Fred Harrison’s Expert Comments tackles the issue of sustainable funding for infrastructure. Analyzing the history of the Roman Empire, he suggests that Europe is now facing similar existential threats that might point to the decline of modern civilization. But he offers us hope: land rents can be used to fund public services. This shift will require governments to take stock of land values, to assess rents, and to use this information as the basis of tax reform for the sake of the well-being of all citizens.

Executive Summary

Civilisation became possible when people learned how to produce more than what they needed for subsistence. The net income was used to fund what evolved into the infrastructure of urban settlements. That infrastructure, in turn, generated more than its costs of production – the surplus, or net income, which classical economists called ‘economic rent’. The earliest cities flourished so long as those rents were recycled back into funding the growth of urban culture. When the rents were privatised, problems arose, which, as they accumulated, became existential threats that foredoomed the civilisations to catastrophes and eventual collapse.

Classical economic theory identified rent as the most efficient way to fund public services. But theory collided with political practice, and the modern world was constructed on a system of taxation that burdens people who work and invest in value-adding enterprise. One outcome is the shift in wealth to the richest 1% of the population; another is the deep-seated discontent in European and American societies today.

Comparison with classical Rome suggests that Europe is now facing existential threats of the kind that might presage the decline of modern civilisation. But social renewal is possible. Governments need to restore the optimum revenue system. Reform, however, is predicated on a popular mandate, which will not emerge without an informed debate. To inform people of what is at stake, the government needs to:

  • compile a cadastre of urban and agricultural land and its value;
  • assess the rents generated by natural commodities; and
  • estimate the ‘deadweight losses’ arising from current taxes on wages and profits.

This information would lay the foundation for tax reform, which would heighten social solidarity and manifest itself in new levels of spiritual, psychological, and material well-being.

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The views and opinions expressed in this publication are those of the original author(s) and do not necessarily represent or reflect the views and opinions of the Dialogue of Civilizations Research Institute, its co-founders, or its staff members.

 

 

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Fred Harrison (born 1944) is a British author, economic commentator and corporate policy advisor, he is Research Director of the London-based Land Research Trust. He is notable for his stances on land reform and belief that an over reliance on land, property and mortgage weakens economic structures and makes companies vulnerable to economic collapse. His first book, The Power in the Land (1983), predicted the economic crisis of 1992. He followed this with a 10-year forecast (published in The Chaos Makers [1997]) that a global financial crisis would be triggered when house prices peaked in 2007. He studied economics at Oxford, first at Ruskin College and then at University College, where he read Philosophy, Politics and Economics. His MSc is from the University of London. Fred’s first career was in newspaper journalism, most notably at The People newspaper, where he became chief reporter. After a move to Economics, initially as Director of the Centre for Incentive Taxation, he spent 10 years in Russia advising their Federal Parliament (Duma) and local authorities on property tax reform and establishment of land markets. Since his return to the UK he has worked as a corporate business advisor, research director, writer and lecturer. Harrison is inspired by the writings of American political economist, Henry George. He has written for a number of newspapers and magazines and his books are widely distributed.