9 Problems With Progressivism

Progressivism, one-time white knight to the poor, has run out of steam and ground to a halt. Progressivism has stopped progressing. This is unfortunate, as the anti-social-welfare breed of nationalism that appears to be rising to replace it is, in many ways, even worse.

The progressive rallying cry always seems to be: “We need higher taxes to fund high-quality public services!”, but government spending in most countries is already between 30% and 55% of GDP ( “right wing” governments “only” spend 30% of GDP). How much more GDP do governments need before they can provide those mythical “quality services” that always seem to be just over the rainbow?

Progressivism is losing credibility, as a philosophy, because government spending everywhere is already so high that a significant increase would mean full-blown, state-planned communism, which, given its history, few people want. Normal workers on modest wages already see one-third to one-half of their salary taken by the state.

A few progressives have recently turned against democracy and believe people are “voting the wrong way.” But instead of asking “What’s wrong with voters?” and casting endless recriminations at conservatives, progressives should ask: “Why is progressivism failing people?” Instead of constantly grasping for ever more tax revenue, we should try to spend the considerable tax revenues we already collect to reduce poverty and want more efficiently.

I do not wish to imply that conservatism is the answer, indeed, conservatives share many (though not all) of the problems that beset progressives (such as neglecting the countryside and monetary policy cowardice) along with some new problems (such as a desire to slash much needed social welfare).

Nevertheless, it’s time to take a long hard look at the dogmas in the philosophy of Progressivism and the problems these create. Only then, can true social progress be achieved. This article aims to do that, listing some of the more serious problems within progressive politics.

 

Problem 1: No Clear Narrative or Philosophy

 

A hollowness resides at that heart of progressive ideology, it lacks a core narrative to answer what people are, and are not, rightfully entitled to.

Right wing libertarians assert that income tax is slavery, that the state cannot confiscate the value of people’s labour without claiming to own their labour – which is slavery.

The left-wing response is: “The State does own your labour!” they then appeal to a kind of “Creator State” elaborating: “The State has educated you. The State protects you from crime. The State has built the roads you travel on. The State has funded the research for the information you use. THE STATE HAS PRACTICALLY CREATED YOU!!! For that you owe The State an eternal, immeasurable debt of gratitude! If The State should demand 85% of your wages, you should be GRATEFUL for the 15% it leaves you!” The portion of income that modern states allow citizen-workers to accumulate resembles the peculium of ancient Roman slaves who, while formally obliged to hand their masters all the value of their labour, in practice, were usually allowed to retain a small Peculium for themselves as an incentive to work harder.

So what exactly are progressive views on our right to own the value of our own labour?

“Well sort of… as long as you pay income tax…so…not exactly…um…I don’t know…maybe people have a right to own a portion of their labour?”

But once we acknowledge state has the right to seize a portion of our labour, it is philosophically impossible to determine the portion we have a right to keep – 90%? 50%? 10%? 1%????

Most progressives don’t advocate a 90% income tax… yet. But progressives respond to every policy that takes a little more wealth from rich people, with: “Yes! We should do that! That’s progressive!” and respond to every policy that taxes rich people a little less, with: “No! We can’t do that! That policy is regressive!”

So what exactly is Progressive Politics progressing towards? Communism? After all, an infinite number of incremental policy changes, each taking a little bit more from the rich, will eventually leave them with no more than everyone else. And, indeed, many progressives look back to the upper income tax rates of 85-95% from the 1950s until the 1980s as “the good old days.” Do we really want exceptionally hard-working people, who take huge business risks to create value for customers, to be no wealthier than everyone else?

Income tax has philosophical problems, but, many would argue, a lack of income tax has even bigger practical problems.

What is often overlooked is that not all income comes from wages or the industry of particular individuals. A modest social welfare can be funded by taxing all income which work does not produce, such as the unimproved rental value of land, and distributing it throughout the population. Workers and businessmen can still retain the full fruit of their efforts.

This is the much neglected Land Value Tax that Henry George proposed in Progress and Poverty. It can be expanded to an equal claim of everyone to all value which individual efforts did not produce. A Georgist system of Land Value Tax simultaneously avoids violating the libertarian principle that a tax on wages is slavery but justly distributes economic rents to everyone equally as a modest basic income, so no one is left in destitute poverty.

 

Problem 2 : Neglecting The Credit Efficiency Of Social Welfare 

 

Existing social welfare isn’t doing a great job at eliminating poverty, yet most governments already spend 40% of their nation’s GDP. How much more social welfare can we afford to pay?

The answer is not to pay more welfare, but to pay the same amount out more efficiently.

Progressivism completely neglects the credit efficiency of benefits yet, if we paid it more attention to it, we could eliminate poverty without raising taxes by one penny!

An income’s stability profoundly affects its credit value. Bank managers prefer to lend money at low interest to applicants with steady jobs compared those on a short-term contracts – even if their contracts pays more.

Similarly, those who receive government benefits based on complex life circumstances and policy changes, which can be cut at any time, will find it impossible to obtain low interest loans from banks. The possibility of benefit fraud lowers the benefit’s credit efficiency even more. Even if you dutifully comply with all the legal criteria to receive a benefit, your creditor doesn’t know this, and will take the risk that you may be cheating and get cut off into account when calculating the interest rate to charge you.

On the other hand, a rock solid basic income, paid out to everyone, which was guaranteed never to get cut, could be used to get loans at much lower interest rates.

Self-sufficiency loans to set up homesteads are particularly relevant. A properly set up homestead should deliver all the homesteaders material needs for shelter, food and water. So once the homestead was set up, with capital purchased from a loan, the full (or almost full ) balance of the basic income could service the interest due on the loan.

In the case of homesteading, quality of life will be proportional to the capital the homesteader can raise to initially build the homestead. This capital will depend, not only on the quantity of benefit which the government pays out, but also its credit value.

Consider a government benefit payment of £10,000 per annum, with a 10% chance per year of getting cut off. If someone wanted to start a homestead with their benefit, the banker would have to charge at least 10% interest to cover the 10% default risk. This means that the £10,000 government benefit could, at most, service a loan of £100,000.

Now let’s consider someone on a guaranteed basic income of £5,000 per year, who wants a bank loan to set up a homestead. Because the banker knows the money will be paid in perpetuity, he charges 3% interest on the loan. Thus, the person receiving £5,000 of basic income can use it to service a £167,000 loan.

By minimizing a payment’s volatility, its credit efficiency can be increased many times.

The social benefit recipient wins! The tax payer wins! Everyone wins!

An advantage of providing for your own needs is that you don’t have to sell anything to anyone else, this makes it a completely secure economic activity that anyone can undertake. By facilitating homesteading, a very modest basic income, about the size of The Countryside Living Allowance could lead to conditions of secure full-employment for everyone.

Capital amplifies the productivity of labour while labour multiplies capital by rearranging it into higher value configurations. A nation’s wealth is proportional to the aggregate value produced and consumed. It doesn’t matter if the producer and consumer are different people or the same person. Basic income increases people’s access to capital. This will not only lift them from poverty, but will also increase their productivity. Capitalization raises productivity.

It’s not surprising basic income pilots discovered that giving people money improves their circumstances. What is surprising is just how little money it takes to greatly improve people’s circumstances. A major observed benefit of the Indian Basic Pilot Income study was it freed recipients from high interest loans.

At an abstract level, trust generates prosperity. Low interest rates are a sign of trust. When large amounts of trust are present in society, people can access the capital they need to purchase tools to raise the productivity of their labour. With less trust in the credit market, people can’t raise as much capital, to magnify their labour, and productivity suffers.

Income volatility damages prosperity, security and well-being at a fundamental economic level. Whether that volatility is due to unreliable benefits, or precarious employment in the “gig” economy, its economic damage cannot be overstated. UBI will reduce income volatility promoting credit, trust and prosperity in the process.

 

Problem 3 : “Free” Public Services Are A Terrible Way To Redistribute Wealth 

 

One of the greatest dogma that plagues progressivism is an obsession with tax-payer-funded public services. But, ironically, far from being a progressive way to distribute tax revenue, it is extremely regressive. Locations with the best schools, clinics, public transport connections, policing, etc., all command high rent and – as such – serve relatively wealthy people while the poor inhabit areas with bad public services.

(There may be a case for some state run hospitals serviced by ambulances for emergency cases.)

Progressives erroneously compare no public services and no social welfare benefits with public services and welfare benefits. But instead we should ask:

Assuming a given tax revenue, which use of it would most effectively alleviate poverty:

• Direct Cash Payments to Poor People

Or

• Providing everyone with “free” tax-payer funded public services

The answer is obvious: direct cash payments. Wealthy people will monopolize “free” public services available to “everyone” as locations near them will have higher rents.

Publicly running a service may sometimes be more efficient than privately running it (roads, for example). But this must be separated from any false notion that public services effectively redistribute wealth and alleviate poverty.

Localized tax-payer funded public services suck at redistributing wealth. If progressives abandoned their dogmatic adherence to them, we could reduce both taxes and poverty.

 

Problem 4 : Monetary Policy Cowardice

 

Back in 2008, global finance nearly collapsed. Since then, most people, including mainstream progressive politicians, have stuck their head in the sand and have done practically nothing to stop it happening again. Perhaps because the problem just seems too complex and thinking about banking gives many people (including politicians) a headache.

Averting another financial crisis is actually fairly straightforward. All that is required to stabilize the economy and prevent a recession from ever happening again is for the central bank to nationalize all deposits. And in order to prevent our lending system from driving inequality, by handing newly printed money to rich people ( which it currently does ), the central bank should, to the greatest extent possible, strive to evenly distribute out all newly printed money.

Most progressive politicians in major parties don’t have the guts to talk seriously about bank reform. Even though it’s the most immediate existential risk we face. Climate change, however horrifying, will take 30 to 100 years to happen. A catastrophic financial meltdown could easily occur in the next five years.

Admittedly, newly created paper cash, printed by the Bank of England, already does fund the national treasury through the mechanism of seigniorage. The problem, however, is that 97% of newly created money is digital. Only by nationalising deposits can the government ensure that the public receives more than 3% of the benefit it deserves to receive from newly created money.

 

Problem 5 : Income Tax

 

Income Tax is socialism’s greatest mistake. How do we help workers through taxing their wages?

The old-school left, correctly or incorrectly, thought workers were the producers of wealth and socialists originally struggled to secure for labourers the full value their labour produced.

Now, obviously, skilled managers and entrepreneurs also contribute to the effectively organising the productive economy. Nevertheless, a class of speculators gets rich without producing value through their efforts (i.e. speculation on land as well as other financial assets with cheap credit ). Indeed, many speculators destabilize the economy through their activity.

The aim of modern governments (including nominally socialist progressive ones) appears to be the exact reverse of 19^th century socialism, namely, to tax the wages earned by the nation’s productive workforce and redistribute them to those who don’t work at all!!!

Income tax plus National Insurance can easily add up to 30% of even a modest salary, while businessmen must pay VAT as well. Where does this money, seized from hardworking people, go? The answer: both downward and upward. Some of it goes to people who don’t work at all, this may be acceptable if their need is great, but wait a minute…how do you think all those “quality services” – which progressives keep promising to spent your taxes on – will effect nearby location values? That’s right! Through the mechanism of land price appreciation, the government seizes the wages of hard-working tenants and uses them to line the pockets of landlords living close to new schools, hospitals and railway stations. And those in political circles, with inside knowledge of future government projects, can buy suitably located land and line their pockets with even more confiscated wages.

While the government only lets businessmen and workers keep a modest peculium of their wages, a tax savvy homeowner, who changes his primary residence strategically, can avoid paying practically any tax at all from the capital gains produced by “quality free public services” built in his area with tax seized from the wages working tenants.

Both left-wing and right-wing governments have presided over these policies. Should progressive, therefore, be surprised if the recent choices of the electorate have been somewhat – shall we say – erratic? Should progressives and home-owning, champagne socialists be shocked that working tenants don’t trust them anymore?

A TRUE Socialist Government should tax capital and PAY labour. Today governments tax labour and use the wages, seized from workers, to inflate capital. Some capital results from hard work and should not be taxed, but a land value tax and universal basic income combined with a radical reduction – perhaps elimination – of all taxes on wages and productive business would do much to get back to the pro-worker ideals of 19^th century socialism.

 

Problem 6 : No Resistance – And Even Support For – Outrageous Planning Restriction Laws

 

Progressives often talk about homelessness and poor housing conditions. Repeatedly asserting we must do something. The funny thing is…they don’t ever seem to want to build homes.

How exactly do you solve homelessness without building homes?????

I’m not joking. Every time I suggest at progressive events that the first – and maybe only – thing we need to prevent homelessness it to stop passing laws that FORBID people from constructing homes on agricultural land, the lack of enthusiasm and discomfort is palpable. The usual response is:

“But, if we get rid of planning regulations…won’t that produce shanty towns?”

No one wants to live in a shack. Therefore, people with an option not to live in a shack, will take it. Shanty towns are produced by a lack of capital, not lack of planning regulations. A modest basic income with a high credit value will ensure everyone has enough capital to construct high quality accommodation. Since anyone with a choice between high quality accommodation and a shack will choose high quality accommodation, a UBI that capitalizes everyone sufficiently will prevent shanty towns without any planning regulations.

Furthermore, if living in a shanty town really is a better option to sleeping under a bridge or sleeping ten to a room in slum conditions, then let people build shanty towns!

The general disdain of progressives towards unregulated house building has serious consequences. Tony Blair’s so-called progressive labour government presided over the largest house price rise in U.K. history. If houses were built freely, immigration might be positive, but immigration combined with building restrictions puts pressure on the housing stock. For homeowners with businesses, cheap migrant labour is great. They can hire people for less wages, the cost of services goes down, and the price of their house goes up. For tenants, the effect of migration is very different – their wages go down while their rent goes up.

Restricting people from building shelter for themselves is not “a policy tool”; it fundamentally violates our human rights. Everyone should have the right provide for their needs on a planet we all share – including the provision of shelter – without some local councilor interfering. The UN Declaration of Human Rights mentions the Right To Housing in Article 25. While this right to housing does not imply the right to have someone else build a house for you, it must at least mean we have a RIGHT to build our own house without state interference. In this sense, laws restricting house construction on agricultural land violate the UN Declaration of Human Rights.

Progressives, who supposedly have the interests of the poor at heart, should passionately oppose planning restriction laws that increase levels of homelessness. Instead they tepidly accept them – and sometimes even support them, selling out homeless people for a nebulous belief it will benefit the environment. (And their wallet, if they own a home).

 

Problem 7 : Bias Towards Cities

 

Since the industrial revolution, there has been a political bias towards urban centres and progressivism has been no exception. The arrow of human progress is thought to point towards urbanization. Greek cities are viewed as the crucible of human culture while the mechanization of agriculture has freed people to devote their labour to greater things like manufacturing and science.

But as David Graeber observes much of what we do in cities is just mindless bureaucracy and, given cities promote stress and many mental illnesses, if we aren’t occupying ourselves more productively in them… should we even be there at all? The miniaturization of manufacturing processes, such as 3D printing technology, may render large urban factories unnecessary, while cheap communication technology enables low density populations to productively coordinate tasks over long distances. Technological developments like these may soon reverse the trend in urbanization. But even if productive work remains to be done in cities, homesteading in the countryside has an important role to play in buffering wages and facilitating a dynamic job market without structural unemployment.

However, despite the importance of the countryside in buffering the urban economy, in general, politicians neglect rural regions. This needs to change. A Countryside Living Allowance or universal basic income would go a long way to re-capitalizing – and re-vitalizing – the countryside.

 

Problem 8 : Identity Politics At The Top Distracts From Poverty And Precariousness At The Bottom

 

Most progressive politicians don’t have the guts to de-fund public services and redirect tax revenues towards reliable direct cash payments with a high credit value to poor working tenants. Most progressive politicians don’t have the guts to institute a land value tax or nationalize deposits to prevent future recession and gain a new source of public revenue that doesn’t drag down productivity. Most progressive politicians don’t have the guts to throw all the laws that force people to apply for planning permission to build on agricultural land in the dustbin. No, major policy changes like these – which might actually help people – are too difficult and too controversial.

Instead, let’s focus on a few really talented women who don’t get the promotion they deserve. Let’s aim to increase the proportion of female CEOs in fortune 500 companies from 5% to 10%. Never mind if homelessness or unemployment goes up. Never mind if people’s jobs become more insecure. If there is greater diversity among business leaders, and high ranking government officials, we can all pat ourselves on the back for a job well done.

90%+ of men and women, of every race and background, will live and die working lousy jobs at the bottom. It is, of course, an issue of some importance that people are denied promotional opportunities as a result of factors which are unrelated to their suitability to perform a given senior role. But the fact remains that most people will never get promoted to substantially senior position anyway – at any point in their lives.

In many respects, getting different identity groups to root for their “elite identity heroes” and then encouraging the proles to argue about whether a new positive discrimination law is justified is more to distract them from a system that grinds many into the mud, than justice.

 

Problem 9 : Love Affair With State Education

 

Progressives love state-funded education. But there is actually no good reason whatsoever to nationalize education. It make sense to nationalize some natural monopolies to stop private owners, in the absence of competition, from hiking prices far above the cost of the services and pocketing the difference. This may apply to railways or perhaps even water, but it certainly doesn’t apply to schools. If one school charges parents too much, there is absolutely nothing to stop a competing school opening nearby and undercutting the first on price.

Don’t we trust parents to judge if a given private school will give their kids an adequate education – possibly by reading the reviews left by other parents of that school?

Some may protest: “But without state education – poor children will enter adulthood less well-educated than rich children!”

Firstly, with state education, poor children already enter adulthood less well-educated than rich children due to higher house prices in catchment areas next to good schools.

Secondly, it is false to compare giving poor children a free state education and giving them nothing. A better comparison is between giving poor children a free education or giving their parents the same tax revenues in cash that would otherwise be spent on education.

If everyone was given cash, everyone could afford to buy their children a private education.

Furthermore, parents who find it hard to get jobs, with lots of time on their hands, could use that time to home-school their children and use the money (that would have otherwise been spent on state education) on food instead. Poor parents in an out-of-the-way locations could also save money by not driving back and forth to and from school 5 days a week. The life prospects of home schooled children are no worse than those who go through the normal school system, indeed many of them are more civically engaged and suffer less anxiety issues. Lack of money is a major stressor not just for parents, but for children as well. It seems to me that the children of parents with little in the way of money and plenty of time would be better off if the state paid their parents to home school them compared with spending the same money on state education.

Before the internet, large centralized educational institutions played a crucial role in disseminating specialised information. In this age of chatrooms, Amazon, online courses, educational YouTube videos, it is time for progressivism to accept that centralized institutions are no longer vital for education. Children still need real people to coach them, but the ready availability of vast information resources mean parents can educate their children without possessing a wide expertise in every subject themselves.

Let us also not forget the money and CO2 emissions involved in daily trips to school (possibly as much as 4 per day or 20 per week).

Another little secret of state education is the job market is changing so rapidly we don’t fully know what we should even teach children to prepare them for the future.

Another mistake that progressives, like Piketty, make is believing that state education promotes social equality. The main role of education is not to equalize, but to differentiate society into the worthy and the unworthy, the smart and the stupid, those with high marks and those with low marks, those who’ve passed and those who’ve failed. Quite possibly a major reason why progressives advocate education so much is because many of the most prominent ones are professional educators and college professors themselves. It’s true that providing a free education to poor people is better than not giving them anything, but just giving poor people that same money and letting them decide whether they want to use it:

• To pay for private education
• To cover household bills while taking an online course
• To invest as capital to start a business

Would be an even better way to promote social equality.

Arguably, the Progressive demand: “We need the state to provide everyone with a free college education” is little more than an appeal to forcefully seize money from hardworking tax payers and place in the pocket of college professors.

BTW I firmly believe that everyone should have the financial means to buy a decent education, if they so choose, but it is ultimate up to the recipient of that money to decide whether a college education is the best investment for them.

The love for state education is more about perpetuating the myths of a Creator State that moulds you, owns you, and has the authority to tax you than any rational consideration.

Education is important. Publicly funded, state-run education is not.

 

Summary

 

The main reason the Philosophy of Progressivism is stalling is because state spending, as a percentage of GDP, is close to the maximum that people could reasonably want in most countries. Yet despite most governments spending 40% of their nation’s GDP, many social problems persist – and in some respects intensify.

Persistent social problems have fostered a desire for change. This can explain the rise of the far left and the far right. The far left is gaining support because a substantial further increase in state spending to – say – 70-90% GDP is more or less full-blown communism. The far right is gaining support by claiming that our social problems are due to too much government spending.

So do persistent social problems like suicides, homelessness, drug addiction and mental health epidemics mean that our current mixed economies are finished? That Progressivism has nowhere left to progress? And that its seeming incapacity to address these persistent problems will result in a general disillusionment that will cause public sentiment to shift to one extreme or another?

A third option exists. Keep the mixed economy but spend tax revenues more efficiently. This involves:

• Cutting Public Service Funding
• Introducing Basic Income (While preserving other welfare benefits)
• Erase all Legislation that Restricts Building Houses on Agricultural Land
• Promote Self-Sufficient Living in The Countryside ( By making low interest homesteading loans available and promote learning the relevant skills needed to support yourself)

It’s truly depressing how few politicians from the main parties advocate even one of these desperately needed solutions. As the system approaches collapse, capable and bold leaders are needed more than ever. But looking at Western democracies today, there has never been a more incompetent troupe of clowns in charge of decision-making at the highest level. Andrew Yang is the only serious political candidate anywhere who’s proposing any of the policies we need for real reform.

Some may not like the “Cut Public Services” part of my proposal. But the money for basic income has to come from somewhere, and public services are the most regressively distributed form of government spending. Sucking the private sector dry with even more tax is not a sensible option.

Even if existing social benefits are never removed, as people’s lives improve and society becomes more prosperous, less people will qualify for them – simply by virtue of being better off. This will free up money to phase out income tax, and phase in land value tax.

 

Hopefully we can then have a balanced, fair, truly progressive economy which works for everyone.

 

John

 

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