Most people know the game Monopoly. But few are aware Monopoly was inspired by political economist Henry George’s warning against a dystopic society where land, water and minerals are owned by the dominant few.

To win in Monopoly, first you buy natural resources. Then you monopolise the land. Add some houses and hotels. And finally, force your adversaries into bankruptcy. In the game, it helps to be strategic, but mainly it helps to be lucky. Lucky to arrive first. Lucky to be able to hoover up the best land. In the end, lucky to crowd out the others, making them indigent losers.

Henry George was a brilliant self-taught 19th century American political economist. An advocate for free-trade and an opponent of protectionism, George is however best known for his criticism of the monopolisation of natural resources, arguing this both inhibits economic efficiency and is manifestly unfair. To achieve natural resource equality, George argued natural resources should be taxed at the level it would cost to rent the “unimproved” land. These taxes could be used to abolish other taxes (George’s position was to abolish all taxes except land tax), help fund government expenditure, such as the military, or redistribute in equal proportion to citizens.

Georgism is not an argument for material equality in any meaningful sense. Equal natural resource ownership is consistent with large levels of inequality when it comes to income and the ownership of non-natural assets. A Georgist might argue individuals own 100% of their labour income; that the industrious builder deserves his multiple houses (but not land), cars and boats, and that these are his alone; that the tech entrepreneur deserves her billions but has no right to buy up huge swathes of land. A Georgist position is consistent with minimal state intervention across welfare, education funding and paid parental leave.

The ideas of Henry George have garnered support from various quarters. Economist Joseph Stiglitz has argued Henry George’s proposal could fund the optimal supply of local public goods. Leader of the Chicago School of Economics Milton Friedman said, “in my opinion, the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago”.

One reason why equal natural resource ownership is preferable is because the alternatives are so underwhelming.

The alternatives of the ideological left, crudely speaking, have disastrous economic consequences. Under collective ownership, government ineptly decides what is produced from natural resources, undermining individual choice and failing to respect citizens. While under common ownership, people use natural resources whenever and however they choose, destroying the environment and economy, as predicted by the tragedy of the commons.

The alternative approaches of the ideological right, again crudely speaking, have their own problems. Primacy is given to first arrivals (though curiously, this line of argument is seldom extended to First Nations people), treating citizens unequally. Like Monopoly, first arrivals win, and second arrivals lose. These arguments typically rest on the ambiguous liberal Lockean proviso that “enough, and as good, left in common for others” or the harsher libertarian Nozickian argument that non-landowners need only pass a subsistence baseline living standard (essentially, non-landowners can eat and have water). But these claims ignore that natural resources are not made by anyone. And if no one has done anything to deserve the unimproved natural resources, and citizens of a country are equal, why are they granted such unequal rights over natural resources, the literal foundation of a country?

To Henry George, every citizen has an equal moral claim to the earth and without this, there is no equality among citizens.

In Australia, we are something of a Hasbro Monopoly ‘Special Edition’. Tech billionaires and their ilk hold some hundreds of millions worth of natural resources, while the mob from Broken Hill have somewhere closer to, and more likely very near, zero. Foreign investors such as Canadian pension funds and the Chinese Government own 14% of Australian agricultural land and 11% of Australian water assets.

Overall, Australian natural resources are worth more than seven trillion dollars (about 85% of which is land, driven by city land values), equating to around $300,000 per person. However, the bottom 20% of Australian households (typically younger folk, most likely regional or outer suburban people) have an average natural resource wealth of under $20,000 (and an average net wealth of around $25,000).

Yet there are reasons to be optimistic. The ACT is 10 years into their 20-year plan to abolish stamp duty and replace this with a land tax, providing instructive “dos” and “do nots” for other jurisdictions. And the NSW Government, with a coalition of support from real estate bodies, accountants, economists and community representative bodies, has proposed a land tax which sensibly considers a gradual introduction of land tax, ensuring fairness for those who have already paid stamp duty, although the proposal insensibly considers making land tax optional.

Overtime, a NSW land tax could be used to reduce other taxes, such as payroll tax, levied by the state government, or income tax, levied by the federal government. Reducing income taxes would reverse the peculiarity of the Australian tax system that we socialise the largely privately created wealth of labour, and privatise the naturally created wealth of natural resources.

Economists boast that a land tax boosts economic productivity, stimulates investment and increases efficiency, all neat reasons for a land tax. But the overwhelming case for an Australian land tax is fairness: that Australian dirt, water, ore and air, are owned by each Australian equally. The overwhelming case for a land tax in Australia is to ensure we don’t become a game of Monopoly.

Monetary policy has yielded substantial social and economic benefits to modern economies.

Not least the achievement of low and predictable price stability. But to whose benefit? 

It’s no secret that monetary policy increases the wealth inequality gap. That’s because it benefits those with assets, and by doing so it widens the chasm between the very rich and everyone else, making many Australians – in particular, the least financially secure – worse off. 

While governments and central banks are openly aware of the inequalities these policies create, they have not taken measures to appropriately address the issue – the first step of which would be to update the RBA’s mandate. 

Let me explain why. The Reserve Bank of Australia (RBA) has again announced that it’s kept the official cash rate on hold at 0.1 per cent, with the possibility it will remain thus until 2024. An RBA document released under a Freedom of Information request estimated that a permanent 1% cash rate reduction increases house prices by 30% over a three-year period. 

For a middle-class family who own a $800k (median Australian) home, a 1% interest rate reduction increases their wealth by $240k. For the very rich who own a $100m portfolio of properties, their wealth increases by $30m, a windfall gain $29.76m greater than that of the middle-class.  

For the one-third of Australians who do not own a home, not only does their net wealth remain unchanged, but the cost of entry becomes substantially higher. They are forced to work, save and pay more for essential assets such as housing, perpetuating the cycle and widening the gap. 

The fiscal equivalent is government awarding a grant of $30m to people with $100m in assets; $240k to people with $800k in assets; and nothing to people without assets. 

You don’t need to be an arch-communist to consider these outcomes unfair. However, the nature of the unfairness will depend upon the theory of justice invoked. For example, equality of outcome theory finds the unequal impacts of monetary policy unjust because Australians end up with different outcomes.  

Alternatively, a Rawlsian theory of justice contends that social inequality is permissible only where the inequality benefits the least well-off to the greatest extent possible – a principle known as the difference principle.  For a Rawlsian, existing monetary policies are unjust because there are alternate policies (including tax and transfer and direct cash transfer policies), that would be of greater benefit to the least well-off members of society.

The theory of justice I find most compelling is equality of opportunity. Like most theories of justice, equality of opportunity can be interpreted in different ways. What I have in mind is substantive equality of opportunity theory, which holds a fair society as one where individuals with the same level of talent and motivation, have the same prospects for success, regardless of their place in the social system. 

Most Australians believe equality of opportunity is an important feature of our national ethos. Indeed, many Australian politicians cite equal opportunity as a key element of a just society (even if this rhetoric is not always followed with policy).  Yet what we are seeing here is falling short of that ideal.

Monetary policy that penalises the least well-off and rewards people based on their starting level of wealth does not provide Australians with equal opportunity. 

Indeed, justifying why the very rich deserve windfall gains is challenging unless one ascribes to the slightly perverse virtue theory that to have wealth is to deserve more wealth. 

One solution is for government to tax and transfer windfall monetary policy gains. This policy might allocate an equal benefit to each Australian, or otherwise ensure each Australian has an equal opportunity to benefit.  

While simple in theory, there are several practical shortcomings with this approach. One issue is measurement: for any asset value increase, determining the increase due to monetary policy versus other factors, such as asset improvements, is not straightforward. Another issue is timing: there is typically a substantial lag between monetary policy actions and asset value increases. 

However, it seems to me, the most substantial issue is political pressure from vested interest groups. Taxing assets – regardless of whether people have earned those assets or the assets were merely granted to them through government policy – is eminently harder than simply not transferring windfall wealth in the first place.  

Finding prevention, rather than jumping straight to the cure, has the added benefit of avoiding the unnecessary social antagonism that occurs when creating groups of “us” (the “lifters” who are taxed) and “them” (the “leaners” who receive). 

A preventative solution can be found in updating the RBA’s mandate, a change that might take on various degrees. The more substantiative update would be to require all future monetary policy to produce no negative impact on wealth inequality. This would make some existing policies unviable or mean that if pursued they must be coupled with additional mechanisms that even up the ledger for the middle and lower classes.

A middle ground alternative might merely begin by requiring the RBA to consider unfair wealth impacts as tiebreakers. For example, when all other features of opposing policy are equal, that which provides all Australians equal opportunity to benefit would be considered preferential. This mandate should require the RBA to consider various options and justify those adopted on the principle of fairness, relative to the alternatives that were overlooked.  

Reserve Bank Governor, Dr Philips Lowe recently stated that the responsibility for controlling asset prices is not that of the RBA: “That’s not our mandate. I don’t think it’s sensible and I don’t think it’s even possible”. 

That the RBA cannot and does not control asset prices is similar to the fact that the RBA cannot and does not control the social phenomenon of inflation. 

Yet the RBA can and does influence asset prices, simply look at the ripple effect of the 0.1% cash rate. The RBA can and does also target asset prices, noting the RBA bond-buying programs which are designed to prop up bond prices. To suggest otherwise is misleading.

Like any other public institution, the RBA is accountable to those they serve – the general public – not to their own ends. And the Australian public may want a little more rigour in that accountability than, ‘that’s not our mandate’ when dismissing the policy options put forth by economists such as Milton Friedman, Frederic Mishkin and Patrick Honohan.  

It might be true that alternative policy options such as cash transfers through the budget (where the central bank issues money directly to the government who distribute it) or direct cash transfers (where the central bank issues money directly) are unworkable.

However, allowing the RBA to dismiss their policies’ negative effects because their mandate does not require this consideration, is not something Australians should consider acceptable. 

Imagine for a moment that your neighbour is a sweet, polite elderly man.

His partner has died and he lives alone. He has no family to speak of, and one day, his lifelong habit of purchasing lottery tickets pays off. He wins $50 million.  

Suddenly, your brain starts ticking over. Statistically speaking, your neighbour doesn’t have too many years left. And when he dies, he’s likely to leave behind an enormous inheritance. What if you were the person he trusted to bequeath some of his wealth to? What would you do to earn his trust with so much on the line? Would you lie? Manipulate?  

It’s important for us to ponder this, because new research from The Ethics Centre suggests Australia finds itself in a similar situation. According to figures produced by Deloitte Access Economics, if Australia was able to elevate its national trust score from 54% – its current level – to 65%, it would unlock $45 billion in GDP. 

With so much on the line, it would be understandable to see political leaders and businesses looking for the fastest, most effective way to build trust. We assume more trust is better than less trust. However, that’s an assumption we need to be cautious of. “I have an issue with the connection of trust with growth,’ says Rachel Botsman, Trust Fellow at Oxford University’s Said Business School and author of Who Can You Trust?   

“Trust,” Botsman explains, “is not always the goal. It’s intelligently placed trust.”

Consider this from the perspective of the elderly man in our imaginary story. For him, growing more trusting of his neighbour is only a good thing if his neighbour deserves to be trusted. If he trusts a dishonest neighbour who just wants his inheritance, that growth in trust isn’t something to celebrate. In fact, this increased trust is dangerous to him.  

When we take the thought experience and apply it to Australia’s economy, the point still stands. As individuals, we don’t want to be more trusting of governments, organisations or markets unless they deserve our trust. Even if higher trust levels are good for GDP, it’s only good for us if it’s earned in the right way – ethically. 

“Trust is the social glue of society,” says Botsman. “To manipulate that – because it can so easily be manipulated and tracked in terms of growth – feels wrong.”  

Botsman has spent years speaking to businesses and governments about trust and encouraging them to value it. Today, she’s worried lots of her audience have missed her message. 

She says, “I start this conversation about trust in organisations, and then a year later it’s become a commercial strategy. They’re trying to assess the return on investment, and, it’s like ‘no, that’s not that’s not I meant!  When I meant ‘value’  I didn’t mean economic growth.”   

Botsman worries about the effects of framing discussions around trust in the language of business and capitalism. Trustworthy decisions “might result in some kind of short-term financial loss, so it’s problematic that loss is caught up in the language of finance and money.”  

Katherine Hawley, Professor of Philosophy at the University of St Andrews, and author of How to Be Trustworthy, defines trustworthy people as those who avoid unfulfilled commitments and broken promises. Basically, Hawley sees trustworthiness as the absence of untrustworthiness. Untrustworthy people make promises they can’t keep and fail to meet their obligations. If you don’t do these things, you’re probably a trustworthy person.  

However, Hawley is quick to add that being trustworthy doesn’t necessarily guarantee that people will actually trust you. “There can be a significant gap between whether you are trustworthy and whether people can see you to be trustworthy,” she says.  

Botsman agrees, “one of the hardest things to get your head around with trust is that even if you behave in a way that you think is the most trustworthy, you are still not in control of whether that person gives you their trust.”

This is one reason why Botsman has begun to advise organisations to stop thinking about building trust, and start thinking about acting with integrity, “because the language of intentions, motives, honesty and whether they best serve the interests of customers is much harder for companies to hide behind than questions of trust.”  

A focus on integrity also helps prevent us from seeking trust in an undifferentiated way – not caring whether it’s intelligent trust or not. It shifts our focus away from what other people are thinking and toward our own activities.

“You would hope that people would want to be ethical, not just seem to be ethical,” says Hawley. However, in case that principle doesn’t persuade some people, Hawley offers a word of caution. She describes a phenomenon called ‘betrayal aversion’, “People get more angry in situations in which they first trusted and then found out that was a mistake than when they just didn’t trust in the first place.”  

This idea, which comes from the work of behavioural economist Cass Sunstein, is a sober warning to those who see trust as a tool – something to be collected because it’s useful for growth, profit or advantage. “The risk for these businesses is that if people come to find out this was going on, or even find out that was their motive, then that could be worse for them.”  

There is a strong moral argument – especially during a recession – for pursuing economic growth. For some, the importance of growth is likely to be enough to justify pursuing trust by any means possible. However, Hawley gives us a good reason to pause.  

Chasing trust in the wrong way is something untrustworthy people do. And that makes the trust you accrue a bad investment – it’s fragile. The slower, more carefully accumulated relational trust might not offer the same returns in the short term, but it’s based on something more stable: ethics.