Greg Sheridan writes:
Europe’s present distress is our future. Everyone knows that part of Europe’s problem is excessive welfare. As Germany’s Chancellor Angela Merkel has remarked, Europe has 7 per cent of the world’s population, 25 per cent of global gross domestic product and 50 per cent of the world’s welfare payments.
Read more at ALP has spread Europe’s disease | The Australian.
Greg Sheridan says “Europe’s problem is excessive welfare” implying that the welfare itself is the cause of the problem rather than being a coping mechanism for an economic system that does not work.
Many journalists and politicians foster the illusion that great fortunes and poverty stem from the presence or absence of individual work ethic, skill and risk taking. Social Darwinism, the 19th century idea that “survival of the fittest” should serve as a social philosophy continues to justify social disparities on the basis of superiority or fitness. In this context those on welfare are easily denigrated as parasitising the rest of us.
The problem politicians are either too afraid or ignorant to address is that the cause of unemployment and poverty is in the tax system.
I quote from
http://38degrees.uservoice.com/forums/78585-campaign-suggestions/suggestions/2412142-introduction-of-land-value-taxation-its-fair-har
to which you can give up to 3 votes for its campaign.
“If we tax labour, buildings or machinery and plant, we discourage people from constructive and beneficial activities and penalise enterprise and efficiency. The reverse is the case with a tax on land values, which is payable regardless of whether or how well the land is actually used. It is a payment, based on current market value, for the exclusive occupation of a piece of land. In the longer term, this fundamentally new and different approach to revenue raising will stimulate new business and new employment, reducing the need for costly government welfare.”
“Land (unlike goods and services) has no cost of production. If an ample supply of land of equal desirability were available everywhere, there would be nothing to pay for its use. In reality land acquires a scarcity value owing to the competing needs of the community for living, working and leisure space. Thus land value owes nothing to individual effort and everything to the community at large. It belongs justly and uniquely to the community. Conversely, the reward for individual effort can belong only to the one who earns it, to spend, save or give away as he or she may see fit.”
Australian governments have a bipartisan zeal to maintain high land prices and have provided property investors with some of the most significant incentives and subsidies in the western world. They have turned us all into speculators seeking the unearned increment in land values.
This rise in land value is not delivered via Centrelink but it comes from the community just as surely as if it was.
There is never a free lunch though, and in exchange we have to live in an angry, competitive community with the problems of poverty and welfare and knowledge that our grandchildren will very much need inheritance from us.
“the cause of unemployment and poverty is in the tax system”
I would disagree. The primary cause of unemployment and poverty is unemployment and poverty.
Unemployment and poverty is a trap from which people find it hard to escape. It becomes self-perpetuating. Not everyone on welfare is a dole-bludger but extended reliance on welfare is also self-perpetuating …and part of the trap. We need to find new strategies to help people escape.
Certainly intergenerational unemployment in families and high peer group unemployment can lead to a self-sustaining culture of unemployment. Lack of educational opportunity coupled with any available low skilled work providing little more take home pay than benefits would deter some people from working. Welfare gives them a survival niche and they stay in it. From a biological viewpoint that is not a surprising adaptation.
How can this change when the economy is governed by a tax system that fines the individual for working while land which is essential for all production and housing is kept at speculative prices? Imagine the boost to small business and therefore employment if some of the dollars that are now directed to paying mortgages and interest were available for consumption.
Even when the economy is in the recovery stages of the 18 year land-led boom and bust cycle the progress feeds back into the land value keeping real wages low. When land is priced so far out of reach that the inevitable depression follows, nations are deprived of huge amounts of wealth. The 2010 depression left 50% of school leavers and university graduates unemployed in countries like Spain, Greece and Italy.
This link
http://www.guernicamag.com/daily/rich-nymoen-jeff-smith-reviving-the-idea-that-urban-land-is-common-wealth/
“Regarding long term trends, as emphasized by Nobel Laureate economist Joseph Stiglitz, our society’s increasing inequality damages our economy because it diminishes the middle class purchasing power that keeps our economy humming. But one of the prime causes of increasing inequality is the increasing concentration of ownership and control of land and other natural resources — down to six big lenders after the crash and bailout, and about the same number of oil companies and media conglomerates — all made possible by letting powerful insiders capture the worth of Earth rather than having society share natural values among all its members.”
refers to Joseph Stiglitz re the economy and the middle class.
http://www.vanityfair.com/politics/2012/05/joseph-stiglitz-the-price-on-inequality
Good piece Alex
Alex
I would agree with much of what you say. I would add that if we stoped treating people who have accumalated vast amounts of money as gods,we would be less aquisative.
over educated