Bridging the Ideological Divide

Differences between ideological factions can often be exaggerated by political polarisation and rhetoric. People are, after all, programmed to win arguments, not to seek truth. However, it strikes me that there are some significant policies that are supported by those at almost any point on the political spectrum. These are the main ones that spring to mind:

An LVT is a great idea

This is the lost ‘free lunch‘ of classical economics. It is unavoidable, because you can’t move land. It cannot be passed on, as it falls entirely on economic rent. The best way to think of this is that the tax is paid whether or not it actually exists as a tax. Since the supply of land is fixed, the price is determined by what tenants are willing to pay. The tax itself does not change these factors – it just means the revenue accrues to the treasury rather than into private hands. In fact, the tax actually encourages use of land and generates growth, as landowners who do not utilise their land for a productive purpose are still charged and so are forced to sell the land or do something that creates value. Hawaii had to repeal theirs because it resulted in too much development.

Since it creates growth and raises revenue, I’m sure we can all agree that is a win win, particularly in our current situation.

The war on drugs has failed

From whichever perspective you view this, it’s hard to defend the war of drugs, at least in its totality. From a utilitarian perspective, it has created massive black markets, crime, and drug use is still widespread. From the perspective of individual freedom, it is obviously a restrictive state intervention. Even from a purely economic perspective, it costs a lot of money and also misses out on a lot of potential tax revenue. Politically it’s potentially explosive but the anti-government narrative is so strong that it could well be harnessed for legalisation.

Naturally, I wouldn’t advocate lifting all restrictions instantly and favour a more pragmatic approach, but even from a libertarian perspective, that’s better than the current situation.

Financial institutions in their current state are an abomination

What effectively happened here was that the half of the New-Deal era regulations that restrained banks, such as Glass-Steagall, were removed, whilst the half that were designed to protect consumers, such as guarantees, remained. This resulted in hybrids that were allowed to exploit the welfare they received from government without having to remain responsible and prudent elsewhere. They grew so big that they were not allowed to fail and their losses were socialised. As John Lanchester puts it, this is nobody’s idea how the world should work.  Whatever is to be done, it will involve taking on these institutions head on, and reforming the financial sector. Whilst people disagree on the details of the second step, the first is a necessary prerequisite that can be supported by all.

Patent law is awful

I am overstepping my bounds here in that I know very little about patent law. However, what I do know is that:

– In its current state, British patent law is so complex that you can technically sue yourself.

– Patent law is not only complex in practice, but also in theory. It is vulnerable to the Tragedy of the Anti-Commons, where individual actors find it impossible to negotiate as there are so many different pieces to put together. This results in some goods never making it to market.

– Patents lead to large amounts of lawsuits, and companies are created solely to extract rents from their copyrights, without actually producing anything.

– Large corporations are generally the main benefactors, as they can afford lawyers and large amounts of patents, making it incredibly difficult for rivals or potential rivals to navigate the market and innovate.

The right might like to frame this as a ‘government granted monopoly privilege’ and the left as just another failure of capitalism, but I know that both oppose it, from those at to post-Keynesians like Dean Baker. Intellectual property really needs a clean up.

Inflation targeting doesn’t work

The Bank of England has actually spend a reasonable amount of time outside its implicit 1-3% inflation boundary for the past decade, which makes me question how much control they really have over inflation. More importantly, however, the policy has not created macroeconomic stability – far from it. So a new monetary policy target is required, and whilst I (strongly) favour low long-term interest rates, I would be happy if the world’s Central Banks and governments at least acknowledged the failure of inflation targeting and started to consider alternatives, whatever they may be. I suspect that I am not alone in this, as even the inflation hawks at the ASI have highlighted some of the problems with inflation targeting.

Issues like this should be placed into the limelight, as they are areas where genuine progress could be made. Many of them, funnily enough, favour big business, which makes me suspect that’s why debate is steered away from them in a ‘divide and conquer’ style strategy. In fact, the differences between ideologies are greatly exaggerated elsewhere, too – once people actually consider issues rather than rhetoric, they generally find themselves in more agreement than they expected.

*If Dubai came into your head you are confusing two definitions of land. In the economic sense, land includes the sea, the air, and the rest of the ‘space’ part of the space-time continuum.


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