Thesis Number: #8 (Page 4 of 9)

The Food Crisis

World population will grow to 10 billion people within this century, according to some estimates. Food prices will rocket as supply falls short of demand, squeezing the life out of many people. The chemicalisation of farming is degrading top-soils and the productivity of nature.  Arid land needs to be irrigated, to nourish the soil. Worldwide, vast sums must be invested in dams and canals.

Correctly funded, investment in such infrastructure need not be at anyone’s expense. The Nile’s first Aswan Dam, for example (four miles downstream from the Aswan High Dam), was built in 1913 to irrigate 450,000 acres. The capital cost was £4.2m, funded by an increase in the land tax of 10s/acre. Revenue amounted to nearly £1.25m per annum. The dam paid for itself in five years. Thereafter, the net gains would be a bonus for all the communities within the catchment area of the dam – if the rents were correctly collected and reinvested to expand the welfare of people and their cultures. That insight was well understood by the US Federal government during the depression years of the 1930s.

When the Roosevelt Administration mooted the construction of the Grand Coulee Dam, to irrigate 1.2m acres in the western state of Washington, an Anti-speculation Act was enacted in 1937. Settlers would not be allowed to speculate in land whose value would be enhanced by irrigation. The Act required owners who benefited from the irrigation network to sell holdings at appraised prices that excluded the benefits arising from the dam. In backing the Senate bill, President Roosevelt wrote:

[…] it is unthinkable that real-estate profits should accrue to private individuals solely because of this great Government work. Therefore, in my judgment, construction of the high dam should be dependent on the elimination of private profit, speculative or otherwise, which would result from this proposed action by the Federal Government.

Roosevelt’s social ideals were betrayed. The dam inflicted environmental damage, and destroyed the lifestyles of Indians who had lived off the salmon that was prevented from migrating upriver (Sprague 2011).  The US government compensated the Colville Indians in the 1990s with a settlement of approximately $53m, plus annual payments of about $15m. The Spokane tribe still seeks compensation. Meanwhile, America’s fiscal system is failing to prevent land owners from pocketing the spin-off benefits created by public investment in projects like that dam.

 

Box 1

When a “tax” is not a tax

 

“The concept of land value capture assumes that public actions result in private gains in property value, and that the public should reasonably be able to share in those gains as a way to finance public investments. The public finance literature also uses the term “benefit tax” in discussing land-based taxes and fees. To describe a tax as a benefit tax is to say that taxpayers pay amounts that are approximately proportional to the benefits they receive from government. Land and property owners receive benefits such as roads, police protection and fire protection from local governments and generally do not pay direct fees for these basic services. If a land-based tax or fee is charged to each household in amounts which are roughly proportional to the value of the benefits received by that household, then that tax or fee can be said to be a benefit tax and is considered the “tax price” for those public services. Thus, both of these concepts (value capture and benefits received) can be used to justify a given household’s billed financial obligation.”*

*UN-Habitat:  Why Land-Based Financing?

Eco-cide is legalised and institutionalised. Corrective knowledge exists to guide policy, but it will not be coherently applied if language is not cleaned up. Policy failures arise when governments refuse to distinguish between an arbitrary tax and a price that is symmetrical to the benefit that is received. The difference is evident in private markets. When we visit a supermarket to select a basket of goods, we are not “taxed” by the lady at the check-out desk! So why talk about “taxing” people when they select for their private use a basket of nature’s services at the locations where they choose to live or work? The linguistic issues were examined by UN-Habitat (Box 1).

© 2018 Fred Harrison. Our Privacy Policy.