Comments by "John Burns" (@johnburns4017) on "Richard J Murphy"
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In the late 50s LVT was introduced in Denmark. The results were startling:
Geoism a Proven Success
Denmark prospered under the Geoist system for three years until the vested interest of landowners dismantled the economic system. The Danes, by tradition, recognised that land is common belonging to the people. The rapid industrialisation and land enclosures of the 18th and 19th centuries began in the United Kingdom cascading into Denmark, challenging the tradition of land being common to the people. Land was turned over to industry as Denmark industrialised.
Liberals Adopt Land Value Tax
Farmers were economically pressed in the latter half of the 19th century with many supporting the ideas presented in the book "Progress and Poverty", by Henry George, the biggest selling book in the world after the Bible at the time. George recognised people needed title to land, loosely referred to ownership, however the wealth that soaks into the land giving the land its value, is commonly created and must be reclaimed to fund common services. The added benefits was that income, sales and other taxes can be abolished, making matters simple for tax collection as land cannot be moved, and business as fewer expensive tax accountants would be required. As the economic situation worsened for small farmers, a Georgist movement began with the Danish Henry George Union being founded in 1902. Some of its more active members wanted a higher profile platform for the Georgist philosophy cooperating with other philosophic groups and public leaders in forming the Liberal Party, which declared:
1) Land value taxation, LVT, (site revenue) should collect all the publicly created economic rent of land for government expenses;
2) Income Tax to be abolished accelerating the free market and enterprise;
During this era, Karl Marx was advocating that the workers unite to fight the desperate conditions of the working people while great wealth was being created through mass production. The Danes took the line of Henry George. Social Democrats were inspired by George advocating in its political manifesto the taxation of land values, known as Site Revenue.
Parties joined to create the Economic Justice Party
Over the next fifty years, not only in Denmark but around the world, there was long and intense debate about liberty and freedom amongst free traders, pacifists, humanists, philosophers and religious institutions. Many of these ideas merged. The disparate parties merged forming the Justice Party, with the aim of gaining seats in the Danish Parliament.
The economic policy of the Justice Party was simple, to collect tax only from the values of Land, abolishing all taxes on Labour and Capital. The effect was astonishing and quick for a new political party. In 1952, the Justice Party won 12 seats out of a possible 179. They influenced the appointment of a Government commission for ground rent in Denmark, who wrote a report clearly highlighting and advocating the benefits of site revenue. In 1957 three parties, the Justice Party, the Social Democrats (Labour) and the Radical Left Wing Party (Liberals) formed what was to be later known as the Ground Rent Government, overseeing the most prosperous era in Denmark. The three political parties agreed on the following:
* Collection taxes from the values of land only (using Land Value Tax);
* Liberalisation of trade;
* A tax freeze;
It was expected that after the formation of the government, some kind of Land Value Tax would be introduced. Land speculation ceased immediately in anticipation of the introduction of land value taxation. Legislation on the taxation of increased land values was prepared and passed by parliament.The economic effects of the near elimination of land speculation were astounding, arousing much attention. On the 2nd October, 1960, the New York Times headlined, "Big Lesson from a Small Nation."
Prior to the 1957 election
Denmark had: a sizable deficit on her balance of payments, was considerably in debt abroad, burdened with a relatively high interest rate, high unemployment figures and an annual rate of inflation of approximately 5%.
From 1957 to 1960, the following improvements in Denmark occurred:
* The big deficit on her balance of payments was turned into a surplus;• Denmark's total debts abroad amounting to 1,600 million kr. were reduced by one quarter to about 400 million kr;
* The rate of interest, and hence mortgage levels dropped;
* Unemployment was replaced by almost full employment;
* Considerable increases in production and wages;
* Inflation was halted;
* All wage increases were real wage increases, the highest ever in Denmark;
* Apart from one tax, no other taxes were levied during this period;
* The country was free of strikes;
* Industrial production rose 32%;
* Investment rose 135%;
* Savings greatly increased, as once again it became profitable to accumulate savings;
After three years Denmark had no foreign debt, no inflation and an unemployment rate of 1%, which was considered full employment. So why did this success not continue?
* A minor conflict developed in the use of revenues emanating form LVT. Until 1960, the Social Democrats were advocating LVT to pay for government social schemes, the Radicals and Justice Party advocated LVT for the purposes of income tax reduction.
* Prior to 1960, Georgist beliefs dictated that when a heavy tax is levied upon land values, land prices will decrease. The consequences of full employment, no inflation, no foreign debt, expanding industry and rising real wages however, brought about a great demand for homes and of course land. Enterprise flourished demanding more land. Land prices did not initially fall, as was predicted. In fact land prices rose because of the boom that was created by the introduction of LVT. Although it was predicted that when the economy settled after the transition, land prices would stabilise or even drop. This took the Justice Party by surprise, being unprepared to counter accusations on the transitional stage;
* In the late fifties, the Danish foreign debt was regarded at crisis levels. To assist in reducing the debt the Ground Rent Government levied an income tax as a temporary measure. Real incomes were reduced, due to the progressive nature of income tax on higher incomes. The self-interested wealthy landowners focusing on one temporary negative point confused the issue in the eyes of the public, ignoring the fact that overall taxes were reduced 10%. The general public believed anti-Georgist propaganda that stated that LVT was simply another tax on top of all the other taxes. The landowners had no problem in promoting the now growing belief that the socialists, who were regarded as communists during this Cold War era, wanted to confiscate your property;
The 1960 general election, the opposition had the largest budget ever in any Danish election campaign, financed by the Conservatives and self-interest groups of landowner associations. With its limited financial resources and lacking support from the national press, the Justice Party was unable to withstand the unfounded attacks. Opposition against the LVT legislation continued after the election with the new weakened government giving in. Further pressure from landowner associations influenced the repealing of LVT in 1964.
After 1964:
* The currency surplus became a currency deficit;
* The annual deficit on the balance of payments in 1972 was 3 billion kr;• Debts abroad since have risen remarkably;
* The interest rate rose substantially;
* Land prices rose sharply;
* Denmark's overall land value rose from 17 billion kr. at the assessment of 1960 to 67 billion in 1969, reaching 100 billion at the following assessment in 1973;
* Rents in new housing were six times of 1964;
* The rate of inflation immediately rose from barely 1% to 5-7% being 8.6% in 1965, the year after repeal of the land tax law in 1964;
* Taxes were five times higher;
A comparison between the three periods, before, during and after the so-called Ground Rent Government, gives a clear picture of the importance of eliminating land speculation. LVT did that painlessly with effective cascading economic effects. The Justice Party underestimated:
1) The population was not educated on what LVT was - only a few Danes understood what LVT was and its positive and stabilising effects. Most people were not aware of the positive effects enjoyed because of LVT and that the possibilities in general would improve further when the LVT levy was increased. People in general did not understand that the wealth accumulated in land, crystallising as land values, belonged to them all, with LVT being the reclaim mechanism.
2) Landowners & Self-Interest Groups Opposed - The extremely powerful opposing powers dominating the public media promoted the misunderstanding that LVT was a tax like all other taxes, not a mechanism to reclaim commonly created wealth. They promoted the notion that only landowners would pay all taxes, ignoring the fact that income and other taxes were abolished or vastly reduced. They emphasised that poor citizens having no or small incomes would see no benefit in a reduction of income taxes.
3) Land prices rose - This was unexpected, as the Justice Party predicted land prices would drop. The reason why was that Land Value Tax diverted investment from land into enterprise, expanding enterprise, creating a demand for land. The demand for homes also was a factor in rising land prices. When the economy settled after the initial boom, land prices would settle. This was not communicated to the population.
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There is talk of damming in the Channel and the North Sea. Two dams from Cornwall to France and a number from Scotland, Orkney's, Shetlands and then Norway. UK, France, Belgium, Holland, Germany, Denmark, Norway, Sweden, Finland, Poland, Latvia, Lithuania, Estonia and Russia will all be protected. 14 countries.
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