FORBIDDEN FUNCTIONS to INVARIABLE FACTORS & RESPONSIBILITY, Ss 12-16
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Functions in which Governments should not intervene, i.e.,
Education, Banking, Public Borrowing. Money is not the issue of credit. Population; Malthusian theory
discussed. Migration ought to be open in a free society, but monopoly causes governments to restrict it.
Sections 12-16, 4th of 5 'pages'
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12. FUNCTIONS IN WHICH GOVERNMENTS SHOULD NOT INTERFERE
Governments should not interfere in many of the functions they do, because these are not necessary monopolies.
(i) Education
In a free and prosperous economy parents could well afford to send their children to the private school of their choice. In England many years ago, before the Acts of Enclosure of the people's land, the church held land, the rentals of which paid for education and public accounting.
The church land was stolen by Henry VIII and the remainder by his nobility. The people became too impoverished to pay for the education of their children. State education, financed by taxation, then commenced.
It is inevitable that state education would result in indoctrination to support the government policies of the day. Australia has inherited the British state education system and cultural education has largely been replaced by indoctrination.
This is particularly noticeable in the teaching of economics in government owned universities and colleges, in which empirical economics has replaced scientific tuition.
There is a measure of private education which only the wealthy can really afford, and government standards are largely followed. This also is inevitable because the incomes of the wealthy arise mainly from land monopoly, with which they insist there must be no interference.
(ii)Banking
Banking is not a necessary monopoly and therefore is a function of competitive private enterprise. The Bank of England was privately owned and issued bank notes which bore the inscription that notes were exchangeable for gold (real money) on demand, as did its competitors.
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Because of land monopoly, repeatedly banks got into trouble, as did other private industries and governmmnts intervened to save depositors' funds. One of the first acts was to withdraw the undertaking to exchange notes for gold on demand. This set the stage for inflation.
Banking has now become a hybrid mixture of private and public banks in collusion, printing notes without adequate real asset backing in many cases. Private loans are secured, to a large extent by land price, which would disappear in a free Georgist economy.
There are many credit unions, (for want of a better name) endeavouring to operate honestly amongst their members, but to a restricted extent. These commenced in Victoria, British Columbia, Canada, sometime after the first world war.
The World Bank and its agencies has become one of the greatest rackets ever known, which thrives on government borrowing.
Scientific Economics and the Art of Government
While the institution of land monopoly remains the sacred untouchable policy of all political parties, it is extremely difficult, but not impossible, to institute an honest, competitive private banking system.
It is necessary to prohibit borrowing against the security of land price (which would be non-existent in a free economy) and reintroduce the requirement that bank notes bear the inscription to exchange for gold on demand.
Coins of smaller denominations could be obtained from a common source.
Land monopoly is the basic cause of nearly all social injustice and disorder. All reforms would be advanced by the removal of the basic cause.
(iii) Public Borrowing
Public borrowing is immoral because present wasteful expenditure is charged to our children, the taxpayers of the next generation, who have every right to repudiate the debts.
Covernments have no security to offer for public debt, because they cannot pledge the land which is held in trust on behalf of the people. The security they do offer is a promise to tax (rob) future generations to repay the debt. This is usually repaid by further borrowing.
Public debt would be unnecessary if public income was raised from the socially-generated site rental value of land (economic rent) etc. in ethical conformity with human rights and economic science, taxation is abolished and governments confined to their proper functions as earlier defined.
13.MONEY
The real function of money is clearly understood by a very few people. There seems to be a general idea that it is the issue of credit.
In an absolutely honest community, with an honest government, a token currency would suffice; anything that is convenient and mutually acceptable. Plastic, metal or leather discs, marked with the different denominations, or even shells could be used, for example.
Interest earned by the use of money in reducing the cost of making public exchanges would accrue to all the people through their government.
Currency would have to be bought by the users, in the first instance, at face value.
The use of money reduces the cost of making exchanges by barter, which was very inconvenient because, for example, a person with surplus sheep, wanting a plough, would have to find another person willing to exchange a plough for a sheep, etc..
Real money is really capital because it earns interest by reducing the cost of labour, just as the use of a machine does.
Because the conditions of honesty stated above are not likely to apply in the foreseeable future, a currency of intrinsic value must be used; that is, the currency must have stable market value for other uses, as does gold, silver or copper, which have been found the most convenient and durable.
A bank note is a receipt, entitling the holder to exchange for real currency on demand. In the case of international exchanges real currency of intrinsic value must be used. This is most convenient and is a safeguard against counterfeiting etc..
Science is not involved, it is a matter of common sense, sound business principles, and conforming to ethics.
International exchanges are made in goods and raw materials which should balance over a period. The exporting or importing of money of intrinsic value or of gold would only be necessary to correct an imbalance or change in national currency values.
14. POPULATION
World population is said to be increasing at the rate of 94 million people a year and the appearance is that if present trends continue, the earth, which is fixed in extent, will be incapable of supporting the increasing population, indefinitely. This is the Malthusian theory.
It is unknown to many people that there is a scientific explanation for increasing or decreasing population.
Jose de Castro, in his book, "The geography of Hunger," explained that reproduction increases faster when the people live on a protein deficient diet, which is cheaper.
It is known that by specialised effort, a greater production, per head of
population, can be achieved.
Under just conditions of access to land, an increasing population should increase the recourse to specialised effort (the division of labour) and by increasing the production of wealth, per head of population, reduce poverty.
This is nature's way of dealing with the problem, but, when land is
monopolised, instead of being available for use at affordable cost the
problem is not relieved, but worsens.
Henry George also explained that reproduction decreases, as poverty is
relieved, to the extent that there is greater recourse to cultural
development.
Scientific Economics and the Art of Government
15. IMMIGRATION
The natural resources of this earth are not evenly spread within
national boundaries, nor according to populations and their requirements.
This is due mostly to past national conflicts which have changed the
boundaries of countries.
This obliges the people in countries which are deficient in natural
resources to indulge in greater specialised effort, to buy from other
countries the resources they lack and to process such to more sophisticated
products, some of which must be exported to pay for the imported natural
resources.
This essential trade is continually being interfered with by governments
which impose tariffs, quotas and embargoes, to restrict the exchanges
which the people need for their survival. These in turn invoke
retaliations, which make matters worse.
This economic warfare incites the countries which are lacking in natural
resources to engage in physical warfare in order that their people may
survive.
Cordell Hull, Secretary of State to U.S. President Woodrow Wilson said
that "If goods do not pass frontiers, armies will." Nearly all warfare is for land, natural resources and for trading rights.
We have established that all people have the right of equality of
opportunity to apply their labour to the land of their country. It follows that in a free society, all people should have the right to emigrate to any other country in search of more rewarding employment opportunities.
Unfortunately, because of land monopoly there is massive unemployment
in all countries, and the feeling exists that immigration will worsen
the unemployment problem, as it will, temporarily, at least.
Governments confer the right of limited migration, in exchange for other
concessions.
Australian governments have paid $31.1 million between 1989 and 1992 from
increased taxes or debt, for assisting immigrants to settle in this
country, many of whom can't even speak our language.
This is just one of the side effects of land monopoly.
It is noted in passing that Australia has nearly all the essential raw
materials except chromium. In theory we could therefore be almost self sufficient, except that it pays
to exchange the products of specialised effort.
For example, although Australia has an automotive industry, we import
many motor vehicles from Japan, which nation is very deficient in natural
resources and must export specialised products to survive.
16. INVARIABLE FACTORS AND RESPONSIBILITY
It is noted that wages and interest are much the same, regardless of the
rental value, upon which wealth producers are engaged.
This must be so
because, to give an example, if twenty bushels of wheat per acre can be
harvested from marginal land, labour is none the worse off paying the
value of ten bushels for the use of the land that will yield thirty
bushels per acre, for the same application of labour and capital.
It is further noted that rent increases enormously from zero, on marginal
land to about $8,000,000 an acre on the most centrally situated land, in
relation to population density, in Australia.
Scientific Economics and the Art of Government
The rental value, above the margin, registers the additional efficiency
of labour and capital engaged in production on any particular site, due
to the proximity of suppliers and customers and of public services, etc.
It is interesting to note that wages and real interest rise and fall
together, in an opposite ratio to rent
.
Labour and capital, employees and employers, thus have common cause to
ensure that socially generated site rental value is paid to society.
The maximum return to labour and capital requires that valuable land is
made available for use, and not held idle, or underdeveloped, for speculative
gain which forces wealth producers to use inferior land yielding a lower
return and many to be unemployed.
Ethical conformity with the science of political economy involves only the
keeping of the Ten Commandments, which forbid theft and murder. The site rental value of land, generated by all the people, belongs to the living generation.
Its misappropriation as unearned income by land monopolists and speculators is theft.
Taxation which confiscates the wealth produced by private enterprise also
is theft, in consequence of which every form of social injustice arises
which results in murder from poverty-induced malnutrition, to violent
crime or suicide by people who have lost hope of ever being able to live a
normal life.
The authors of political policies which permit socially generated revenue
to be misappropriated, as unearned income by speculative investors, instigate theft and murder as accessories before the fact.
Those who support taxation, public debt, inflation and monetary manipulation
as alternative sources of public revenue, are equally guilty. Opponents of conformity with economic science would have us believe they are wiser than the interpreters of divinely ordained, natural law.
Find more by contacting economic reform groups through the Links and Contacts list, or us on: http://www.multiline.com.au/~georgist, or e-mail to: georgist@multiline.com.au, or call at Georgist Education Association, 10 Broome St. (off Douglas Ave., near Canning Hwy.), South Perth, most weekdays 11am - 4pm. Telephone (09) 367 5386 before coming.
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