According to their ancient oath, doctors are supposed to save people’s lives. Without understanding how, many of Britain’s doctors are actually participating in the cannibalisation of their communities. Indirectly, this leads to many premature deaths. It’s all done in the name of making money out of property.
I first revealed the scam in my book Ricardo’s Law (2006). Belatedly, the story has made headlines in Britain when a newspaper discovered that doctors were pocketing windfalls running into millions of pounds at the expense of taxpayers. This is how it works.
A medical practice buys a building for surgeries. The building is then rented to the Department of Health at a rate that often far exceeds the mortgage repayment. When the doctor retires, he sells the property to another doctor or a developer and pockets the capital gain.
So a property that was funded by taxpayers results in a mighty profit which is retained by the doctor. This scheme costs Britain’s taxpayers £630m a year. If the capital gains were returned to taxpayers it would cost them nothing, and the doctors would occupy surgeries rent-free.
Gutting Our Communities
This is not an exceptional racket. Recently, a chain of care homes went bust in Britain because the original shareholders used the tax-and-tenure laws to pocket hundreds of millions of pounds. They sold the freeholds of the care homes and leased the properties back. This meant that the company was paying market rents for the care homes to a landlord.
When the economy went bust and fees from the elderly residents became a problem, the company found it could not pay the rents. The original shareholders did not share in the financial problem, of course, because they had stashed away their profits from the properties in safe havens.
Windfall gains from the sale of land is regarded as evidence of shrewd entrepreneurship. In reality, it is a predatory activity that weakens society and exposes both the young and the aged to stresses that ultimately cause the premature deaths of many of them.
Does anyone care enough to do something about it? The only effective solution is to redesign financial incentives.
We should be allowed to keep what we create, but not pocket a dime of the value that is the product of our collaborative endeavours. Put at its simplest, that means abolishing income taxes and raising public revenue from the rents of land.