Category Archives: Sane voices

Not the first daylight robbery, but a good one

I’ve long considered Dominic Frisby, perhaps the only working comic who’s also a financial writer, to be a Georgist.  Several years ago he posted a nice video explaining the land value tax.  Now he’s gone deep into a history of taxation and its effects, in  Daylight Robbery: How Tax Shaped Our Past and Will Change Our Future   Readable and succinct, but somehow by the end Frisby has forgot about his video.

The title is appropriate, so good that over a dozen older books already carry it, but the subtitle may be unique.  Frisby asserts quite a few facts new to me, and for the most part provides references (altho some are a bit summary, showing only the domain name such as cbs.com, or time.com, where one might need to search around a bit).

The book starts with the story of Hong Kong, a British colony which prospered thru free markets and lower taxes (The point stands, even tho in recent years external demand pushed housing costs to obscene levels, and in recent months political and governmental interference made conditions even more difficult.) Going thru tax history, Frisby of course discusses the effects of the window tax (“daylight robbery”), and explains why it was considered to be fairer and easier to administer than its predecessor. He tells us about tax revolts and England’s first income tax, all records of which were apparently destroyed (source citation is a two-volume history that I can find only in Latin).  He explains the cause of the U S War between the States (which Lincoln waged more for revenue purposes than in any opposition to slavery.)  He notes that Hitler was tax-exempt, and the Guardian used a Cayman Islands entity to (apparently legally) avoid taxes.

After lots more stories about taxation and its role in history, moving to modern times, Frisby explains (as if any of us need to know) the burden that taxation of productive activity places on people trying to, well, be productive. He talks about the digital nomads and crypto currencies which make collection of production tax more difficult, and about digital transactions which make the collection easier.

Finally he proposes a Utopian tax system.  Is it collection of all economic rent as the sole source of public revenue?  Not really.  He wants VAT (not to exceed 15%, and including narcotics) and income tax (also not to exceed 15%).  So the record-keeping burdens and complexities of those will remain, tho perhaps a bit reduced because the impact of error is less.  To these he wants to add L U T (Location Usage Tax), which is basically LVT but with perhaps a clearer name, and which would be set at some percentage of the land rental value.  He wants voters to choose the percentage, apparently a single rate nationwide. And since he aims to keep governmental expenditures below 15% of GDP, it’s unclear that there would be any L U T at all.

“The location usage tax does not apply just to land, but to any asset granted by nature — the airspace the mineral wealth, and even the broadcast spectrums.”  He doesn’t seem to have any problem with private collection of rent for “intellectual property,” even tho I P is a privilege granted and protected by the government, thus straightforward to track and assess– if there’s any justification for I P at all.

It seems that much of the land in Britain is “unregistered,” in that the owner isn’t known, and in Utopia this will be remedied by identifying every  owner.  I’m not sure why that’s necessary.  A tax bill could be posted for each parcel, and a copy mailed to the owner should s/he request it.  After due and repeated notice, If the bill isn’t paid, the land could be taken over by the Crown (or whatever they call it over there), and auctioned to somebody willing to pay the tax. (If nobody’s willing to pay the tax, it needs to be reduced.)

Would I like to live in Frisby’s Utopia? Well, of course here in the U S we have no VAT, and the retail sales tax is generally less than 15%. But income tax can be higher, and we have various other taxes which Frisby proposes to eliminate.  And LVT has other benefits in addition to the revenue it generates.  So on the whole, it’s a better deal, a step in the right direction. But Utopia? Go back and watch the video.

(Note: This review is of the 2019 edition of the book.  The Publisher’s web site indicates that a new edition will be released later in 2020.)

Costs of medical services still out of control– and some ideas for improvement

book coverIt’s pretty well-known that medical care is absorbing an increasing proportion of GDP, and putting many Americans into financial (and, in many cases, medical) distress.  One source of the problem is poverty– people whose incomes are too low to afford decent housing, food etc. are unlikely to have much left over to pay for medical treatments.  And another cause might be an aging population who demand advanced treatments to further extend their lives.  Both important issues, but this post focuses on another, probably more important one: The medical system is full of rentiers and other thieves, who, pretending to improve health or efficiency, impose tolls or promote unnecessary treatment, resulting in higher and rising costs.  That’s the book Marty Makary (MD) has written.

Using a conversational style, well-organized, packed with personal anecdotes, Makary, a cancer surgeon at Johns Hopkins, works his way thru some of the reasons medical care costs so much.  Sources are meticulously cited in endnotes.  I think his findings can be pretty well summarized:

  • Some medical professionals offer screenings and other promotions to entice folks to get treatment they really don’t need.
  • Hospital charges are, not quite random, but pretty much void of any relationship to actual costs or what other customers pay for the same service.
  • Some hospitals take advantage of their quasi-monopoly status to charge excessive prices, and aggressively sue customers who don’t pay promptly.  On the other hand, at least a few hospitals in similar circumstances find they can prosper while charging more reasonable prices.
  • Air ambulance (and, to some extent, surface ambulances) have been largely taken over by private equity firms, and impose excessive (mostly unregulated) charges on people who are in no position to bargain.
  • Some doctors are outliers in terms of types of birth delivery and various surgeries, meaning that they perform invasive and/or expensive procedures at a much higher rate than the norm.  This may be because they’re selfish and inconsiderate, or maybe they just haven’t thought about it and, when shown the data, mend their ways.
  • The opioid problem, as reported elsewhere, is partly due to some doctors prescribing more pills than really necessary.
  • Overtreatment is a problem; often a more conservative approach is more effective (as well as less expensive).
  • A few organizations have managed to rethink how medical care is provided, giving more autonomy to practitioners as well as more support to patients. Also, a few payers (meaning, typically, employers who pay for insurance) are managing to learn the charges imposed by various providers, and incentivizing their insureds to choose less costly providers.
  • “Health insurance,” which is really a care financing arrangement and not insurance in the conventional sense, is an even sleazier business than I thought, and insurance brokers are incentivized to maximize costs.
  • Pharmacy benefit managers may have seemed like a good idea at one time, but basically are toll collectors between the payer and the drug provider.  Similarly, “group purchasing organizations” charge a toll on hospital purchases of equipment and supplies.  In both cases it’s rarely possible to get accurate data on who is paying who how much for what.
  • Then there’s the “wellness” industry. Of course sensible diets and some exercise are good things, but “wellness” seems to have evolved to divert attention from the main causes of escalating costs.

The book concludes with a few recommendations, mostly for providers and legislators, but also for consumers, who are encouraged shop around, and ask for prices before agreeing to treatment.

A few important concepts are missed.

  • The scandal of “Certificate of Need” laws, which protect hospital monopolies and still exist in several backward states, isn’t mentioned.
  • While the cost of drugs receives attention, no mention is made of the patent games by which the U S Government enables drug manufacturers to extend protection, and collect rents, far beyond the statutory period.
  • Little attention is given to the history of medical care in America, including lodge practice and the role of wealthy foundations in choosing how medicine developed.

Finally, I hope the next edition will avoid doubling the populations of Missouri and Wisconsin (page 79).

 

“Chicago’s growth spurt” part of expanding Gaffney trove

Michigan Avenue around 1912.

As Polly Cleveland continues her project posting Mason Gaffney’s works, we find “Chicago’s Growth Spurt, 1890-1900.”  It’s not very long, and worth reading today as a contrast to our current stagnation. Most importantly, Gaffney deduces circumstantial evidence that during the era of growth, land values were significantly taxed.  As he notes in conclusion, “More research into Chicago’s political history is needed.”

The whole trove contains dozens of working papers, class notes, and publications, in Gaffney’s concise and understandable style.  (You’ll find it linked here as well as above; depending on your screen size and magnification you might need to scroll over to the right to see it.)

 

New ideas on taxation, and why most of us usually don’t know about them

Photo of Dilbert model by Jon Stefansson via Flickr (cc)

Six weeks without a post, OMG! Not because I had nothing to say, but perhaps too much to organize into something readable. Or maybe I’ve just found it too difficult to locate suitable images to go with the posts.  Well, forget that, it’s time to get back to blogging.

And it was nearly six weeks ago that Miles Kimball blogged about some great ideas expressed by Dilbert creator Scott Adams for improving taxation of the “rich.” Adams’ piece was published in WSJ, I can’t figure out which date, I don’t know how long the public link will last and I can’t actually figure out the title of the article.  Adams’ point, if I understand it correctly, is those who pay the greatest amount of taxes would more willing to do so, if given suitable nonmonetary incentives.  He suggests maybe the top 100 taxpayers should be invited to a celebratory dinner at the White House, where they’ll be praised for their contributions to America.  (I wonder whether richest-men Warren Buffett and Bill Gates would qualify for this event.  More likely a bunch of wealthy heirs and heiresses who got poor tax advice).  Another idea is that top taxpayers should get certificates allowing them to violate certain regulations, such as parking in handicapped spaces or using carpool lanes alone. (Of course, the very wealthy wouldn’t worry much about the fines such actions would impose if unauthorized). Or, suggests Adams, maybe the top taxpayers should each get two votes (which would make no difference in election results compared to the influence the wealthy can already buy).

More important, I think, is Adams’ point that, if you can’t think of a good idea, it’s best to think of some bad ideas and offer them for criticism. It’s a technique I have used with fair success (my role being to offer the bad idea).

But the main lesson we can draw from Adams essay is that,if your idea regards public policy, then no matter how good (or bad but creative) it is, nobody powerful will pay attention to it until it’s expressed by somebody who is already influential. Thank you, Scott Adams.

 

Taiwan monitors land value

Shin Kong Life Tower

photo of Shin Kong Life Tower from Wikimedia

Much like Korea, Japan, and other advanced countries, Taiwan has a land value tax which requires it to monitor land value regularly.  And they do, apparently pretty well, as indicated by this report that 2011 land values average 8.65% over the previous year. The land value tax could be one of the reasons Taiwan seems to be more prosperous than most countries, but that isn’t my point.

My point is that assessing land value is not exceedingly difficult, if one has competent and reasonably honest assessors.  The most valuable land in Taiwan is reportedly under the Shin Kong Life Tower, NT$1.21 million per square meter (about $4,000 per square foot, a figure probably never seen in Chicago).

Thanks to the Facebook LVT group for the link.

Occupying Chicago

My only excuse for not posting since last month is that I’ve been diverted with other projects, including the new hgchicago site. The bad news is that it’s still not all there.  The good news is that it’s WordPress-based and that the new version of Firefox, 7.0.1, no longer freezes my OS.  Never did solve the Opera vs. WordPress problem, but now I’m back to Firefox for most things.

Chicago is no longer a media center, but still important enough to have Occupy action. I stopped by Jackson/LaSalle this afternoon, there were a few hundred people with signs and a good attitude.

Some occupiers

 

More occupiers

Occupiers

 

I saw no "media" of the type that has satellite trucks and excessively attractive newsreaders, but Distract Chicago was there.

Well-put

The scheduled teach-instarted nearly on time, with St. Xavier Professor Aisha

Teach-In

Karim speaking about Marx’s Communist Manifesto.  Unfortunately, the acoustic conditions and the speaker’s accent prevented me from a full understanding of her case.

It looks from the previews like WordPress might be doing some things to my images, but I’ll wait to see the actual post.

Lambert’s Law of Rent

“All rents tend toward fraud”

Lambert has proposed this as “Lambert’s Law,” but since there appears to already be a “Lambert’s Law” in the field of physics, we could name this one “Lambert’s Law of Rent.”  Based on, tho not directly derived from, the Law of Rent.

Lambert goes on to assert that “a parasitic class of rent-seekers has paralyzed and hollowed out the economy,” which sounds correct to me.  Lambert’s post (which actually is not about economic rent) is here.

The logical conclusion, of course, is that public policy should seek to collect for the benefit of the community those rents that cannot be eliminated.