Solving the Real Debt Crisis / by Fred Harrison / September, 2007

ONCE privatised, the rent of land is converted from public value to private debt. Its essence of rent remains: it is created by cooperative effort. But it is turned from a benign surplus, available to fund the civilised arts and the community's capital, into a legal force that wrecks culture. Rent now becomes a debt - a transfer payment, as economists put it - that is owed by the majority to the minority. The owners of land interpose themselves between people and nature, the fundamental outcome being the implosion of society in a thousand and one ways.

The Asian Development Bank notes that "the most successful redistributions" of land have taken place after wars, citing South Korea and Taiwan, and it asks: "Is the redistribution of land possible in less extreme circumstances?" Pessimistically, it concludes: "[T]he answer to this question may well be 'No'".[1]

But wars, driven by territorial aggrandisement, were fostered by unenlightenment. So we need not accept that future reforms can only follow destructive conflicts. By democratic debate, and by showing that everyone gains from the tax-and-tenure reform we have described, we can expect people to insist on enjoying their birthright without many people first having to die for it.

People of the redeveloping countries need to take control of the agenda if they wish to determine their fate. Westerners can help, starting with a new approach to debt cancellation. Campaigners who wish see relief from the debts that cripple whole societies must understand that a different kind of debt is responsible. The nature of this debt is affirmed by the United Nations.

For national accounting purposes, the UN recommends that balance sheets should have entries for buildings, machinery and vehicles - the things that people make to help them produce more wealth - but should exclude land.[2] Why? The UN defines land as a non-produced asset. This means that the money paid for its use is a transfer of income from one person or group to another, as if it were no more than a debt incurred.

Rent, in its privatised form, does not represent a value-for-value exchange. For so long as that debt hangs around the necks of nations, it must impede evolution towards communities that are balanced in personal health and functional institutions.

The debt-cancellation agenda should switch from the debts owed to banks to the far larger debt that is paid to those who claim the legal right to a nation's rents. But a new campaign - aimed at driving a stake into the heart of poverty - will not take off unless we amend the constitutions and declarations of human rights that inspire people.

We saw in Ch. 7 (§2) that the UN's Universal Declaration of Human Rights does not outlaw this most pernicious of all debts.[3] By its act of omission, the Universal Declaration of Human Rights permits rent-seekers to hold nations to ransom in perpetuity. Agreement is needed between member countries to modify the Declaration to assign it the moral authority that would support sovereign governments - those that really care about their people - that want to amend the laws of their land.

The International Union for Land Value Taxation (theIU) has launched a global campaign to petition the UN. TheIU proposes that a new clause should be inserted in the Declaration of Human Rights in the following terms:

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This provision, if implemented in the laws of nations and faithfully administered by governments, would secure people's fundamental rights and render redundant many of the Declaration's cosmetic clauses.

You, the reader, are invited to log on to theIU website (www.=====) to sign the petition, and to invite others to do the same. For a full explanation why the Declaration needs to be revised, you may download a free copy of Poverty and Property, and forward it to people who need the understand that would render territorial wars obsolete.

TheIU invites governments to endorse the campaign, and to represent the interests of mankind to the UN Secretariat. The General Assembly must authorise the revision of the Universal Declaration on Human Rights. This would encourage governments of redeveloping countries to amend their tax codes, which is the pre-condition for consigning poverty to history.

Inter-governmental initiatives would be helpful. An example is provided by Gordon Brown, Britain's Prime Minister. He has assembled a coalition of government leaders and multi-national corporations to convene at a UN-sponsored conference in 2008 to address the deepening poverty in Africa. Brown realised that the Millennium Development Goals were not being achieved - "it is already clear that our pace is too slow, our direction too uncertain, our vision at risk".[4] But without a comprehensive understanding of the causes of poverty, such initiatives will go the way of previous gatherings, where hand-wringing was not followed by action proportionate to the root causes.

The people of Africa do not need aid. They can fund their infrastructure out of their own resources - the rents that are being sieved out of the continent. This self-funding mechanism (described in Ch. 5 [§3]) is the solution that economists choose to ignore. If you want to prove them wrong on behalf of the dollar-a-day billion, the starting point is for you to lobby politicians on behalf of a new UN agenda on human rights.