1.     What challenges are local urban authorities facing to mobilize financial resources for urban development in developing countries? What are some solutions to these challenges?

Local urban authorities are searching for a sustainable and equitable source of public finance, one that can fund infrastructure, education and other public goods while also addressing poverty, wealth inequality and the need for affordable housing for all.

If there is one thing that unites everyone in the UK, it’s that we have a housing crisis. The reasoning behind this consensus goes something like this:

a) Too many households cannot afford to buy their own home and many are struggling to pay the rent.
b) This must be down to excessive demand and a housing shortage.
c) This shortage is all the fault of those meddling planners, NIMBYs and/or net immigration.
d) We need to build at least 300,000 new homes per year to keep pace with growing demand.

Unfortunately, this reasoning is based on a fundamental mistake that land has a net cost, like capital does. As land is everything not supplied by human effort, it cannot by definition have a net cost.

Introduction

The purpose of this presentation is to understand the conditions in which money can be created and issued and to what extent it can be used to stimulate an economy.

Money simply

There are many stories illustrating how money comes into being, and here is one of them.

Reviewed by Brian Hodgkinson
Shepheard-Walwyn Books, 2015
ISBN: 9780856835070
This book by Andrew Purves is a remarkably concise, yet wellresearched, study of the Hong Kong economy. The author spent his childhood there and makes good use of his acquaintance both with the place itself and with people in strategic positions within the ex-British colony. His stated aim is to answer the question that the students whom he has taught in the School of Economic Science in London most frequently ask, namely ‘Is there somewhere where Land Value Taxation is actually put into practice?’ Yet the book is in no way an attempt to paint Hong Kong as an economy of milk and honey based upon a perfect tax system. Purves is only too well aware of deficiencies such as serious inequality.

There is an almost universal belief by farmers that high land prices are beneficial to farming. I contend that high land prices are a curse on farming. I do not deny that some landowning farmers become very rich from high prices, but only when they sell, most of them making more money from selling their farms than they did throughout the time they were farming. There is a clear distinction between what is beneficial to a few farmers and what might be beneficial to farming in general and especially to those who want to farm but have no land.

In Scotland the average price of farmland is more than £4000 per acre and has increased by 17% in the last year. The average price of arable land is £8000 per acre. The market price of land is much more than can be justified by its productive capacity. Taking as an example land for growing wheat which is capable of yielding 3 tonnes per acre:- the current price of wheat ex farm is less than £120 per tonne which gives a gross income of under £360 per acre, the current cost of growing wheat is about £115 per tonne or £345 per acre, leaving a surplus of £15 per acre.

What is Science? The dictionary defines science as knowledge, the truth of which is certain. The scientific method and the advancement of science are based on the search for truth.

Economics is currently seen as a Social Science but it is a Natural Science because the production and distribution of wealth obey Natural Laws, as natural as the Law of Gravity. The Natural Laws of Economics were described by Classical Economists, the most important being Adam Smith, David Ricardo and Henry George:

[Centenary Essay No.2, published by the Economic and Social Science Research Association, 1980]

“One of the truisms of the ecology movement is this: everything is connected to everything else. Everything else must include economic phenomena. A parallel truism of the body economic is: the cost of anything depends on the cost of everything else. Everything else must include the cost of the air we breathe and the cost of the water we drink.”

INTRODUCTION

The national economy and economic life is a means to an end – it is not the end or purpose of a nation or of a human life. It is the means by which the needs and wants of people living in a civilised society may be met. Its success is not thus to be measured by its size but by how it contributes to the provision of a happy and satisfying life for the nation and its citizens. In a modern economy public revenue and expenditure represent a huge fraction of the wealth that a nation produces. How public revenue is collected has a profound impact upon both how wealth is produced and how it is distributed throughout society.

Would taxing the rich reduce inequality? We need to know how it is to be done, how would the tax be raised, and how would the extra revenue be used?

Shall we tackle the last question first?

How would the tax be used? The current cry is that wages are too low, so we might suppose that some or all of the extra tax is to be used to alleviate the condition of the poorest. They are certainly squeezed. If you read the writings of Paul Nicolson of “Taxpayers Against Poverty” it is plain that the poorest are under great pressure (1). So, maybe the minimum wage is increased, or the level of benefits is raised, or that VAT is reduced. What would be the result?

Here is an example told by Winston Churchill in his campaign speeches of 1909. “Some years ago in London there was a toll bar on a bridge across the Thames, and all the working people who lived on the south side of the river had to pay a daily toll of one penny for going and returning from their work. The spectacle of these poor people thus mulcted on so large a proportion of their earnings appealed to the public conscience, an agitation was set on foot, municipal authorities were roused, and at the cost of the ratepayers the bridge was freed and the toll removed. All those people who used the bridge were saved sixpence a week. Within a very short period from that time the rents on the south side of the river were found to have advanced by about sixpence a week, or the amount of the toll which had been remitted.” (2)