As the FT notes this morning:
It is fashionable these days to portray London as a nascent city-state, a world city pulling away in wealth and status from the rest of its benighted country — “a first-rate city with a second-rate country attached”, as one American working in London's financial district put it.
Now I should add that the article half-heartedly concludes that such a separate City state is for now impossible in the current UK political climate. However, the article still seems to me to be an exercise in kite flying for an idea that it its author, Brian Groom, clearly has sympathy for and for which he perceives there to be a groundswell of support, at least within the City's limits.
As he puts it:
A low-tax London could set policies as international trading hub, while whatever was left after London and possibly Scotland had been carved out could, for example, aim to encourage manufacturing while ridding itself of England's centralised government system.
Yes, that's fantasy for now, but someone clearly has that fantasy. And the reality is that those who have that fantasy do want tax haven London to break away from the rest of the UK.
Don't rule out the suggestion gaining momentum as the 'recovery' begins and those in the City see themselves being weighed down by the need to redistribute what they see as their wealth to the regions of the UK. Then the clamour for London to keep what it sees as its own wealth may create a real divide in England, let alone the UK.
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I’m not sure it’s fantasy, Richard – we’ve got it minus the ‘encourage manufacturing’!
I was thinking about the phrase ‘wealth creator’. The City does earn a lot of money and its role in banking, insurance and investment is a vital one. It earns foreign currency and contributes about 12% of taxes (according to a quick search.) However, the vast majority of transactions through the City are moving money about to earn more money. There is no outcome except an increase in wealth for those own it or can manipulate it.
In Robinson Crusoe there is a second wreck and Robinson finds a drawer full of gold coins which he throws down in disgust. He cannot exchange them for real wealth i.e. goods and services. Is it not true that the wealth creators are, overwhelmingly, the people who provide services and make goods? We need capital (stored work) management skills (and raw materials) and labour to produce real wealth. We are-to coin a phrase-‘all in it together’.
Aristotle got it right – you can’t really make money from money
Of course you can. (My late father always said the opposite.) That’s exactly what capitalism does. If you have money you can get some more without lifting a finger – or at least by just picking up the phone and dialing your financial advisor.
So, the City of London as England’s Monaco? And the Lord Mayor as its version of the gimcrack, vaudevillian House of Grimaldi? (The House does share a patronym with a famous clown).
Well, one thing’s for sure – the City won’t need to build any Casinos, as it’s already one big casino, withe the odds heavily stacked in favour of the House.
And will they rebuild the Walls and Gates? They’ll need to, given the opportunity offered for cross-border smuggling. And anyhow, the City gents and ladies are already well used yo living in gated communities, keepoing the common heard well at a distance. Odi profanum vulgus, et arceo, as the poet Horace has it “I hate the common herd, and keep tham at arm’s length”,
It is really true that Investment is a vital role,as a matter of fact without any investment the city of London will be no longer known.
I’ve already suggested, in a letter to the FT, that this could be achieved by adopting Herbert Morrison’s 1939 ‘Site Value Rating for London’ bill.
Could we then have the rest of the land back into communal ownership? If so, I’d say yes, let’s do it.
There is no need to change ownership – it’s never going to happen anyway. If you nationalised the land you would still have to create a market to establish the rental value to charge, otherwise you end up with corrupt or totally inefficient allocation. You socialise the rent, not the land itself.
So it’s ok for the Queen to keep it all?
Well, I’d get rid of the monarchy, but since the queen neither has beneficial use of nor rent from total UK land, I don’t see the relevance here. She and Charles Windsor would, of course, have to pay LVT on the land which they do use.
The Queen, as Monarch, is the head and so the continuation of the essentially feudal system we still have in place in this country. If we’re going to throw off the shackles, she’s a great place to start. It would be nice to see Her Majesty’s tax havens under new ownership too, they need to be dragged out from behind the shelter of the Crown. If we were to start lower in the food chain say with the Duke of Westminster and charge him a land value tax, which would arguably be a more direct route, I bet we’d then be met by platoons of Old Etonian lawyers all swearing blind the land actually belongs to the Queen so he was ineligible. The Monarch, of course, would then field her platoons of Old Etonians swearing to exactly the opposite. Say hallo the long grass. Centuries later, the case would still be being debated once every few decades and things would be no different. That is how the game is played. Remove the Monarch and a lot of that nonsense would be stillborn.
I don’t believe we’ll ever do this lawfully. The whole point of the law in England is the preservation of the status quo. I have no doubt this will become apparent to all over the next few years.