Privileges           by Ole Lefmann

Everybody who owns something is able to grant other people the
privilege to enjoy it or use it; sometimes the granter will collect a payment
for it. A privilege can only exist if physical power protects it against abusers/intruders.

This treatise will discuss Monopolies/ Privileges given and
protected by the society’s supreme physical power, the Government, or by
local governments. The two words Monopoly and Privilege are commonly used for
the same thing: An exclusive right for one or a few - individuals, companies or
institutions - to do what is prohibited for people in general.

People will usually stay away from other people’s monopolies/
privileges; but in specific situations it might be necessary for the privilege
holder in question to call upon “the forces of law and order”
(police) to keep uninvited people away. For
example: A landowner whose exclusive right to use an area entitles him/her to
exclude people from his/her area, may call upon the authorities for help to
throw out intruders; and the holder of an exclusive right to use certain
electronic waves for transmission of information may call for public assistance
to keep pirates away from the waves in question.

VALUE OF PRIVILEGES

The values of privileges differ. Some do not have any value in
exchange at all; others have, and some are extremely valuable.

Values of monopolies/ privileges occur
when they

·  support the
holders’ ability to compete;

·  increase the
holders’ enjoyment of
advantages of nature and/or society;

·  enable the
holders to increase the prices they charge for goods and services with an excess profit on top of what they would
have been content with had they not held the monopolies/ privileges; and/or

·  for other reasons
that attract the interests of investors.

Advantages of monopolies/ privileges flow
to the holders directly, or they may flow to them indirectly when they let other people use the
advantages for a payment.

The values of advantages yielded
currently by monopolies/ privileges could be called the privilege rent. When other people would like to take over
the monopolies/ privileges it is possible to register their annual market-determined privilege rents.

Sometimes advantages of monopolies/
privileges fall to the holders as lump sums called windfall profits.

GROWING NUMBER OF PRIVILEGES

Over most of the past millennium of years
“Private Monopolisation of Nature” has expanded; slowly in the
beginning when most monopolies/ privileges were landholdings that originally
implied the obligation for the holders to pay the rent of land to the
sovereign, which obligation some nobles managed to slip off from. Gradually
over the years this “slip off” became more common, and finally it
became the rule.

But also “Private Monopolies of Trade
and Industry” have been granted and protected by Governments - in the
latest centuries in a growing number of cases - securing their holders unearned
income of excess profits on top of what they would have been content
with had they not been holding the monopolies/ privileges.

In the 20th century rent-seeking
activities have increased formidably; today it is possible to get much more
income from investment in rent collecting arrangements than from investment in
productive activities. Authorities assessing applications and issuing patents
have never been as busy as they are these years.

BAD
EFFECTS OF PRIVILEGES

1. Bad
effects on Economics

The effects of monopolies/ privileges are
appreciated by their holders, of course, but they are damaging
the Economics of the Society and damaging private economies of other
people in the society as well:

‘Bad
effects of monopolies and privileges’

Productive monopolists and privilege holders hamper their competitors’
endeavours to compete, which causes that goods and services are produced in
smaller quantities, in inferior qualities, and offered to the public at prices
increased with excess profits on top of
what the monopolists and privilege
holders would have been content with had they not held the monopolies/
privileges.

That means waste of resources and possibilities.

Non-productive
monopolists/privilege holders exclude people from the advantages of nature
and society, producers from production and citizens from enjoying life; the
result of which is that the demand for access to advantages of nature and
society increase, and consequently also the prices for access increase. It also means fewer products for sale, and
fewer homes for sale or rent, and therefore increased
prices of homes, goods and services.

Employees have to live
far from their working places, wasting time and money on commuting, and burning
much transport fuel that pollute the environment.

That means waste of resources and possibilities.

Some monopolists/
privilege holders are at the same time productive AND
non-productive.

Valuable
monopolies/ privileges:

Some monopolies/ privileges are
without any or of minor market value, but many
are extremely valuable because
their holders are able to use the excess
profits or windfall profits as
purchasing power for their own purpose. Thereby the valuable monopolies/
privileges:

-
build
up fortunes to a few persons, who - by using the excess- or windfall-profits as purchasing power - take out products and
services from the market without supplying to the market any goods or services,
which leaves a reduced quantity of goods and services for unprivileged and
under-privileged citizens to choose among at increased prices.

-  deprive
the Government of the income it creates by using its power to protect the
monopolies and privileges, which makes it necessary for the Government to
collect from the producers the revenue it needs for administration of
the society and for provision of public service.

-  cause
a deadweight on production because the effect of taxes on production and/or
consumption is that demand and supply cannot meet at prices for optimal
production; fewer consumers will accept the higher prices and fewer producers
will accept the lower income, meaning reduced production and reduced employment.

-  create poverty among unprivileged
and minor-privileged citizens who do not
receive big salaries or profits for supplying specialised services or goods
either to the Government or to the wealthy holders of monopolies/ privileges.

-  expand
the gap between rich and poor people, which makes the society unstable
with a class of very satisfied wealthy and lavish citizens, a middle class of
satisfied citizens, and a growing class of very unsatisfied, insecure and
alienated citizens having to accept low wages for their work, the alternative
to which is unemployment.

-  destroy self-confidence and self-respect
among people who are deprived of their equal share of the values
of nature and society, denied free access to nature and advantages of
society without compensation, and referred to accept unfair working
conditions and low wages.

-  in the longer term sweep our civilisation back to
barbarism as it happened to the civilisation of Rome and to any other
ancient/archaic civilisations. The sweeping civilisations back to barbarism
have every time been the result of concentrated power and wealth with few
citizens leaving crowds of poor citizens without possibilities to fend for
themselves dependent of charities and/or social security benefit.

-Measures against the bad effects of
monopolies/privileges-

Monopolies and privileges should be abolished as far as this is possible, but some monopolies/ privileges have to be tolerated
or might be tolerated (landownership; use of certain radio waves; exceptions
from general restrictions of industry and trade such as trade in certain drugs,
explosives and other dangerous commodities; etc).

Tolerated monopolies/ privileges should either be run by the public, or by private holders who pay the excess
profits to the public administration who will use the revenue for the
betterment of all citizens on an equal footing.

Then the effect of tolerated monopolies/
privileges will be spread around to all citizens; and nobody will take advantage in
preference of others of the values of nature and society. The result
will be a society in which the citizens feel they participate on equal footing,
democracy will be strengthened, and peace and harmony will dominate. The ill
fate that brought down Rome
and other archaic civilisations will be averted.

2. Bad effects on Politics

One effect of monopolies and privileges that is much appreciated by
people who want to argue against the proposal of abolition of monopolies and privileges as far as that is possible and
collection of the excess-profits and windfall-profits of tolerated monopolies/ privileges to the public purse
for use to the betterment of all citizens on an equal footing, is that
today the value of land is too small to provide for a revenue sufficient for
the budgets in countries that offer its citizens in need considerable social
security benefits.

This argument seems to be in accordance with the figures
statisticians are able to provide, but the reality is that the
statisticians’ figures show only the values that are reduced by taxes and
privileges-profits.

VALUABLE
EXCLUSIVE RIGHTS REDUCE THE RENT OF LAND

Tax-collectors, Holders of monopolies/ privileges and Criminals
reduce people’s possibilities to pay the amount they would have paid for
use of land hadn’t they been forced to pay taxes,
monopoly-/privilege-profits, or to suffer loss of fortune to criminals. This
means reduction of the amount landowners are able to collect as rent of land.

Henry George in his book Protection
or Free Trade, Chapter 25, called the landowners the rubbers that take all what is left by other rubbers.

At another webpage about Size
of Rent (Click here) the term Capturers
is used about Tax-collectors, Monopolists, Holders of valuable monopolies/
privileges, and Criminals offending properties, who by power or under
protection of power take what they want from people in the market without
giving back to the market any goods or services wanted by other people. This one-way
distribution practice contrasts the way the market normally works.

Normally the market is the place where people exchange their goods
and services with other people’s goods and services; a two-way system
for distribution of the results of production by which both seller and
buyer become satisfied. Without both parties being satisfied no exchange will
take place voluntarily.

Some of the taxes will be used to provide the citizens with public
service but it does not happen as a voluntary exchange via the market. If public
administration provides the citizens with wanted services that private
entrepreneurs are unable to deliver as good and as cost effective as the public
service can, then the citizens will find taxes good for the economy and a
blessing for the citizens. But if public administration doesn’t satisfy
the citizens in general they will find taxes a torment, and prefer it abolished
from public administration.

VALUABLE EXCLUSIVE RIGHTS SPOIL PEOPLE’S BELIEF IN “THE
FREE MARKET”

Because free trade has been restricted by the bad effects of
monopolies and privileges Wage-Earners have experienced that free competition
has forced them to accept insufficient conditions including low wages, which
the Wage-Earners have not been satisfied with.

Because of that Wage Earners are of the opinion that free trade,
free competition, is “NO GOOD”.

When the bad effects of monopolies and privileges are eliminated
Wage-Earners will no longer have reasons to be against free competition or free
trade.

CREATION OF MORE PRIVILEGES

In spite of the fact that monopolies/
privileges are harming the economies of unprivileged and under-privileges
citizens as well as harming the economics of society as a whole we have in the recent
decades seen Governments handing over to private entrepreneurs activities that
by nature are monopolies, such as supply of water, electricity, gas,
administration of main railways, and mail collection/ distribution; activities
that previously were looked upon as public affairs.

In recent decades the tendency in
politics has been that any activity that possibly could be managed by private
entrepreneurs should be handed over to private entrepreneurs, which caused that
previous public monopolies became
private monopolies/ privileges.

That tendency is still very much in, due
to the philosophy that “private enterprises are always more cost effective than
public administration and public works”, which is incorrect! It is correct that great organisations -
private as well as public - are in danger of suffering from carelessness,
wastefulness, rigidity, ineffectiveness, corruption; but turning public
monopolies into private monopolies doesn’t guarantee a change to the
better.

The sure result of such a change is that
the excess profits of monopolies will
go into private entrepreneurs’/shareholders’ pockets instead of the
public purse and leave the exchequer to collect the revenue he needs from
taxpaying producers and consumers, with the unfortunate consequences it has,
causing deadweight on production, creation of unemployment and poverty,
expansion of the gap between rich and poor citizens, destruction of
self-confidence and self-respect of unprivileged and helpless people dependent
on charities and/or social security benefit, and destabilisation of the
society.

In order to prepare the reader for the
worst to come if the ongoing tendency continues or maybe accelerates in the
future, the below list of monopolies/ privileges that exist somewhere today is
enlarged with activities that might be granted as privileges in the future.

This
list
of EXCLUSIVE RIGHTS includes monopolies/ privileges that exist today in some countries, plus
activities that have the characteristics of privileges and therefore might be
granted as privileges in the future.

Use of NATURAL RESOURCES such as:

o       Areas on land
(for any purpose: production, residence, leisure, etc.);

o       Areas at sea and
under sea level (fishing, farming and hunting places, and resource extraction
areas);

o       Streaming,
floating and falling water (for power and irrigation, and for transport of
people and goods);

o       Orbital space
positions (for research, and for collection and/or transmission of
information);

o       Electronic waves
(for transmission of information);

o       Scarce natural
resources on or from soil and underground, seabed and space (asteroid
occurrences);

o       Vulnerable
environments.

Use of UNIQUE CONSTRUCTIONS, the exclusive rights to use of which function
like exclusive rights to use of natural resources, such as:

o       Cables, wires and
tubes passing public land or sea, or officially registered on private land or
sea (for transport of energy, information, fuel and water);

o       Rails, roads,
bridges, tunnels, cables, and canals over public land, or officially registered
on private land (for transport of people and goods);

o       Air lanes and sea
lanes (for transport of people and goods);

o       Watermills,
locks, dams, and water storages;

o       Big power plants,
(hydro, nuclear, or otherwise fuelled);

o       Airports,
harbours, railway stations and terminals;

o       Satellites in
orbits, and research rockets in the inter-planetary space.

Provision of UNIQUE SERVICES, such as:

o       Emission of
money/ putting money into circulation;

o       Lotteries,
casinos, betting;

o       Police and guard
forces;

o       Emergency
preparedness for catastrophes such as fire, storm, earthquakes, flooding;

o       Cremating and
burying corpses.

Trade in DANGEROUS PRODUCTS such as:

o       Nuclear products;

o       Drugs, medicine,
narcotics;

o       Poison,
pesticides and fertilizers;

o       Explosives and
weapons.

Trade in DANGEROUS SERVICE such as:

o       Commercial
transport of persons;

o       Medical,
chiropractic, dental, etc. treatment of human beings;

o       Commercial
serving of intoxicating drinks and/or drugs;

o       Exhaustion, out
letting, discharging, storing, destruction and burying polluting materials;

o       Disposal of
refuse and waste.

DANGEROUS INSTALLATIONS, such as:

o       Gas, electricity,
water;

o       Erection of and
taking down huge scaffoldings.

The list is by no means exhaustive; it is
growing longer every year and the volumes of most of the items are growing as well.
That means a constant increase of the volume of privilege-profits that take
goods and services out from the market without putting any wanted goods or
services back into the market with the unfortunate effects that has.

The Bad
effects of monopolies and privileges and the Measures
against the bad effects are described in the box above about “Bad effects . . “.

THE
SOCIETY OF EQUAL FREEDOM

Measures against the bad effects of
monopolies/privileges are (as described in the first of the frames above, under
the headline “Measures against the bad effects of Monopolies/ Privileges”):

1)     Abolition of
monopolies/ privileges so far that is possible.

2)     Tolerated
monopolies/ privileges run by public administration, or by private entrepreneurs
who forward the excess profit to the public administration, who use the revenue
for
the betterment of all citizens on an equal footing.

The revenue of publicly
collected excess profit may be used for the betterment of all citizens on an
equal footing in different ways, either:

1.   by
financing commonly needed -New Public Tasks- such as
installation, expansion or maintenance of infrastructure, public education,
health service, transport systems, water supply, waste water disposal, etc.
(some people would call this the socialistic model); or

2.   by equal distribution - an equal -Citizens
Dividend- - to all
citizens having citizenship to the country in question whatever the citizenship
has been obtained by birth or by naturalization (some people would call this
the libertarian model); or

3.   by reduction or abolition of taxes on
anything else but exclusive rights to use advantages of nature and society,
which will -Lift
the Deadweight off the
economy- (this is a model proposed by
economists); or

4.   by
a combination of above mentioned 1, 2, and/or 3.

Whatever the choice will be 1 or 2 or both, the
result will ‘End the Great Inequity. and everyone of

the citizens will enjoy their yEqual Rights to the values of Common Property..

The result of using 2 will further
ease off most of the need for social security benefit, the need for public
expenses will decline, and the government will be enabled to reduce taxes,
tariffs and imposts on other things than exclusive rights to use advantages of
nature and society. This will make life easier in the society, less poverty,
more dignity, stronger feeling of citizens’ fellowship, strengthened
democracy, less crime; it will increase the value of life and of the Society,
and that will increase the revenue of public collection of the values of
exclusive rights.

When 3 has been carried through, maybe as a
result of use of 2, or of 1 and 2 in combination, to complete abolition of taxes, tariffs and imposts of every sort on
anything else but exclusive rights to use of Common Properties, then

the citizens
will enjoy also sIndividual Rights to the Full Results of their Lawful Exertions..

Public collected Rent of Land and use of
the revenue as described here is all what is needed for implementation of a Society
based of Equal Freedom for all citizens.

For the purpose of maintaining/
protecting the Society based on Equal Freedom I recommend that some of or all
the revenue from public collection of the values of exclusive rights to use
advantages of nature and society is equally distributed to all citizens,
together with a confirmation that emphasizes that the payment is the
citizens rightful share of the value of nature and society. The
hope is that that will make the citizens interested in protecting the system against
power brokers’ try to reclaim the “free lunch” of rental
value that morally and rightfully belong to all citizens on an equal footing.

The reader's comments are very
welcome. Please send a letter to:

International Union for Land Value Taxation and Free Trade,

212
Piccadilly, London W1J 9HG, United Kingdom,

or e-mail to: [email-masked]