Comments by "Henry Law" (@henrybn14ar) on "PragerU"
channel.
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@WiggaMachiavelli It is not clear what exactly you are proposing but if government were to create the money needed to pay for the public sector, including pensions and benefits, the additional money in circulation would lead to a general rise in prices. In year two of the scheme, more money would be needed to pay for the public sector, due to that rise in prices. In year three, it would be more still. Within a decade, there would be runaway inflation. What you are proposing was done in Zimbabwe and Nicaragua.
My argument does indeed apply to all inflationary monetary policy. It is fraudulent, it robs people of their savings, it destroys the function of money, government should not do it and they do not need to do it.
There is no difficulty in assessing the rental value of vacant land. The valuer looks at the value of all the land around and takes a weighted average. Valuers do this all the time. It is their job. If it could not be done, a tenant or purchaser would never know how much they should pay for purchase or lease. Exemption of unused land promotes dereliction. It rewards landowners for leaving sites vacant and punishes them for bringing the land into productive use. That would be a perverse incentive. It is, in fact, the way the British commercial property tax operates. That is why British cities are full of derelict sites. Dereliction deprives people of work opportunities. It is a major cause of unemployment.
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@WiggaMachiavelli Funding governments by wholly or partly by expansion of the money supply has been done many times before. It has invariably led to accelerating inflation. The simple explanation is the one I gave earlier. The more detailed explanation is based on the academic work done between 1955 and 1980, following the problems that arose with the Keynesian full employment policies adopted after 1945. It is a runaway effect. Inflation was a couple of per cent in 1946 but had risen to over 20% by the late 1970s and that led to the election of Thatcher. In between there were two runs on sterling, followed by devaluations, and the crisis which led to a bail out by the IMF, as well as the property boom which ran from about 1965 to 1974.
People allow for the inflation in advance by fleeing to other stores of value.
As for your comments on land value taxation - I am not even going to begin to answer them, since clearly you have not yet understood what is proposed, nor the economic theory that lies behind the proposal, nor the likely effects, which are largely known because it is not a new or unknown policy.
Valuations are based on the rents that are actually taken. They are derived from market evidence. If they are wrong, there is an appeals procedure, exactly as there is with existing UK property taxes. The difference from existing UK property taxes is that since the valuation is on land alone, there is more certainty and less scope for dispute.
The purchase of land which is then left derelict is widespread. There are large and valuable sites in the middle of Brighton (Sussex, UK) which have been vacant for over 30 years, and that is WITH planning consent for most of the time. Those sites are exempt from property taxation.
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@gooble69 Are we having the same conversation? Seemingly not. What do you think I mean by 'benefits received'?
Hint: see Adam Smith on taxation - Canon 1.
'The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. The expence of government to the individuals of a great nation is like the expence of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation. Every tax, it must be observed once for all, which falls finally upon one only of the three sorts of revenue above mentioned, is necessarily unequal in so far as it does not affect the other two. In the following examination of different taxes I shall seldom take much further notice of this sort of inequality, but shall, in most cases, confine my observations to that inequality which is occasioned by a particular tax falling unequally even upon that particular sort of private revenue which is affected by it.'
You could usefully read the entire chapter if you want a coherent right wing view on taxation.
https://www.econlib.org/library/Smith/smWN.html?chapter_num=36#book-reader
I am not in the US but another commentator said that military defence worked out at $2000 per head per year, which is $40 a week. That is not a fortune. If 40 million people cannot afford to eat regularly you need to ask why. I would suggest that one reason is precisely because the tax system is NOT based on benefits received, as defined by Smith.
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@WiggaMachiavelli Hyperinflation does not occur when the money supply is tightly controlled. But what you seem to be suggesting is that all government expenditure should be by expansion of the money supply.
We can look at the figures for the UK. In the first place, money supply has to be defined, as there are four separate measures. The widest measure is M4, which includes double counting with credits which are cancelled out by debits. If we go with the M3 definition, that is £2.8 trillion for 2018. Government expenditure in 2018 was expected to be about £1 trillion. If that amount of money was just printed into circulation, it would increase money supply by 30%. This takes two years to worth through into prices, so in 2021, prices would be 30% higher. That means that in 2021, £1.3 trillion would have to be printed into circulation. In succeeding years the annual amounts needed to be spent into circulation would grow at an increasing rate, and there is your runaway inflation. It would not be hyperinflation at Zimbabwean levels, but the rate would be accelerating.
Money CAN safely be spent into circulation but it has to be removed later on through taxation.
In most modern economies, the inflation has been feeding into land values eg spiralling house prices, rather than to retail prices. This is going to end catastrophically, probably in 2025.
What I am saying is not in the least controversial.
https://www.economicshelp.org/blog/634/economics/the-problem-with-printing-money/
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