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Tea Parties – there is a lot of tea in China

Just a quick link on an interesting story about how the growing, affluent middle class in China is taking the view that it likes taxes as about as little as the Tea Party campaigners in the US.

15 comments to Tea Parties – there is a lot of tea in China

  • Nuke Gray

    The history is different. The colonials kept talking about the ‘rights of Englishmen’, which they summarised as ‘No taxation without representation’. Today’s spindoctors would probably put it; ‘No vote?- No Tax!’.
    China doesn’t have that sort of history. Whilst they are being taxed, they can vote for the communist functionary of their choice, so they have no valid complaint.
    As a libertarian, I would say, “No taxation, AND no representation, please!”, but that is clearly not an historic response.

  • Alice

    From the article: “An annual levy on property would give local officials a reliable stream of revenue, making them less dependent on land auctions that have fueled speculation and helped prices rise 10.7 percent in February from a year ago”

    Hmmm. Can anyone explain that to me?

    If Chinese local officials have to auction off land every year to fund their operations (a great idea for limiting the growth of government, by the way), then the steadily increasing supply of privately-owned land would tend to depress prices.

    Unless Chinese people suspect that their officials are planning to stop auctioning off land, and it becomes a case of grabbing whatever land they can while the auctions are still continuing.

    If China institutes some kind of Land Value Tax, then the government will no longer have to auction off state-owned land. Perhaps that is why the officials are talking about the tax — to drive up the price of the land they are selling. Seems to be working!

  • Johnathan Pearce

    Alice, I was wondering who would be the first person to mention LVT!

    Aaarggggghhhhh…

  • Johnathan:

    Perhaps China should institute the LVT, if only to serve as an example of how it won’t work in reality. :-)

  • Johnathan Pearce

    Ted, maybe we can send out Mark Wadsworth out to China to see how it works out.

  • Paul Marks

    First – please remember everyone that the Tea Party movement is primarily about GOVERNMENT SPENDING rather than taxes.

    For every banner about taxes at a typical Tea Party event there are likely to be ten about government spending and debt.

    Of course the “mainstream” media will only show the “Obama is Hitler” banner – even if it turns out that the person holding it is working for the local Democratic Congressman (or some far left group – or both).

    As for China:

    Land sales – problem is all that land can be taken back again (at the whim of local or national officials).

    If people think the United States has a big problem with Eminant Domain (and that varries from State to State of course) try looking at the P.R.C. sometime.

    Taxes are indeed much lower in China – this is one reason why manufacturing industry in the West can not compete against Chinese industry.

    It is not just lack of unions or lower wages – after all British wages were double those of Nazi Germany and there were no independent unions in Nazi Germany (it was a society very similar to the People’s Republic of China in many ways), BUT British manufacturing exports were competitive in third party markets. THEY ARE NOT NOW (and nor are American manufacturing exports).

    This is because Nazi German taxes and regulations were worse than those of Britain – but Britain has got wildy worse since the 1930’s (something the establishment with their worship of the credit bubble economy tried to hide for years) in both taxes and regulations – so we could not compete against Nazi German style industry now, and we can not compete against PRC industry.

    P.S. – imposing import taxes will not do the trick (even though, yes, both Britain and the United States had them in the 1930s – although that does not explain our third party exports) in fact it would make the situation WORSE.

    As it would mean yet another excuse for Britain and the United States to avoid facing up to our real problems – i.e. the Welfare State (and the taxes needed to pay for it) and the endless regulations.

    Of course “public services” are on the march in China also.

    As Thomas Friedman of the New York Times says “one party rule in China means that when the leadership has an enlightened idea it can be introduced…. in the United States enlightened ideas face opposition from the party of NO (he means the Republicans) and so results are suboptimal”.

    It is good to know that “liberals” are so open about their support for tyranny.

    Doubtless if the Chinese leadership decide to shoot Chinese Tea Party types, Thomas Friedman will laugh and dance as the bullets hit their targets.

  • No Jonathan, you were wondering who will beat you to it – don’t be a sore loser:-)

  • DBC Reed

    China already has LVT : the Republic of China that is.
    It is generally accounted as one of the reasons for Formosa’s and then Taiwan’s economic success.There are a number of similar reformed land schemes throughout the Far East e.g. Hong Kong and Singapore while Japan has used LVT a number of times ,successfully in the late nineteenth century and in the American Proconsulate era.If the PRC were to introduce LVT ,it would bring mainland China into line with their former Chinese nationalist enemies .They seem able to take LVT in their pragmatic stride over there,while in the Occident everybody loses their heads.

  • It is generally accounted as one of the reasons for Formosa’s and then Taiwan’s economic success

    No actually, it generally is not one of the reasons held up for Taiwan’s relative prosperity, other than by LVT enthusiasts who bizarrely think a neo-Feudal tax can lead to prosperity.

  • DBC Reed

    Dunno about “bizarrely”: the existence of schemes to put rising land values to public use in Hong Kong,Singapore,Taiwan and ,from time to time ,Japan does provide some evidence about LVT,which Perry’s plain denial followed by door-slamming and standing out in the garden does not.
    Marx dismissed LVT as capitalism’s last ditch .Even he would have been astounded that capitalism would go on to ignore this simple way to ameliorate one of its principal contradictions.As it is ,we have libertarians so laissez faire that they think the present post last-ditch situation where every new worker is saddled with 100k quid up-front debt just for a patch of land to live on in this country (anywhere there is work)is just tickety-boo.

  • Johnathan Pearce

    The reason why the “Asian tigers” have risen to tremendous prosperity in recent years is not due to some “magic bullet” land tax, as DBC Reed claims, but because taxes in such places are generally low across the board. The exact composition of the tax system is less important than the overall state grab of the national income.

    I would add that in Hong Kong, which has an LVT of sorts, land values gyrate considerably.

    The more I read about Henry George and his ideas, the more admire his free trade views, but the less I agree with his land tax idea. As Murray Rothbard once quipped, George devoted 90 per cent of his time in defending the one idea about which he was largely mistaken. A shame. I get the general impression that George was generally one of the good guys.

    Here is a good item about land tax. It is from the Dictionary of Anti-Political Thought, by Jan Lester:

    Georgism Henry George (1839-1897) propounded a *land *tax, to which ‘Georgism’ now refers. The idea is that the value of land as such, as a *natural resource, is due not to the owner’s efforts but to general social development. Thus it does not *proactively impose on the landowner to tax the socially created aspect for *welfare-enhancing redistribution. However, this seems erroneous for various reasons.
    1) Not merely land but absolutely every product and even ourselves have a considerable part of their, *market and non-market, *value because of the *demand of other people. It is not *labor that creates value.

    2) Insofar as there is mere luck involved in this, and there will probably always be some, we are still not thereby proactively imposing on other people by enjoying the fruits of this luck (unless we are *monopolizing a naturally occurring vital resource, such as the sole natural water supply in some area).

    3) If the *state taxes us for whatever reason, then that ipso facto proactively imposes on us. So such taxes cannot be *libertarian.

    4) Moreover, there seems no realistic case that these taxes can improve *welfare any more than any other kinds of taxes. All the usual *moral hazard, *corruption, *waste and absence of *economic calculation associated with taxation appear to apply equally to a land tax.

    5) Land is not the inherently finite natural resource that it is supposed to be. For instance, when *politics allows, superior *agricultural techniques (producing vastly more food per acre), land reclamation, and building techniques (producing vastly more living space simply by building skywards) mean that the real *price of land, and so its relative *scarcity, is declining. It is not declining at the same rate everywhere and would be declining faster with less political intervention. But the differences in price are themselves a market signal that taxes would, as ever, also disrupt and so slow growth. Admittedly, such things as developed *agricultural and habitational land will command relatively higher prices and ever greater *populations will ensue. But the greater *division of labor will ensure that, paradoxically for *common sense, the relative scarcity of land will continue to decline.

  • DBC Reed

    @Johnathan Pearce,
    Very nice of you to copy out all that Jan Lester quote:the profusion of asterisks made it very hard to read BTW.
    The question remains: why is it desirable to lumber British citizens with a 100k quid up-front charge for land ,which they will spend a lifetime paying off?

  • Johnathan Pearce

    DBC, sorry you found it hard to read: the formatting can be a problem. I dunno what sort of brower you are using. I can read it okay.

    As to your question: if land is expensive because demand is rising and supply is limited, then that is a market price like any other and we need to look at what is causing the price to be so high as it is.

    If prices are high because of say, an influx of people, you would – in the absence of state planning laws and whatnot – get things like skyscrapers, high-rise condos, land reclamation, and the rest. The high price of accomodation is also a way of encouraging people thinking of moving in to an area to may be think of somewhere else instead. It is all part of the price signalling process of a market. It is not a bug, but a feature.

    In a small country like the UK, with its dense southeastern bit, that means that it makes sense for some folk to move out into less densely populated areas and if the market were allowed to work, this would, for instance, encourage businesses and firms to move. Not everyone will do that; the high price of renting an office in London or living near the Smoke is part of the trade-off people make against living in a much cheaper place in the middle of no-where.

    I just don’t think can show that prices are held high by some sort of conspiracy to “hoard” “unused” land. If a landowner buys 50 acres of sites in say, London, and presumably funds that purchase with a mix of cash and borrowed money, he or she has to sell it eventually and get the best possible price, otherwise his or her bank manager will lose patience. If we did not have credit bubbles, such “hoarding”, as Georgists complain, would not be able to last very long. In any event, the definition of “hoarding” is so vague as to be of little use: what is “hoarding” to the potential buyer of land is just the right of the seller to sell at a price he wants.

  • DBC Reed

    Very kind of you to take so much trouble to explain your
    p.o.v .But, when it boils down to it ,you do think that young people should take on an up-front debt of 100k for not basic accommodation but the ground beneath.And don’t forget many of the prices they then pay have a component that pays the retailers’/ suppliers’ rents.So their total lifetimes’contributions to ground rent,their own and those they do business with ,must be incalculable.
    In effect young British citizens have to pay for the right of settled residence here.
    I just think that any reform that could possibly deal with this problem,and has some track record elsewhere, is worth trying.
    BTW There is not an absolute shortage of land in this country as the opening premise in your argument announces.
    Tell you what, why don’t we stop this exchange here
    as there is no common ground really?.

  • Johnathan Pearce

    that the uk is a relatively densely populated
    nation, especially in the southeast, is hardly contrversial.

    As I said, if the price of land is very high, due
    to such scarcity, then you will get things like
    skyscrapers and so on unless these are banned
    by the state.

    Forgive me if this kind of rude but expecting
    a tax can make anything cheaper is hardly
    very logical.