We have updated our Reader’s Guide, our index of important posts on our blog. In the coming weeks, we plan to do more updates to it.
This post is based on a presentation I gave as part of an undergraduate course on Modern Political Philosophy.
Crime and punishment is a subject which should be taken into account by Space colonists. If one thing is certain, there will be crime and criminals in any future Space settlement. Therefore we should consider how to deal with issues of criminal law. However, in this post we will not pursue what act should be considered as crime, only that we believe that the harm principle should be used to construe crimes .
An important question is whether we should use imprisonment as a punishment. Although the modern prisons system has been invented in the 18th century as a more civilized punishment, it has been controversial ever since. The prison reform movement is in fact as old as the institution itself.
American professor of criminal justice Peter Moskos argues :
For most of the past two centuries, at least in so-called civilized societies, the ideal of punishment has been replaced by the hope of rehabilitation. The American penitentiary system was invented to replace punishment with “cure.” Prisons were built around the noble ideas of rehabilitation. In society, at least in liberal society, we’re supposed to be above punishment, as if punishment were somehow beneath us. The fact that prisons proved both inhumane and miserably ineffective did little to deter the utopian enthusiasm of those reformers who wished to abolish punishment.
Incarceration, for adults as well as children, does little but make people more criminal. Alas, so successful were the “progressive” reformers of the past two centuries that today we don’t have a system designed for punishment. Certainly released prisoners need help with life—jobs, housing, health care—but what they don’t need is a failed concept of “rehabilitation.” Prisons today have all but abandoned rehabilitative ideals—which isn’t such a bad thing if one sees the notion as nothing more than paternalistic hogwash. All that is left is punishment, and we certainly could punish in a way that is much cheaper, honest, and even more humane.
As an alternative Moskos make the following proposal in his book In defense of flogging :
I propose we give convicts the choice of the lash at the rate of two lashes per year of incarceration. One cannot reasonably argue that merely offering this choice is somehow cruel, especially when the status quo of incarceration remains an option. Prison means losing a part of your life and everything you care for. Compared with this, flogging is just a few very painful strokes on the backside. And it’s over in a few minutes. Often, and often very quickly, those who said flogging is too cruel to even consider suddenly say that flogging isn’t cruel enough. Personally, I believe that literally ripping skin from the human body is cruel. Even Singapore limits the lash to 24 strokes out of concern for the criminal’s survival. Now, flogging may be too harsh, or it may be too soft, but it really can’t be both.
Because not only does incarceration not “cure” criminality, in many ways it makes it worse. From behind bars, prisoners can’t be parents, hold jobs, maintain relationships, or take care of their elders. Their spouse suffers. Their children suffer. And because of this, in the long run, we all suffer. Because one stint in prison so often leads to another, millions have come to alternate between incarceration and freedom while their families and communities suffer the economic, social, and political consequences of their absence.
The benefits of optional flogging as an alternative punishment for prison are clear, both for the criminal as for society. The life of the convict is not destroyed as is the case with years of imprisonment, but is still punished for his crimes. For society the main benefit is the reduced costs of administering justice.
Of course, Peter Moskos realizes that some criminals should be locked up, although this is not for the sake of punishment upon the criminal, but in order to protect society against the most dangerous criminals. Moskos further argues that optional flogging can and should be used in combination with restorative justice.
Video interviews with Peter Moskos:
In Defense Of Flogging As Alternative To Prison (CNN, 4.18 min)
In Defense of Flogging: Controversy Over Prisons and Punishment (PBS Newshour, 6.15 min)
 We see the harm principle as a rule of thumb rather than as an absolute rule. We acknowledge that this principle will not work in some circumstances, however we believe it is appropriate as a general rule.
 Peter Moskos, In defense of flogging in The Chronicle Review, April 24, 2011. (Visited on April 6, 2013).
 See previous note.
Lagrangian Republican Association promotes the establishment of independent and sovereign republic, which is based on the principles classical republicanism and classical liberalism. With classical liberalism we mean the tradition in political theory based on the works of Adam Smith and John Stuart Mill. In this post I will discuss Smith’s vision on the proper functions of government. Continue reading Adam Smith on the functions of government
The post is a sequel to The problem of taxation. Part One. If you haven’t read that post, we urge you to read it first. In this post we will give a justification of the Land Value Tax (LVT), subsequently we will investigate how Space governments can establish a fair rental value. Thereafter we will propose a method to deal with defaulters. Finally we will address briefly the discussion of additional taxes.
Although we use in this post the term “land value tax”, we have explained in part one that a LVT is not a tax in an economic sense (however, it might be in a legal sense). Secondly, the discussion in this post is concerned primarily with land, however our argument applies equally to things like broadcast spectrum licensing.
Justification of the Land Value Tax
There are two defenses for implementing a Land Value Tax (this is actually a misnomer): 1) the classic Georgist defense and 2) Ronald Burgess’ theory of public value.
The first approached is based on the fact that land is a fixed quantity, that land cannot be destroyed or created by man. This statement might seem contrary to space colonization, which aims at the expansion of humanity’s living space. However we have to consider that though the Solar System is large it is still finite. Suppose that we should build a Dyson sphere, a sphere with a radius of one astronomical unit, we “create” an area much larger than the surface area of the earth but it is not infinite. Further we do create the space itself which occupied by the Dyson sphere. Land, in a Georgist sense, are the coordinates in space we occupy in space. Space itself is not created by man.
In the Second Treatise of Government English philosopher John Locke explained how people can become owners of land. According to Locke land becomes one’s property if one has mixed his labour with it, the rationale is that you own your body and hence [the fruits of] your labour. However Locke placed a restriction on the amount of land one can appropriate. This Lockean proviso states that one might appropriate land with the condition that there will be left enough land of sufficient quality for other people.
This proviso leads to a problem: if more and more people are appropriating pieces of land, the amount of unowned land will decrease. If simultaneously population is increasing, there will be at some time not enough land for some people. In Anarchy, State and Utopia (ASU) American philosopher Robert Nozick argued that because of this all previous appropriations are unjust. In order to solve this problem Nozick proposes a weaker version of the Lockean proviso (Nozick 1974: p.176-177).
However, this weaker proviso is still problematic and is also unnecessary. Earlier in ASU Nozick introduced his principle of compensation: if someone is violating your rights, then you are, according to Nozick, entitled to compensation by that person (Nozick 1974: p.78-84). If under the original Lockean proviso the appropriation of all lands is unjust, then the landholders are obliged, in Nozick’s theory, to pay compensation to the landless. Since there is no one-to-one relation between any particular landholder and landless person, it’s up to government to collect this compensation and to distribute to those whom are entitled to it.
A second defense for implementing a LVT is presented by British economist Ronald Burgess. According to Alfred Marshall the value of land is composed of two parts: the public and the private value of land. What is the public value of land? We can answer this question with an example: suppose I own an apartment complex in London, I can sell the building or more accurate the land on which it stands for a certain price. If I, however, would own that same building but now somewhere in the emptiness of the Sahara, I can sell it now only for a much lower price than in the previous case. Why? In the Sahara there are no public services, while in London there is a multitude of services.
The value of a particular location is partially determined by the amount of services available in the surrounding area. Infrastructure, schools, shops, police, hospitals etc. are all factors which increase the value of a certain plot of land. Suppose I own a plot of land outside a big city, at some day the city’s subway line is extended to my neighbourhood. As a result of this subway extension land prices are tripling. Without any effort on my part, I can make a nice profit by selling my land. This what is called the public value of land.
However, this increase in land value is due to public investments, not mine. Therefore it is perfectly reasonable if the community, which has paid for those investments, should benefit from this, according to Burgess (Burgess, 1998: p.98-102).
One might ask what the private part is. Well, this is the part of the value of your land which is the result of your own efforts. According to Burgess this is the part to which you are entitled to and which cannot or should not be sized by the government.
Since the investment in (certain) public services is related with the increase of public value of land, the imposition of a LVT which collects all public land value should raise enough money to fund public spending. Consequently, there is no need for the government to tax people’s private income or private property (Burgess, 1993: p.106-107).
How to calculate the LVT?
An important question is, of course, how we can calculate the value of land within a space habitat? The problem is that space colonization is about settling “new” area, in which almost by definition are no market prices to base our calculations on. We might set an arbitrary price, but this might be to low or to high. In Progress and Poverty George discussed the use an auction to sell land to highest bidder, however he rejected this because he didn’t consider it necessary to expropriate current property holders. Instead he preferred to tax the unimproved value of their land.
However, since there are in space no existing landholders, allocation of land through auction is a good idea. In fact this is also a simple method for determining a market comparable value. The auction of land inside a space habitat is a kind of multi-unit auction, an auction in which several items are allocated to sever bidders.
Multi-unit auction are either uniform or discriminatory price auctions. As explained on Wikipedia:
A uniform price auction otherwise known as a “clearing price auction” is a multi-unit auction in which a fixed number of identical units of a homogenous commodity are sold for the same price. Each bidder in the auction may submit (possibly multiple) bids, designating both the quantity of units desired and the price he is willing to pay per unit. Typically these bids are sealed – not revealed to the other buyers until the auction closes. The auctioneer then serves the highest bidder first, giving them the number of units requested, then the second highest bidder and so forth until the supply of the commodity is exhausted. All bidders then pay a per unit price equal to the lowest winning bid (the lowest bid out of the buyers who actually received one or more units of the commodity) – regardless of their actual bid. Some variations of this auction have the winners paying the highest losing bid rather than the lowest winning bid. (Wikipedia, visited at April 5, 2013).
It’s not hard to see how this would work for the owners of Space habitats. Suppose that in a O’Neill cylinder we have some 10 square kilometers for lease. We organise an auction and we ask potential lessees to submit a bid. In this bid they announce what amount and for what price per unit they are willing to lease a plot of land. The price is the rent to be paid per period (once a year, once per month).
A discriminating price auction works in the same, only in this case people do not pay the same price (say 10,000 per hectare). Instead the highest bidder pays the second bid, the second bidder the third bid etcetera.The question which auction gives the fairest price is a complicated one and is the subject of auction theory.
In order to deal with inflation, we suggest that the price as determined in the way described above should be corrected each year. One way of correcting the rental price to the rate of inflation is to fix it to the consumer price index. If this index increase by, say, three percent the rental price will rise by the same amount. If, however, the index will decrease, the land rents will also decrease. In this way public revenue is protected against inflation. Of course this annual adjustment will be communicated beforehand to the prospective lessees.
Failure to pay
Another issue we have to address is the possibility that some landholders might refuse to pay the land rents they owe to the public. We are familiar with tax evasion, tax avoidance and the like in our current tax systems, so it is reasonable to assume some people will try to forsake their obligations. There it will be necessary to have a method to deal with reluctant landholders.
A LVT has one benefit compared with modern tax systems: land cannot be hidden. Whilst people can decide not to report (part of) their income or use all kind of elaborate schemes to avoid to pay income tax; landholders cannot hide their land from the government, nor can they avoid to pay (some) LVT by using legal persons as strawman. Unlike the tax systems we are familiar with, the LVT system does not provide for a different treatment for corporations. One might decide to rent land through a trust, but that will not change the amount of rent.
In order to collect the LVT, the government has to register all landholders and some landholders might try to avoid registration. However, if some piece of land is not registered as already rented by some one, the government is free to rent it to someone else. Therefore landholders have a strong incentive to register.
So the only way landholders can avoid to pay their rent is simply to refuse to pay. What should we do in this case? Our proposal is simple: first we should send the landholder a reminder to pay within a reasonable period of time. If the landholder has not paid after this period, his tenure will be revoked and he will be evicted from his land. Subsequently the landholder will be placed on a blacklist, which means he cannot rent another piece of land as long as he has not paid to money he owes to the public.
We see no reason why we should waste our time with prosecuting and imprisoning reluctant landholders. Just revoke their land and blacklist them, until they come to terms.
This is a good moment to ask whether we should have another kind taxation as source of revenue. (This phrasing is, of course, wrong since a LVT as we endorse, is strictly speaking no tax.) The first question is whether is will necessary at all, however I will address this issue in another post.
One kind of taxation we consider to be appropriate are the so-called pigovian taxes. Actually these are also no taxes, they are called tax mainly because of legal reasons. In fact a pigovian tax is a monetary compensation for externalities caused by some one. Many activities have negative consequences for third parties, an example is pollution. Since this is an infringement on the rights of these third parties, they are (at least according to Nozick’s principle of compensation) entitled to some compensation.
However, often there is no clear direct relation to the person who cause a negative externalities and the people who suffer from it. Often we only know that some people cause the externalities and some people suffer, therefore it’s up to the government to collect this money and spend it in such way to reduce the effects of the externalities.
Nozick, Robert 1974. Anarchy, State and Utopia. Basic Books, New York.
Burgess, Ronald 1993. Public Revenue without Taxation. Shepheard-Walwyn (Publishers) Ltd, London.
Bas Lansdorp, the founder and director of “Mars One”, thinks that it will be possible to fund a manned mission to Mars through a reality soap. In order to defend this Mr. Lansdorp is tireless in referring to the Olympic Games. However Mr. Lansdorp ignores the financial reality of the Olympic Games.
If you are seeking an opportunity to invest your money, the Olympic Games are a very, very bad choice. According to The Guardian the estimated costs of the 2012 Olympics were at least 11 billion pounds, and according to Wikipedia the 2012 Olympic had no net loss OR profit. The article also shows that most OGs since 1976 were break even, or had a profit of a few million USD.
Of course, we aren’t sure how reliable these figures are, but these and other data suggest that the Olympics have a very low or negative return on investment. The reason why we are sceptical in regard of the figures of the costs/profits of the Olympics is that both politicians and the IOC have interest to lie about the real costs of the Olympics.
The truth is that the IOC is able to run “profits” from the games, whilst all costs resulting of the externalities caused by the Olympics are shifted to the government. All great part of the costs of the games are hidden, indirect costs. These are often hard to estimate and easy to keep out of the books. And more importantly the IOC never takes responsibility for them.
When Mr. Lansdorp is referring to the Olympics, he takes great risks. More and more people are realising that the Olympics are, financially speaking, a huge scam, where the IOC takes all earning, whilst shifting all costs to the taxpayer. By associating himself with ruthless criminals, he gives not only the Mars movement but the general Space movement a bad name.
See also our post Mars One for a critical review of Mr. Lansdorp Mars program.
Since the 1970s advocates of space colonization have believed that building space power satellites and transporting space based solar power would be the raison d’être of space colonization. However we do not believe that space based solar power (SBSP) will have any future for terrestrial application.
The first reason why SBSP will not be a core export product for Space Settlers, is public acceptance. A central part of all SBSP proposals is microwave transmission of power, although this wouldn’t be dangerous for people, a lot of people are afraid of anything related to radiation. An example, in the Netherlands there is broad concern about the health effects for people living in the neighbourhood of overhead power lines. Given that the Netherlands are a densely populated country, a few million people live within two kilometers from an over head power line. Although no scientific study has ever been able to provide conclusive evidence that living near an overhead power line is actually bad for your health, many people believe it is.
Some space advocates believe that we can “educate” the masses through tv shows like man-made marbles, I think this will be a dead-end. It is quite unlikely that it will be possible to educate the masses in this way. First of all, only a selected group of people actually watch this kind of tv shows, and these people are probably already convinced of stuff like SBSP. Secondly, the stronger one’s beliefs are the harder it will be to change these beliefs. Especially beliefs related to health issues are quite strong and therefore difficult to change.
Changing public opinion is difficult and we believe that space advocacy groups shouldn’t waste their time and funding to attempt to eradicate radiophobia.
Another issue is whether SBSP is actually necessary. Back in the 1970s photovoltaic technology was in its infancy, solar arrays had low efficiencies and were quite expensive. It was in this time that people like Peter Glasser and Gerard O’Neill were proposing to solve the global energy problem (the 1970s were the age of the oil crises). However, since then both the efficiency of solar cells has been improved and their production costs have been decreased.
In order to provide the world with sufficient energy, we need actually a surprisingly small area: some 62,500 square kilometers or about 2.63 percent of the surface area of Algeria. Of course it will be bad idea to concentrate all of the world’s power plants in the Sahara, but we could spread the solar power plant about the world. In the USA, we could cover a great part of Nevada, Arizona and New Mexico with solar arrays, Western Australia is another place suitable for solar power plants, in Latin America Chile’s Atacama desert will be an attractive site.
An exciting development are the so-called solar islands designed by a Swiss company. Oceans cover two-thirds of the surface of the earth, and are exposed to a large portion or our intake of solar power. So it is a logical idea to harvest solar power at sea.
In a previous post we have discussed the future of Japan’s energy supply, in that post I mentioned the possibility of using synthetic fuels:
One way to do this, is by producing hydrogen through electrolysis. But hydrogen has some severe drawbacks. First the very low density of hydrogen gas requires either storage under high pressure or liquefaction to very low temperatures, which might cost more energy than can be delivered. The storage problem of hydrogen is one of the greatest obstacles for the transition to a hydrogen economy.
An alternative for hydrogen would be the production of synthetic fuels through the Fischer-Tropsch process from hydrogen and carbon monoxide gas. CO gas can be obtained by electrolysis of CO2 from the atmosphere or sea water. There is also current research of creating fuels directly from water and CO2. Both methods will produce hydrocarbons, like methane gas [main component of natural gas], or alcohols like methanol. These synthetic fuels can easily be transported and because the synthesized fuels are chemically similar to “mineral” gasoline, they do not suffer from the transition paradox. This is the problem that no one will buy hydrogen cars if there are no hydrogen gas station, but no one will build hydrogen gas station if no one drives hydrogen cars.
There is no reason why the production of synthetic fuels couldn’t be done on solar islands.
For more information about solar islands see:
It is hard to imagine that Space Based Solar Power will ever been accepted by the broad public, due to concerns about radiation. Any effort to change this attitude is probably wasted energy. Further it is questionable whether SBSP is actually a necessary part of the World’s future energy supply.
Asteroid mining is not only the solution for resource depletion on Earth, but is also good for our environment. A lot of current environmental demage is caused by mining.
The problems faced by us all with resource scarcity and the possible solutions on the horizon. Even though they might seem unrealistic they can still be envisioned by the average person with a reasonable science understanding.
Would it surprise you that the needle indicating the amount of certain resources essential to our technological way of life are running near empty? If the current level of demand for non-renewable resources such as copper, Indium and even Silver will be depleted in under 30 years! This might not seem to bad for many of us but it will cause many headaches for our children. So if we can’t get these resources from existing mines any-more where can we get them?
One solution that is being given thought to these days is to acquire rare elements from near earth passing asteroids. Ok this might sound like something from the pages of a science…
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The technology described in this article are of interest for space colonists. Using chicken hens to lay of other birds will help us to implement our “Noah’s Ark 2.0” strategy (see https://republicoflagrangia.wordpress.com/2012/12/21/noahs-ark-2-0/ ).
Correction Appended: Mar. 20, 2013
The Turducken — a duck stuffed inside a chicken stuffed inside a turkey — is a mythical culinary beast and the dream entree of Thanksgiving obsessives everywhere. And now, science is on its way towards making the Turducken a reality — sort of: a duck has successfully fathered a chicken at the Central Veterinary Research Laboratory in Dubai.
Researchers injected a chicken’s germ cells — carrying DNA to produce eggs and sperm — into the reproductive organs of a male duck embryo; once the duck matured, it began to produce the chicken’s sperm. Initially looking to genetically modify chicken to produce more fertile hens (the global poultry industry currently maintains some 50 billion chickens), these scientists are now planning to use this technique to allow hens to lay eggs of other birds, including ducks, songbirds, hawks or eagles.
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For the purposes of this post, I will define Space governments as the owners of space habitats.
Governments of space colonies need funding, both for protecting their citizen and for maintaining space habitats (and for several other purposes, depending on the specific policies of space colonies). The question is how Space governments would raise their funding. In this post I will discuss several proposals for taxation and non-tax revenues.
Regardless how future space communities will be organized, one thing is certain: space habitats have to be maintained and are someone’s property. The communities of the larger space habitats, like the Bernal sphere or the O’Neill cylinder, with their several thousands of inhabitants, also need security, both internal and external. So the “owners” of space habitats have to provide at least the following services: maintenance, police and national defense. Also highly desirable is the arbitration of conflicts between residents of the space habitat. But governments will almost certainly offer many other services, especially when they have to compete with other space colonies for citizens who are able to vote with their feet. Of course some space governments will only a minimal government package, with low taxes, but I guess that many more governments will offer more elaborate bundles of governmental services.
Whatever services a government of space colony offers, they need to be funded. One way to do this by imposing a head tax, a fixed amount of money to be paid per person. In fact this is a kind of “rent”, where the taxpayer pays for the “right” to live in a particular space habitat. A head tax is especially interesting for those space communities which are committed to a minimal state. But for space communities with a more elaborate government a head tax will most likely to be insufficient for funding these services, or they had to be so high, that no person is willing to pay them, or many are simply unable to pay them. Foot voting present a fundamental problem for any space government: people like to have many services to be provided by their governments, but are less willing to pay the required taxes.
Since space colonies are new comers in the global “market” of societies, the cannot rely on for example feelings of nationalism, people who strongly identify with their country are more likely to pay their taxes (with the possible sole exception of the USA). Furthermore, we can safely assume that the persons most likely to emigrate to a space colony are those who have the least attachments to their homelands. Attracting immigrants with income tax rates of 90% will not work.
Therefore we need to find other ways for funding space governments.
Canons of taxation
Adam Smith formulated in his famous work On the Wealth of Nations, four rules for levying taxes which governments should keep in mind. These rules are known as the canons of taxation.
1. Canon of equity: this is the principle that people should pay taxes according to their ability to pay and the benefits they receive from society. The logic is that people who has the greatest advantage of public services should also contribute the most of it.
2. Canon of certainty: this means that people should know in advance how much they had to pay. This is both beneficial for the government as the tax payers, since they can plan their revenue and obligations in advance.
3. Canon of convenience: taxation and the collection thereof should not place an unreasonable on the tax payer. For example taxes should be collected at the moment the tax payer receives the money.
4. Canon of economy: the collection of taxes should not be more expensive than the revenue. The lower the costs of collection, the better. If a tax is difficult to collect, less revenue can be spent on public services since more money has to be spent on collection.
For more information on the canons of taxation can be found on this site, it also discusses additional canons made by modern economists.
Tax on consumption
Many popular proposals for abolishing income taxes advocate their replacement with sale or value-added taxes. There are several problems with this idea. First of all are taxes on consumption regressive to income. Wealthier people spend as a proportion of their income less than poorer people, the wealthier a person is the more he will either save or invest his money instead of consuming. Because basics needs are (almost) the same for everyone, regardless of their income. This problem might be solved be charging a higher tax rate on luxury goods than on basic goods, however this leads to the question of what is a basic or luxury good? And who decides this?
A basic problem with consumption taxes is the collection, these taxes are collected by retailers from their costumers. Although costumers will be pay their taxes without notice, the tax officers have to check whether the retailers are collecting the right amount of revenue. It’s easy to imagine that some shopkeeper collects the sales tax from his costumers, but keeps a part of the money himself.
Another complication is in our age the on-line sale of goods and services. On line shopping is not restricted by national boundaries, so if one buy something on the Internet from abroad, how would you impose a sales tax? Recall that sales/VAT taxes are collected from retailers, not consumers, and foreign based retailers are not bound by laws of other countries.
Most modern countries rely nowadays on taxation on income as prime source of public revenue. A common system is Pay as you earn, which means that your employer will withhold some of your earnings and transfers it to the tax agency. Income taxes may be levied on both natural persons as on corporations.
However a common problem is unreported employment. For employers it is attractive to employ people unreported, because they will have to pay less wages for the same amount of work. Another problem we have with income taxes is the fact that these taxes are violating people’s privacy. In order to calculate how much money someone owes to the state, tax officers has to collect a huge amount of data: how much and what work one has done, what kind of assets one has and so on.
Income taxes are usually progressive or proportional. Also most countries have a lot of deductions for all kinds of stuff, mortgage interest rate, if you have a business, or whatever. Actually these deductions are more a tool for wealthy people to avoid taxes legally, if you afford to pay a good accountant you can save a lot on your tax by exploiting all kinds of loopholes. Therefore tax agencies has to spend a lot of efforts in order check whether tax deductions are filled legitimately. Because of this, we are no fan of such deduction. In our view it is better to have a low tax rate with no deduction than a higher rate with much possible deductions.
A common definition of tax is:
A compulsory contribution to state revenue, levied by the government on workers’ income and business profits, or added to the cost of some goods, services, and transactions (Oxford dictionaries).
This helps us to understand what non-tax revenue is. However this definition is missing one essential aspect of taxation, namely that taxes are without a direct quid pro quo for the tax payer. Non-tax revenues are non-compulsory payments for goods and services provided by the government to private parties.
Many governments in the world have multiple sources of non-tax revenues. In some countries this kind of revenue is a substantial part of public funding. We should ask what kind of non-tax revenues could be utilized by the governments of Space habitats. This question is in fact equivalent to what kind of services can space colonies provide to their residents for the purpose of raising public revenue?
There is actually a very obvious service which can be provided by the governments of space habitats: land. Since they are the owners of the colony, all land contained in the habitat is their property. By renting land to interested private parties, space governments can raise revenue to fund their activities. Interestingly, by providing certain public services the governments of space colonies might increase the rental value of their land. Good school, clean streets, low crime rates are among of several factors which will attract potential emigrants from Earth.
The idea of using land rents to fund governments is not a new one. During the 19th century American economist Henry George argued in his famous work Progress and Poverty, that a so-called Land Value Tax (LVT) would not only be quite efficient but it would also raise sufficient revenue for governments to fund public services.
Because land cannot be hidden or moved out of the country, collecting a LVT is quite efficient. Most modern countries have already an elaborate registration of ground ownership, and space colonies should easily be able to keep track of who rents what and how much land. A further advantage of the LVT is that it does not discriminate among different classes of tax payer. It does not matter whether a single person, a family or a corporation rents the land.
In a future post we will explain more about Henry George and his defense of the LVT. Here we want to state that according to George taxation on income from labour and capital is both immoral and bad for the economy. A tax on land, however, is just because land is not created by any particular human and hence belong equally to all.
Land in a Georgist sense does not only include “area”, but also the electromagnetic spectrum (used for wireless communication) (among other things). Because the EM spectrum is not made by man, it also belong equally to all. Licensing the radio spectrum will be good source of additional revenue for space colonies.
Another important source of non-tax revenue for space colonies are the sale of asteroidal resources. Asteroid mining is, we believe, is the raison d’être of space colonization and as we has argued in a previous post, it would be one of the most profitable activities of space colonists. However, terrestrial experiences has taught us that funding governments with the easy money from natural resource extraction is often detrimental for both the economy as political freedom.
Economists talk about the Dutch disease in this context. The export of a natural resource by a nation often leads to increase in public spending and to a decrease in productive activity. Instead of spending revenue from resource extraction, it would be better to put these into a sovereign wealth fund and to use the dividend from this fund for public spending. In future post we will discuss the role of sovereign wealth funds for space colony governments.
See here for part two of this post.
For more information on the land value tax:
We couldn’t do a better job in explaining why Dennis Tito’s plan for a manned mission to Mars are a bad idea than this great post by Tom Liberman.