.

Mental health stands between spiritual and physical health and is highly dependent on both.

All three levels of health, both in the individual and in society, are influenced by social and economic conditions past and present.

Many years ago Mr. Leon MacLaren, the Founder and Head of the School of Economic Science, London, and author of "Nature of Society", stated that " you cannot study economics without also studying philosophy".

This can be taken further in that "you cannot understand the health of a nation without an in-depth understanding of both economics and philosophy".

Outdated, theories, opinions, beliefs and customs often inhibit rational thinking and meaningful research into ways of improving the welfare and health of both the individual and the nation.

This presentation attempts to break out of the present tunnel vision, to look at the various aspects of the health of our nation as a whole. The welfare of the individual effects that of the nation.

Economics and land enclosure have a direct bearing on the level of unemployment; unemployment leads to poverty, poverty results in ill-health at all three levels and inevitably fosters social unrest, crime and violence. All of these place undue strain on the individual and on health services. Every social ill has an adverse effect on mental health. A vicious circle!

The key to unlocking the potential of the nation, the creation of wealth sufficient for all, economic independence and restoration of individual dignity, lies in a radical change in the concepts of national revenue collection and of land tenure.

HISTORICAL OVERVIEW

Our present systems of revenue and land tenure have been inherited from the past.

Traditionally landlords had duties towards the state and were responsible for maintaining law and order. There were few if any taxes similar to those so common today. The workers and tenant farmers were poor but did not live in poverty. There was normally the option of fending for them-selves on communal land.

In time, land enclosure denied people access to the commons and the opportunity to meet their own basic needs. At about the same time landlords used their power to change laws in their favour, evading their natural duties and passing the burden onto the state and the community.

Private ownership of land provided a source of enrichment for the few at the expense of those who were denied access to land.

The wealthy landlords sponsored most universities; thus economic education became biased in their favour. The classical economists such as Adam Smith, David Ricardo and Henry George were gradually relegated to the past as being no longer relevant. To this extent, modern "economists" hardly know of their existence let alone understand their teachings.

It is only necessary to look at the state of modern societies to realize that economics has taken a wrong turn. In spite of the total generosity of nature, all the modern technology, the ability to produce untold wealth, and rapid communication, a large section of humanity lives in abject poverty. Masses are unemployed; tens of thousands die daily through war and starvation.

Is this what the Creator intended when he gave Man freedom of choice?

UNEMPLOYMENT

The present system of taxation can be clearly seen as a major cause of unemployment here in South Africa.

A series of simple graphs will be presented that show how our taxes collectively,

1. Increase the cost of production beyond the market value of that production. This applies to a large amount of poor quality land and also land that is more remote from markets. The result is that both land and labour are rendered idle.
   
2. Increase the total cost of labour beyond the productive value of that labour, even on prime land. This results in labour being replaced by machines. Both skilled and unskilled labour is affected.

A large number of previously viable industries in the former independent homelands were forced to close down when they came under the RSA tax regime. In some areas very few survived.

Tens of thousands of people were suddenly deprived of employment. This happened in areas where there was no alternative form of employment, nor the opportunity for self-employment.

Poverty forced the migration of people to urban areas and resulted in large squatter camps and an ever increasing need for new subsidized housing. But most of these people came from somewhere where they previously had a roof over their heads.

Most of the people in squatter camps do not have marketable skills and many are poorly educated. Even when given houses by the state many cannot afford to live in them.

The whole exercise has resulted in deteriorating quality of life, unhealthy living conditions, increasing health hazards and injury through crime and violence. All of this imposes additional strain on national health services.

Until material poverty is reduced, what chance is there for improving mental and spiritual health? The overall cost to the nation cannot be measured in monetary value. Poverty also leads to an increase in gambling and domestic violence. There has been an alarming increase in gangsterism and drug dealing, all part of the general decline.

So where does the turning point come from? Who is prepared to look below the surface and tackle the major issues?

Who is prepared and able to set the guidelines towards a healthier society?

CONSIDERATION

The Preamble to the Constitution of the Republic of South Africa states:

"We, the people of South Africa,

"Believe that South Africa belongs to all who live in it, united in our diversity.

"We therefore, adopt this Constitution as the supreme law of the Republic so as to -

"Improve the quality of life of all citizens and free the potential of each person;"

Beautiful and encouraging words to raise the hopes of all our people!

But what are the facts of the situation?

• Has the health of the nation improved materially, mentally or spiritually?
  
• What has government done to level the playing fields other than drive away the trained people most needed to improve the health of the nation?
  
• What has the budget done to decrease unemployment, poverty and the causes of bad health?
  
• Must we sell our nations birthright at fire-sale prices to temporarily bail us out of debt?
  
• When will government realize that some of the professional advice that they get is biased by personal agendas?

PROPOSAL

Since South Africa belongs to the people of South Africa and,

• since it would not be practical to cut the country up into equal proportions and,
  
• since some land is far more valuable than other: Why not simply let everyone who has ownership or tenure of land,
  
• render to the community an annual rent related to the annual economic value of that land?
  
• This annual Rent payment must be directly to government. It must not be an additional payment but a payment in place of all existing taxes.

TAXES ARE A DIRECT CAUSE OF UNEMPLOYMENT

David Ricardo defined economic Rent of land as the excess of production on that land compared to the production on the least productive land in continuous use. It is based on equal application of capital and effort. This Rent is normally taken as the annual amount that would be paid for the use of that land if it were free from man made improvements.

Rent has traditionally been capitalized over a twenty-year period to give a market value. Whilst annual Rent would be a fairly consistent amount for existing conditions of potential production, the corresponding land market values would vary with changes in interest rates and levels of taxation.

Graph No. 1 shows graphically, on a Log scale, the production on various sites across the country, ranging from the most productive to the least productive land in use.

When the cost of inputs of materials and services are taken away you are left with a value added curve. Remove from this value-added curve the return to labour and capital then what is left approximates to Ricardo's Rent curve.

The Rent curve runs to zero at the margin of production, or in other words, the least productive land in continuous economic production.

Graph No. 2 shows the effect of taxation. All taxes, both direct and indirect are collected together and then deducted from the original Rent curve. It does not matter where and how taxes are imposed, they eventually come out of Rent. For the purpose of clarity, the original Rent curve is here spoken of as the Natural Rent, excluding taxes of any sort. When taxes have been imposed then what is left over is the Economic Rent.

Where the Economic Rent curve strikes the base line becomes the new or Economic Margin of production.

All the land between the original or Natural Margin of production and this new or Economic Margin of production will soon go out of economic production. Losses may be absorbed out of capital but this cannot continue for long.

Production of wealth stops, labour becomes unemployed, taxes dry up, and society is left with the burden of additional poverty and all its related effects.

• This is the fulcrum point of the economy!
  
• This is where the nation's health is put at stake.
  
• This is the undeniable fact that economists turn a blind eye to!

However this is not the end of the story. The following graph takes it still further.

Graph No. 3 shows how the national health is further destroyed by land speculation.

The existing system of taxation and land ownership encourages speculation in land. This can be done at very little cost but with anticipation of large unearned profits. Land is either withheld from use or under-utilized.

Even prime land is kept out of production and often out of the tax-net. It produces no national wealth and provides no employment. Yet unrealistic prices are demanded from anyone who would put it to good use.

The taxes lost through this anti-social behavior have to be found from somewhere, namely increased taxes paid by others. This is shown as secondary taxation in the graph.

The Economic Margin is moved from (1) to (2) on the graph and the economy, employment and the health of the nation suffer a further setback.

All land from line 2 on the graph through to the Natural Margin has now been rendered unproductive. This land now has no annual Rent value but the unfortunate fact is that it still has a speculative value and an unrealistic market value.

This sub-marginal land is not readily available for subsistence farming and is locked out of use.

If the unemployed had ready access to this land, then many of them could once again cater for their own basic needs and live under healthier conditions. They could restore their personal dignity and improve all three levels of health.

POSSIBLE SOLUTION

Graph No. 4 provides the key to the whole problem of National Health.

Returning to the basic proposal given earlier, if all existing taxes were repealed or done away with we would revert to the original Natural Rent curve and Natural Margin shown in graphs 1 and 2.

Collecting all the Rent for revenue instead of present taxes would produce far more revenue than presently collected. It would only be necessary to collect about 80% of the Rent to meet all government needs.

Collecting revenue as a percentage of annual rent will result in a different Economic Rent curve. This will only go to zero at the Natural Margin of production. Large amounts of land presently rated as sub-economical will be rapidly restored to use.

Speculation in land will become unprofitable and land currently withheld from use will soon be brought into best use or sold at reasonable prices to those who are willing and capable of using it productively.

There will be an increasing demand for labour since it will be freed from all existing taxes.

Land beyond the margin of production will still have no rental value but will loose its speculative value and become freely available for subsistence living. Those who choose to use it will pay no taxes of any sort. Whatever they produce will be entirely theirs.

The economy will very soon establish a growth rate unprecedented in this or any other country.

This annual Rent should be collected from all land that has a market value. The Rent will be related to the land's natural qualities and to its locational advantages as expressed in land values operating in a free market under the new conditions.

• All economic advantages eventually find their home in land Rent.
  
• Land monopoly is the father of all monopolies.
  
• Land Rent is the most equitable source of revenue.
  
• Land Rent is the only source of revenue that complies with Adam Smith's canons of taxation.

In "The Wealth of Nations", (1776) V2 P307, Adam Smith stated that "The subjects of every state ought to contribute towards the support of government as nearly as possible in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state." Rent as revenue collects most from those who enjoy the greatest benefits from society and removes all tax burdens from those who receive the least.

It provides the most effective and just means of levelling the playing fields between the privileged and the unprivileged; achieved at the least cost to society.

Rent as revenue will be the easiest and least expensive means of raising revenue, and the most difficult to evade. It will reduce the manpower necessary for revenue collection and the cost to business of maintaining the currently unproductive mandatory records. High level skills will be redirected towards improved production rather than tax avoidance.

Since land cannot be hidden and its value is established in an open market, a land tax is therefore the most transparent tax system, avoiding both favouritism and the incentive towards corruption.

Unlike other taxes, Rent collection encourages best use of land in accordance with the consent of the community. It encourages increased production at lowest cost and provides a large incentive to full employment and full land utilization. This makes it the most sustainable system, as economic growth will constantly increase the tax base.

The removal of all taxes from the least productive land will stem, if not reverse, the tide of migration from rural areas to the cities. It will encourage the growth of rural communities and villages, providing healthier living conditions and a better quality of life.

The change to a land based tax must be accompanied by security of tenure, which is necessary to promote capital development and economic growth. Only by producing wealth will it be possible to pay the land Rent.

The price of goods will be reduced when existing taxes on production and at the point of sale are abolished. This will improve domestic markets, reduce inflation and promote foreign trade.

The collection of state revenue based on a percentage of the market value of land or a larger percentage on the annual Rental value will change people's attitude towards land use and ownership. It is the most efficient way of bringing about the redistribution of land and of providing opportunity to restore family life.

The above proposals will play a major part in reducing the present wage gap, in increasing employment and living conditions and providing a firm base for physical, mental and spiritual health.