We live in an age of globalization, of greater international trade and finance. Globalization decreases the barriers to changes around the world. Changes work also within a country. The movements are inflows and outflows, including export and imports, money, and the migration of people as well as traveling.
The 19th-century economist Henry George analyzed and promoted the “single tax system” of using land rent or land value for public revenue. Henry George also explained trade in his book Protection or Free trade, and contemporary economist Fred Foldvary explained the Georgist analysis in his article “A Georgist perspective on Globalization” the free-trade elimination of tariffs and quotas.
George used the term “true free trade” which means elimination of barriers on trade and reduces the taxes on goods and services other than the land tax. True free trade fully implements the principle of comparative advantage, with neither taxes nor subsidies on goods.
As a result, for example, Saudi Arabia, Kuwait and Mexico compete well with U.S. chemical production firms. Their opportunity cost is low. That makes their chemicals less expensive. That's because many of the raw ingredients are produced in the oil distillery process ("Robust Growth"). On other hand, the teacher hire the assistant to type the notes an the the time the teacher spends in typing could be used more productively in teaching services.
A developed country typically generates more pollution than a developing country because of greater industrialization. These countries destroy the environment, as they are not required to pay for damage they cause. Most of the developing countries are agriculture-based economies with pollution infected the crops of farmers. If the developed country levies a pollution tax, it could and give some relief to the developing-country farmers. The developing countries would also benefit with a "green tax shift," a replacement of their taxes on income and sales with levies on pollution.
Globalization involves flows of funds as well as goods. Money flows across boundaries to pay for goods and also for financial transactions, such as when a resident of one country buys the bonds and stocks of firms in another country. True free trade also avoids interfering with flows of funds. There is a saying, that money goes to where it is best treated.
Immigration has been a major topic of policy in the more developed and relatively peaceful economies. Henry George argued against the Malthusian doctrine that food supply would not keep up with population. George analyzed that there are economies of density, so that a greater population generates increasing returns due to the greater division of labour.
The opposition to immigration is largely based on culture, including religious issues. The Georgist position on immigration is to generally be permissive.
The free movement of goods, funds, and people have wide long-run benefits. The contribution of Georgism is to advance the case for free trade to the "true free trade" of the abolition of all taxes other than on land, so that as productivity increases land rent, the benefits are shared by the whole population.
Foldvary, F. "A Georgist perspective on Globalization."
U.S. Bureau of Labor Statistics. "Robust Growth and the Strong Dollar Set Pattern for Import and Export Prices."
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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.