argued that globalisation and giving access to markets were the way to cure poverty. He is more right than those who would argue for protectionism, but implicit in his advocacy of the free market is the idea that wealth will be distributed through the famous trickle-down effect.

Unfortunately, there is no such effect. Surplus value ends up as rent and is claimed by whoever owns the land. This is why the benefits of fair trade can be a delusion. If the farmer gets paid more for his crop but does not own his own land, then the extra he receives will be claimed by the landlord through higher rents. Pirie ruins his sound case by ignoring the effect of land tenure on wealth distribution and needs to address this with appropriate policies, of which land distribution is not necessarily the right one.

Unfortunately, by bringing the idea of free markets into disrepute, he lends weight to those who see protectionism as the solution. But protectionism is equally disastrous for the poor.

lördag 10 mars 2007

Council Tax snooping


London suburb
Originally uploaded by blackwine.

The Daily Mail has been running a campaign against proposals for a Council Tax revaluation. (article and editorial, 9 March)

At present, the Council Tax is based on the value of a house as it was or would have been in 1991, and so the valuations are badly out of date.

The Daily Mail is complaining that the valuers have been issued with guidelines about how to do the valuation; houses which are in good condition or have extensions, improvements, or attractive gardens, will be assessed at a higher value. So will houses which are near to a railway station or have a good view.

I am no supporter of the Council Tax and as a Brighton resident, I am all too aware of councils' ability to squander money through incompetence and hare-brained schemes.

However, the services they provide have to be paid for somehow, and around a quarter of what councils spend comes from Council Tax. What is the alternative? Surely not higher Income Tax and VAT?

It would be possible to avoid penalising improvements, extensions and the like by reforming the Council Tax so that it was based on site values only, but that too, the Daily Mail would be against. So what are they suggesting goes in its place?

måndag 5 mars 2007

Support for congestion charging 'greater than ever'


Kensington Protests - No Congestion Charge - 04030012
Originally uploaded by normko.


In Stockholm it is a different story. Support for the congestion charge is greater than ever before, according to a new poll.

The congestion charge, under which drivers pay to enter central Stockholm during weekdays, is to be reintroduced by the centre-right council and the government on 1st July.

In the poll, conducted by Skop for newspaper Stockholm City, 67 percent of those questioned said it was good that the new government had decided to reintroduce the charge. 33 percent of the 1,021 people asked said they disapproved of the decision.

The congestion charge was initially introduced by the former Social Democratic government for a trial period in the first half of 2006.

A 51.3 percent majority voted in favour of retaining the charge in a referendum in September. The incoming centre-right administration promised to honour the vote, but said that income from the charge would go towards road-building, rather than towards public transportation as the Social Democrats had planned.

But why the difference in attitudes between Stockholmers and Londoners?
Read more

torsdag 1 mars 2007

Brighton Schools lottery





Brighton and Hove Council has become the first education authority in Britain to allocate secondary school places by lottery. Nothing could better demonstrate the failure of British social policy since 1945.

Probably the most popular state secondary school in Brighton is the one in the pictures - Cardinal Newman, a Catholic establishment. It is odd how so many people who are vehemently anti-religious are happy to send their children to church schools when they recognise that church schools tend to provide a higher standard of education. A friend of mine sent his daughter there and was livid when she decided to become a Catholic - he would have been less put out if she had been in trouble with the police, got pregnant or become a drug addict. What did he expect?

How things have changed - at one time Catholic schools were notorious for having the roughest pupils and severe discipline. Newman is over-subscribed with Catholics and Anglicans, so if you aren't eligible and can't afford to go private, the fate of your children will depend on the Council's lottery.

The background to this needs to be spelled out. Troublesome children tend to come from deprived families. Usually this means poor families and these tend to have concentrated in particular parts of the city, mostly the large housing estates on the edge of town. So the schools that include these estates in their catchment areas have more than their fair share of troublesome children, whose presence disrupts entire classes. Not only do they make it difficult for anyone to learn anything - they also drive away many of the best teachers, and the entire setup discourages potentially good teachers from entering the profession at all.

Parents who are concerned about their children's education want to avoid living in the catchment area of schools whose intake includes children from the council estates. It isn't snobbery - they only want to make sure that their children do not waste their time at school and keep away from bad company. The effect of this is to drive up house prices - really, land values - in the areas away from the council estates, within the catchment areas of what have become the better schools.

The council's lottery policy will ensure that every school in the city will have its quota of disruptive children and that everyone who goes to school in the state sector will have to put up with such children in their classroom and have their education damaged in consequence.

The real question that has to be asked, though, is why, more than sixty years after World War 2, we have spawned a permanent and growing underclass, whose children so many of the rest of us are desperate to keep our own well away from? This is the extent of the failure of British social policy.

The Journey East #2

The state of the Catholic Church A few years ago I visited Riga, the capital of Latvia. At 9.30 in the evening, a crowd of young people cam...