|Wealth and Want
|... because democracy alone is not enough to produce widely shared prosperity.
Landlording It Over Us
If we’re spending decades of our life trying to purchase what should be our common birthright – land, the Common Wealth – then just who is it who’s riding on our backs? Here your Mr. Ed exposes the extent by which the great landowners – in Britain, particularly – “get rich in their sleep.”The hope is that newcomers to the Geoist world view will soon “see the cat” – that is, grasp the big economic picture and see the various ways by which a few gain while so many remain the working poor.
Geoism holds that there’s nothing necessarily wrong with being rich – indeed, an economic system exists whereby we could ALL be rich (in wealth, education or leisure time). The justification for riches all depends on whether a wealthy person has become so through creating wealth (in the form of goods and services that people willingly buy in a free and fair market) or through living off the wealth really created by others. Earned wealth might arise through talented or arduous inventing, writing, sports ability, entertaining, entrepreneurialship or whatever. Such examples of fairly earned wealth should not be subject to any (confiscatory) taxation, which would be legalised robbery. There is, of course, a natural form of public finance, in the form of Natural Resource Charges.
Geoism seeks to expose the many forms of unearned wealth, or privilege, that exist in our monstrous economic system. Monopoly rights are the more obvious examples of economic privilege, but less noticeable is the massive wealth to be gained by using the Global Commons (especially land) without reimbursing the rest of us. Where such wealth is purely misappropriated (as opposed to created), Geoism maintains that the whole lot be given over to community coffers through natural resource charges (such as land value taxation or eco-taxes).
Here we’re going to look at one of the most obvious examples of unearned wealth – the massive riches accumulated by the great landowners of Britain. Remember, it’s not the acreage of land that is important, but the value of the land. Australia doesn’t have quite the disparities of land wealth of Britain, being a newly-settled/colonised country, but each so-called property “boom” in Australia is widening the gulf between the haves and the havenots.
Some of the following quotes and statistics were taken from “Who Owns Britain” by Kevin Cahill, and from Alexander Garrett’s article “Coming Into Land” in the April 2003 issue of Business Life magazine. Due to the lasting privilege of royalty, Britain is different from other European countries in the sheer size of its private estates. Thierry de L’Escaille, secretary-general of the Brussels-based European Landowners Organisation says, “There are large estates in most countries, but what we call large is usually 1,000, 2,000 or 3,000 hectares [a hectare being about 2½ acres]. They are never as large as in the UK.” However, Spain is an exception, where there are around 150 estates that are more than 10,000 hectares in size – due, perhaps, to the perpetuation of royal privileges and power through the Franco regime.
Why is Europe different? De l’Escaille says the main reason is the adoption of Napoleonic code across Europe. This determined that an estate must always be divided between the children – although one could have a larger share – and the effect has been to steadily reduce the size of individual landholdings over the ensuing two centuries. Estates are still held in most European countries by aristocratic families and even royal families, but examples are elusive, due to a reluctance among the ranks of the landowners to receive publicity.
Nowadays, the ranks of established landowners are being joined by a new wave of owners for whom land is the ultimate status symbol, of whom De l’Escaille says, “These are entrepreneurs who have been very successful in their business who are buying estates everywhere across Europe.”
But the rewards of land go far beyond status, evidenced by how, over the centuries, the land-owning elite has pulled the levers of power in society, politics and the world of commerce. The Earl of Derby’s 1881 candid analysis of the benefits of owning land perhaps says it best,
The gross injustice of handing over community-created values to landowners is revealed by cold, hard figures. According to Yolande Barnes, head of research at FPD Savills, the average UK building plot – at £709,650 for a greenfield acre – is worth around 403 times the equivalent agricultural land. Nationwide, through this form of rezoning, around £5bn. windfall profit is handed over to UK landowners each year.
Barnes explains further, “In many parts of the South and Southeast, it is certainly true that prices are paid for agricultural land that wouldn’t be justified by its agricultural value.” She said further that it is impossible to know how much of this differential is accounted for by a "hope" factor – a speculative play on future change of use – and how much represents the premium for land’s amenity value when it is in such short supply. But she adds: “There has certainly been a deal of strategic holding and buying on city and town fringes by agricultural owners and farmers. New development land is usually designated in “fill-ins” and close to existing developments.” She added further that farmers buy around towns because they can’t lose. They’ll farm the land anyway, and if permission is given to build, they’ve won the lottery.
A great way to run a casino, but what sort of way to run an economy and a society? It makes you wonder how someone who realises the scale of these windfall profits can accept them so unquestioningly. But, then again, we had the example of a young Melbourne Geoist a few years ago who did the ultimate sellout: he quit working for The Cause to use his knowledge of the great land rip-off in order to set up his own get-rich-quick property seminars!
Britains' wealthiest man gets rich the easy way -- he has his underlings collect and bank his rent. And if the rents from his vast land holdings weren’t enough, soaring property prices have escalated his net worth sky high – to be exact, UK£11.5 billion. To give him his full title, he is His Grace, Gerald Grosvenor, OBE, Sixth Duke of Westminster.
Forget the vast tracts of rural land, including a 100,000-acre estate in Scotland which contains no less than three mountains. The 300 acres the duke owns in central London, comprising Mayfair and Belgravia, are today one of the most valuable patches of ground on the planet.
It was a handy marriage which brought this fortune into the Grosvenor family’s hands – in 1677, Sir Richard Grosvenor married Mary Davies, heir to the hundred acres north of Piccadilly and the “Five Fields” south of Knightsbridge. During the 18th and 19th centuries, Mayfair and Belgravia were built up as residential areas for London’s wealthy classes, a position they have occupied ever since. Unlike many other great landowners who have cashed in, the Grosvenors held on and have benefited enormously from the latest boom in London property prices.
The duke has nowadays diversified his land portfolio. His commercial property company, Grosvenor, has become a serious player, with a vast array of investments and developments around the world. These include office blocks in San Francisco, business parks in Vancouver, luxury apartments in Hong Kong and shopping centres in Spain and Portugal. In the UK, Grosvenor has developed Festival Place shopping centre in Basingstoke and is set to undertake a £700m. mixed-use redevelopment in the centre of Liverpool. Back in his tract of Mayfair, land values are in the stratosphere: in 2001, BP’s pension fund sold ten acres of Mayfair for a cool £335m.
Is it any wonder that, given how there is little or no land value taxation, the duke has all his many eggs in the land investment basket? But it’s not just for economic considerations that he could never contemplate selling his vast acreage, for he has a philosophical reason for not selling. (Have a bucket ready before reading the following!) “This is part of my heritage, my birthright. It is not to do with anything materialistic, but is deeply ingrained.”
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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper