Saturday, May 24, 2008

Geonomics

Geonomics:
Geonomics is a political/economic system that understands that economies run on the exchange of time, and that governments are extremely bad at doing anything other than force.

Governments have diworsified into vast areas of life. Areas that the government runs it runs extremely badly. The ways that government raises money cause huge economic damage, and the ways that government spends the money cause huge social damage. Government should be used only for externalising problems, such as pollution, crime and defence.

A Geonomic government would treat everyone equally. Instead of paying out when people make mistakes (what governments call social-insurance*), geonomics pays every citizen a regular citizens dividend. This is raised by taxing the right to exclude i.e intellectual (patent/copyright) and physical property tax.

With 8 Trillion of Property to tax at 7% per year each UK citizen could get a dividend of over 9 thousand pounds! The average person, should be able to live in the average house.

Market Geonomics:
Market Geonomics allows the owner to set the price of their property, and they are taxed at a percentage of that value. However to make sure the price is not set artificially low anyone can buy the property, with a delay (say 2 years for physical). This would solve a lot of planning permission problems and speed up compulsory purchase etc. and ensure a much more efficient utilisation of land. For intellectual property this would ensure much more sub-licensing of patents in order to make the patent work, instead of using it as an attempt to block competitors.

Any country using geonomics would be able to lower their investment interest rates as the geonomic tax would act like an interest rate. This would mean that houses would be more affordable(Av Wages/Av House Price), and that speculative house price bubbles should be much less likely to form.

Education:
Parents would be responsible for paying for the education of their own children. Government would lend parents the money (Government would become a net lender instead of borrower and thus take inflation more seriously), only the interest payments would come out of the parents citizens dividend. As parents would be choosing schools and paying for their child's education, they would tend to take far more interest in the standard of the teaching, rather than using them as a subsidised crèche, this should lead to higher educational attainment, as well as an end to poorer parents being priced out of schools because they cannot afford a near enough house to a good school. By the time each child has left school their accumulated citizens dividends should make a sizeable fund to let them purchase job relevant training or a university education.

Health:
Each citizen gets a dividend, this would be topped up depending on the cost of catastrophically insuring a fit person of their age and sex. This would ensure that the moral hazard of the NHS is removed. It would also allow you to decide not to pursue terminal low chance treatments and enjoy your last times. If someone was not watching their health they would hopefully notice the extra payments they have to make to purchase insurance and decide to do something about it.

Employment:
As there are no taxes on Income, there are no barriers to earning, so more people would work, and more people could be employed. You would keep 100% of the money you earn, and the government would not need to pry into your private financial details. Hopefully more people would find the security of the citizens dividend to setup their own small businesses.

Retirement:
Retirement would mean that you just take the citizens dividend. There would be no ageism with regard to forcing people of a certain age from their work.

*as normal Social-X means the opposite of X.

11 comments:

Adam In said...

I tend to think schemes like this are contrived, complex and arbitrary.

There is no objective way to determine the correct rate for the tax you suggest, particularly on things like 'intellectual property'. There are obvious problems with the regressive nature of a property tax. Your self-assessment scheme seems like it might be open to abuse by a third party, and surely interferes with the notion of property rights. The economic impacts of such a scheme are (afaik) too complex to predict.

Applying such a scheme uniformly across the entire country in a 'one size fits all' manner is also problematic.

I tend to think that if the state were limited to its proper function, there would be no need for such contrivances.

AntiCitizenOne said...

Adam,

I'm interested in where you see property rights coming from.

For me, property rights are an extremely useful invention. They do however have externalities and geonomics is one way to correct this.

To be honest the "correct rate" for the tax is pretty irrelevant as price is based on yield and this tax lowers the yield. I expect the tax to raise roughly the same whatever the level as the price will drop.

The "regressive" nature of the tax is countered by the citizens dividend.

Adam In said...

Hi ACO

Apologies for the combative tone in my post above - on re-reading I realized that it's worded rather more strongly than my A-level econ justifies :)

Please take what I say with a strong pinch of 'IMHO'.

This is the way I see things atm, though my views are highly subject to change in the light of new information:

A system of government should be such as to create an environment which is sympathetic to the innate psychology of humans.

The concept of property rights is an intrinsic feature of human psychology. It is a 'cultural universal', hard-wired into the brain of every (normal) human.

Human behaviour is generated by the brain as an optimisation of a genetically-determined, internally calculated measure of wellbeing, subjectively perceived as the emotions, though only strong, complex emotions are generally described as such. The way I like to think of it is that every twitch, every sneeze, every thought that passes through your head happens because some part of your brain has calculated it to be in your best interests, based on the information available to it (environmental and hard-wired).

As a general principle, government should act so as to enhance some aggregate measure of wellbeing across all individuals, though the nature of that measure is problematic. I think this is the way most people see the role of government, but eg leftists' aggregate measure of 'societal wellbeing' derives from a naive projection of their own petty grievances onto everyone else.

Protecting a person's 'natural' (ie psychological) right to life and liberty is an obvious way to enhance aggregate wellbeing, because the negative emotions associated with physical fear and the necessity for personal defence are far stronger than the negative emotions associated with payment of taxes.

The cost of policing is not a function of property values, so I think the two didn't ought to be connected.

Sorry about the ramble - I've never bothered to organize 'my' thoughts on these matters into something coherent. When I say 'my' thoughts, I do of course mean a mishmash of the thoughts of Pinker, Friedman, etc :)

Mark said...

I'm there with you on the citizens' dividend and the health and education systems, but I don't really follow the property argument. Can you point me towards more infomration?

BTW you may like to read John Seddon on Public Services.

Mark Wadsworth said...

Good plan.

I don't get Adam In's comment about "regressive nature of property taxes", if property owners think that they are being stiffed vis-a-vis tenants, they can always sell up and become tenants.

I have mulled your idea on treating 'intellectual property' the same as land. It is a bit trickier than that, but an interesting idea - IP rights only have value because the state protects them via copyright laws. But then you get into a murky area of goodwill, trade secrets and so on, as opposed to "Michael Jackson buys up Beatles' back catalogue" style deals (which are quite simple and fit into your overal scheme).

SACKERSON said...

The trouble with all radical schemes is, can you get there from here? If so, how and what cost?

Bertrand Russell said that although he thought the result of a revolution was desirable, the cost of achieving it made it not worthwhile. 'Life in Russia to-day [1920], just as it was in the Puritan England, runs counter to human instinct. If the Bolsheviki fall, it will be for precisely the same reason that English Puritanism fell: time will come when people will realize that the joy of life is of greater value than anything that Puritanism has to offer.'

Paul Lockett said...

That's the first time I've seen the suggestion of self-valuation with the land effectively permanently up for sale and I have to say, I think it's total genius.

I'm a big fan of LVT and I'm often faced with objections based on the problem of valuation and the possibility of corruption. That would solve the problem completely.

It's a beautifully elegant solution.

Knut said...

As mr. Lockett above, I am also quite excited about any solutions to the market valuation issue. However, I humbly ask for a clarification. Let's say this is a piece of residential land with a pre-existing structure on it. Does this mean that when a purchaser bids for the house, the land would still be subject to auction to the highest bidder irrelevant of the house purchase? As I understand, this would be a partial LVT. Let's say there is an LVT of 75% of site value, to encourage a certain degree of incentive for the owner to allocate to the best use. What would be an appropriate way of offering; setting a price of 50K, which would then automatically imply that the purchaser will need to pay the interest rate of 150K annually in LVT - or taxing 75% of a 200K price tag? When I try to wrap my head around it, I can't see how the first case would allow the fluctuations of local market prices being implemented annually in an LVT, unless the property will constantly be up for sale, and in the second case, well, ditto. Or did you actually mean that the land would be up for sale every two years or so? I am sure there is something I've missed, a further explanation would be much appreciated.

Lola said...

Excellent, except for the 'setting own land value/compulsory sale bit'. Blokes like me (that support LVT) but live in houses that represent our little bit of heaven, and that we've worked on to be so, and to hwom the 'value' is entirely unimportant, but because of the nature of the property would be attractive to much wealthier people than would get forced out. Happy to have a 'market valuation' set by the DV's office on which I pay LVT, but not waht you propose. Essentially it would encourage speculative house improvement by wealthy opportunists.

Robin Smith said...

This post feels like question begging:

Who votes for government?

Individuals right... Think about it. Governments are not bad. The individuals that keep electing bad ones might be.

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