Archive for Economics
Great article on the present complete inability of economists and politicians to see what is actually going on:
See full thing at: http://www.onlineopinion.com.au/view.asp?article=8817&page=1
It is fascinating to watch the behaviour of our political and business leaders as they attempt to cope with the world’s deepening financial crisis. It is becoming clear that they don’t have a clue what is actually going on. Their blindness is explained by confusion about what actually enables economic growth. The shared delusion is that money makes the world go round.
As share and asset values crash we hear talk of deflation. Many nations are trying to counter this by expanding their money supply. However, they seem to have forgotten the most basic fact about money that we are taught in school – that it is a medium of exchange. Money allows agreements on relative “value” (how much of one thing will be exchanged for another) but it has no intrinsic value itself. It is simply a mechanism that allows the distribution of real “stuff”. So if the economy is crashing what is this “stuff” that is disappearing? It can be summed up in one word – energy.
Energy is everything
No living or manufactured thing exists on this planet without energy. It enables flowers and people to grow. We need energy to mine minerals, extract oil or cut wood and then to process these into finished goods. Without energy the goods would not exist so we can think of each product as containing “embodied energy”. So the most fundamental definition of money is that it is a mechanism to allow the exchange and allocation of different forms of energy. The economy is energy
The most important source of energy in the world economy is hydrocarbons – molecules made up of hydrogen and carbon atoms. Small hydrocarbon molecules form gases such as natural gas. Larger molecules form the liquid we know as crude oil. Hydrocarbons can be burned to provide heat energy to power generators and motors. Almost all transport relies on liquid hydrocarbon energy. Hydrocarbons are also incredibly useful for making plastics. It is difficult to find any manufactured thing that does not now include plastic. Oil and natural gas provide almost 2/3rds of the energy used in the world economy. A simpler way to say this is that hydrocarbons are 2/3rds of the world economy.
Until recently (about 2005) the world economy was growing. The number of people has been increasing which requires increased production of food, clothing and shelter – the basics. On top of this, many of us have been using more energy than previously – to travel farther, eat more food, buy additional clothes and enhance our shelters. Until 2005 we could expand our energy use to meet this demand. This is something we were able to do – with occasional interruptions – for the past 150 years. However, after 2005 we could not expand our energy supply. In other words we could not expand the world economy.
Day One -20th May – of the forthcoming All Energy conference in Aberdeen
Posted by: | Commentsre the Grid, the second one being the one I’ve put together re the Legal and Financial Infrastructure.
I have Aily Armour-Biggs (a Clavertonite) chairing it, plus a Scottish Government speaker, Mike McElhinney, and a lawyer from Talisman Energy, Jacquelynn Craw, who is very familiar with the North Sea MasterDeed legal infrastructure Read More→
HOUSE OF COMMONS SEMINAR ON LAND VALUE TAXATION
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Organised by The Coalition for Economic Justice Hosted by Vince Cable MP
Panel of Speakers:
Sir Sam Brittan, Financial Times
Fred Harrison*, Land Research Trust
Prof Iain McLean, Professor of Politics– Oxford University Ashley Seager, The Guardian Molly Scott Cato, Green Party Economics speaker David Triggs, Henry George Foundation
* Author of Boom Bust: House Prices, Banking and the Depression of 2010.
There was standing room only in Committee Room 5 at the House of Commons on Tuesday evening for a lively and stimulating seminar hosted by Vince Cable. The Coalition for Economic Justice – a recently formed grouping of concerned organisations across and beyond the political spectrum– believes that the private appropriation of community-created site values is lethal in its effect on our economic arrangements, dooming every economic upswing to an ultimate collapse. To end this cycle of boom and bust it is vital that the Government has some control over the level of property prices. Land value taxation would give it that control.
The House of Commons seminar held last Tuesday was aimed at parliamentarians and policymakers. It examined the advantages of land value taxation, how it might be introduced and how transitional problems could be dealt with.
As Sir Sam Brittan saw it, the case for LVT was clear and simple. But perversely, people find this difficult to grasp; they expect complexity in taxes. Being a tax on unearned value increment, LVT was no disincentive to Labour or Capital. As a temporary expedient, pending the full introduction of LVT, he advocated the auctioning of planning permissions.
Ashley Seager of The Guardian cited instances where public expenditure had led to massive increases in property (i.e., land) prices. In one case, the building of a school had led to such a big increase in local property prices that teachers in the school could not afford to live in the area. As the land of this country is provided free of charge by nature, “rising property prices do not raise national wealth one single penny”. They serve no useful economic purpose and are an obvious target for taxation.
Professor Iain McLean explained how, as a member of the independent expert group set up by the Calman Commission, he was looking at LVT as a way of financing public services in Scotland and Wales. LVT would replace council tax, business rates and stamp duty.
>From a Green perspective (Molly Scott Cato), land is a trust for the
people, its life-giving properties to be preserved from one generation to the next. LVT, which aims to curb private profiteering from the nation’s patrimony, was seen as a valuable tool in this connection.
The groundwork for the panel discussions was set out by David Triggs in his opening address. “The challenge that confronts those interested in establishing a just and equitable division of the fruits of production lies essentially in recognising that land values impound that part of the value created which is attributable to factors external to the individual, e.g., the country’s infrastructure, the system of governance, law and order and the density of population. It is manifestly unfair to tax the individual on what he produces while those community-created values are provided tax-free to the benefit of the landowner. These land values, arising essentially from location, should be the primary source of taxation.”
Fred Harrison reinforced this message. He showed how failure to collect location value led to diminished opportunity and life expectancy at the marginal location.
James Black (a sixth-former) said LVT made common sense to the young and the opportunity should not be missed.
This seminar is the first step in a campaign to interest parliamentarians in the formation of an all party parliamentary group on Land Value Taxation.
END
For further information contact
John Lipetz, 020 7794 5343, johnlipetz@hotmail.com Robin Smith, 07786 078836, robinsmith3@gmail.com Dave Wetzel, 07715322926, davewetzel42@googlemail.com Tony Vickers, 07950202640, tonyvickers@phonecoop.coop
www.c4ej.comCEJ Member Organisations:
Labour Land Campaign (LLC)
Liberal Democrat Action for Land Taxation and Economic Reform (ALTER) Social Liberalist Party (SLP) Systemic Fiscal Reform Group (SFRG) School of Economic Science (SES) Land is Free (LF) Henry George Foundation (HGF) Land Value Taxation Campaign (LVTC) Professional Land Reform Group (PLRG) Christian Council for Monetary Justice (CCMJ) Global Justice Movement (GJM) The 1909 Group
