Globalization decreases the barriers for changes around the world. Changes work also within a country and the movements of outflows and inflows including imports and exports, financial flows, the migration of people, and traveling from one place to another place.
Henry George observed and promoted a “single tax system” on land rent or land value. Henry George also explained free trade in his book Protection or Free Trade. Fred Foldvary also explained the connection between land value taxation and free trade in his article “A Georgist Perspective on Globalization,” which also included free-trade elimination and also barriers on quotas.
George used the word “true free trade,” which focused to exclude of domestic barriers to trade by eradicating taxes on goods and services other than the land tax. Moreover, if a country has subsidies on exports to its selling the products below their average cost, this too reduces the efficient effect of free trade. This concept is in accordance with the principle of comparative advantage.
As a result, for example, Kuwait, Iran, Saudi Arabia, and Venezuela, having a comparative advantage in oil and gas or other natural resources for production, compete well with U.S. chemical production firms. Their opportunity cost is low. That makes their chemicals less expensive because many of the raw ingredients are produced in the oil distillery process. On the other hand, a teacher hires an assistant to type the notes, since the teacher's; time is used more productively in teaching services.
The developed countries produce more pollution than developing countries because of industrialization. They destroy the environment, as they do not pay for a reduction of pollution because that would increase of cost of production. The developing countries should pay for the social cost of their pollution. Most of the developing economies are agricultural, and their pollution infects the crops of farmers; they decrease production and GDP. Developing economies could reduce pollution and improve their economies by replacing taxes on wages and goods with a tax on pollution, in addition to land value.
Globalization includes flows of financial capital. Cash streams crosswise over limits to pay for products, coordinate speculations, and furthermore for portfolio exchanges. For example, when an inhabitant of one nation purchases the bonds and loads of firms in another nation. Genuine facilitated commerce abstains from meddling with streams of assets. There is a saying that money goes to where it is best treated.
Henry George also wrote on population growth. A denser population generates increasing returns due to a finer division of labor, with greater specialization. Immigration therefore can have positive effects, as both theory and evidence conclude that immigrants, being consumers as well as producers, do not reduce the demand for labor. The opposition is also due to culture issues. The Georgist position on immigration is to generally be permissive. Immigrants have been the foundation of the economic growth of the Americas.
Both free trade and the freedom of migration have positive economic effects, but pollution taxes imposed on developed countries give advantages to developing countries to control pollution and improve the environment, especially in agriculture based economies where industry is not based.
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Yousuf Shabbir is an economist working with Tax & Corporate Advisory Services in Karachi, Pakistan. He graduated from the University of Karachi with a masters degree in economics and finance. Shabbir is also a student of the Applied Economics Research Center. He resides in Karachi, Pakistan.