Land and inequality

Though inequality of wealth is a “hot” topic, one of its root causes is usually neglected. We are talking here about the unequal distribution of land. About a year ago The Guardian published the following article:

Half of England is owned by less 1% of its population

The essence of this situation is nicely summarized in the following quote:

The findings, described as “astonishingly unequal”, suggest that about 25,000 landowners – typically members of the aristocracy and corporations – have control of half of the country.

A overview of the grim statistics provided in the article cited:

  • 30% of land is held by the “old” aristocracy and gentry
  • 18 percent by corporations
  • 17 percent by city banker and oligarchs and another 17 percent is uncounted for
  • only 8 and 5 percent is held by respectively held by the public sector and home owners (emphasize is mine)

But why is this a serious problem? An answer is provided by Carys Roberts:

“[…] What this demonstrates is the continuing importance of the aristocracy in terms of wealth and power in our society.”

And stated by Labour MP Jon Trickett:

“It’s simply not right that aristocrats, […] and large corporations exercise more influence over local neighbourhoods – in both urban and rural areas – than the people who live there.

“Land is a source of wealth, it impacts on house prices, it is a source of food and it can provide enjoyment for millions of people.”

The concentration of land ownership in few hands, means that a relatively small portion of the population has a huge amount of power. And this undermines the very foundations of democracy itself. Also it facilitates the transfer of wealth from the masses to the elite.

In Scotland the situation is hardly better, though there seems a larger awareness of this problem, as evidenced by the following article in The Guardian:

Report calls for reform of “unhealthy” land ownership in Scotland

One might wonder why someone who is not British and whose primary interest is in establishing human settlements in Outer Space, actually cares about land ownership in the United Kingdom. The reason is why we should care is that ownership is of utmost importance to orbital space habitats.

The owner of a space habitat has enormous power over its inhabitants – both physically and economically. And hence the proprietor of a space settlement will also be its government, if not legally then at least in practice. So the UK serves as an example for the social and political consequences of unequal landownership.

In our humble opinion, the only way to preserve a democratic republic in orbital space settlements is if the space habitat is collectively owned by its residents. As I wrote previously, we should make a sharp distinction between public property and state property.

Space settlements committed to democratic and republican ideals, should implement a system where individuals can lease the right to use land. Such a right will be a temporary privilege and conditional upon a periodic payment based on market rental value. This system will in practice constitute a land value tax or LVT.

The Atlantic has an article by Annika Neklason on how a LVT could address economic inequality:

Henry George’s Single Tax Could Combat Inequality

From this article:

Unlike other assets, [..], land—separate from any buildings constructed on it—generates wealth not through individual effort or ingenuity, but instead as a result of societal change. Communities engineered developments that prompted economic growth [..] and already well-off landowners reaped the benefits in the form of rising land values.

Despite that a wide range of economists, left, right and center, varying from Milton Friedman to Joseph Stiglitz have argued in favor of a LVT, no major government has ever implemented such a tax a devised by Henry George. Aside from the pragmatic issues regarding the uncertainty of the level of revenue that could be raised this way (which we will discuss in the future), it is obvious that the land owning elite has all reason to oppose the implementation of a LVT.

Whereas an income tax is easily evaded by the very wealthy, to the detriment of the middle class, a land value tax, provided that land is appropriately registered, is virtually impossible to escape. Land cannot be hidden nor removed from the country.

The foundation of a space settlement will provide a unique moment to create a more equal society, in the absence of established interests. We should not let waste such opportunity.