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Regeneration. Molly Scott Cato Reader in Green Economics, Cardiff School of Management. How Green Economics Could Transform Wales. Nature is not a place to visit, it is home Gary Snyder. Four Questions. Is energy efficiency enough? What is the role of land in a sustainable economy?
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Regeneration Molly Scott Cato Reader in Green Economics, Cardiff School of Management How Green Economics Could Transform Wales
Four Questions • Is energy efficiency enough? • What is the role of land in a sustainable economy? • What is the role of money in a sustainable economy? • Should we create jobs or livelihoods?
Prosperity without Growth? • Sustainable Development Commission suggested ‘flourishing within limits’ • So far there have been no attempts to categorise and measure different types of consumption and their social usefulness.
Who gains the benefit from land? • Henry George, Progress and Poverty, 1880 • The ‘single tax’ • Site-value tax or Land Value Tax • At present we are effectively renting land and labour overseas to provide for our needs
Structure of Land Value Tax • Land Value Tax is levied on the annual rental value of each parcel of land • Based on unimproved value, so not a tax on capital • Need a baseline survey of the values of certain types of land and survey of land holding
Canons of good taxation practice • Cheap to collect • Difficult to evade • Should fall lightly on production—sales and employment taxes discourage economic activity • Discourages speculative land holding, e.g. Olympic site in Stratford • Encourages active use of land
Reasons for taxing land • It is fixed • The proceeds of the most valuable resource should be shared • It leads to efficient use of land and means it is not left ‘idle’ • Reduce the concentration of land ownership • Can work with planning system to influence land use
How might this work as policy? • Could be a change to council taxes and local business rates • Could be used as a planning windfall tax • In conjunction with planning policy to build a sustainable, self-reliant economy
One Planet Development • TAN 6: Welsh planning policy for the countryside • ‘Development that through its low impact either enhances or does not significantly diminish environmental quality’ • OPDs should, ‘over a reasonable length of time (no more than five years) provide for the minimum needs of the inhabitants’ in terms of income, food, energy and waste assmiliation’
Land reform and food production • ‘A large majority of studies show that smallholders in developing areas produce more per hectare than big farmers. • The land reforms of the 1950s in Japan, Taiwan and South Korea were followed by rapid growth in farm output. So were land reforms in West Bengal, India, in 1969-84 • Professor Michael Lipton, ‘Smallholders can spearhead growth’, FT, 20 April 2010
Land Reform in Scotland • ‘A comprehensive economic evaluation of the possible impact of moving to a land value taxation basis’ • Recommendation of the Land Reform Policy Group, 1999 • Glasgow is considering replacing Council Tax with a Land Value Tax
What Mervyn King Said • ‘Unemployment is up, businesses have closed, and the direct and indirect costs to the taxpayer have resulted in fiscal deficits in several countries of over 10% of GDP – the largest peacetime deficits ever.’ • ‘Of all the many ways of organising banking, the worst is the one we have today.’
And what he didn’t say • 97% of money is created as debt by banks: • 95% of money transactions have no contact with real goods • Allows people to make a claim on future value
The lubrication of a fully functioning economy is the most basic role • But it is incompatible with the role as a commodity in international speculation
The Crises are the Same Crisis • Sustainability requires equality • Sustainability requires financial stability, because debt-free money forces economic growth • Debt requires inequality, because of interest transferring money from poor to rich
Odious Debt and Audit Committees • Invented by the US in the 19th century to reject Spanish debts when it conquered Cuba • Justification to reject Iraq's debts after the 2003 invasion • In 2005 in Ecuador President Correa invented the idea of the national Audit Committee: 80% of loans rejected • Greece and Ireland now have Audit Committees • http://topdocumentaryfilms.com/debtocracy/
The global trade system is insecure • A system of energy intensity • Extended supply chains reduce resilience • Weakening of community bonds
Challenging our preconceptions • ‘the origins of the cataclysm lay in the utopian endeavor of economic liberalism to set up a self-regulating market system’ • ‘previously to our time no economy has ever existed that, even in principle, was controlled by markets’
Welfare and community • Side by side with family housekeeping, there have been three principles of production and distribution: • Reciprocity • Redistribution • Market • Prior to the market revolution, humanity’s economic relations were subordinate to the social. Now economic relations are now generally superior to social ones.
Important changes in welfare Citizenship becomes the basis of entitlement The individual would be the tax/benefits unit The Citizen’s Income would not be withdrawn as earnings and other income rises The availability-for-work rule would be abolished Access to a Citizen’s Income would be easy and unconditional
Citizens’ Income Automatic payments depending on need Tax-free and without means Income tax and employees’ national insurance contributions would be merged into a new income tax The tax-free allowance would balance out the Citizens’ Income for higher earners
Schumacher Centenary • ‘it is inherent in the methodology of economics to ignore man’s dependence on the natural world’. • E. F. Schumacher
Find out more www.greeneconomist.org gaianeconomics.blogspot.com Green Economics: An Introduction to Theory, Policy and Practice (Earthscan, 2009) Environment and Economy (Routledge, 2011)
