THIS BOOK is rather academic for the general reader but as the title suggests, it’s distinctly activist in tone; this review addresses it not academically, but from an activist viewpoint. Written by middle-class South Africans, it is animated by frustration if not anxiety at the increasing “sea of poverty” which is swamping the post-apartheid “Rainbow Nation” project. Insofar as it addresses the big question of social inequality, it is a valuable contribution to debate.

The authors cut to the chase: the land issue. However, instead of joining the sterile left/right ping-pong which pits extension of individual property ownership against wholesale nationalisation, it heads off in a different direction, picking up on the “single land tax” movement pioneered in the 19th century by Henry George, and blends it with certain elements of the thought of 18th-century economist Adam Smith (as the authors point out, Smith being a founder of the discipline, is selectively interpreted by all manner of successors and often blamed for their shortcomings). The authors’ semantic preference for “land rent” instead of “land tax” is too subtle to go into here, other than saying that it is part of the general category of “natural resource rental”, which interestingly, has already been partially applied in South Africa’s mining industry, in which one of the authors has worked.

On one hand, making land into the main revenue source for the state implies a form of nationalisation; on the other, the proponents of land tax envisage no removal of private title in owning, selling or leasing land; on the contrary, the tax to be extracted would be determined by market forces, such as positional advantage of property, assessed during the conduct of private enterprise. This decisively departs from the statist centrally-managed economic model. Hence, this paradigm shift has the potential to break the deadlock in current S.A. politics, where left and right each hold hostage elements of the social order, each desperately wielding discredited dogma.

In essence, the book’s argument is that whatever you tax, you tend to discourage – except that which is inevitable, like positional advantage. Hence under a land-tax regime, marginal areas, for example rural and peri-urban ones, may still host viable enterprise due to low or zero tax/rent – as opposed to the present situation where economic activity itself is taxed, sometimes to extinction. In short, the book treats the status quo as a market failure; recognising that the rationale for having a state at all is to regulate the market, it proposes a different paradigm for doing so (at one point referring to George Soros’s assertion that financial markets tend to create bubbles, and that central banks’ role includes restraining this).

The authors thus support a taxation system which restrains social inequality, since it falls mostly on the owning classes. Our current system promotes inequality, since consumption tax such as VAT falls disproportionately on the poor, and income tax, while theoretically targeting the rich, is notoriously easily evaded by them. Unproductive, speculative property-owning is currently a major driver of inequality, and this would also be discouraged by a land tax. It should be noted that the authors, following Smith, have no problem with taxing luxuries as a secondary source of revenue.

In order to concretise their proposal, the authors present a draft annual budget for South Africa, which includes transitional measures such as continuation of income tax for the rich. The relative size and efficiency of the state is insufficiently focussed on. Every taxation model implies a corresponding model of collection, enforcement and protection. There is a contradiction between the “libertarian” discourse of most plutocrats, and their ever-increasing need for a police state to safeguard their predatory activities. Whipping up panics over terrorism, drugs, computer hackers etc. can be seen as a way of papering over this credibility gap. The authors, being “respectable” citizens, lack traction here, beyond implying that the middle and working classes need to ally against the super-rich and the “rentier” class (the authors tip their hats to Moeletsi Mbeki, author of “Architects of Poverty”, in this regard).

Another problem insufficiently addressed is that of digitalisation. Much economic activity now takes place in cyberspace (although still linked to physical computers, it can effortlessly be transferred to different ones, thanks to the internet). Thus, transformation of taxation systems must be global to succeed fully. This must be taken into consideration by proponents of a new model.

The grapevine has it that discussion groups are forming around the book’s ideas. They may take to social media and this review may assist them.

Book Review: “Our Land, Our Rent, Our Jobs”
by Stephen Meintjes & Michael Jacques

Publisher:

Tag: Jobs