Wednesday, November 23, 2011

St Paul's London OccupyLSX

At the Tent City University outside St Paul's Cathedral, London yesterday I gave a talk with an interwoven discussion from a very attentive audience. The topic was the concept of the free lunches available on this planet. What are they? Who gets them? How might they be shared more fairly? 

Firstly: Land brings a huge value for owners. Value accumulates on land because of the particular location of every plot and is driven by the success of the surrounding community. A desirable school will drive up 'house+land' prices in an area so that the very teachers who create the educational excellence cannot afford to buy a home in the area! The value is nothing to do with the owner of any 'house+land' package.  All the owner can do is  improve the house and so add 'house value'.  The taking of some of the land value 'community inspired free lunch' for taxation, in place of income and other taxes is needed for fairness. The community which endowed the value would get value back.

Secondly:  Credit is a marvellous device that has been around a very long time. It enables people to plan and enact constructive projects sooner than otherwise. Because of human creativeness and co-operation, surplus wealth leading to human progress is relatively easy to produce. But  creation of credit is needed for this. Credit flow depends on a settled society and trust between people - in a war zone where society is hardly functioning, credit would be difficulty to get hold of. Thus the community, like in the case of land value, is the essential source of the credit and not the bank that demands the interest. The government could and should be the source of all credit money, just as it is the source of note and coin money which only comprises about 3% of the money needs. It could grant credit for public investment free of debt and free of interest. It could ban any credit towards speculative activity.  Take away these dangerous toys, then the economy would settle productively and a free lunch would flow to citizens through the saving of interest charges paid by goverment to banks as is the case now.

Currently banks merely seize the business opportunity and with the government's grant of their monopoly power create the credit and cook up another debt-laden free lunch for themselves.  And look what a mess they keep getting us into! This latest economic collapse since 2007 is merely the worst of many in the history of the modern economy. Many more will follow, because the UK government  is trying desperately to get the banks it has taken over, into some sort of shape so they can wreak their havoc yet again.

Some at Tent City yesterday were concerned about governments getting the power to create credit. Surely  democratically controlled credit creation and allocation under Parliament must achive a better outcome? [25 Nov: Banks would become retail outlets for local credit needs with credit at wholesale rates provided centrally.]

What will come out of the current crisis? The old wild capitalism again with 'banking as normal'? The rule of dictatorial oligarchs? Or will we reclaim the use of credit creation power back from incompetent banks, back into the hands of the people? 

It seemed to me on my first visit to an Occupy site that these people are waiting, they are waiting in some discomfort, but  peacefully and they will hear and listen and debate with anyone. They don't look as though they are going away soon. Ultimately they await politicians who alone can initiate a serious search for a solution. 
posted by Charles Bazlinton. Author: The Free Lunch - Fairness with Freedom

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