You will see a letter in the Financial Times (28/29 Nov) where I suggest that Fred Harrison might receive a knighthood for his accuracy in forecasting the current economic crash. HM The Queen had asked academics recently at the London School of Economics why nobody had noticed the credit crunch coming when it turned out to be so large? Fred’s published warnings well ahead of time deserve recognition.
His researches lead him to believe that these crashes will keep recurring unless we take steps to rearrange our tax system. He says we should stop taxing income and goods and tax land value gains instead. Credit booms feed right through into house and property price booms. By taxing property (land value element only) we would moderate the boom and prevent the bust. Homes would be more affordable long term. The tax principle is that you pay for what you get. For example if a road or other transport improvement near your home means its value rises, you would be taxed on the benefit accruing to it. For most people the net result will be neutral as income tax and vat would go eventually. Fred sees this method as ‘self funding’ for the schools, roads, hospitals we all need. Other benefits include: a reduction in much of the burden of long term government borrowing, which is the conventional way of paying for these facilities; also, businesses would be able to plan better having a steadier economy rather than the violent swings that trouble us.
Read The Free Lunch – Fairness with Freedom for this and other suggestions to prevent another crash in the mid-2020s. Our children and grandchildren deserve our action now from Fred’s foresight.