Stewart asked a few questions on Economic Myths: The Property-Owning Democracy:
Can you direct me to where you have discussed the Citizen's dividend in more detail?(1)
Excuse my economic ignorance, but what ensures it ends up in people's pockets, and doesn't just subsidise lower wages/higher prices?(2)
Also, if the dividend and LVT cancel each other out for the most part,(3) how do we support those who genuinely cannot find work (even when the disincentives to work have been removed by the new system)?(4)
Thanks, Stewart.
1) All over the shop. Try here or here, or indeed the Citizen's Income Trust. That booklet is well out of date (2007) but the updated version for 2012-13 should be up shortly (child rate £56.25, adult rate £71, pensioner rate £142.70, disability benefits are a separate issue, same cop-out on Housing Benefit).
2) We can safely assume that out-of-work benefits push up wages at the bottom end (because people are less desperate for a low paid job) and that in-work benefits pull down wages at the bottom (because people are prepared to work for less). At the moment we have a worst-of-both-worlds welfare system with quite separate in-work and out-of-work benefits.
If we replaced the whole shebang mish mash of out-of-work and in-work benefits with a flat rate Citizen's Income/personal allowance, then the two effects cancel out. People are less desperate for low paid work but more willing/able to take it, the effect on wages (upwards or downwards) is negligible.
3) They cancel out for median or average households. The people at the top pay in a shedload in and a larger number of people in the bottom quarter or third receive a few thousand quid a year out of the system. It's like feudalism but turned on its head.
4) There are some people who are disabled, but true disability benefits are a separate issue. They relate to the additional costs of being disabled and have nothing to do with your earnings capacity. If a lorry driver loses a leg, that's a blow to his earnings capacity as a lorry driver. If an office worker loses a leg and can manage with a false one, his earnings capacity is barely affected. Nonetheless, they are entitled to the same Disability living Allowance of £50 a week or whatever it is. Low cost mass insurance against losing a leg, you can't complain about that, there but for the grace of G-d etc.
And there are some people who have a low earnings potential anyway, it's no loss to the economy if they don't work, and some people who are quite happy living on a low income and not working at all. They'll have to cut their housing cloth to suit their budgets, I'm afraid.
There will be precious few people in expensive areas who genuinely cannot find work, by definition. That is because rents are to a large extent a function of local average wages and job availability - so rents in areas where it is easy to find work or where work is better paid are more expensive. If somebody can't even find a job in that sort of area, then they are knackered either way. Most people who are genuinely looking for work but can't find it will be in low-rent areas, so they will be net beneficiaries of the system; that excess of their CI entitlement over their LVT bill is paid out to them as rough and ready compensation for the fact that they can't earn as much.
I'm So Glad I Never Clapped For Them...
1 hour ago
8 comments:
Why do we need more welfare if everyone is getting their full wage, government is fully paid for not too much not too little and there is nothing left over?
Assuming all taxes had been abolished except for that on the value of land.
Where will the welfare come from, taxation?
RS, I keep telling you over and over and you won't listen.
The cost of the core functions of the state, or public goods, or whatever you want to call it (law and order, defence, immigration controls, roads, refuse collection and public health in the narrow sense) is less than 10% of GDP.
Land rents are potentially up to half of GDP.
So if you collect full on LVT of 50% of GDP and run a sensibly small government at 10% of GDP, there's 40% of GDP left over, so why not dish it out as personal allowances?
And as I also keep saying, but you won't listen, the result of all this is that the median sort of household in a median sort of home gets a Citizen's Income which is approximately equal to their LVT bill so they live in a truly tax-free and welfare-free world.
A CI paid from Rents is not welfare, it is the fulfillment of the Lockean Proviso.
F, thanks for the back-up and I wholeheartedly agree.
To my mind, it doesn't really matter which end you start, you always end up in the same place.
You can start like Tom Paine or Queen Elizabeth and say "A bit of basic welfare to stop people from starving is good, but what is the least-bad way of raising the tax to pay for it?".
Or you can start from the Georgist view by saying "LVT is good (for umpteen reasons)... now what the heck do we do with the excess of LVT receipts over the actual cash cost of running a country?"
Or you can say "Rents are created by people, therefore everybody has an equal right to the rents (but not the land itself)." (which is approximately the Lockean Proviso).
You always end up with LVT-CI.
Citizens Welfare is non sequitur with an LVT. It is mandatory without one.
This thread is projecting the current model onto the new one, not accounting for fundamental changes with an LVT.
With an LVT, peoples earnings will rise dramatically relative to rents up to a new equilibrium. Its all relative.
The opposite of today. The only thing that would remain are both earnings and rent would rise in absolute terms. But this does not leave a surplus of rents. Its all relative.
So after wages were taken and functioning govt was paid for, no more, no less, there would be no surplus left over.
Citizens Welfare would then be utterly unjust and corrupting because it would need to be stolen as taxation or govt borrowing again.
Today without LVT it is mandatory, because it is cheaper than means testing.
But today is not tomorrow! Tomorrow is a completely different place, unless one is a believer in something.
RS; "With an LVT, peoples earnings will rise dramatically relative to rents up to a new equilibrium. Its all relative."
Hopefully true but not relevant.
"So after wages were taken and functioning govt was paid for, no more, no less, there would be no surplus left over."
Not true and misleading. Yes there would be a surplus, the cost of running the country is fixed at (say) £100 billion a year. That cost does not go up when the economy grows, if anything it falls slightly, so it dwindles as a % of GDP.
Once wages rise, then rents rise as a share of GDP, and the rental value of land will be £500 billion or £700 billion a year or heck knows what.
You can either have a government run a permanent massive surplus (which hugely benefits cash savers and therefore by definition harms people with no cash savings - so I am happy with that) or you can dish it out as Citizen's Income/homestead allowance.
Can you not grasp the concept of a median household neither paying tax nor receiving "welfare"? I don't think that is difficult to understand at all, and seems like a worthy goal to me.
Imagine we manage to construct a congestion charge that varies the fee by the minute, and ensures that cars can go at maximum speed at any time. Does this fee reflect at all what the road authority spends on the road? Ofcourse not, it reflects the benefits drivers that pay the fee get.
Anyway, what MW says, what's left after government spending is best done as a CI, whether that's a little or a lot. I find it strange that this is such a departure from scripture. And the idea that there is not going to be any welfare at all for those who are and will not be productive under any tax system, is not very likely in most western societies.
Kj: "best done as a CI, whether that's a little or a lot"
Exactly. People always wail on about CI being "unaffordable" or whatever, but the CI is not fixed at a certain amount of money per week, it just says that everybody gets the same. It might be that everybody ends up with £zero.
The CI might be £20 a week, it might be £200. As long as it is enough to cover the LVT for the bottom third or the bottom half of people, then that is about right.
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