Tuesday, November 29, 2011

What about the "New Economics Party?"

I've seen a video courtesy of  Robin Westenra's blog:
-and seen their website
Still I can't get my head round their website, seems like a dogs dinner of vaguely populist ideas mostly adopted because of their acceptability to the disposessed without actually requiring them to get off their arses and become responsible for their own sustenance, i.e. we just adjust certain facets of the structure of the economy and all good things follow.
 The trouble is that any movement that is aiming to achieve prominence by collecting votes is doomed to populist policy. This party is clearly aimed at urban populations that don't own land, don't have access to land, dont want to work on the land but see land as a priviledge of the wealthy that can be taxed to provide an income stream to be given free of any commitment to do real productive work to those who have become unhealthily attached to their urban service sector "thinking rather than doing" lifestyle jobs that are in reality only possible because of the anachronism of a century of subsidy by cheap oil.
 These guys really need to understand the concept of distributism, which is a well thought-out concept of land use that is the only way that everyone is going to get fed in the post oil age. Unfortunately working the land is an abhorrent thought to the vast majority of those in Auckland or Wellington and that is where political power (and civil disorder danger) lies. For these populations, I'm afraid only the misery of an empty belly at some future time will be sufficient to cure them of their attachment to town life. See here my blog post on supply chain collapse for likely outcomes.
For a seriously plausible alternative economic strategy see Positive Money NZ.
Deirdre Kent of the New Economics Party replied:

There is nothing populist about our policies. We leave that to the Green Party to go for the middle ground and not campaign on the urgent issues of our time which are positively alarming. No one is going to argue that recommending a 4-6% decrease every year in our oil imports would appeal to anyone except those who know the reality and know we must face it.

If you think it is a "dog's dinner" by which you mean it doesn't fit any previous models (actually I meant it was a basketful of snippets from here-and-there) you are right. No other party wanting the whole world to have access to food, housing, water, health, education and social justice is currently recommending such a radical reversal of tax policy.

We say we need to tax unearned income not earned income. After all it was the banks in the early 20th century who demanded of our government that they impose income tax, we didn't have it in NZ up till then. GST is regressive and why should any government tax enterprise?

On the other hand, as Greens have pointed out for two decades, prices give the wrong signals because companies and individuals use water, land, oil, artificial fertilisers, pesticides and herbicides etc and society pays the price of clearning up the mess, (rivers, toxic sites and so on). The way to internalise costs is to charge an annual rent for the privilege of using that part of the commons you "own". Many industries today can only operate because their costs are externalised – an "I keep the income, someone else pays the costs" mind-set.

As Charles Eisenstein says in his book Sacred Economics "The price of a tank of fuel doesn't include the cost of the pollution it generates, nor the cost of the wars fought to secure it, nor the cost of oil spills."

Ours is a party that recognises that more people need to return to the land and to work the land. Just outside our major cities we watch as lifestylers commute all week and play on horses and ride-ons all weekend but don't use their valuable land for growing food. And meanwhile they watch their property value rise as community infrastructure round them is built by others while they gain unearned income. Here where I live I know a guy who bought his land on a river near a town which was growing. He bought it for $400,000 and it is now worth over a million while he has worked in Wellington and let the property decline and decline. And our council wants people to grow food on our good land! But without tax signals and rating on unimproved value they are relatively helpless. Ridiculous and unfair.

Our policies of imposing resource taxes rather than income tax and GST are designed to reward those who work to improve their properties. If they are not working the land they should sell it to someone who does.

Actually when an Australian NGO called Earthsharing Australia did some research on land values they found that the biggest concentration of land value was in the centre of the cities. A land value tax is the way to stop speculators sitting on valuable sites and waiting for them to appreciate. As the 2009 Tax Review stated a land tax will bring in income from overseas owners where before they didn't pay tax.

And our policy is that those who contribute back to the commons should be monetarily compensated. This includes farmers who remove land from production to provide ecological services like carbon sequestration, water and soil conservation or provide habitat for plants insects and fish.

With land value taxes and the removal of the incentive to speculate on land and resources the cycle of boom-bust is evened out. The price of land remains more even and doesn't rise exhorbitantly.

The Greens in their campaign seem to have one resource tax – the tax on the commercial use of water. This is a good start. Capital gains tax will never do it for land though.

 Kevthefarmer Replied:
I have to say, re-reading the website there is nothing in the NEP that I can disagree with apart from the Land Value Tax, which I find perverse and offensive in every way, and which provoked my snarky blogpost.
"But income is a poor predictor of someone’s ability to pay. Their wealth is a much better predictor, and much of their wealth is often tied up in property."
 Cursory examination shows this to be untrue. All farmers (and most people will be a farmer in the not-to-distant future) -are capital-wealthy and cash-poor.  You (or someone) use the phrase "tied up", which indicates lack of liquidity- which is exactly the case with land holding, whereas income is a liquid asset and is easily available for taxation purposes. This whole passage is an oxymoron. The perversity is that a person using the land for a productive purpose rather than speculation runs the risk of being driven off their land by the Valuation Officer. This happened to some fairly smallscale (few hundred acres) farmers in Golden Bay (Laurences turf so he should know) because the V.O.realised they had "million dollar views" of the mountains and sea!  Land Value Tax is popular with government book-keepers because you can"t export or hide the land. therefore it is easy to charge. That is its only "advantage".
Death duties and capital gains tax do work well for a wealth tax, given certain exemptions such as first dwelling house and land farmed in-hand. Community Land Trusts and the State could be exempted
Do you realise that land based industry only accounts for 5% of GDP in NZ, whereas service sector is 70% and manufacturing is 25%. how do you propose to extract a significant proportion of the more-or-less 40% of GDP that the state requires for its purposes from a sector that only accounts for 5% of GDP?

There is more- Let me join the discussion at your website!

Regards, Kev.


  1. Well thank you Kev for that input into the building of the New Economics policies. We started the party 5 weeks out from the election because of our disillusionment with the lack of any serious political position at this election on the issues of peak oil, climate change and the monetary system. Our policies are an open source starting point so thank you for your input although you did seem to be trying to be critical for the sake of it and hugely presumptive. I was growing food for self sufficiency in awareness of the unsustainablity of the world 30 years ago - I have done a lot of thinking on this matched by a whole lot of action to try and help move society into preparedness. Deirdre and I have both been key supporters in the development of TT in New Zealand. I have just been around the country promoting Fleeing Vesuvuis NZ Edition, responding to economic and environmental collapse. Dont judge us by one rough little unscripted video, you need to do a little more homework Kev. Regards Laurence Boomert Golden Bay

  2. "Our policies of imposing resource taxes rather than income tax and GST are designed to reward those who work to improve their properties. If they are not working the land they should sell it to someone who does."

    Exactly, so as you improve land, it becomes more valuable, and therefore you pay more tax on it. Where does that incentivise anyone? How do you differentiate between inherently good or poor land, skillfully improved or wantonly depleted land? Do you maimtain the premium price and exorbitant "per hectare" rating valuations that are applied to efficient niche-oriented small block farms whereas the thousand Hectare farmer pays peanuts on a "per hectare" basis?

    I don't see whats wrong with progressive income tax and GST on luxuries. I maintain this is designed mainly to garner support from the disposessed, (which, incidentally, I am one of -I own no land, house etc. but at least I have access to land for the present) basically an envy tax.
    There is a lot of good stuff in here like the banking issues, TPPA, depletion awareness etc. is the point of this crazy taxation policy to create a "point of difference" from the "democrats for social credit"?