Sharing the earth’s bounty is the natural way to ensure that everyone gets a fair go.
This is possible by harnessing the best of market forces with the natural changes inherent in community development. Yes, a synthesis between capitalism and socialism is both desirable and realisable.
Natural resources need to be at the centre of our thinking. Under the current system, land is too expensive. High prices act as a filter to limit small business. This is due to a tax framework that encourages speculation over productive work. Negative gearing assists this trend. Why should speculation in the earth’s bounty be encouraged?
This trend is enhanced by the fact that as the population naturally grows, central locations will always become more valuable. The public’s understanding of land ownership should respect that this increase in land values is due to the community’s development, not the entrepreneurial skill the market system is meant to give priority to.
A system of Resource Rentals provides a simple method of raising revenues to replace the presently complex and inefficient tax system. As resources were put on this planet as a gift to us all, they and their profits should be shared amongst all people.
Much time and effort was needed to compile the figures for Resource Rents of Australia (2000).
Venezuela’s Hugo Chavez is doing a good job increasing oil royalties from less than 2% to between 30 – 50%. The latest increase will mean that at current oil prices, the country could raise $1.34billion p.a This will help provide the free health & education Chavez has given priority to.
What Chavez has missed for many years is the very land his people are living on. On Jan 07, 2007 his Tax Department announced that vacant rural land would be charged a Resource Rental fee. He should go further if he is serious.
If he charged a 10% Resource Rental on all land he would soon loosen the pressures of poverty and dead end jobs. It’s not just rural land that is used inefficiently. How many of those barrios are full of run down or deserted properties? At present absentee landholders are able to sit on this vital asset and wait for it to naturally appreciate. With a Resource Rental system in place, all land needs to be used efficiently as they now have to pay a yearly fee on it. This leads to under-utilised land being put on the market. When supply goes up, prices go down. Urban density improves, as does the ability to fund infrastructure.
Small business would then be able to start up under it’s own accord with access to a cheap site. This would lead to independence and true freedom.
Following World War 2, General MacArthur implemented elements of this system in Japan, ensuring cheap access to land. This catalysed the economy, providing it with the level playing field for small business that fueled their dramatic growth levels over the 1960’s – 1980’s. This all ended with Japan’s land bust in the late 80’s.
The Asian Tiger economies of South Korea, Taiwan & Hong Kong also adopted market-based land reforms that assisted their massive growth in the post war era. They maintained these policies, whilst Japan didn’t. Which economies were more successful over the last decade?
Land is the natural birth right given to all. By sharing the earth’s bounty we capture what is called economic rent, the missing element in today’s policy prescriptions.