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Mentions of LVT in GE2017 manifestos

Conservatives

Unsurprisingly, there is no mention of LVT in the Conservative manifesto.

However, there is a commitment to “work with private and public sector house builders to capture the increase in land value created when they build to reinvest in local infrastructure, essential services and further housing, making it both easier and more certain that public sector landowners, and communities themselves, benefit from the increase in land value from urban regeneration and development.”

Labour

“A Labour government will give local government extra funding next year. We will initiate a review into reforming council tax and business rates and consider new options such as a land value tax, to ensure local government has sustainable funding for the long term.”

Lib Dems

“Reviewing the Business Rates system, prioritising reforms that recognise the development of the digital economy, lessening the burden on smaller businesses, and ensuring high streets remain competitive. We will also consider the implementation of Land Value Taxation.”

Green Party

“Action on empty homes to bring them back into use and a trial of a Land Value Tax to encourage the use of vacant land and reduce speculation.”

Scottish Labour

“We would scrap the council tax, and allow local authorities to use new options, such as a tourist tax and land value tax, to ensure local government has sustainable funding for the long term.”

Scottish Green Party

“Tackling wealth inequality will be a priority. We will introduce a wealth tax on the wealthiest 1%, continue support for a Land Value Tax and introduce laws to limit the size of CEO pay relative to the lowest-paid workers in the company.”

Plaid Cymru, UKIP, Scottish Conservatives, SNP, Scottish Lib Dems

No mention of LVT.

 

To be truly “Open for Business” Brexit Britain needs a Land Value Tax

Since the UK voted to leave the EU in June, the Tory leadership has been determined to make it clear to the rest of the world that Brexit Britain will remain “open for business”.

A recent report published by the Institute of Economic Affairs (IEA) has suggested numerous tax and government spending reforms intended to achieve just that.  The authors encourage Chancellor Philip Hammond to take a sledgehammer to the UK’s tax system to stimulate economic growth, in what has been dubbed a “bonfire of taxes” by the Telegraph.

A key part of their solution is to replace several taxes with a new land value tax, described in the report as “well understood by economists to be one of the least growth-inhibiting taxes available”.

The idea of a land value tax – or LVT- has a long history, with figures from the 18th to early 19th century such as Thomas Paine, Adam Smith and David Ricardo supporting its implementation. It is closely associated with American journalist and economist Henry George, who believed that a tax on land could act as a “single tax” and replace all other taxes. LVT was also described by 20th century economist Milton Friedman as “the least bad tax”.

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American journalist and economist Henry George who believed a land value tax should replace all other taxes.

In the UK, a land value tax was proposed in 1909 by then Chancellor of the Exchequer David Lloyd George and his ally Winston Churchill. The reform was included in their People’s Budget but was ultimately rejected by the land owners who filled the House of Lords.

More recently, LVT has been supported by the Green Party and Labour’s Shadow Chancellor John McDonnell.

Numerous arguments are made in favour of LVT. Firstly, increases in the value of land are largely a result of the economic activity of other people. It is possible for land owners to receive unearned income simply by speculating on increases in the value of land without making any improvements themselves. Furthermore, by taxing land, governments can recoup some of the money that they invest in infrastructure and utilities, rather than allowing the resulting increase in land values to merely provide a windfall for land owners.

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Winston Churchill makes the case for land value taxation in 1909.

Photo credit: By BiblioArchives / LibraryArchives [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)%5D, via Wikimedia Commons

Secondly, the tax would encourage owners to develop valuable land rather than leaving it unused. In particular, sites in inner city areas would be used more efficiently, leading to a reduction in urban sprawl.

Unlike corporation and income tax, LVT would be virtually impossible to avoid. Advocates also claim that it would stabilise the economy, curbing the boom-bust cycle.

Lastly, switching to a land value tax means the burden of taxation can be shifted away from productive enterprise, and taxes that fall mostly on the poor can potentially be reduced or even abolished.

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In the UK, three taxes that are usually considered prime candidates for replacement with LVT are:

  • Council tax – In the above-mentioned report published by the IEA, council tax is derided as “Confused, outdated and unpopular”.

 The regressive nature of council tax has been criticised by journalist George Monbiot: “Why should council tax banding ensure that the owners of cheap houses are charged at a far greater relative rate than the owners of expensive houses? Why should Rinat Akhmetov pay less council tax for his £136m flat in London than the owners of a £200,000 house in Blackburn?

 Furthermore, MSP and LVT advocate, Andy Wightman of the Scottish Green Party has noted that 83% of households in England would immediately be made better off by a revenue-neutral shift from council tax to a land value tax.

  • Business rates – The IEA has previously criticised business rates in a blog post arguing for LVT: “Ideally, as argued here, they [the government] should at minimum consider scrapping business rates and replacing them with LVT. Business rates have long been criticised by many businesses because of their complexity and discouragement of investment and growth.” 

Another problem is that business rates are reduced or zero for charities, agriculture and unused or underdeveloped land, which, according to the IFS, “provides a clear and perverse incentive to use land inefficiently”.

  • Stamp duty -It has been claimed that stamp duty, a tax on property purchases,  has “a strong claim to be Britain’s worst tax”.

Jonathan Isaby, Chief Executive of the TaxPayers’ Alliance says that “Stamp Duty is unfair, unjust and must be reformed. It stops ordinary families moving up the property ladder, discourages the elderly from downsizing, and worst of all is a barrier to young people looking for their first home”.

However, abolishing these taxes could be just a first step. As mentioned above, a land value tax could also be used to shift the burden of taxation away from workers and businesses, thus encouraging enterprise and entrepreneurship. Taxing land rather than income would help the government to achieve its aim of “making work pay”.

A shift to a land value tax would encourage economic growth as it would result in lower “deadweight losses” than other forms of taxation. Economist and land value tax advocate Fred Harrison estimates that these deadweight losses amount to around £500 billion every year: “How does this happen? Taxes such as those on corporate profits, consumption and most of the rest of the fiscal tools imposed on the people of Britain result in negative forms of behaviour. The cumulative effect of all those distortions can be summed in one statistic: £500bn. That is the additional annual wealth and welfare which the people of Britain would produce if they were not burdened by Treadmill Taxes… That is because the incentives to work, save and invest would favour higher productivity in the way people went about their daily lives.

Although, strictly speaking, they don’t have a land value tax, Singapore and Hong Kong are good examples of places where land rents have been captured for public revenue. In Singapore and Hong Kong most land is owned by the government, which leases it out to businesses and private individuals.

According to economist Neville Bennett, Hong Kong raises approximately 38% of its revenue from land leases. This has enabled the city state to keep its taxes on businesses and income relatively low. Income tax is very low in Hong Kong, with a top marginal rate of just 17%. Corporation tax there is 4% lower than in the UK (16% vs 20%).

Similarly, the highest earners in Singapore pay a maximum marginal rate of 20% on income above $320,000, while businesses pay a flat rate of 17%.

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Singapore, the country that topped the ease of doing business rankings every year from  2007 to 2016.

Photo credit: By chensiyuan (chensiyuan) [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC BY-SA 4.0-3.0-2.5-2.0-1.0 (http://creativecommons.org/licenses/by-sa/4.0-3.0-2.5-2.0-1.0)%5D, via Wikimedia Commons

Land value taxes have been implemented in a couple of European countries. One of these is Estonia. In part thanks to its use of LVT, Estonia is considered to have the most competitive tax system in the OECD.

Denmark also has a land value tax in place, and like Hong Kong and Singapore, it has been among the top six countries in the ease of doing business index every year since 2008. Impressively, Singapore topped the rankings every year between 2007 and 2016.

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Ease of Doing Business index 2015-17. Source: Wikipedia (link)

Although numerous other factors contribute to the ease of doing business in a particular country, basing their tax systems on capturing land rents clearly hasn’t had a negative impact on those countries in this respect.

In addition to regularly featuring among the easiest places to do business, these places also perform significantly better than the UK in terms of budget surpluses/deficits.

The most impressive record belongs to Hong Kong, which has achieved a budget surplus every year since 2006, while Singapore has done so on seven occasions over the same period.

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Hong Kong budget 2006-15 (link)

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Singapore government budget, 2006-15 (link)

Meanwhile, although not as impressive as Hong Kong or Singapore’s records, European countries Denmark and Estonia have also registered multiple budget surpluses during the period 2006-15.

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Denmark government budget 2006-15 (link)

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Estonia government budget 2006-15 (link)

By contrast, the UK has only achieved a budget surplus eight times in the past six decades, and not once in recent years, despite the austerity measures implemented by the coalition and subsequent Conservative government.

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UK government budget, 2006-15 (link)

If the government wants to ensure that Brexit Britain is truly open for business, it would be well-advised to consider the examples of Hong Kong, Singapore, Denmark and Estonia and take a serious look at the idea of land value taxation.

Photo credit for featured image: CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=353710

Who are the Deobandis?

While researching for one of my previous blog posts titled “The Issue of Foreign-Funded Mosques in Europe”, I came across an article by Innes Bowen that posed the question “So which Islamic schools of thought run Britain’s mosques today?” Bowen’s response countered some of the assumptions about the influence of Saudi Arabia that I had had up until that point. “The influence of Saudi Arabia’s Wahhabi movement is often cited” she writes. “But the Wahhabis — or Salafis as they prefer to be called — control just 6 per cent of mosques”.

Instead of focusing on Saudi Arabia, Bowen’s article puts the spotlight on the Deobandis, a sub-sect of Sunni Islam that controls more than 600 of Britain’s 1350 mosques. One sentence that particularly caught my eye – and that was particularly relevant to my blog post – was the concluding line of the article: “It is, perhaps, time to stop blaming foreigners. Illiberal Islam is thoroughly British these days.” Until reading Bowen’s article I had never even heard of the Deobandis so I thought it might be interesting to research them and write a blog post about my findings.

The Deobandi school of thought first arose in colonial-era India as a revivalist movement against the British and as a reaction against the perceived corruption of Islam caused by the British occupation. In 1857 a mutiny against the British was crushed and, according to one article I read, “Muslims in British India were the primary targets during the ensuing British crackdown because the revolt was fought under the leadership of the Muslim Mughal emperor”. This resulted in the migration of Muslim clerics to various places in an effort to “preserve their religious life and culture”.

One particular place that attracted several clerics was the town of Deoband in Uttar Pradesh in northern India. These clerics established the Darul Uloom seminary (or madrassa) in Deoband in 1866. By 1967, the school was producing 3,191 graduates and today has over 100,000 students. The Deobandi movement began to spread as scholars migrated to Pakistan following the separation of India in 1947.

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The Darul Uloom Deoband in India

Photo credit: By Bakrbinaziz (Own work) [ CC BY 3.0 (http://creativecommons.org/licenses/by/3.0) ], via Wikimedia Commons

Eventually, the movement found its way to the UK when migrants from India and Pakistan were encouraged to move to Britain to provide labour in the post-war recovery. In just five years between 1961 and 1966, the Pakistani community in England grew from around 25,000 to 120,000. According to a report on the Pakistani Community in England, there was no “automatic loyalty” to the various Islamic movements that arrived in the UK along with these migrants, and a fierce rivalry between Deobandi movements, such as Tablighi Jamaat, and the Pakastani Sufis (known as Barelvis) ensued for the control of mosques. The Deobandis focused their efforts on building educational institutions, which has led to the current situation where 80 percent of British-trained imams are Deobandi.

The first Deobandi school in England was the Darul Uloom Al-Arabiyyah Al-Islamiyyah, established on the outskirts of Manchester in Bury in 1975. Other institutions such as Jameah Uloomul Quran in Leicester and Jami’at Ta’lim al-Islam followed in 1977 and 1981 respectively. More recently, there has been controversy about plans to construct a £100 million “mega-mosque” in East London, which were eventually rejected in 2015.

Deobandis in Britain are often accused of not being willing to integrate into society and of not conforming to British values. Sometimes the accusations go further and suggest that Deobandi mosques are radicalising British Muslims.

While researching the Deobandis in Britain, I soon found myself reading about numerous controversies surrounding the sect. For example, in 2007 a Deobandi school in the northern town of Dewsbury was revealed to be under investigation for “promoting an extreme form of Islam”. The school was accused of exposing children to anti-Jewish propaganda and teaching students “not to adopt British customs”, watch television, or participate in mixed-gender activities. Most worryingly of all, material distributed by the school encouraged Muslims “to ‘expend… even life’ for ‘Allah’s just order’”.

I also found stories linking Deobandi clerics to the distribution of extremist literature in British prisons and threatening behaviour towards other sects and anyone who opposes them. For example, according to the BBC, a Deobandi Muslim from the Midlands “had been threatened with excommunication and violence for raising concerns about, among other issues, the propagation of sectarian hatred”.

A particularly useful source of information was a two-part BBC radio programme about the Deobandis that was broadcast in April of this year. In the programme, academic Phillip Lewis described the “Deobandi villages” that can be found within northern English cities. He talked of a “closed world to non-Muslims”, adding that these Deobandi enclaves are also ”often a closed world to other Muslims who aren’t Deobandis”.

The programme revealed how Masood Azhar, now the leader of a violent Islamist group in Pakistan and wanted by the Indian authorities for a terrorist attack carried out on a military base, had been welcomed with open arms at numerous Deobandi institutions in the UK in 1993. He toured the UK, visiting over 40 mosques to preach about jihad. He is reported to have told young people that they “should prepare for jihad without any delay. They should get jihadist training from wherever they can”. He is accused by Innes Bowen of being the “first to spread the seeds of modern jihadist militancy in Britain” and providing training camp facilities and logistical support to British Muslims to carry out terrorist attacks in the UK.

Also mentioned in the programme, was Aimen Dean, a former member of al-Qaeda, who had switched allegiance and was subsequently recruited by MI5. In his role as an informant, he pretended that he was still with al-Qaeda and discovered that “even after 9/11 many mosques were still stubborn in their support of the Taliban because of the Deobandi solidarity”.

The programme received a considerable backlash from British Deobandis. One blogger points out that many Deobandis actually do promote British values. He highlights the fact that the largest Deobandi school in the UK has been rated “outstanding” by Ofsted inspectors and praised for promoting “fundamental British values, such as democracy, rule of law, individual liberty and mutual respect and tolerance for those of different faiths and beliefs”.

Another blogger argues that the label “Deobandi” is basically meaningless: “I guarantee you, had the reporter bothered to go to a ‘Deobandi’ mosque and asked a worshipper – “Are you a Deobandi?”  The response would probably have been, “No – I am a Surti” or “Bharuchi”. The majority of the stated 600,000 so-called ‘Deobandis’ in the UK do not even know that they would be classified as ‘Deobandis’.”

As I continued digging deeper into this subject, it became increasingly clear that the Deobandis are far from a homogenous group. For example, although the Taliban is considered to be a Deobandi offshoot, the original seminary in India issued a fatwa against terrorism, with rector Habibur Rehman stating that “Islam rejects all kinds of unjust violence, breach of peace, bloodshed, murder and plunder and does not allow it in any form”.

Something that is often overlooked in some of the more scare-mongering articles that I read is the influence that the Wahhabi/Salafist ideology has had on the Deobandi movement.

It’s no secret that Saudi Arabia has spent billions of dollars to spread Wahhabism around the world, in particular in the area along the border between Pakistan and Afghanistan. It is the “Saudi-isation” of Pakistan that has given rise to the Taliban in the region.

The Saudi’s also capitalised on the fight against the Soviet Union in Afghanistan in order to spread their influence, as explained here:  

According to a World Bank report, enrollment in Deobandi seminaries increased after 1979, coinciding with the start of the Afghan jihad against the Soviets. Pashtuns played a major role in the Afghan jihad, and a large number of these fighters were drawn from Deobandi seminaries. In addition to American and Saudi money helping to support the war against the Soviets in Afghanistan, Saudi Arabia infused Deobandi seminaries with Wahhabi ideology. The Saudis targeted Deobandi Islam because it was the most popular Islamic school in the Pashtun belt.”

Backed by Saudi money, it is this Wahhabi-infused form of Deobandi Islam that has been gaining strength around the world in recent decades, including in Britain. In the UK, this is demonstrated by the fact that some of the extremist material discovered in British prisons mentioned above was printed in Saudi Arabia.

So is illiberal Islam “thoroughly British these days” as Innes Bowen claims? Well, there are clearly issues concerning conservative Islamic beliefs and integration in Britain that need to be dealt with, including within the Deobandi community. However, the Wahhabi ideology being propagated by Saudi Arabia – not Deobandism – is what leads to radicalisation and is the real threat to the world. It is when Deobandism becomes infected with Wahhabism that it becomes truly dangerous, as has been the case with the Taliban.

With the rise of radical groups and terrorist attacks occurring on European soil, we seem desperate to pin the blame for all the problems on a particular group, and the Deobandis make for an easy scapegoat. Maybe I’m guilty of doing the same with the Saudis, but the more I read the more I can’t help seeing the grubby marks left behind everywhere by sticky Wahhabi fingers.

Basic Income vs Job Guarantee: A Few Thoughts

Since I began following the discussion about basic income a couple of years ago, I’ve seen a number of people arguing that a job guarantee is a better solution to alleviate poverty. Briefly, a job guarantee is where the government acts as “employer of last resort”, providing jobs when the private sector is unable to. I’ve read several articles about the concept, but have always had a few reservations about it and felt that some of the criticisms of basic income made by its supporters have been somewhat unfair.

For example, in August Pavlina Tcherneva, a prominent supporter of the job guarantee, made an appearance on RT’s Boom Bust programme (see video below). One of her main criticisms of basic income is that it doesn’t do enough to stabilise the business cycle. “The basic income doesn’t have this counter-cyclical stabilisation function” she says. “It is supposed to be provided at all times irrespective of the macro-economic conditions. Every fiscal policy has a counter-cyclical feature except the basic income guarantee”.

So far, this doesn’t seem to have been an issue with the Alaskan dividend – the nearest example to a basic income that we have – which has been providing every Alaskan with an annual, unconditional cash payment since 1982. Funding a basic income like this by means of a sovereign wealth fund is the method preferred by Guy Standing, co-founder of the Basic Income Earth Network. He has refuted the “business cycle” argument, saying that basic income payments made in this way can be increased and decreased depending on the state of the economy with an independent body making judgements on the amount being paid out.

However, if –unlike the Alaskan dividend – a basic income is used to replace existing elements of the welfare state, in particular unemployment benefits and tax credits, then Tcherneva’s criticism may be a legitimate concern.

Many basic income models already have a counter-cyclical feature built into them though. This usually involves an integration of the benefits and tax systems. For instance, several proposals for a basic income in the UK include the abolishment of the personal tax allowance. This means that, unlike now, all income would be liable for taxation. As soon as someone’s income rises they would begin to pay back more of their basic income through income tax. Additional marginal tax rates can be implemented to ensure that more of the basic income is clawed back from higher earners.

In this way, a counter cyclical feature is ensured: when the economy is doing well more people will be paying back their basic income, and when it’s not doing so well people will rely more on the basic income, just as they do with welfare now. Alternatively, a land value tax could be introduced to recoup some of the money from wealthy individuals. It is often argued that a land value tax would stabilise the economic cycle of boom and bust.

Clawing back the basic income in one of these ways also tackles another common criticism of basic income, namely that it isn’t targeted enough to people on low incomes. If the basic income is recouped from the rich, more money would be available to raise the level of the basic income and ensure that people on low incomes are better off.

I’m not against the idea of a job guarantee in combination with a basic income though. “Providing a financial incentive to seek work may not be enough, if job-hunting is difficult and expensive” writes basic income advocate Frances Coppola in Forbes. “People may need help looking for jobs, and in some areas may need the government to guarantee a job… The combination of job guarantee scheme with basic income should ensure that anyone who wants to work can do so.”

If there is work to be done that won’t be taken care of by the market then why not have the government employ people in certain areas of the economy? If we look at the United States for example, there is clearly a need to deal with the country’s crumbling infrastructure. A jobs programme to fix this, like the one proposed by Bernie Sanders in his presidential campaign, would be a good idea.

L. Randall Wray, a professor of Economics at the University of Missouri–Kansas City and colleague of Pavlina Tcherneva, provides a list of other possible jobs that could be guaranteed by the government, such as companion for senior citizens, the bed-ridden, mentally or physically disabled, public school classroom assistant, neighbourhood clean-up worker, library assistant, environmental safety monitor, etc. These would be useful jobs that wouldn’t necessarily be filled by the private sector so I see no problem with a job guarantee providing this work.

A worthy goal that advocates of both the job guarantee and basic income have in common is the aim of redefining what is meant by “work”, allowing people to choose to do useful work that is not usually considered “productive”. However, if a government were to implement a job guarantee with the objective of simply achieving full employment, no matter what sort of jobs are being done, then I probably wouldn’t be in favour of it. This would continue the fetishizing of jobs and lead to more people being employed in what David Graeber describes as “bullshit jobs”. The main issue is see really is whether there is enough useful work to do for the government to guarantee everyone a job.

There is also plenty of work, such as care work, already being done that isn’t always remunerated and wouldn’t necessarily make sense being part of a job guarantee programme. According to Emily Holzhausen, Director of Policy at Carers UK, 1.4 million people in the UK each provide over 50 hours of unpaid care per week. A basic income seems like the simpler way to recognise this unpaid contribution and make it easier for people to take on and possibly share the responsibility of care work without involving state bureaucracy. If there are important jobs that need to be done within a community, does the government really need to get involved to provide formal jobs? We could instead just provide a basic income and let people decide what work needs to be done on their own.

An issue that I have with implementing a job guarantee without a basic income is that it would do nothing for people who are already employed but whose incomes fluctuate; the self-employed, freelancers working in the gig economy or workers on part-time/zero-hour contracts, for example.

In particular with the potential for giant leaps forward in terms of automation and artificial intelligence, it seems clear that we’re moving further towards an economy that creates fewer and fewer steady full-time jobs, and increasingly promotes flexible labour markets. Without a basic income we will forever be resisting this. It would surely be better to embrace new, more flexible ways of working, while also ensuring improved financial stability for workers in the form of a basic income.

Furthermore, a job guarantee doesn’t eliminate the disincentives to work caused by high marginal tax rates at the lower end of the income scale. As Scott Santens explains in a recent article, welfare effectively punishes people for working because it is withdrawn, whereas a basic income would help to remove the “benefits trap” and make sure that work always pays.

Related to this is the final criticism of basic income that I want address: the idea that basic income simply pays people to stay at home. Mariana Mazzucato (who I thought was a supporter of basic income) recently tweeted an article by L. Randall Wray to present this argument.

In the article, Wray talks about a job guarantee programme called Plan Jefes y Jefas, – or Jefes – that was introduced in Argentina following an economic crisis there in 2001-02. The scheme created around 2 million new jobs for poor heads of households.  

According to Wray, at one point three quarters of the participants were female. However, when the economy recovered and the men in the families began to find work again in the private sector, the government decided to draw down the Jefes programme and place the women back on regular welfare. When the women were asked “would you prefer to receive the benefit of the Jefes program but stay at home,” they all said that they would prefer to go out to work.

It seems odd to me that Mazzucato would see this as an argument against basic income. Surely it is rather an argument against welfare in its current form? I think this idea of basic income paying people – in particular women – to stay at home is a really unfair representation of basic income. Pilots have shown that a basic income can help people to work. For example, following a basic income trial in India, Guy Standing notes that people actually worked more, not less. One example he gives is of a disabled woman who was able to buy a sewing machine and become a seamstress. If – as job guarantee advocates seem to agree – people instinctively want to work, why would a basic income stop women from going out and participating in the community or finding a job? Unlike conventional welfare, a basic income would give them every incentive to do so.

I think this discussion about these ideas is really interesting and I intend to keep an open mind about a job guarantee. Like France Coppola, I think a job guarantee could be done alongside a basic income and I see no reason why we can’t try both.

See also Scott Santens discussing basic income and job guarantee with Iain Dooley of the Australian Employment Party:

The Issue of Foreign-Funded Mosques in Europe

This week the burkini ban that has been implemented in a few French towns has been making headlines, in particular after armed police officers made a Muslim woman remove part of her clothing on a beach in Nice. However, this is not the only policy that has been proposed recently by French authorities following a summer of jihadist terror.

On 28th July, French Prime Minister Manuel Valls stated that he was “open to the idea that – for a period yet to be determined – there should be no financing from abroad for the construction of mosques”. There are fears within the country that the influence of funding from foreign countries, such as Saudi Arabia, is radicalising French Muslims. According to the World News Journal, “between 100 and 150 new mosques are at various stages of planning and construction across France” since 2011, and “US government sources suspect that much of the funding is actually funneled from Saudi sources through difficult-to-track chains of bank accounts and person-to-person cash transfers”.

Tension has been growing around the sources of funding for mosques in France. For example, in Nice – where 84 people were killed in July by a Tunisian lorry driver – a Saudi-funded mosque finally opened this summer following a 15-year dispute. The construction of the mosque had been fiercely contested by former mayor Christian Estrosi who has accused the Saudi owner of “advocating sharia” and wanting to “destroy all of the churches on the Arabian peninsula”.

It would seem perfectly reasonable for any country to be concerned about the influence of Saudi Arabia on its Muslim population. For decades the kingdom has been spending billions of dollars in an attempt to spread its extremely conservative and intolerant ideology known as Wahhabism around the globe, resulting in the growth of extremist organisations worldwide. The strategy has included funding mosques and madrassas – particularly in Afghanistan and Pakistan – as well as providing training and textbooks.

These tactics have also been used in European countries. A major example is Kosovo. The small Balkan country of just 2 million inhabitants has seen more people per capita travel to Syria to fight for ISIS than any other European nation. Traditionally, Kosovan Muslims follow the Hanafi school of Islam, described here in the New York Times as a “liberal version that is accepting of other religions”.  However, as that article explains, in the period following the bloody Balkan civil war, the Saudis arrived offering millions of dollars in aid. This money was used to build new mosques, train Kosovan imams in Saudi Arabia and disseminate Wahhabi literature, sowing the seeds of intolerance and political Islam within the local Muslim community.

Belgium is another country that has seen parts of its previously moderate Muslim community gradually radicalised by external forces. In the 1960s, the then-king of Belgium actually gifted the land and building that currently houses the Great Mosque of Brussels to the Saudi king Faisal in return for oil contracts. The ultra-conservative Wahhabi ideology imported to Belgium from Saudi Arabia conflicts with the more tolerant version of Islam adhered to by immigrants who arrived from places like Morocco and Turkey in the 1960s and 70s. In combination with poor social conditions like those in the infamous neighbourhood of Molenbeek, the spread of Wahhabism has led to a small minority of residents being especially susceptible to radicalisation by groups like ISIS.

One European country has already banned foreign funding for the construction and running of mosques. In 2015, Austria passed its updated “law on Islam”, which the Austrian government believes should be a model for the rest of Europe. In addition to banning the external funding of mosques, the law also requires imams to speak German. However, the government attempted to strike a balance by strengthening protections for Austrian Muslims, allowing Muslims to take time off work to observe their holidays and extending other rights relating to Islamic graveyards and pastoral care in hospitals.

The Austrian law is both a reaction to the growing number of Austrian Muslims leaving to join jihadist movements abroad and an attempt to counter the influence of rivals Turkey and Saudi Arabia who have been competing to lead the Muslim community in Austria for decades.  “What we want is to reduce the political influence and control from abroad and we want to give Islam the chance to develop freely within our society and in line with our common European values” says Foreign Minister, Sebastian Kurz.

There are, however, potential problems with the Austrian ban on foreign funding. Firstly, the ban may alienate Muslims as it only applies to them and not to other religious groups. Secondly, limiting funding might mean that moderate mosques are unable to survive or have to turn to illegal sources of funding, possibly pushing them towards more radical sources of financing.

This is an issue that France will also have to deal with if it goes down this path. Being a deeply secular state, it cannot intervene to provide funding for religious institutions. To get around this, the creation of a new foundation to provide “total transparency” of funding is being discussed. The idea would be to finance French mosques with fees from the halal food sector. It seems doubtful, though, that this would be enough to cover the costs of running the country’s mosques.

One critic, Senator Nathalie Goulet, has denounced the plans to forbid foreign funding, describing the idea of the ban as “absurd and impossible”. She claims that the proposals are “based on the assumption that radicalisation takes place inside mosques, which is not true”. In her opinion, the best solution is to make funding transparent by ensuring they are transferred via a dedicated foundation.

It’s true that mosques are not the only place where radicalisation takes place. For example, France’s prisons have been described as “factories for radical Islamists”. Meanwhile, the success of radical groups recruiting online is a major concern. As a Jordanian intelligence official says, “Even if I shut down every mosque, every person who supported ISIS in Jordan, there would still be YouTube videos recruiting young men with gun fights that look like they came out of a Hollywood movie. There would still be Twitter where men tweet about how they are living in paradise with three wives and a house, and there would still be WhatsApp and Telegram and every other network for them to communicate personally with whoever they want”. Remarkably, ISIS has even used dating sites for recruitment purposes.

Without addressing these issues, as well as the underlying social and economic conditions that leave previously tolerant European Muslims susceptible to radicalisation, a ban on the foreign funding of mosques may prove an ineffective way to combat extremism. A blanket ban would eliminate funding from moderate sources and could potentially result in the further alienation of the local Muslim population if the ban is only applied to them and not to other religious groups.

Like the burkini ban, the elimination of foreign funds for mosques may be driven by a desire to be seen to be doing something, even if that something is ultimately counter-productive. A more successful strategy might be to build relationships with Muslim organisations, cooperate in identifying extremism and, as has already been happening in France, shutting down mosques where radical ideologies are being preached.

Photo credit: wstuppert via Foter.com / CC BY-NC-SA

 

Labour Should Commit to a Basic Income Pilot

This week it was revealed that the troubled families scheme, launched by David Cameron in 2012, has had “no discernible impact” on employment, truancy and adult and child offending. The scheme was initiated following the 2011 riots with the aim of “turning around” troubled families. However, an unpublished Whitehall report suggests that it has badly failed in its mission. The scheme has so far targeted 120,000 families around the country at a cost of £400 million, with a further £900 million due to be spent on another 400,000 families by 2020, meaning around £2500 will have been spent per family.

This money could instead have been spent on trialling basic income, and likely with better outcomes. The total cost of £1.3 billion would have easily funded a reasonably large-scale basic income pilot. For the same amount, 156,250 individuals could be given an unconditional weekly payment of £80 for two whole years. And if the pilot was designed to temporarily scrap job seekers allowance and perhaps reduce in-work benefits in the trial area, the pilot could even cost less than this or be widened in scale.

Shadow chancellor John McDonnell has already shown an interest in a universal basic income, and I believe a pilot is the sort of idea that the Labour Party should be looking at for the next general election, whenever is and whoever their leader may be. The party could use a pilot to test what impact a basic income would have on things like employment, mental and physical health, school performance, crime, entrepreneurship and private debt.

Some ardent supporters of basic income might say “oh but we’ve had successful pilots around the world already, let’s just get on with it and implement basic income for real”. However, it could be political suicide for the Labour Party to commit to a basic income before the public has had a real chance to acquaint themselves with the idea and be convinced. I would worry that the British public would reject basic income – just like the Swiss did in June – if they don’t have the opportunity to see it in action first. As Jeremy Corbyn has said, a basic income would be “a major, major change in social policy”. A pilot could provide us with further evidence that basic income really is the way forward and move us a step closer to its implementation.

So why not find a town or region with a higher than average unemployment rate in, say, the north of England, and try giving all working-age individuals a no-strings-attached £80 a week for a couple of years and see what happens? After all, it can’t go worse than the failed troubled families scheme.

How to Fund Basic Income in the UK Part 4: Sovereign Wealth Funds and Dividends

In a Reddit AMA session a couple of years ago, co-founder of the Basic Income Earth Network (BIEN) Professor Guy Standing stated that the “best way to fund a basic income is through establishment of sovereign capital funds”, otherwise known as sovereign wealth funds (SWF).

These funds are typically used by countries with great oil wealth in order to preserve some of this wealth for future generations when the oil eventually runs out. The funds are invested around the world to grow them over time. Norway’s SWF – currently worth around $847 billion (£647.6 bn) – is the largest in the world.

The SWF that people with an interest in basic income are most likely to be familiar with is the Alaskan Permanent Fund. Since 1977, the state of Alaska has been putting at least 25% of its oil revenue into the fund. The money is then invested, and the profits generated are distributed equally to every resident of Alaska in the form of an annual dividend. Last year’s dividend, at $2072, was the largest paid out so far.

The Alaskan dividend system has been a great success, enabling citizens to save and reduce their levels of debt, while helping the state to reduce inequality and poverty. Although it is obviously not a full basic income (i.e. enough to live on), it is the closest we have to an example of a basic income in the sense that it is a regular, unconditional payment made to all citizens.

Unfortunately, the UK squandered a great opportunity to set up a similar SWF in the 1980s using revenue from North Sea oil. Instead, as Stewart Lansley explains in an LSE blog post, “the proceeds were used to cut taxes and boost consumption – now widely recognised as a huge historic policy error”.

Writing in the Guardian, Guy Standing says that the UK must not make this mistake again by allowing a few elites to benefit from fracking rather than the many. Despite his opposition to fracking “for environmental and safety reasons”, he argues that “if fracking is to go ahead… then the people of this country should be the primary beneficiaries and decision-makers, not a plutocracy and a few multinational corporations.” Standing proposes the establishment of a “democratically governed national fracking fund”, created by renting areas of drilling to companies through public tender. The proceeds would then be “invested in ecological and socially desirable investments”, with dividends paid out in a similar way to the Alaskan Permanent Fund.

There are several other possible ways to create an SWF. One would be to reverse the trend of privatising publically-held assets. In the afore-mentioned blog post, Stewart Lansley outlines how and why this should be done:

In the last year alone, over £30bn of publicly owned assets from Eurostar to RBS have been sold. Next in line are to be the Land Registry and the remaining shares in Lloyds Bank previously bailed out with taxpayers’ money.

The government claims that such sales help pay down the deficit, but it makes little sense to use long term capital assets to finance a temporary revenue gap. Sales offer a one-off windfall – the family silver can’t be sold again. This will mean the permanent loss of collectively owned public assets, many highly profitable, built up over many decades, and the end of a stream of income delivered over time. In recent years, for example, the land registry has achieved annual surpluses of up to £100m, thus delivering regular dividends to the government…

Imagine the shape of the British economy today if, instead of the £200bn worth of successive sell-offs since the mid-1980s, public assets had then been pooled into a protected public ownership fund. With the revenue paid back into the fund – and only an agreed proportion of it spent – it would have grown to represent a significant part of the economy, providing a powerful balance to the entrenchment of private capital.

In a paper that would later be published as a chapter in his book “Exporting the Alaska Model: Adapting the Permanent Fund Dividend for Reform around the World (Exploring the Basic Income Guarantee)”, researcher Gary Flomehoft explores numerous revenue streams that could be used to establish SWFs or provide straight-up dividends. He shows that the Alaska model can be applied even in states and countries without vast reserves of oil, explaining that “SWFs can be based on other valuable resources such as copper (Chile), diamonds (Botswana), or even phosphates (Kiribati)”. Furthermore, he argues that even a resource-poor state like Vermont in the U.S. could harness its common assets to provide dividends of at least $1,972 to its citizens:

One might get the mistaken impression that only oil or resource-rich states can afford such a fund and dividend. Every state or country has substantial untapped revenue available because many natural resources and social common assets have been given away by government to private businesses. Businesses then sell them back to the public capturing not only the value they add with their effort, but also the scarcity value or economic rent of the assets given to them by public authorities.”

In his paper, Flomenhoft looks at various revenue streams such as land value and a carbon tax, licenses for logging, hunting and fishing, as well as fees for companies extracting groundwater and minerals or using publically funded resources such as the broadcast spectrum or the Internet (see also Peter Barnes’ excellent website dividendsforall.net). There’s no reason why these ideas couldn’t be looked into in the UK too.

Other options not explored in Flomenhoft’s paper include using Thomas Piketty’s idea of a wealth tax to establish an SWF, as suggested here by blogger Matt Bruenig, or Robert Reich’s proposal of sharing out profits from patents and trademarks.

In conclusion, we are certainly not short of common assets that can be rented out to the benefit of all citizens rather than a few individuals. By applying the Alaska model to the UK, we too could preserve the value of limited resources for future generations, while also reducing inequality and poverty today.

See also:

How to Fund Basic Income in the UK

How to Fund Basic Income in the UK Part 2: Land Value Tax

How to Fund Basic Income in the UK Part 3: Carbon Tax and Dividend

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