Arguments Against the Planned Economy

Harry Pollard

[Reprinted from a Land-Theory online discussion, 21 September, 2005]

Both "capitalism" and "socialism" are advocates of the controlled economy. That's an economy that takes the proceeds of your labor and gives it to others. An economy that knows far better than you what you should have, what you should be, and how you should behave.

I say a pox on them both.

I want a free economy. However, we can't have a free economy without Rent collection. That's necessary economically to prevent land speculation and land withholding. It's necessary to for the establishment of a just society. It's the ending of a basic privilege.

Rent collection is a first step on the road to justice and the establishment of the free market. This led to my contention "Better to collect Rent and throw it in the sea than not collect it at all.

Absolutely vital to a free society is collection of Rent. It doesn't matter what happens to the proceeds -- though I would prefer they are used for infrastructure. There should be enough -- perhaps more than enough.

When all is said and done, there are only two sources of government revenue - Rent and Wages. Several Georgists on this list appear to want to tax wages by a land Value Taxation that uses rack-rent as its base.

Worse, we calculate Rent by using sales prices. I have pointed out for more than 10 years that land sales prices are part of the "collectible market" with different rules to the price mechanism controlled market.

Surprise! Economists and real estate people have been discovering that housing sales prices are losing touch with housing incomes. Apartments are selling for far more than they can earn from their rentals.

They report it, but they don't seem to know why. Which means that they have no idea of how a collectible price can plunge when a collectible is offered for sale but no-one wants to buy.

When the active parts of the stock market began to act like a collectible market, all the analysts could mumble was "price/earning ratios".

The stock market doesn't matter, but the collectible market for land does.

Using these huge inflated figures as the source of Rent allows us to build up an enormous revenue potential from land. We can run the country, pay off the National Debt, have a war or two, raise Africa to a European standard of living AND pay everyone a Basic Income using "rent".

Well, perhaps not all of these things -- but most.

I would suggest this is pie in the sky. Economic Rent in the central city is enormous -- but so is the cost of services which probably includes police and fire. A safe neighborhood invites use. If police protection keeps the nasties from making a High Street unattractive, more people will access it - thereby raising the Rent. So, perhaps police should be considered a part of "infrastructure". Maybe the fire service too.

When all is said and done, in a Georgist economy, we will have to pay for governmental services out of our wages. A free National Health Service is paid for from our wages.

Old Age Pensions are paid from our wages.

The trick is under both socialism and capitalism that our wages are first milked by privileges, then some of the milk is taxed away by the caps or the socs. These taxes are then used for a free health service and pensions for the elderly.

We pay for them anyway out of our production.

Essentially, the capitalists or socialists make an arrangement with the privilege looter in which he gives back some of our production to buy us off. The socialists are expected to recover more of our production than the capitalists. So, there may be a difference of degree, but not kind.

The soviet socialists didn't have high paid CEOs but their privileged did all right. The newly independent Ukraine was landed with the dacha of a high soviet official. The news item that revealed this reported that they were anxious to get rid of it. It cost $300,000 a year to maintain.

Henry George did not give us reformed capitalism, nor did he present us with reformed socialism.

George was a radical and he looked at things in a distinctly radical way.

Important to his analysis was the contention that collecting Rent would open up alternative opportunities to labor, the supply of labor would become short and wages would rise. Further, as landholders could no longer charge rack-rent (the highest amount that can be collected from a tenant while maintaining production) the difference between Rent and rack-rent that is normally taken from labor's wages would remain with labor.

For even the lowest worker, it seems to me that a government health service won't be needed -- nor will old age pensions be required. People will handle their own health needs and save for their own pensions in a Georgist society.

It would be pretty ridiculous in such a case to welcome the dead weight burden of a socialist or capitalist controlled economy.

You say:

"The problem is neither the inherent flaws in democracy nor the size of government.. The problem is the design, purpose, and funding of government. Capitalism cannot be reformed by Georgism because returns on investment will drop to near zero in a Georgist state."

I don't know what you mean by "design" and "purpose". Funding presumably means that anything left after local needs are met could go to a higher level of government.

I have no idea what you mean by returns to investment will drop to zero in a Georgist state.

How much of your saved wealth will you invest in my factory startup if you will be getting nothing back. Rather than tie it up, you might as well keep it around in case you decide to buy a yacht, or something.

With many more lenders and fewer borrowers than now, one can certainly expect interest rates to become low. Actually the historic level of interest is about 3% - though the controlled economies (both socs and caps) so meddle about with currencies that it is difficult to make any sense of it.