Uninhibited Basic Income

In Poverty and Progress, Henry George develops two basic concepts.  One is the notion of a Land Value Tax (LVT), in which land is taxed at a rate based upon its current value.  I’ve commented and developed this notion in different directions at length in earlier notes.  The second concept was the redistribution of the monies collected in this fashion on a per individual basis to all those within a certain (unspecified) bounding set – be that a locality, regional area, state or nation.

In George’s conception, it was the return to each individual of the value that they forbore by allowing other individuals monopoly use of land. As such, it was inherently tied to LVT and the collection of that rent.  Being tied to that collection, it was also thus constrained by it, and thus self-limiting.  So, as a pair of measures, they had the capacity to work reasonably well together.

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My, er, rates appear to have gone missing

Today’s flare up over the ‘gifting’ of some $14M worth of concessions and inducements to Kalis and Myer to construct a new Myer Department Store in the Hobart CBD illustrates yet again the pernicious consequences of both poor ratings systems and individually justified inducements to invest despite those systems.

The problem is not that Hobart Council has paid an inducement to see Myer return to the CBD. They believe that they will receive a reasonable return on that inducement, and they are quite probably – but not certainly – correct in that belief.

The problem is twofold. Firstly, a rating system that increases charges when landowners and developers invest in their property, inherently acting to discourage development and best use. Secondly, the lack of a system that is capable of identifying the uplift in land values resultant from a specific development, enabling the distribution of community benefit to those who, through that investment have benefited the community.

It is more than time we renewed our rating system to serve us better. To avoid the problems that Hobart Council faces today (and other councils will continue to face into the future), the following features need to be put in place:

  • A single system state wide, assessed by the state, levied by the local council;
  • A system based solely upon land value, valued in a continuously manner;
  • A system that accounts for and rewards activity that contributes to land value;

A land value tax, levied against land value alone, at a rate which is a fixed proportion (nominally one third) of the current cost of capital (i.e loan rate), on all land without exclusion within the state, satisfies point one.

In the Myer case, the proximate cause of half of the furor is that developing a site substantially increases the charges that will be levied on it by council. This is completely inverted from what it should be. Devloping a site should be encouraged, not discouraged. Charging rates based solely upon land value avoids this problem.

A system, incorporating data from each sale of land, and utilising expert action to assess on major changes that will affect that prices, on a continuing basis, is able to satisfy point two. There is simply no excuse in the modern age of information for land values to be assessed on anything other than a continuous basis, avoiding the major pitfalls and shocks associated with re-assessment every five years. Limiting this assessment to land only rather than land and buildings makes this process much simpler.

Given such a system, the effect of any development, above a certain scale on land values (determined by the level of statistical noise) can be measured by a process of deconvolution — mathematically recognising the pattern and extent of uplift over time and separating it out.  The increase due to this represents a valid basis for both the assessment of the value returned by public works, and the value properly due developers for private works.

The other half of the Myer furor is over the council contribution to both initial costs and council effectively providing a guarantee of revenue.  Estimates remain estimates, and guarantees often incentivise perverse outcomes not anticipated at the time of their establishemt.  Possessing the capacity to assess community benefit after rather than estimating before the fact keeps all of this process above board.  Furthermore, assessment for such uplift is then available for any development that impacts beyond the scale of statistical noise, rather than for a single entrant with leverage.

This is a simple outline, but does set out the major features of a system that provides incentives in the correct directions, and allows the more sensitive processes that reward significant developments to be handled in a manner above board .

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Further thoughts on the Senate

As a result of some discussion recently, I’d like to note down a few more thoughts on the possibilities of reform in the Australian Senate.

It is quite clear to most that the Senate does not function as intended, fulfilling, when it has the power to do so, a function of frustration rather than a function of principle. It is not so clear, nor nearly so agreed upon, as to what the appropriate course of action to undertake to remedy this situation is.

So let me lay out the competing position to the one that I have previously expounded upon (that the Senate should embody a principle, or set of principles, that must be enshrined and enforced if good governance is to occur over the course of our history). This alternate position holds that the successful embodiment of principled consideration of legislation is impossible and impractical, and that the government of the day should have its way in regards to the legislation it wishes to enact.

If we take this to be correct — and it may well be — then what does this suggest for the senate?

Firstly, that if a senate exists, its make up should closely mirror that of the lower house; if anything it should be more tightly aligned to the government of the day than the lower house is. Thus it must be aligned in time; any variation in voting methodology should be to the benefit of the dominant parties of the day; suffrage must match.

First considering constitutional possibilities:

– breaking up the existing states into smaller states, retaining some portion (notionally the state capital) as the ‘original’ state. This would lead to 6 ‘original states’ with six senators, and 14 new states with three senators. At this scale, a Hare-Clarke style system would be quite workable, and lead to the situation where a party picking up a majority of the vote in an new state would pick up two seats out of three, and three of six in the original states. These new states could be composed of and aligned with 6 electorates for the House of Representatives. This would suggest NSW having six new states divided off, Victoria having four carved out, Queensland three, Western Australia one, and South Australia and Tasmania remaining as original states. This is relatively easily achieved under the current constitutional limits, and would afford the government of the day considerable advantage in having legislation passed.

– Working with the states as they stand, senate positions could be awarded to the various parties in proportion to the house of representative results achieved at the federal election, allocated by a preference vote taken against a party senate list, or simply moving down that list.

Once you start opening up options for constitutional change, the possibilities are near endless. There is some suggestion about removing the notion of states altogether; this is possibly the most difficult approach in that the states are actually the sovereign units of our Federation. It would actually be simpler to disband the Federation — in fact, that may well be the only way to achieve that goal. That said the notion of removing the states and ending up with 30 super-councils would in practice look quite similar to the suggestion sketched out above, but with the original states broken into two chunks each and the possibility of ignoring existing state boundaries where they are inconvenient.

To be honest, this final concept rather horrifies me, as it leaves the nation with one legislative body, and that body with no restraint. It would lead to much faster and more disruptive changes to society, and be quite unstable in its nature. All the power of a sovereign vested in a popular government, with no drivers to principle or national purpose. No capacity for differentiation across the nation, no capacity for smaller scale legislative experimentation. I’m not even sure what the advantages are supposed to be, other than the utter concentration of power.

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In tribute

A crystalline silence, an otherworldly plain;
Discarded piles of tribute — all that remains.
Save a single flag, yet flying;
Scarred standard yet defiant.

Lightning flashes through the vision;
Bringing thunder without sound.
Valor true, dragons dying;
Men transformed, mothers crying.

Approach the standard, here ye well;
In awe, yea in abandon, read the solemn tell.
Of one who stands in Glory;
His foe in depths of hell.

Lion Rampant.

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Senate Reform

In the wake of the recent federal election, and the follow up by-election in Western Australia, the need for reform to the Australian Senate is widely recognised — specifically to the voting process, but also the structure of the senate itself. However prior to getting into the specifics of those reforms, it is imperative that the purpose and contribution of the Senate is considered.

The Senate is widely called the house of review. This is quite aimless in and of itself; for review to have value, it must take place on a known and desired basis. The basis on which this takes place, in practice, is completely determined by the differences between the Senate and the House of Representatives. It is more correct to say that a well structured Senate functions to limit the worst excesses of democracy through the protection of the abiding principles of governance from the follies of the day.

Only in to the extent that it differs from the House of Representatives, does the Senate provide value.

The corollary to this of course is that the Senate demonstrates its value when it modifies or rejects legislation put forward by the House of Representatives. For this restraint to be considered worthwhile in the long run, the value of those changes must be greater than the frustration they cause. They must be clearly in accordance with the fulfilment of the principles of difference that exist between the Senate and the House of Representatives. Furthermore, the basic principle of the lower house must be known and fulfilled by that house.

The House of Representatives serves to completely fulfil the concept of ‘one person subject to taxation, one vote’.

Once this is understood, it becomes clear that this principle is near irrelevant to the Upper House. Thus it is not a valid complaint, in respect of the Senate, to point out that Tasmania far fewer people than New South Wales, but the same number of Senators. On the other hand, it is quite valid to point out and redress mal-apportionment on the basis of population in the Lower House. The Senate does not need to address that principle, except where not doing so reduces its capacity to protect the principles it exists to express.

So what principles does the Senate encapsulate; what additional principles should it capture?

Currently the Australian Senate maintains differences of greater and lesser effect based upon length of term, proportional representation, and geographic distribution. The principles behind these differences may be summarised:

Federal Law should not change on the whim of the day but with slow deliberation in concert with change in societal values, giving due consideration to what has held true in the past.

Federal Law should be reviewed in the presence of representatives of different schools of thought present in reasonable proportion throughout the states.

Federal Parliament should not easily dictate to a state standards that are not in keeping with its regional mores simply because more other, more populated states have different mores.

I would also submit the following for consideration, that is not captured at all in the current system:

The expenditure of Federal Parliament should be subject to review and approval by representatives of those whose primary income is not provided by the government.

Each of these issues is more or less perfectly (in most cases, less) captured in the current system. If we hold that these principles should be maintained, then every effort should be made to see that they are well captured, and not devolved in practice by the perditious political machinations of representative democracy. In detail:

The longer term nature of Senate seats, both in the term of office and the increased likelihood of seat retention works well in capturing the principle outlined above. The only change I suggest in terms of timing is that Senate elections take place on a rolling basis — one state every six months, rather than the three year half cycle we currently have.

Quite clearly, proportional representation has become unwieldy due to the group voting ticket abomination. The simplest method of resolving this is to adopt a proven proportional system, such as the Hare-Clarke system we have in Tasmania. Adopted as is, with a minimum voting depth of 10 and a maximum of 5 candidates per party, the proliferation of micro parties that is occurring solely to take advantage of the current process would be addressed at the source. Furthermore, technological solutions to increase the timeliness of the result can be adopted. The use of scanning pens in the voting booths that store each individual vote while retaining the existing full paper trail would dramatically reduce the time required for a count, while retaining the same degree of security, privacy, and the same process as currently in use. A process refined over the course of 100 years is not lightly to be discarded, despite recent hiccups.

I was involved in a discussion recently regarding the resolution of the issue of geographic distribution. The result of that discussion was a proposal to excise each of the state capitals and their contiguous urban areas from the original states, reducing the number of Senators for each state to 8 (leading to a total of 100 senators once the territories are included). The lower house would increase to a scale (200 seats) that allowed an even distribution of electors there, resolving the issues of the over representation of Tasmania in the House of Representatives.

Finally, it must be noted that the Upper House does not in any means capture the principle behind the original Upper House, the House of Lords. That is, that those who fund government must have the capacity to limit the expenditure of government —he who pays the piper calls the tune. This principle requires at the very least that suffrage for the Upper House is limited to those who do not depend upon the state for their primary source of income. This constraint is deeply divisive but necessary. It provides a driver for integrity and honour in politics; without it, democracy has a corrosive and corrupting influence upon our politicians first, and our culture second. If that pressure is not borne by the system, it is borne by the individuals within it, a proportion of whom inevitably fail.

If we are to have democracy, it must be properly restrained. What is proposed here is a Senate intended to do just that; comprised of proportionally elected individuals within the the six states, the six city-states, and the two territories. These Senators represent the long term views of the electors in those regions who are not dependant on government for their primary source of income, and review legislation proposed by the democratic House of Representatives on that basis. In doing so, the capacity for reestablishing integrity in politics, restraint in government spending and limits on government intrusion into our private lives can be found, at least for a time, until this structure too, needs reform.

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In recognition of nobility

Nobility is a concept that does not sit easily with democracy. It inherently suggests that there is an order among men; that breeding matters; that all things are not relative.  It rejects the grand misconceptions of this age; that all are created equal, that success is only a matter of effort or lack thereof, that no act has consequences.  So in this age —to allow those falsities to persist — nobility is defamed.

Nobility lost the war against barbarism.

It is not alone in being a concept that has been defiled not because of what it is, but because the losing side in a war held that concept.  Even today, our concept of ‘a noble‘ is a tainted one, and quite distinct from our concept of ‘a noble deed‘.  The contrast perhaps between the attainment of the ideal and the imperfect vessels that sought that ideal? But not only that; the residual effects of combat against those who upheld those ideals.

Democracy is by nature the glorification of the ignoble.

We forget this. In the name of democracy, we have broken up the concept of sovereignty and distributed it widely, claiming that sovereignty stems from the people. We have, in erratic fits and starts, continued to remove the barriers to the exercise of sovereignty to the point today where only children and criminals are denied sovereignty. We have no standards: we rejected nobility as a standard; we rejected capacity as a standard; we rejected leadership as a standard. Sovereignty, rather than being reserved to the greatest, has been dispersed amongst the least, with only the base caution not to commit a crime left as restraint.

To recognise nobility is to reject democracy at a foundational level.

The heart of the unthinking, shocked reaction to the introduction of an Australian knightly order is a personal rejection of the principles — and in many cases an absence of the capacity to abide those principles — recognised as necessary to be worthy of that title.  A true cultural cringe; a revulsion towards the mere acknowledgement of greatness, knowing that the achievement of that greatness is beyond their scope.  Recognising greatness means noticing its lack.

The Emperor has no clothes.

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Unease in the Working Class

It’s not as though the issue of quite different perspectives and preferences is isolated to the Liberals. A similar study on Labor shows a distinctly different set of votes for those who preference the Greens, to those who don’t.

image002Labor voters who preference the Greens highly also tend to preference the Liberal Democrats, HEMP and the Pirate Party.  Labor voters who don’t preference the Greens highly tend to preference Stop the Greens, Family First and Fishing and Lifestyle / Shooters and Fishers.

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