MIME-Version: 1.0 Content-Location: file:///C:/91693D06/privilegesolef.htm Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii" PRIVILEGES

 

Privileges        &= nbsp;  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 payme= nt for it. A privilege can only exist if physical power protects it against ab= users/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 f= or 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 monopol= ies/ privileges; but in specific situations it might be necessary for the privil= ege 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 assist= ance to keep pirates away from the waves in question. <= /p>

 

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.<= /o:p>

 

Values of monopolies/ privileges occur when they =

&midd= ot;  support the holders’ ability to compete;<= o:p>

&midd= ot;  increase the holders’ enjoyment of advantages of nature and/or society;

&midd= ot;  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=

&midd= ot;  for other r= easons that attract the interests of inves= tors.

 

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 ov= er the monopolies/ privileges it is possible to register their annual market-determined privilege rents<= /b>.

 

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 y= ears “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 unea= rned income of excess profits on top of what they would have been co= ntent with had they not been holding the monopolies/ privileges.

 

In the 20th century rent-s= eeking 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 paten= ts have never been as busy as they are these years.

 

BAD EFFECTS OF PRIVILEGES

 

1. B= ad effects on Economics

 

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

 

 

&nb= sp;

Bad effects of monopolies and privileges

 

Productive monopolists and privilege holders hamper their competitors= 217; endeavours to compete, which causes that goods and services are produce= d in smaller quantities, in inferior qualities, and offered to the public at pri= ces increased with excess profits on t= op of what the monopolists and privil= ege holders would have been content with had they not held the monopolies/ privileges.

   That means waste of resources and possibilities<= /b>.

 

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 t= o 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<= /b>.

 

Some m= onopolists/ privilege holders are at the same time productive AND non-productive.

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Valuable monopolies/ privileges:

   Some monopolies/ privileges a= re without any or of minor market value, but many are extremely valuable bec= ause their holders are able to use the e= xcess profits or windfall profits= as purchasing power for their own purpose. Thereby the valuable monopolies/ privileges:

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-=   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 servi= ces, which leaves a reduced quantity of goods and services for unprivileged and under-privileged citizens to choose among at increased prices.

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-  deprive the Government of the income it creates by using its power to protect t= he 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.

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

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-  create poverty among unprivile= ged and minor-privileged citizens who d= o not receive big salaries or profits for supplying specialised services or g= oods either to the Government or to the wealthy holders of monopolies/ privilege= s.

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-  expand the gap between rich and poor people, which makes the society unstable<= /i> 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 alternati= ve to which is unemployment.

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-  destroy self-confidence and self-respe= ct among people who are deprived of their equal share of the va= lues 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.

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-  in the longer term sweep our civilisation back= to barbarism as it happened to the civilisation of Rome and to any oth= er 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 dr= ugs, explosives and other dangerous commodities; etc).

Tolerated monopolies/ privileges shoul= d 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 monopolie= s/ 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 foot= ing, 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 appreciate= d by people who want to argue against the proposal of abolition of monopolies and privileges as far as that is possible a= nd collection of the excess-profits and windfall-profits of tolerated monopolies/ privileges to the public p= urse 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 lan= d.

 

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. Thi= s one-way distribution practice contrasts the way the market normally works.

 

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

 

Some of the taxes will be used to provide the citizens with pub= lic service but it does not happen as a voluntary exchange via the market. If p= ublic administration provides the citizens with wanted services that private entrepreneurs are unable to deliver as good and as cost effective as the pu= blic service can, then the citizens will find taxes good for the economy and a blessing for the citizens. But if public administration doesn’t satis= fy the citizens in general they will find taxes a torment, and prefer it aboli= shed 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 competiti= on 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 t= hat by nature are monopolies, such as supply of water, electricity, gas, administration of main railways, and mail collection/ distribution; activit= ies 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 priva= te 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 organisatio= ns - 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 t= hat the excess profits of monopolie= s 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 depend= ent on charities and/or social security benefit, and destabilisation of the society.

&nbs= p;

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 futu= re.

 

 

 

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

<= i> =

Use of NATURAL RESOURCES such as:

o      = Areas on la= nd (for any purpose: production, residence, leisure, etc.);<= /p>

o      = Areas at se= a and under sea level (fishing, farming and hunting places, and resource extracti= on areas);

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

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

o      = Electronic = waves (for transmission of information);

o      = Scarce natu= ral 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 func= tion like exclusive rights to use of natural resources, such as:

o      = Cables, wir= es 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, road= s, bridges, tunnels, cables, and canals over public land, or officially regist= ered on private land (for transport of people and goods);

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

o      = Watermills, locks, dams, and water storages;

o      = Big power p= lants, (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 a= nd burying corpses.

 

Trade in DANGEROUS PRODUCTS such as:

o      = Nuclear pro= ducts;

o      = Drugs, medi= cine, 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, electr= icity, water;

o      = Erection of= and taking down huge scaffoldings.

 =

The list is by no means exhaustive; i= t 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, u= nder the headline “Measures against the bad effects of Monopolies/ Privileges= 221;):<= span style=3D'font-size:12.0pt;color:blue;mso-fareast-language:EN-GB'>

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

2)     Tolerated monopolies/ privileges run by public administration, or by private entrepre= neurs who forward the excess profit to the public administration, who use the rev= enue 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. &n= bsp; 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 <= span style=3D'font-size:13.5pt;color:silver;background:silver;mso-highlight:silv= er; mso-fareast-language:EN-GB'>-Citizens Dividend-= = - to all citizens having citizenship to the country in question whatever the citizen= ship 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. &n= bsp; 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 everyo= ne of

the citizens will enjoy their y= Equal Rights to the values of Common Property<= span style=3D'font-size:13.5pt;color:blue;background:blue;mso-highlight:blue; mso-fareast-language:EN-GB'>..

 

The result of using 2 will furt= her 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 Societ= y, 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 citize= ns will enjoy also s<= b>Individual Rights to the Full Results of their Lawful Exertions..

 

Public collected Rent of Land and us= e 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 syste= m against power brokers’ try to reclaim the “free lunch” of rental value that morally and rightfully belong to all citizens on an equal footin= g.

 

The reader's comments are ve= ry welcome. Please send a letter to:

Internat= ional Union for Land Value Taxation and Free Trade,<= /o:p>

212 Piccadilly, London W1J 9HG, United Kingdom,

or e-mail to:= = iu@inte= runion.org.uk