Democracy is not enough

For a society to move forward and to be fair, improving democracy is not enough.

Yesterday I attended a talk by Max Rashbrooke in Wellington. He had put out a new book – Government for the Public Good published by Bridget Williams books and costing above average. The talk was good and the matters he raised in it were important and oh so well articulated. I loved hearing the stories of Citizen Assemblies in Ireland on abortion, Iceland on their constitution, and in Taiwan on Uber and how they worked so well that they solved potential clashes and resulted in legislation that stuck. All good. (Especially as in one case people started to respect politicians more after the long process).

He talked about general dissatisfaction with government, the research on the privatisation of prisons, on charter schools and the importance of teaching people to argue for government ownership (not “intervention” as this language implies the market has the right). He talked about the ‘level of taxes’, assuming of course that the main taxes are taxes on income.

Better methods of decision making are always interesting and important.

But where was the deep thinking on taxing land and other natural monopolies? Absent. This is a man who has written so well on inequality so I understand he believes that to have a functioning society we need only a narrow gap in wealth between the groups in society.

So on the train home I turned my attention to what he had missed.

To obtain social justice we need a concept of the commons and a mechanism to ensure the commons is shared. The big one is land. Not all people can have the exclusive rights to the same site at the same time. So we need to charge regular rent for monopolising the use of land sites and other parts of the commons or natural monopolies.

Charging a rent for monopolising any part of the commons, including natural monopolies like ports and airports is the way to share our commons.

What we already do towards this goal, sometimes totally inadequately
Charge rates on land or property value which includes land. So minimal at the moment it should be in the second category. Each site is unique and a natural monopoly.

Commercial land in downtown Auckland is most valuable land and owners need to pay full land rent. Currently this is minimal. Rates are not a burden for them.

Charge taxi licences.
Charge yearly for registering our cars This is effectively a small road user charge.
Charge road user charges. Drivers of light diesel vehicles and heavy vehicles pay levies through road user charges. No doubt far too small as it by no means pays for road damage they cause.
Fishing licences for freshwater fishing, none needed for sea fishing.
Fisheries are a public resource and so sea fishing is regulated through selling fishing quotas. But not annual payments
Railways in New Zealand had mostly been owned and operated by the Government. Never meant to be profit making business. Privatisation in 1993 failed.
Broadcast licences for monopolising a certain bandwidth.
Royalties for gas and oil are charged.

What we are not charging for
Power retailers
Water use for irrigation no rent charged. Water rights are on a first come, first served basis and cost nothing.
Water use for water bottling. No charges yet.
Airports. Most big airports have shares held privately as well as some held by the local council. So rent should be charged proportionately. Private airports pay a tiny nominal rent to local government in the form of rates.

Paraparaumu airport is privately owned. It should be paying a rent for monopolising special land

Wellington Airport is two thirds owned by Infratil and one third by Wellington City Council. So Infratil should pay a substantial rent for the monopoly privilege.

Ports.
Health services
Prisons
Schools
Forestry
Banking. Since private banks have the monopoly of creating 98.5% of New Zealand’s money supply and money is part of the commons, they should pay a high rent for the privilege. (Their method of creating money as interest bearing debt should be regulated by government too)

Underground pipes and fibres. Chorus should be charged rent for the privilege of having a monopoly over using land for this purpose.
Subsoil minerals.
Patents
Satellite Orbit Rights

And then there are the rents not paid yet for the monopolising of soil, rivers, lakes, sea, biosphere for dumping waste. This includes all climate change issues and all pollution of waterways and soils.

There are two people I know who have done studies on these resource rents and how much they can raise. Karl Fitzgerald for Prosper Australia in The Total Resource Rents of Australia report finds monopoly rents are capable of replacing taxation at all levels of government.

Earlier Gary Flomenhoft while a lecturer at the Gund Institute in Vermont, got his students to work on a study to estimate the potential of resource rents on common assets for public revenue and put it together in a report.

In both these studies the potential revenue from land rent dwarfs all others.

Yes Max democracy is fine but you also need to democratise wealth. Democratising resource use, understanding that rent must be paid for use of the commons is a concept we all need to grasp. There is very little argument for taxing what is good, like work!

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