Tim Worstall – back in harness after running for office as a UKIP MEP – writes about the Labour government’s stated desire to ensure that not a single tract of the UK is without broadband access. It is the sort of techie, practical measure that Mr Gordon Brown thinks will help win him a bit of respect in the traditional Tory and LibDem shires.
As Tim says, the logic of this idea is questionable. There are geographical, physical reasons why broadband access, or indeed other forms of communications, are not available everywhere, all the time. Also, as the comment thread attached to Tim’s piece reveals, there is this argument, that I have raised before – also prompted by one of Tim’s articles – about why people feel that because X or Y wants a road, canal, power cables, whatever, that therefore the state should be able to use compulsory purchase powers, and taxation, to pay for whatever it is that is wanted. I have referred to this mindset as “brute utilitarianism”. Also, it is a cost of living in the countryside that one does not always have the same degree of speedy access to certain things that one has living in a town or city. That’s life, so folk should deal with it. (One of the few arguments for land value taxes is that people living in such remote places would, other things being equal, pay less taxes also. However, there are other problems with LVT as the Austrian school of economics points out, attractive at first blush though the idea might be).
I pay more to live in my rabbit hutch apartment in Pimlico and for the same outlay I could live in a big place in the sticks. But for the benefit of living in SW1, I get quick access to airports (a short trip from Victoria to Gatwick); the Tube, buses, taxis, broadband access, etc. This is part of the cost “package”, if you like, that comes with my locational choice. A person who lives in a remote area and who demands Pimlico or New York-style communcations is demanding that the citizens of a city should subsidize that preference. And yet many of the people who migrate from the towns to the country are quite well off; as I have noted in my native Suffolk, as soon as the townies settle in, they start demanding all kinds of amenities, not realising, or caring, that such things don’t exist because they are relatively expensive to put in rural areas, which is precisely why Mr and Mrs Chartered Accountant can afford to live in their nice village cottages in the first place.
Sometimes such debates are as easy as this: if people want something, then damn well pay for it yourself, and do not use the robber powers of the state to grab it off someone else.
Rant over.
Er, not quite: my reference to LVT brought out a crop of Henry George “land-is-special!” types on the comment board. Several of us have responded to them, but I came across this nice essay by Jan Narveson, which I think is one of the best smackdowns for the land value tax mob that I have ever read. Excerpt:
Now, the point of this little essay is that that is basically all there is to it, and there doesn’t need to be anything else. The idea that we all have an equal right to the land is amazingly arbitrary, and contrary to all human experience while it’s at it. It’s arbitrary in that it has no basis. The fact that we don’t make the land is irrelevant, as already seen: we don’t make the natural part of anything we have or own, no matter whether we have “made” it or not. But the point is, it doesn’t matter. For things are just things: they do not come with labels saying that they “belong” to some people or that some people, somehow, have a “claim” on them, nor in turn that everybody has a claim on them, equal or otherwise.
That’s what I said in the Comments 🙂
As you say, the cost of infrastructure improvements which benefit property values (whether that’s broadband in the countryside or flood defences or anything else) should be funded by LVT, and if the extra LVT won’t fund it, it isn’t worth doing.
In the absence of any infrastructure (urban land in the UK is worth 100x as much as agricultultural land in the UK) or core functions of the state, land would be nigh worthless (see for example Zimababwe).
The Von Mises article is strange, it seems largely to focus on the fact that exact values are hard to pin down. So what? Just pitch the assessed value at the bottom range of estimates and Bob’s your uncle.
As LVT has no deadweight costs, £1 of LVT can replace £1 of taxes on production and wealth generation, which have deadweight costs of 30p or £1 or whatever, hurray, society as a whole ends up 30p or £1 better off.
Mark, one of the problems with an LVT is valuation. The problem is, the LVT itself affects the value. The first round of valuations can be based on market prices; once the LVT is in place there is no market price and assessors must try to guess what the land would have been worth if there were no LVT, which will over time simply deviate from whatever it would have been. It’s impossible to guess at a price in the marketplace, since prices are only set at the instant of an individual trade.
The mistaken preconception that communications infrastructure should be built by the state stems, I believe, from the fact that the infrastructure was built by the state (in the guise of the GPO before it became BT) in the first place.
Where I currently live (Semi-rural South West Scotland) could have had fiber and all the benefits that stem from that (including cable TV and other such luxuries) more than a decade ago, but the local authority wanted to charge the cable company too much to dig up the roads and so the cable company went around us. So although we’re a regional capital we’ve been without decent broadband till about 2 years ago and the effect on the local economy has been strking.
Oh and it shows how ‘in touch’ the state is with the future requirements of our digital information society if it thinks that 2 megs is anywhere near enough.
I predict this Digital Britain thingy will be very bad in oh so many ways. It is Gordoom’s parting turd in the laundry hamper to replace the internet with MandyNet. I should work-up a post about it but it would be long and require thinking and I’m getting to the stage of being past caring.
Yesterday and today the UK blogosphere has gone nuts over the outing of NightJack. They missed “Digital Britain” which is the real Stegasaurus in the utility room.
Could these timings be less than co-incidental. The conspiracist in me thinks perhaps not. I see the hand of Voldemort in picking “a good day to bury the news”.
But then I think he’s behind everything.
That’s what I said in the Comments
Absolutely Ian. And I note some commenter accused you of ranting but failed to give a coherent answer as to why people living in area X should cross-subsidise those elsewhere. For them, it is just a case of “I need, I want, I get the state to take”, and if you are lucky, they might get you a market price for the pleasure.
I really can’t understand why the idiots promoting this scheme keep saying how the plan will “lift us out of this depression.” We are given no explaination for this, and it is plain that it is being stated just to make it appeal to the public.
There’s another economic factor that may be at work here.
In one of the very-remote places that I go in the US – a place that makes the remotest parts of the UK look positively urban – they’ve had high-speed broadband for ages. Some amazingly-remote places do not, but if you’re near any sort of road (and near means ‘within a mile’) chances are that you can get broadband access simply by asking for it.
How can this be?
Well, it’s because telecom services are provided by private concerns. And those concerns figured out a while back that glass fiber is much cheaper to operate and maintain in the long run, and has lots more room for future expansion, and so they were stringing glass in these places a decade ago or more, down to the individual customer level. When a service call may involve a 250-mile round trip, you look for the technology that will minimise service calls, and that tends to be the newer, better stuff.
Impose a universal state mandate, and you crush this level of forward thinking. Providers will provide, what the state compells them to provide, and not a whit more – and since some places will always be unprofitable to service, the service to all will be the cheapest, most-minimal that can be found. In other words – the old stuff.
Ever watch ‘The Deadliest Catch’? (I understand it’s popular in the UK). Ever wonder why Dutch Harbor/Unalaska AK – a town of less than 5000 people that’s literally 500 miles from anywhere has such great cell-phone service and plug-in high-speed broadband connections at the fish quay? Hint – it’s not because of a state mandate.
I’ll bet that you can’t get plug-in high-speed broadband at the fish quay in Brixham.
llater,
llamas
Mandrill and llamas-
Indeed. If 2Mb is the minimum, it will be the maximum.
The whole “LVT doesn’t work because you can’t value land” argument is just ridiculous. LVT is used in several jurisdictions and I’ve never heard of any problems with valuation. Just rent out the land yearly via auction – that’s as much of a “market transaction” for the purpose of price discovery as it is when a monopolist chooses to sell some of his land.
I can’t even get BT to give me 2Mb in central London; not anything like, even though that’s what they charge me for. BT is the model of government mandated service-standards, so I do not imagine that the official minimum standard and the actual minimum standard will be the same.
Ian B:
That might be true if LVT were set at 100% of the rental value, but for anything less than that, there will be a residual selling price which can be assessed. In effect, this is the situation we have anyway, because prices are already suppressed by Council Tax and Business Rates.
Mark Wadsworth wrote:
“As you say, the cost of infrastructure improvements which benefit property values (whether that’s broadband in the countryside or flood defences or anything else) should be funded by LVT, and if the extra LVT won’t fund it, it isn’t worth doing.”
The problem is, when you assign the state the right to use its powers to do something as nebulous as ‘benefit property values’, the length of time it will take the state to abuse those powers for venal or political ends can be measured with an egg-timer.
The state used to uphold restrictive covenants on property to ‘benefit property values’. In recent times, the state has forcibly taken the property of some owners specifically to ‘benefit (the) property values’ of other owners – and always, oddly enough, other owners who promised higher tax revenues or who made appropriate campaign donations.
The value, and the increase or decrease in value, of a piece of real property is the sole concern of its owner. The minute that you allow the state to forcibly impose measures to ‘benefit property values’, you open the door to logrollers who seek to improve the value of their property – at the expense of others.
I might be persuaded that the state has some business taking measures to prevent the destruction of property – flood defences are not a bad example, for example. But then, I’m from a place which has had excellent experience with both private and public flood defences – maybe the only place in the world that ever has. In virtually every other place, state control of flood defences has almost-always become just another opportunity for political profit and simple graft, and the water comes anyway. From NOLA to the Three Rivers to the Thames Barrier, state-controlled flood defences almost-always turn into second-rate defences bought at first-rate prices, and a rent-seekers paradise.
If you want high-speed in the sticks, get out your wallet. You should be prepared to pay substantially more than a city dweller, since the benefits/value of really good comms are so-much greater in isolated areas than they are in the city.
llater,
llamas
@ Ian B, of course taxes on property affect values (e.g. council tax, business rates, stamp duty land tax, TV licence fee, inheritance tax, capital gains tax, s106 agreements etc) as do subsidies for land values (Housing Benefit, Council Tax Benefit, CAP subsidies) which is why they ought to all be chucked in the bin and replaced with a fiscally neutral LVT, in the interests of simplification, if nothing else.
To paraphrase llamas “The problem is, when you assign the state the right to use its powers to do something as nebulous as [tax incomes or turnover or employment] the length of time it will take the state to abuse those powers for venal or political ends can be measured with an egg-timer.”
On this particular topic, I guess that we should leave it to the cable companies whether a particular area should be cabled or not, but do not forget that they have their own cost/benefit analysis and demand curves; but assuming that they pay for this entirely out of their own pockets, will rental values and land values in the cabled area increase?
Methinks yes.
We also know that ntl/telewest went bankrupt a couple of times and went through debt-for-equity swaps to get where they are know (part of Virgin); I sorely doubt whether their current income justifies the original investment in digging up pavements and laying cables.
So to whom should that extra land value accrue – land-owners, the cable company who paid for it, or society in general? I fail to see why the default answer should always be ‘the land-owners’. Is it not possibly fairer to capture the gain to reimburse the cable company for part of their losses/expenditure? And if you don’t like subsidies, how about capturing that windfall uplift and using it to cut income tax or repay the national debt?
Once more, into the breach…
Mark Wadsworth said:
Why should the landowner get to claim the increase in the value of the land?
How about, “Because it’s HIS GORRAM LAND.”
Unless you’re trying to claim that merely owning something doesn’t entitle someone to act like he owns it. Because all he did to claim ownership of his land was to find a willing seller and offer him money. It’s not like he got the county assessor to tell the seller “Screw you, it’s ours now.”
Llamas:
*cough*
*cough*
*Wal-Mart*
*cough*
A certain world’s largest retailer (who I could name, but won’t) has been running around metro Denver bribing the various suburban city commissions to condemn land under eminent domain and transfer it to said retailer, because it would improve sales/property tax revenues. There were plenty of campaign contributions involved, along with probably a few fat envelopes left under chairs.
But in some corners of the intarwebz you can’t say a bad thing about Wal-Mart without being accused of being an anti-business communist or something.
Even though a telephone tax has already been suggested in the United States (there is already a statute that allows it – so there would, supposedly, be no need for a vote in Congress) the telephone poll tax here in Britain still surprised me.
So to provide some people with broadband computer access the general population (including the poor – full disclosure, people like me) are to face yet another tax.
I supposed it makes sense in the twisted mess that is the leftist “mind”.
I suspect the broadband thing came out of arguments about the “stimulus” approach to getting us out of recession. They follow the vaguely Keynesian prescription of raising demand by buying stuff, but what to buy? I understand Obama’s approach is to shovel money at his lefty friends and donors. But this has been criticised as not very useful economically.
It has been suggested that one of the roles of government is to develop infrastructure: all those shared facilities that make earning wealth possible, but suffer from the “tragedy of the commons” difficulty of free riders. Because the government forces everyone to pay, everyone pays for the benefits everyone gets. If the government is going to be spending on anything, this is less bad than some of the other options. So I think somebody told them to “build infrastructure”.
I’m pretty sure we did the LVT to death here once before. The problems, if I remember rightly, were that totally unimproved land is technically valueless, that the supply of improved land is not fixed, that there is a third dimension (and ownership can vary with altitude), and that while it only distorts the market in the same sort of way as taxes on other things, that if you have it as your only tax this distortion becomes extreme. It would end up like the window tax.
In practice, I think it always ends up being an effective partial tax on the improvements: infrastructure, development, industry, etc. but in a highly opaque way.
I do home/small business IT work. I see all sorts. Many people who are going to be “outreached” with this will neither know nor care what it is.
Currently they, if they wanna be off the wire, are OK but when the clunking fist of “now everyone is online at the glorious 2Mb/s” they will have no excuse for not joining in the glorious digital-socialist future”.
And that is what they want, Imagine if something like Wii fit is provided down these state tubes to every house? I think we all know where we’ve seen that before.
And you know. It’s not their fucking internet even though Al Gore invented it. It’s our place and they can’t stand that. Now is the time to stand and fight against their “equality of access” because that is an equality of slavery.
PA hits the nail on the head: the Georgists may be right to rail against many other taxes besides LVT, but I would be worried if all we had was LVT because it would distort economic behaviour in an arbitrary way; the LVT advocates argue that because land is scarce and God-given, there is no special merit in benefiting from any increased value that acrrues to holding it. This seems to be arbitrary: one might as well say that a supermodel should not earn a big salary for her unearned looks.
I read it as “her unearned boobs”. I need coffee.
Wireless broadband is getting better. It is much cheaper to implement than wired, and it will before too long provide much better speeds than does wired broadband at the moment. (Note the wording though – wired broadband will have improved by then and wireless will likely continue to be slower than wired). The best thing the government could do is to make sure that appropriate spectrum is available for telcos that want to implement this in rural areas. (At the moment 3G services operate at 2100MHz, which is not suited to rural areas. Regulators are discussing making lower frequencies available, but it goes on and on and …….).
Oddly, Telstra in Australia have got this right (at a technology level anyway – their prices are outrageously high by UK and European standards), and have built a fast wireless broadband network at 850MHz. However, the government is doing even worse things than here, and some monumental sum of taxpayers money is going to be spent on building a “National (wired) Broadband Network”. Having rejected the bids of the telcos to build this, the government has announced that it is going to build it itself, apparently creating a new state owned telco to replace the ones that were privatised. And despite apparently having no idea how to build one. It’s hilarious.
The biggest philosophical problem I have with the Georgist tax, or any tax on owned property, is that it’s a tax on, well, something you already have but which may not be earning any money. Adam Smith remarked that the home produces nothing, and income is required to sustain it. The LVT presumes that every landowner is a rentier, but that isn’t true of the private individual who owns a plot of land and simply lives on it. And I would have thought that to most libertarians, the idea of one’s property as one’s own is a very core idea.
We might disagree about much of our individual interpretations of liberty, but the idea of true ownership of property- “once I’ve bought a thing it is mine, and nobody may take it”- is pretty fundamental. If you charge people a “state rent” on owned property, that’s the state threatening to take it away, and Georgists seem happy with that. I’m certainly not. At least an income tax, unpleasant as it is, is actually taxing income. Georgism is taxing a presumed potential income.
You may as well charge every woman a prostitution tax, regardless of whether she does so or not, since every woman’s body has an assessable market value on that basis.
Bullseye! One might, for example, say the same about organs such as kidneys, livers, etc. Self ownership, and ownership of land on which you stand, is indeed basic to liberty.
Which incidentally is why the utilitarian defence of freedom, a la J.S. Mill, can often fall down when the supposed greatest happiness of the greatest number (“let’s build more broadband access”) is used to overcome the right to not to have one’s wallet lifted.
Sunfish wrote:
‘A certain world’s largest retailer (who I could name, but won’t) has been running around metro Denver bribing the various suburban city commissions to condemn land under eminent domain and transfer it to said retailer, because it would improve sales/property tax revenues. There were plenty of campaign contributions involved, along with probably a few fat envelopes left under chairs.
But in some corners of the intarwebz you can’t say a bad thing about Wal-Mart without being accused of being an anti-business communist or something.
Well, of course they did.
It always suprises me when people express shock and outrage at something like this. In my own neck of the woods, a city council member is just about to do the perp walk for selling her vote on a sludge-hauling contract. Everyone is shocked – shocked! – that such a thing could happen.
My response is – of course it happens. It’s just good business. In the sludge-hauling case, it was matter of a $1.2 billion contract, and the deciding vote was bought for $6,000.
Think about that. If your choice was either a) a massive lobbying effort with no guarantee of success or b) a single payment of $6,000 with a guaranteed outcome – what would you do?
It’s nothing personal, Sunfish – it’s strictly business.
(I’ve been saving that line up for just such an occasion for months. I want full credit).
Wally World enages in such shenanigans because the local elected officials have sent the message that they’ll play this game. I don’t hold any brief for Wally World, but don’t blame them alone. Some smart Italian dude has observed that it is hard to decide which is the worse offender – the person who gives a bribe, or the person who takes it.
Coming back to broadband access – we can draw a parallel with access to TV and radio, in years past. In the 20s and 30’s, producers of radio content struggled to figure out a business model that would disseminate their product, and in the 50s and 60s, the same happened with TV. But then it clicked, and now you can get 200 channels of radio anywhere in the US for $9.
95 a month, and 200 channels of TV for $19.95 a month – a density of information delivery that would have made Marconi and Baird blink in amazement.
The state shopuld step aside and let private enterpise crack the problem. The state will inevitably go for the current, safe, well-understood solution, aka, The Obsolete Stuff. After all, their main interest is in making stirring speeches about how we are Exceeding The Five Year Plan and delivering 16% More Megabytes than the Forecast.
What’s needed is some Gates-like nerd sitting around thinking the equivalent of ‘what if we put a satellite receiver in every car? Yeah, that’s the ticket . . and we make it a free receiver – yeah, free . . . . and then we institute a delivery system that costs the same for 1 user as it does for a 1 million users . . . but then we make every single user pay $9.95 a month for it . . . and then we’re RICH!’
Rural users will get cheap broadband a lot quicker that way than they will with the State driving it, since their ideas will inevitably revolve around Bert and Ernie and their shovels and a big lorry full of copper wires. And they’ll make sure that Bert and Ernie are union members. And that the wire was made by union members. And that either Bert, or Ernie, is gay. The lowest priority will be how many bits come out the end of the wire.
llater,
llamas
I think it was Robert Heinlein who said you didn’t truly own anything that you couldn’t carry while maintaining a fairly good clip. By that standard you never own land.
The arguments conflating land with one’s body (as well as simple arguments from “BUT IT’S MY LAND!”) are implicitly assuming that land can be property, and thus begging the question. If a person has a right to property in his own body, then he is entitled to the benefit of it, whether “earned” or not.
Yet I’ve never seen a satisfactory argument for how originary interest in land can be acquired. Even if I accepted the ridiculous “first appropriator” rule, supporters still don’t seem to have any answer to the fact that nowhere on Earth is land owned by the first appropriator (or anyone that can trace an unbroken line of trade back to him) beyond “ehh, forget it”. And I don’t even accept the rule. And even if it were correct, and it was somehow just to ignore the centuries of illegal appropriation of land, then this principle of absolute monarchy would still deliver the landless 99% of the Earth’s population into literal serfdom (if not worse) which I am not prepared to accept on practical grounds, to say nothing of philosophy.
A lot of nonsense, here, Richard:
It is entirely possible to establish a principle of “finders keepers” of initial acquisition, and of the idea that a person who “mixes” his labour with land, and who adds value to something that was previously not valued at all, has some stake in it, and can derive a living from it, transfer it, etc.
If you take the view that no-one can own land at all, in any meaningful sense, then neither do collectives, either. Giving all ownership of land to a state shifts the problem that you think lies in ownership, it does not resolve it.
of course in reality, there have been conquests and acts of violence that explain why some land is owned as it is; but that hardly invalidates the principle of property ownership; and over time, the ownership rights that have built up can and should be respected not least for the many benefits that property rights confer, ie, economic growth, social peace, etc.
Bullseye 🙂
If the people do not have any right to their land, the collective of the people has no right to it either. Besides all else, you can’t claim that a man has no special right to a parcel of land, then tax him for owning it!
It’s similar to an inherent flaw of communism. The communist states that the worker does not own the means of production, and this is Wrong, then awards the means of production to the state… so the worker still doesn’t own his means of production! The initial complaint has not been solved.
(The way to solve the problem of the workers not owning the means of production is the diversification into small business and independent trading that a true free market will provide. The small businessman/sole trader really does own his or her means of production… which is one reason the left despise free marketeers- we solve their conundrum without invoking the state. But that’s getting way off topic for this thread, probably).
Still, we are left with an unsolved problem in Georgism. If I do not own my land, the state I am a corpuscle of and empower cannot own it either. It thus has no more right to profit from it than I do.
It’s very illuminating reading the pros and cons of the LVT and the philosophical arguments over taxing land, but I doubt there is one person in the Treasury, or the whole state apparatus, who knows or cares one whit about those arguments.
To them, the main argument is purely political. “We’ve promised not to increase income tax but we need to steal more money in order to bridge the Great Digital Divide, so that my brother, Julian, can work from his Cotswolds cottage without dragging into London every day. So what’s the least contentious tax we can spin as not going back on our election promises, and accuse the other lot of being selfish for opposing.”
Whatever the party in power, any new tax is going to be an addition, not a replacement.
Ten shillings a month tax for daring to own a telephone, just so that Dogshit NuLabor can establish its own 21st century Minitel. Someone please wake me up when the nightmare is over.
I had plumb-forgotten Minitel. A perfect example. Thank you.
HMG still probably pines for the halcyon days of Ceefax/Teletext, where they got to control the content and the customer paid by the minute. The whole InterWideTubes thing must give them nausea – imagine, all that data, with no taxes and no control! People making money in ways we can’t get a piece of! The horror!
llater,
llamas
But it isn’t about asserting collective ownership, it is about asserting common ownership. I don’t accept that an individual has a right to exclude me from a location, but nor do I accept that the state may either, so while I support LVT, I’m in complete agreement with your first sentence.
In principle, that means that all rights to exclude others from locations should be achieved through mutual consent, i.e. person A and person B agree to stay off the land that the other wants exclusive use of. The problem with that approach is that, once you have more than a handful of people, the transaction costs become prohibitive, but using a central collector to obtain the market value of each plot and then pay it out in equal shares achieves the same result without the excessive negotiation.
You may as well charge every woman a prostitution tax, regardless of whether she does so or not, since every woman’s body has an assessable market value on that basis.
And, it is the right of every women to work as a prostitute if she so wishes. But her earnings therefrom are down to her own efforts. And if we are agreed that income tax is A Bad Tax, then there’s no reason to have a special tax on deemed income from prostitution.
OTOH, the site-only value of any particular plot of land (ignoring buildings and improvements) on the other hand has absolutely nothing to do with the efforts of the owner – they have to do with infrastructure, planning restrictions on neighbouring plots, views over land that other people own, the fact that The State will register your title and send in the police if others trespass etc etc.
So when you rent or buy a house, you are paying for bricks and mortar (which is absolutely fine, somebody has invested capital in that or his own energies) BUT ALSO for access to local infrastructure (which the landlord/vendor did not pay for), for the fact that there is a restricted amount of housing in the area (because of planning restrictions), for views over land that does not belong to the landlord/vendor and for legal protection (which The State provides, not the landlord or previous owner).
So applying your prostitute tax by analogy, buying or renting land is like visiting a prostitute and having a jolly good time, but having to pay all the money to her pimp, who doesn’t give her a penny.
Paul already answered this more elegantly than I can, but I will say that the point of LVT is that the state doesn’t “profit” from the rent of land, it is used to profit the whole community via the production of public goods (with any surplus being redistributed via a citizen’s dividend). It may be difficult to define a state that is inclusive and democratic enough that these rents truly are used for the benefit of all, but Hong Kong and Taiwan seem to manage. I don’t see why potential difficulty in building an inclusive state should be a reason to “throw the baby out with the bathwater” in claiming a two-tier society with 1% of the Earth’s population on the top tier.
But you see, you’re just asserting that the principle of finders-keepers is acceptable, as I have asserted that it isn’t. It isn’t an argument either way. But the “finders keepers” principle was expounded by Locke, who was starting from a flawed premise: the premise that all government was founded by consent (and therefore that there had to be a good reason for the vastly unequal distribution of land that he saw around him). But of course government is not founded by consent, and the fact that social relations exist does not make them the product of consent.
Mark, my prostitution tax analogy wasn’t an income tax, it was a state rental the same as LVT. LVT taxes people for having something that would be of value if they rented it out; the same applies to the woman’s body. It would be of value if she rented it out. The LVT is unfair for the same reason; the woman does not rent her body out and thus has no income from it. A landowner likewise may not rent their land out, and has no income from it. They may be using it for the purpose of living on it.
A person buying land makes only one payment. The LVT extracts payment every year. The fact that you think they’re getting something for free they don’t deserve such as the view or presence of the local pub (the latter is useless to them unless they patronise it, in which case they pay for it in the price of beer) is no different to the woman’s body-value being raised by living in a town full of potential prostitution clients.
The LVT forces landowners to somehow raise the ground rent you have assessed, even if they cannot rent out the land (because they themself use it). As such, it remains the same as taxing a woman on the basis of her rental value, despite her not wishing to rent herself out.
I return to the example I have used here before- an elderly widow living in the house she bought decades before with her husband, on a meagre pension income. She owns the house outright, for the mortgage is long paid off. But she cannot afford your LVT, which has been pushed up beyond her control because, since they bought the house a railway link, shopping malls and many new leisure facilities, which she does not use, have been built by others nearby which the LVT assessor concludes have raised the price of her land.
The market value of her land is beyond her control. You would tax her for the actions of others on land surrounding it, and, when she cannot pay the tax, force her to leave. All tax regimes are unfair, but some are more unfair than others. I remain unable to accept that the above scenario is the fairest. If we must tax something, let it at least be a proportion of something gained- far better than a continual state charge for something already owned.
It’s interesting to hear people arguing Georgism. I read George as an inquiry into “Libertarian History”, but had no idea anybody was still backing it.
There is a way that the Georgist vision could come to exist within an anarcho-capitalist society:
* People form a “joint-stock company”
* The company buys a very large piece of land
* The company leases the land to anyone who wants to come and build on it.
* The company uses it’s revenue after overhead to maintain a militia and a court system.
In this case, the money paid on the leases could be called LVT, and the company would operate as a “government” without the initiation of force. If you wanted to be governed by a “one man, one vote” system, award one share of common stock to each citizen. If you want a monarchy, award all shares of common stock to your new “king”. If you want a council of elders, give one share each to your initial elders, on the condition that they will it back to the “council” to be given to your replacement.
Note that I did not include enforcement in the realm of the government, that could be handled better by insurance companies / mutual-aid societies. Having the courts and the enforcers beholden to different entities might keep the system a little cleaner.
Ian, you continue pushing this prostitution angle, but you haven’t addressed the distinction between what she is entitled to (property in her own body) and what she is not entitled to (exclusive ownership rights over common resources).
I can’t believe you would bring up the Old Widow Bogey argument in this context. Churchill described that argument as having been repeated to “exhaustion” over 100 years ago! here:
As Mark has explained plenty of times elsewhere, the jurisdictions that have LVT exempt widows for precisely this reason.
That’s because nobody ever presents a compelling argument as to why there is such a distinction- it appears to be in the minds of LVTers alone. I cannot actually prove that a person is entitled to ownership of their own body. The main dominant political philosophies (progressivism, socialism, conservatism, theocracy, etc) do not assert such an entitlement. Only libertarians do. So we’re out on a limb already. Neither is there any compelling distinction between portable and non-portable property. You cannot prove that you have more right to your washing machine than the land it stands on, other than a personal preference, based on a presumption that the limited supply of land makes ownership unfair. You’re entitled to believe that, but you can’t prove it.
The biggest problem you have is that property rights in land- or rather the assertion of ownership- extend back to prehistory. Tribal assertion of territory, either temporary or permanent, is an essential part of our culture. You may want to abolish that, but you’ll find it difficult. You may say that tribal territory is collective, so it doesn’t count- but since libertarians are in general unique in asserting individual rather than collective property rights- that is, the transfer of tribal collective rights to the individual- I think it’s fair to say you must apply that in all things or none at all. That is at least consistent.
So in other words, your tax reverses the general libertarian idea. It asserts a collective ownership of land- that is, ownership by the state, and it is just a pretense that this is not so to use the word “common” rather than collective. If the land were truly “common”, that is, unowned, then nobody can assert the right to extract a rent (or anything else) from it. Just as general socialism does not abolish the factory boss, but instead makes him the State, likewise Georgism does not abolish the rentier, but instead makes him the State. If I must have a boss, I would prefer he be a private individual than the state bureaucracy. If I must have a landlord, I would prefer he be a private individual than the state bureaucracy. I’m a libertarian. It’s fundamental.
The further assertion that that is okay because the money will be spent on “public goods” is the same justification for state control and taxes used by socialists and the same libertarian reply- that the state will take your money and use it for its own ends, while pretending that that is for your own good- suffices.
If your tax needs exemptions to cover specific classes of citizens, it’s broken, simple as that. Any tax should self-adjust. The poor widow is just a placeholder for the citizen- any citizen- whose income does not suffice to pay the rentier state.
You have a problem in UK? In Australia, there is also a demand for capital city services across The Outback–a demand that is being pandered to [or promised] by the present govrenment. That is, someone several THOUSAND kilometres [cf. London-Istanbul] from the cities should be able to expect the same service as someone in central Melbourne. I wonder whether a resident of a 25th floor studio apartment in central Adelaide should demand as a right that they be able to keep a pony, because people in Wagga Wagga can easily do.
In the past, I have said that the Georgists, with their monomania about land as a scarce resource that cries out for special treatment, are ignoring the fact that at times in human history and economic development, it is humans and human skills that have been scarce, while land has been relatively plentiful. Take the settlement of the north American West, or Australia, etc. There is in fact plenty of land out there; the issue is the cost of finding, acquiring and then developing it. If we single out land as something special and ignore everything else in deciding tax policy, this situation gets ignored.
Let me deal with a couple of points. Ian B has already replied vigorously to some of the LVT nonsense but here are a few things from me:
Paul Lockett:
This is playing with words. If you say we own all land “in common ownership”, then no-one in particular owns anything; it is, therefore, a collective thing. Collective/common ownership : what is the fundamental difference? Maybe I need more coffee.
Then you are arguing for the rights of trespass on other folk’s property, whether it be a small vegetable patch or a big farm, and office block, etc. You are denying property rights exist, that they should exist. If you believe that then you are no defender of liberty, that is for sure. Or are you saying that people should only be allowed to rent property on sufference, and if so, from whom or what? (And a lot of wordplay about the supposed difference between common and collective ownership will not help here, I suspect.)
Richard Allan:
Finders keepers is preferable, on the grounds of fairness, to the idea that the state, collective or whatnot is somehow entitled to hoover up the benefits of other persons’ acts of discovering, settling and farming land, or mining it for minerals, building things on it, etc. To be a “finder keeper” does at least involve some effort, some risk of failure and expenditure of fruitless labour in the search.
As for the practical fact that much property ownership fell into the hands of some people in the past through violence, I do not contest that (the Norman Conquest etc), but to repeat, again, that fact does not invalidate the concept of property rights as such. You guys clearly are hostile to it. And as Ian says, if you are hostile to ownership of land, then it also follows that the idea of self ownership in the fullest sense is up for grabs. And that is one of the reasons why the Georgists, with their land fixation, should be treated as cuckoos in the libertarian nest. Off with them!
I would have thought the distinction between phenomena which are the product of labour and those which aren’t was a perfectly rational and obvious one to anyone who claims that property rights flow from the right of the individual to his own labour; as libertarians did, I thought. Of course no-one can ask for “proof” of any moral statement because that is impossible. I’m looking for principles that would compel the assent of most of humanity on aesthetic grounds.
It may well be difficult; the statist system we live under is designed to protect vested interests. But I’m a Stirnerist, so “culture” is no impediment to me, merely a spook. Nothing is “essential”.
Firstly, that’s absolutely fine! Why on Earth would you suppose me to disagree? If you don’t want to rent land from the state, then just rent it from someone who has already paid the LVT! It’s a settled conclusion of political economy that LVT doesn’t increase rents, so you wouldn’t be paying any more than you would under the monarchical system. The comparison between rents in Hong Kong and London seems to bear this out, with rents in Honkers being similar on average to rents in London, but a lot more stable. To ensure that you have no contact with the state, you simply need make no effort to vote in elections or cash your citizen’s dividend cheque, and you can live a perfect “anarcho-capitalist” existence, beholden to nobody and with nobody beholden to you. Likewise if your landlord makes unreasonable demands, you’ll be free to look for another one, and not to ask for the “government” to protect your rights (even though I’m sure it would if you asked).
Secondly, as I’ve alluded to by reference to the “monarchical” system, if a “state” is an entity with a de jure or de facto geographic monopoly over dispute resolution, and if the landlord has absolute property rights over “his” land, then the landlord is the state and the state is the landlord. It is therefore meaningless to make a distinction between “private” and “state” landlords; they are one and the same! For me, the distinction is between “inclusive” and “exclusive” landlords/states, or, if you prefer, between monarchies and republics. I prefer an inclusive landlord, where some of the rent comes back to me and I have some say in the legislative process, to an exclusive, “absolute monarch” of a landlord. The fact that Hans-Herman Hoppe defends both absolute rights in land ownership and also defends monarchies as a form of government suggests that he understands this too. I’m currently reading The Commonwealth of Oceana by James Harrington, which I gather expresses similar views.
Of course, I’m in the top 1% of the world’s wealth distribution, so I can afford to advocate absolute monarchy, knowing I’ll be on the “right side” of the social divide. But I abhor a two-tier society, whichever tier I’m on.
And this is getting overlong, but Johnathan, first, the cost of land nowadays has exceedingly little to do with the cost of discovery etc. Where this does apply, (eg. oil and gas), I’m sure an LVT-using state would be perfectly happy to defray the expenses of the searcher, as it would clearly be in their best interest to do so (in the same way that LVT-using governments use land rents to defray the expenses of infrastructure providers in order to boost land values – bringing us, rather circuituitously back on topic).
You have it exactly backwards. It is only by protecting equal rights to phenomena which are not the product of labour, that a man’s right to the product of his labour can be protected (lest his product be entirely captured by landlords). In the Heritage Foundation’s Index of Economic Freedom, the top three countries (Hong Kong, Singapore and Australia) all have LVT. Even Marxists recognise this, which I can assure you is why they hold Georgists in a lot more contempt than “libertarians”. At any rate, if “libertarian” is to mean a defender of a two-tier society based on land ownership then I will gladly part ways with that “ideology”. But I don’t think the anti-Georgists will end up as the winners of that particular battle.
Er, my body and general person are not the product of labour. Inherited property is not the product of the owner’s labour. Gifts are not. And so on. The distinction is arbitrary.
As to the rest of your argument- if the state claims all ground rent, there is no purpose in “owning” land (that is, having the state assign you as rent collector). There is some cost associated with collecting the rent in order to pass it to the State- thus any “owner” who must collect rent will make some loss in the undertaking. There is no point to acquiring this status. Thus under LVT, all land must eventually be acquired by the state, and be rented from it.
For the owner who lives on their land, the assignment of “ownership” will be meaningless. They have no property rights over it, nor security of tenure. If they do not pay the ground rent to the State, it is confiscated from them.
The system will rapidly devolve to a nationalised landlord, to whom everyone pays rent. It goes without saying that the State will then manipulate ground rents to its advantage.
Richard, your argument that one does not have to rent from the state, but just rent it from someone who has paid LVT is sophistry; your point begs the question of why we need to have this tax in the first place.
I deny that the existence of property rights requires the existence of a state with a monopoly of law enforcement or application of violence. property rights can pre-date a state, rather than the other way round.
It is not perfectly rational or obvious at all. I “mix” my labour with the stuff of nature to make something or deliver a service; if the ownership of the stuff of nature is in doubt, then so is the fruit of my labour. You cannot disentangle then, though the Georgists, or Stirnerists, or whatever, try to do. You cannot. If I cut down trees from a forest that does not belong to me, then the fact I have made wonderful furniture out of it does not mean I have title over that furniture. And so on.
There is also the issue of positive externalities. Leaving aside the issue of how property rights can be justified morally or in law, their existence means we can be confident that A has title to something, so that therefore makes contracts enforceable; it enables production to occur without the fear of sudden state banditry – as with compulsory purchase or eminent domain laws – and this legal certainty over property has been understood as one of the reasons why wealth has grown in the countries enjoying stable property rights.
Since we want wealth to grow as much as possible, this is hardly just an academic issue. Here is a good book (Link)on the issue.
Perhaps I put the chain of reasoning the wrong way round. Ownership of one’s body implies ownership of one’s labour, which implies ownership of the product of one’s labour. Inherited property and gifts, if they are the product of the giver‘s labour, are legitimately owned by him and can therefore be legitimately transferred by him to another. It’s funny that Georgists are usually accused of being one step away from socialists, but I most often see socialists making the argument that inheritences are not legitimately owned by the inheritor as they were not the product of the inheritor’s labour (I think it’s in the Anti-Libertarian FAQ, actually).
As for landlords, well, I can only disagree. Under LVT I can still see private landlords existing. For example, if land is auctioned off yearly, the winning bidder paying the second bidder’s bid for use of the land, then the winner will have residual benefits from ownership of the land, which he may wish to monetise by sub-letting.
Of course you can! If I rent the forest from the “community” by some “inclusive” process, then I own whatever I can draw out of it during that year. Or if I cut down a tree which the “community” values at £10 and sell furniture for £20, then the difference is the product of labour. Granted, it may be hard to define “inclusive” and “community” in this context, but Hong Kong and Taiwan seem to manage. The fact that it might be difficult doesn’t mean that we shouldn’t try; to be glib, “it’s better to be roughly right than precisely wrong”.
And if “property rights” in land are necessary for economic growth, why is per Capita income so high in Hong Kong and Singapore?
But the person had to get permission from a property owner, or have ownership himself, over the stuff of nature that he transformed into the things that were passed on.
This begs the question of whether the “inclusive community” – a term that brings me out in a rash – had legitimate power of monopoly ownership in the first place. (No). At least with private owners who had homesteaded property, developed it etc, they had done something to the land, otherwise there’d be no point in them doing it. Even the most lazy landlord has to do something to earn an income off land or else the landed estates eventually break up, which is why in reality it is impossible that the land of the Earth would, under conditions of competitive free markets, ever come under the control of just one or a few people.
LVT advocates say property landlords do not really earn the value of their land, but then if that is true, then neither does the rest of the community, so why should others get the benefit if they have done nothing to care or look after it? LVT in this sense is a sort of punishment tax.
You have not explained how this wonderfully “inclusive” process comes about, either. I don’t know enough about the specific examples you give, but I’d wager that state coercion and force played a part in it along the way. There is much that is good about Hong Kong, of course, not least that it was run for decades run on laissez faire principles with very low public spending.
There is another problem here. Suppose one were to start off with a hypothetical example of a piece of territory inhabited by 1 million people, and they all got a 1 millionth of the land, equally divided; after a period of time of trade, inheritance, transfers, and so on, some folk might end up with a lot of land, some with little, but the process has violated no laws; no violence of coercion has been involved. Now explain to me why LVT would be justified in this case?
To amend the late Robert Nozick, taxing property ownership because the land is not a legitimate cause of wealth would be to punish consenting capitalist acts.
I can sympathise with your view that the Hong Kong/Taiwan arrangement might be better than some of the alternatives, but to be honest, does anyone on this board really believe that if LVT came in, that the anti-property rights folk would be appeased, and stop the manifold assaults on property that have occured in the West in recent decades? Anyone?
Richard, there isn’t a Land Value Tax in Hong Kong. The state owns all the land and rents it out on leases. It is a nationalised landlord, as I described earlier. If that’s what you want, say so.
Probably some of the Internet tax will find its way back to the BBC so as to “make up for” the fact that people who watch TV on their PC’s don’t (currently) have to pay the BBC Licence Fee (read Poll Tax).
The other point to remember, which nobody seems to have noticed yet, is that if the State puts in the network, then the State will tell you what you can use it for and what you can’t. The whole business of Internet Access in the UK could end up as a sort of fake charity. Beware.
The initial redistribution of the land into equal parts is illegitimate, because by taking effect forever it alienates subsequent immigrants and non-inheriting children from their equal rights to the land. The “redistribution” should be made yearly, by renting out the land and redistributing the proceeds. And yes, this means that someone who immigrates 6 months after the citizen’s dividends are paid out is being alienated from six months’ worth of access to the land! Gosh! But even that is surely better than being alienated from it, forever.
Comes about? Hopefully via the spread of “Georgist” ideas such that land can be acquired by people who will use the rents an in “inclusive” manner, or by the use of the democratic process. As for whether a “state” is “inclusive” or not, well, it depends on immigration rights, the right to elect public officials and legislators via a proportional rather than majoritarian system, things like that. I agree it sounds rather fuzzy, but then the world isn’t black and white. I think Hong Kong, Denmark and Taiwan are some of the best examples.
But in your post at 11:19 you pointed out that they’re practically the same thing? I’m confused.
Yes I did Richard, which is my point. You’re not promoting a tax, you’re promoting state ownership of all land. Which is the same as the communist fallacy, which does not abolish private property, but instead transfers it to the state, and makes everyone a serf thereof.
If 51 per cent of the population vote that their elected representatives seize the land of those who, for whatever economic theory, is considered to be illegitimate, that does not make it right, I am afraid. Democracy is the least-bad way of removing bad governments from power; it does not carry much moral weight beyond that so I am wary of those who use it to deal with such issues.
No. If a piece of land is legitimately owned under the egalitarian starting point that I gave in my hypothetical case (shades of Nozick’s famous demolition of redistributionism) then the land can be transferred to whomever the owner(s) want; some will be disinherited, but those who are cannot then complain that the landownership derived from an unequal starting point. If you accept that a person is entitled to X, he is entitled to transfer it to Y, and if that pisses off Z, then that is too bad.
I notice that you briefly mentioned the idea of “equal right to the land”. There is no such right. We have a right to life and a right to pursue the means of securing a life; we do not have an “equal” right to land as such and our right to life is not a sanction for thievery, even if that thievery adopts the garb of a questionable economic doctrine.
We can, for example, live entirely by earning money genrated through creation of non-physical goods, such as through services, etc. (This being one of the great aspects of an economy made possible by strong property rights). Ownership of land is not, therefore, vital to life in the way it was thousands of years ago, so denial of it via disinheritance is not a violation of a basic right to life.
And as I said, monopolistic ownership patterns of property are in fact more a feature of government than of laissez faire; so at an empirical level, the Georgist objections are unfounded.
Well, we have to agree to disagree on this point. I believe that there are collective action problems which are best solved by a participatory democratic process. In my society there would be plenty of safeguards for people who felt that the process had wronged them, like the right to appropriate land that no-one else was using until someone else was prepared to bid for it, and thus to set up a “state” in opposition to the current one. But if it started to become an exclusive, rather than inclusive one, and provided the “Georgist class-consciousness” was sufficiently developed, I would expect boycotts to arise which would make it very difficult for the exclusive state to operate.
But that’s my point, you’re begging the question again. Even the “egalitarian” ownership of land is wrong because all perpetual ownership rights in land are wrong, so the land in question is not “legitimately owned” and can therefore not be legitimately transferred. And yes, I’m begging the question as well, because any political system needs axioms that are treated as true. I just think that my axiom of equal rights to land is more agreeable to human nature and conscience.
This is a definition problem. A Georgist would define his system as laissez-faire, and your system as “government”. I quote Albert Jay Nock:
Richard, I think we need to recognise that this land-based philosophy is flawed. The removal of the land from the people in Britain- via the enclosure acts- was an injustice, yes. But it led to a differente economy, and it is a foolish desire to return to the old subsistence agrarian one. While each man has a plot of land he has indeed a “source of human subistence”, but barely. His is lucky if he can feed himself for a whole lifetime without suffering calamity, and he will certainly be living in abject poverty.
The economy that came after, the industrial one, was the first time in history that food supplies became reliable, that people could produce far more than a subsistence level, and thus economic growth was possible. A man no longer needs to grow his own food, because he can be far wealthier just trading some other product for food grown by a few farmers. I’m an artist. I don’t want to spend all day growing food. I prefer to draw pictures and swap them for food somebody else grew. I don’t want a plot of land. It’s not how I want to live my life.
So it’s useless to say I’ve been “alienated” from the means of my subsistence. Whatever suffering my ancestors underwent- which must in many cases been considerable- I myself in the modern age have profited enormously. We cannot and should not try to go back and fix wrongs of the distant past, when their ultimate result has been improvement for us.
If at some point in my life I buy some land, it will not be for its productive value. It will be for housing, and a garden, and for the security in my ownership of those things that property rights over them provide. Your land value tax will not make it easier for me to acquire land. It will force me to be a tenant with an arbitrary rent set by the state, rather than having outright ownership. All you can offer me is insecurity.
I am not alienated by not having a farm. I am much relieved that I do not have to live that life of scratching an existence from the earth that my ancestors did.
Nowhere have I argued for a “subsistence based economy”. Hong Kong has LVT and is one of the most developed, capitalist, prosperous countries in the world, if not the most. Under LVT the rent would not be “arbitrary”, it would be set by the market via auction; exactly as if you wanted to rent the land from a private landlord. If you don’t want a plot of land, I have no desire to force one onto you.
Yes it will, by giving landowners an incentive not to hold land idle and instead to release it onto the market. As for “insecurity”, well, if you measure security in terms of ownership of land, then you can offer the landless 99% of the Earth’s population nothing but insecurity either. I’m not prepared to sacrifice their security for yours, so to speak. Even if there was some kind of redistribution that gave everyone his “fair share” of the land, then any newcomers would therefore have no security left for them.
“property rights can pre-date a state”
That’s simply not true on a historical level or a logical level. The Vikings imposed their ‘state’ and Anglo-Saxon land ownership was wiped out, then the Normans imposed their ‘state’ and Viking land ownership was wiped out. Had the Germans won WW2, ditto. Or look at East Germany under the USSR.
Without land registration and the force of the state to e.g. evict squatters and non-paying tenants, protect you from burglars & trespassers, restrict your neighbour from extending his property and thus devaluing yours etc, land rights are more or less worthless – see for example Zimbabwe where law and order has broken down.
Or closer to home, why is UK farmland worth 1% as much as urban land? It’s because a farm is worth what it’s worth because of what it can be used to produce, it required relatively little police presence, it requires very little in the way of things that make urban land valuable (it doesn’t need street lighting, refuse collection, transport infrastructure, fire service etc).
Robinson Crusoe may have declared his own republic on his island and declared himself owner of the whole island. But that right is only worth something provided he has the force to back it up. If he has enough weapons (legal or actual) to back it up and get people to pay him rent or to pay money for freeholds, then by definition, he is The State.
As to physical moveable property, however malevolent The State or your enemies, you can always hide them or take them with you to another country – a kilo of gold (well hidden/protected) has much the same value whether in Zimbabwe, North Korea or the UK.
I’m not sure how anybody can contend what you contend.
I don’t want to rent the land. I want to buy it, precisely so that I don’t have to pay rent on it. Which part of that is so difficult to understand?
Perpetual ownership is another way of saying land owership is absolute: either you own something, or you don’t. I own my flat; I don’t own it so long as Gordon Brown or whatever decides that the “community”, in its infinite wisdom, decides that the “greatest happiness of the greatest number” wants to do something else with it. If property rights are reduced to the status your paragraph implies, there is not much point to it.
No doubt. I have read Nock, and I think it is a bit disengenuous to use the passage in the way you did. He was writing about the Norman Conquest, and the destruction of the property rights of the Anglo Saxons, which in many ways fitted in with a fairly benign model of property rights. The Normans were indeed good examples of a violent, property grab by a strong state.
Another thing I don’t get about the LVT crowd is how you try to claim that by paying LVT, the owners of this wicked property somehow are redistributing their ill-gotten gains among the population, but how on earth can one, from this assertion, decide what the rate of LVT should be: 10%, 30%, 50%, what? And suppose the goodies are spread around: should this money go to certain groups (who in some cases will already own property), or to those with no physical property, or what?
The whole idea is an incoherent mess. I have lost patience with it.
I understand perfectly. It’s just that I consider ownership of land in perpetuity to be too harmful to the need for security, (which you so eloquently defended), of people who can’t afford land.
You will always have the “security” of being able to appropriate unwanted land under my system (as long as it is unwanted), and so will everyone else, as well as the “security” of a vote and a citizen’s dividend cheque.
This may leave you with less security than a system of land appropriation would, given that you can afford land, but I believe it would result in so much more security for the landless that it is morally impermissible not to make the trade-off. Your system generates a two-tier society based on historical accident in the appropriation of land, which rightfully should belong to everybody; I regard this as morally repugnant on pretty much every level.
That is nonsense; LVT, by driving up the cost to landowners of holding “idle” land (idle in the sense that it is used for reasons you disapprove of) the land will most likely be sold for developments, not necessarily of a sort that people on modest incomes can afford.
Which by the way is a great reason to support H. de Soto’s contention that the lack of enforceble property rights in Third World is a serious problem; LVT will not change that much. If the large landed estates that you claim are owned by 1 per cent of the world’s population (sounds a dubious figure to me, BTW) are “idle” or not run at “optimum” levels, then surely that would lead to the gradual selloff of this land anyway to more productive, higher-value owners. Landowners want to make money and have a good life like anyone else; the idea that we tax people to make the system work more efficiently is not terribly convincing.
So let me get this straight; the right to own property must be limited or penalised, somehow, so that those who do not yet have it, or have not even been born yet, can have a chance of having it. But that does rather ignore the reality of how property is constantly in a state of flux; the ownership patterns of land in the West have changed and will change further as people rise and fall along the income scale; people die off and their estates are sold to pay bills or inheritances are spent on businesses or consumption.
You raised the issue of immigrants in an earlier comment. What immigrant would want to enter a country in the hope of buying a bit of land if he thought that that property would be heavily taxed by people who regard property as some sort of special case, unlike say, physical or mental labour? And in truth, as we know, immigrants who have earned lots of money have bought property when given the chance to do so. So it is a nonsense to suggest that property should be restrained or taxed to create some sort of level playing field (sorry to mess around with metaphors).
Just offer an auction for the right to use land for one year. That’s a market transaction, giving you the market price. As for the distribution, that’s for the proportionally elected legislature and executive to decide. And if it’s such an “incoherent mess”, why does it work so well in creating such free, prosperous societies as Hong Kong and Taiwan? It’s the libertarian idea of property rights in land that’s an incoherent mess.
“How does one get property in land?”
“By getting there first, and building a fence or something.”
“Should people be allowed to take land by force?”
“No, that’s stealing.”
“So people who steal land should have to give it back?”
“…no.”
I don’t support LVT on the grounds that it would make the system work more efficiently; I was merely trying to demonstrate that the contention that LVT makes things less efficient is false.
I don’t see why the fact that land ownership is in flux somehow obviates the need to look after the landless class. You might as well say that since a person’s income tax liability moves up and down, we needn’t abolish income tax.
Well, I would. I want Hong Kong citizenship ASAP; better than living in this dump.
Richard, so why don’t you go to Hong Kong if you could get a visa?
Oh and there is this comment that really cannot stand:
Dearie me. How could be sure that the supposedly “excluded” non-property owners would get the money, or that such a legislature would have an accurate understanding of who the “deserving” are? Let’s take a trip into the real world, shall we? Look at how governments the world over – including East Asia – actually operate. Much of the budget of the state attracts rent-seeking of a form that would put many traditional landowners to shame.
This is also question-begging:
.
What land? All of it? Estates above 100 acres/1,000 acres, urban land, houses, lakes, what? Should every freeholder put his fucking house up for auction once a year so that it can be assessed and then giving a right-good taxing?
Look at that link in the main piece about the Austrian critique of Georgism. It gives a devastating take on the difficulties of LVT and in fairly setting it. The tax, no matter how ingenious some of the advocates try to be, cannot fail to have arbitrary effects although of course all taxes fall afoul of that to some extent.
No wonder so many true libertarians believe in ownership of guns.
I put these two next to each other because I think it’s an interesting disconnect. Firstly, the theory of participatory government is contrasted with the real-world example of non-participatory governments. Fair enough; no system is perfect, but this is the reason behind the “safeguards” like appropriation of unwanted land for the creation of one’s own state. If competition between “governments” should generate better government overall, why hasn’t it done so far? Because existing governments are allowed to maintain their monopoly over land that is lying unwanted and unused. Stop that, and we’d rapidly find participatory governments springing up that were more efficient than you or I can imagine.
Secondly, the disconnect comes when you refer to the article (which I have read) which states all the theoretical reasons to oppose LVT based on valuation. Except, well, let’s take a trip into the real world, shall we? I’ve never heard of any problems with valuation in any of the jurisdictions that use LVT. So the theoretical objections mostly seem trivial in the face of real-world evidence.
Should you have the right to carry a gun onto private land if the owner doesn’t want you to?
A good question, and the answer is that under globalisation, assuming free movement of persons is a key part of that, and that governments don’t try to prevent tax competition, such competition arguably has had an improving effect. For instance, I would bet that the low-tax approach of Ireland, for example, has been one factor encouraging lower corporate taxes in the UK. In fact, tax competition is one of the few forces in evidence that is forcing otherwise socialist governments to behave, although in their desperation for tax revenue, they are now hounding tax havens.
BTW, one reason I worry about LVT is that you can bet that governments, if they adopt it, won’t make equivalent cuts in other taxes, such as VAT or income tax. If they did, I might be a tad friendlier to the idea, but I think people like Mark Wadsworth are being a shade too optimistic on that score.
here is a good piece by Jan Narveson(Link), the political theorist, on the Henry Georgists and LVT. It is worth a read.
No. If the owner says you cannot carry a gun, or act in a certain way, then no entry. Period. I was being a tad blunt: it is the property-owners who are more likely to be friendly to the idea of gun ownership to defend what is theirs. “An Englishman’s home is his castle” used to be an expression that conveyed a certain meaning; nowadays it is a bit of a joke.
Just read it. I don’t think there’s any argument in there that hasn’t been discussed in this thread already, though. Again, it centres around the assertion that appropriation of unused land in perpetuity isn’t force, which I believe it is. He claims that land ownership is necessary for economic development, which it isn’t.
Do you think people should have the freedom to move onto private land if the owner doesn’t wish it? I take it from your answer to the “guns” question that the answer to this is also no.
So your position is that the surface of the Earth should be divided into a patchwork quilt of private land holdings, each of which should be controlled by a private individual or group of individuals who have the right to determine whether the people within that land have the right to carry guns on it, or even to step onto it.
Now, let’s take a trip into the real world, shall we? We already have such groups, they’re called states. States determine whether people within their boundaries can carry guns, or whether they can live and work within those boundaries. And what is the result? Very few of these land-owning entities allow people carrying guns onto their land. Very few allow free immigration, or indeed respect the individual rights of the inhabitants in any serious way. If free movement is necessary for the competition between landowners to improve standards, and no-one is to be allowed free movement onto another’s land, how can you claim that “private” landlords (although as I’ve argued this distinction seems to have little meaning) will be any more beneficent than “public” landlords?
Why were Catholics in Ireland and Indians in India not allowed to carry guns in the 19th century? Because of the genocide being carried out against the peasantry by private landlords. And don’t say “it could never happen here”, because it did happen here – on British soil.
Collective property has its use determined by the majority, whereas all have a claim over common property which cannot be extinguished by the majority.
Free speech is in principle a common right, because it gives each individual the right to speak as he/she sees fit. If it were a collective right, then each person would be told what they could say by the majority and if it were a private right, each person would be told what they could say by the owner of the rights to speech.
That’s begging the question. I said previous that I don’t believe that locations are something that should be treated as private property.
I’m arguing that not everything should have private property rights attached to it. I believe that physical objects can be legitimate private property, but intangibles such as locations and ideas can’t.
There are many differing opinions about what can constitute legitimate private property, with areas such as patents, copyright and natural resources still producing a lot of disagreement. Just because my definition of property doesn’t mirror yours doesn’t mean I don’t support property rights.
I’m saying that people should have the right to own material property and anything else they want from others they should have to acquire by mutual agreement.
Paul, a lot of nonsense here:
Explain how commonly held property comes to be that way. Let me explain: it is because of a state has brought this about in some way, in which case, if that state is a democratic one, there is a majority involved, in which case, you might have a minority who are not so thrilled by the idea. Or, common property rights can be formed by individuals who choose, as is their right, to pool their property together; as a corrolary, such folk should have the right to take off and set up on their own if they want.
There are problems with common ownership in certain things, of course: I am sure you have heard of the “tragedy of the commons”, etc.
Depends on what you mean by “locations”. A piece of land might a “location” but it is still a piece of property if title on it has been recognised.
With ideas, well yes – enforcement of rights over ideas is so difficult and counterproductive that IP is a big issue.
Richard Allen is unpersuaded by claiming that land ownership is not needed for development. Securiity of possession is surely a pre-condition of wealth production as a matter of simple common sense. Societies where property owners can be expropriated by states, taxed and harrassed are likely to be less rich than those that aren’t. I think you guys are now just being stubborn in your egalitarian dislike of property rights and it would be better to just come out and admit it.
Of course they do. States are also trying to regulate us in all aspects of what we do from morning to night. That hardly makes it right, does it?
Anyway, I have had enough of this. You guys are basically socialists, or if not, you sure sound like them.
JP, yes, common property rights only exist because states recognise and enforce them, but exactly the same applies to private property rights, so private property rights are collective rights to the same extent that common property rights are.
Land has no intrinsic value independent of human labour. The value of land is the sum of the total future earnings you expect to make from it, discounted by the rate of inflation. The rental value is the difference between these totals at the start and end of the rental period. (The value is also affected by technological capabilities and improvements made to land nearby – infrastructure, transport, markets, information, etc., which again are added labour.) The entire value of the land is the value of the work you can do by benefit of controlling access to it, and is therefore clearly ownable, even under Georgist ethics. The reason for granting this control is so that you can obtain the benefits of the improvements you make to it, to make it productive. So again, the value of the control is based on the improvements, not the land.
To see that land has no value without the possibility of productive labour making a profit through using it, you only have to consider the value of land on the moon. It would theoretically be possible to obtain and trade ownership of patches of the moon, but since the labour you can mix with it is zero, its value is entirely the intrinsic value of undeveloped land. I believe some conmen have managed to run small businesses selling it, but even then it is extremely cheap.
Ultimately, LVT is a production tax, but weighted according to the ground-plan area in which you produce. That can work, of course, but it doesn’t have the special properties claimed for it.
A second point to consider is that you can make more land simply by adding another storey. If you put up a multi-storey building, each floor is a separate, brand new patch of land that you can use for productive labour. One square kilometre can be turned into 20 square kilometres, with a little effort. And what’s more, because Georgists tell us that the buildings are not counted, the extra is all entirely free and untaxed. If each floor is for rent or sale individually, on the value of which one should the tax be based? Or if you base it on the economic possibilities for all of them together, are you not then back to taxing buildings? Do you divide the tax up amongst all those who own a horizontal slice of it? And how about underground? Or floating on/in the sea?
(Incidentally, this has the effect of encouraging skyscrapers. That can sometimes be the sensible thing to do anyway, but in other situations it might not be the most efficient method. This is one way the LVT would distort the market.)
Suppose I want to get rid of some land, but nobody wants to buy, because everybody has all they can use. Does the land then have zero value, and therefore no tax liable? Can I simply declare it to be no longer reserved for my use, free for anyone to take and claim, and stop paying taxes? (Can I even carry on using it, subject to eviction by any new claimant, while I do so?) Or if the state claims it has a particular assessed value, can I be guaranteed to be able to sell it to the state? (If you’re not willing to buy it at that price, you can hardly justify claiming it is worth that much.) So assuming the state holds a reservoir of unused land, or there is a large amount of unclaimed land, then again the total amount of economically productive land isn’t fixed. It can vary depending on the price.
And so either total tax revenue will vary, or the tax burden per unit area will. Sounds like incipient chaos to me.
Then why is the price of empty land not zero? “Unimproved” and “improved” land refers to improvements made by the landowner, which you also seem to be referring to. Unimproved land has a value which has been improved by persons other than the landowner, who nonetheless captures the benefit.
And yet you admit that the price of land on the Moon is not zero, and therefore that land on the Moon does not have “no value” as you claim. Unless you believe in a “just price” that is somehow different from the market price. If the people selling land on the Moon weren’t conmen, and you could actually enforce your claim, the price would be higher. Still very low, but not zero.
If you can prove this, you have disproved something which virtually all economists believe to be true. Submit your findings to a peer-reviewed journal, and you might even win a Nobel Prize!
Seriously? You can’t tell the difference between land and buildings?
The one that would still exist if the building did not, ie. the ground floor.
No it doesn’t, the scarcity of land encourages skyscrapers, and LVT does not raise the price of land. If you can prove that it does, in defiance of all economic theory, you deserve a Nobel Prize as I’ve said.
Yes.
No. The assessed value is the value the community places on its resources, which you owe to the community for the temporary use of those resources. It is worth that much because the community is prepared to buy it at that price, conditional on the revenue being used for the benefit of the community rather than a private individual.
Right, because under income taxation the tax burden never varies, and neither does the tax burden per unit of labour, and likewise with commodity taxation. Also, where’s the “chaos” in Hong Kong, Taiwan, Singapore, or Australia? They all have LVT.
And Johnathan thinks I’m a socialist, and that land ownership is necessary for economic development. If that’s true, then why do Hong Kong, Singapore, Australia and Denmark, all with LVT, score more highly than the UK in terms of both economic freedom and per-capita GDP?
I say again, recognising equal rights to land is the only way that socialism can be defeated, and the principle of property rights in the product of labour can be defended.
Under LVT, must all leases of land from the State be limited to one year terms? Would it not be possible to auction multi-year leases (which would help with longer-term planning and thus drive up the implicit value)? If not, what is magic about one year? Why not monthly, or even daily, leases?
So, assuming that multi-year leases are possible, let’s postulate a society where all property is “common” (i.e., owned by the State), that it has a “value” which has been established via some objectively fair mechanism, and that in this State there is in place a LVT regime which has assessed an appropriate level of tax. (I prefer to call it a “tax” rather than “rent”, but that’s just semantics.) If that is the case, then it is a simple mathematical exercise to calculate the present value of the entire future stream of tax revenues to the State: simply divide the annual tax amount by an appropriate discount rate (which should be roughly the rate of inflation, perhaps with some additional growth factor). By paying to the State, in advance, that entire future stream of taxes which this land is going to generate, one has created a prepaid, perpetual and non-cancellable lease. As far as I can see there is nothing in this thought experiment which is conceptually contrary to the tenets of LVT, but what we have now accomplished is the de facto purchase of land, which is right where we started: private ownership.
Laird, that might be the case if there was no public expenditure, no one was born and no one died.
“Then why is the price of empty land not zero?”
Because it measures the profits from future economic production. The value of empty land is that you can do stuff to it to make it productive, and then reap the benefits. The point of ownership is so that you don’t lose your investment. It is that future production that constitutes its value.
Land for which there are no prospects of future production does indeed have zero value.
“And yet you admit that the price of land on the Moon is not zero”
Touché!
Yes. The fact of ownership has some aesthetic value for space-romantics. I would suggest that it is the ownership itself that holds the value, rather than the land, but I won’t argue.
“No it doesn’t, the scarcity of land encourages skyscrapers,…”
There is no shortage of land. There are billions of acres unused. The only shortage is of land with the right sort of improvements to it.
“…and LVT does not raise the price of land”
No, it lowers it.
It raises the price of producing things on it.
“The assessed value is the value the community places on its resources, which you owe to the community for the temporary use of those resources.”
The community places no value on resources. It only values the goods produced using those resources.
“They all have LVT.”
They all have a component of LVT, along with other types of taxes.
“And Johnathan thinks I’m a socialist,…”
Ownership of the means of production by the state, as a stepping stone towards joint equal ownership by the community?
“… and that land ownership is necessary for economic development.”
Not precisely. Land ownership is necessary so that you can invest in improvements to land in advance of reaping the profits.
If you improve the land, and then somebody else takes it from you before you make any profit, you lose out. If that can happen, there’s no incentive to invest. But if you can obtain exclusive rights, then any labour you add to the land remains yours to exploit.
By owning it, you are only really reserving the right to the added improvements you make.
If there’s no investment in improving the land required, then you simply move your business somewhere else at no cost. Ownership would not be needed.
The fundamental premise of LVT enthusiasts is that the private ownership of land is improper and/or immoral, that it all somehow belongs to Society writ large. That is a viewpoint with which I do not agree, but it is an article of faith. This is a theological discussion, which is always a waste of time; no one is ever convinced.
I’m only sorry I’ve invested the time in reading this thread this far.
There is certainly a shortage of land in the inner cities, which is where skyscrapers go. Who the hell would build a skyscraper in the boondocks?
“Means of production” is the socialist fallacy. In reality the “means of production” are land, labour and capital, which should be treated differently.
You are living in a fantasy world where there are no buildings in Hong Kong, Singapore, Taiwan, Australia, or Denmark. In reality all of these except Taiwan have a higher GDP per capita than the UK, why? Yes, they have other taxes, but these other taxes can only hamper investment; unless you’ve somehow proved that these taxes play off against each other, in which case I need to see you submit your findings to a peer-reviewed economics journal.
You’re assuming perfect knowledge of the future, which obviously doesn’t hold in reality. But to answer your previous question, once land values had stabilised I would expect rents on longer terms to become available, maybe up to 10 years or so. For reference, people move house on average every 8 years.
I’m a Stirnerist, I don’t believe in any objective morality. As I’ve said before, I merely believe that the principle of equal rights to land is more agreeable to human conscience and better capable of acceptance among the population at large than the monarchical principle. If “libertarians” can’t accept this then the movement is doomed to irrelevance.
“There is certainly a shortage of land in the inner cities…”
Exactly! The value is attached to the city! Buildings, improvements, transport services, … the products of human labour. The economic value of additions to land leak out into their neighbourhoods.
The land considered as pure area is hardly worth anything. But cities are extremely valuable. And in essence, the LVT is a tax on the city – the buildings and services and improvements – and on the extra productivity that it enables.
Of course, there’s nothing wrong with that; any more than for any other productivity tax. It can be made to work. But it isn’t at all what it claims to be.
A detailed refutation of Henry George (ist) ideas is given by Murry Rothbard in “Man, Economy and State” (leading on to “Power and Market”). I will not repeat Rothbard’s points here.
As for the general private landownership point.
This is an old argument……
For example, John Locke went along with Samual Pufendorf in interpreting the Book of Genesis gave all land in the world to humanity as a collective – so that private ownership has to be “justified”. It should be remembered that “mixing your labour with it” did NOT undermine the original collective ownership of the world (in the, mistaken, view of John Locke) it was part of the Lockian “justification” process.
This is not just dodgy interpreation of the Bible (which would not matter to athiests), but also leads on to bad philosophy – such as Locke’s efforts to “justify” private ownership by such things as the Lockian proviso (i.e. the economic claim about higher living standards for everyone), which collapses political (indeed moral) philosophy into an argument about economics and is also flawed in its own terms (because if only one person can be shown to be economically harmed, rather than benefitted, by private land ownership then the whole thing falls apart).
John Locke himself was driven by this (the above) to interpret the “right to life” as a positive government welfare right (something I did not know till I studied Locke back in the 1980’s – I had assumed that the Lockian right to life was a libertarian right not to be murdered). Henee his view (for example) that a captain of a ship, carrying a cargo of food, that goes from port to port seeking the best price is “guilty of murder” if anyone in a port that he had passed by dies of starvation.
A moments thougt should tell a person that this would destroy all trade (as well as all private ownership) as there is always someone dying of starvation in some part of the world – and if they have a legal right under the “as much and as good left for others” rule……
However, there is no need to “justify” private ownership if one believes that the world is unowned (not owned by humanity COLLECTIVELY) till a specific bit is claimed by a specific person.
If one rejects the theology that led to the errors of John Locke (and those of the young Herbert Spencer and of Henry George) then one can turn everything around.
Instead of the landowner having to “justify” his ownership – the raider (the person seeking to take his land) must “justify” his theft. The burden of proof is reversed.
And the existance of civilization (which is based, in the long run, on the de facto private ownership of land) has a chance.
Again this is not a new position – for example Hugo Grontius held that humanity did not collectively own the world. So there was no need for the owner of a farm or untouched bit of forest (or whatever) to “justify his possession”, it was up to the aggressor (the person seeking to invade the land held by someone else) to “justify” his aggression.
Thus putting the legal burden of proof round the correct way.
“But what of land that was stolen?”
All land (other than in Iceland and a few other places) was taken by force at some point or another – so does this not invalidate present land ownership?
No it does not.
For two violations (two wrongs) do not make a right. For example, Mr Smith’s great grand father invaded some land – that does NOT give someone else the righbt to attack Mr Smith’s home now. He was not guilty of the aggression and has lived (occupied) the estate all his life. It is occupied by his reasoning will – not that of his criminal great grandfather. And the people his great grandfather drove off are long dead.
This is the area of law covered by the Roman law concept of “historical usurpation” (the important bit is “historical”). It did NOT justify Roman conquests (for example what Julius Caesar did in Gaul was still wicked criminality for which he should have been executed), but it does mean that other people have a right to say centuries later “your forefathers took this land – so you have no right to object to us taking it”.
As normal Edmund Burke is a better guide than John Locke (but “I would say that” – being so fond of the latter’s thought).
However, one must be clear what “private landownership” (including de facto private land ownership – such as Common Law “free hold”) is and what it is not.
There is a right to “exclude someone” (after all if there was not neither crops could be grown, nor could nature be preserved – for the owner of an estate could neither protect the crops or protect the natural environment either), but there is no right to imprison someone.
This is why law (both germanic Common and Roman) understands (for example) one can not just buy land in a circle round somone and then deny them access out of their own home (false imprisonment by another method). Or deny them their property in light and air.
Private property is actually a bundle of rights – the law of property (in days before it was undermined) was complex and worth of study.
Of course these days land may be stolen at the whim of the state.
We have gone into the days of “Late Republic” and the Empire is not far away.
Interestingly England became a great power because the de facto private landownership of “free hold” was actually more secure than the Roman Law private ownership of mainland Europe – the government had less right to take land than it did in Europe. Although, of course, land was more securely owned in France, Austria and other Western lands than it was under the despotism of the Turks and so on (the failure to understand the difference between Western and other civilizations on this point is one of the things that makes the words of intellectuals on shows like “Start the Week” so worthless – they study long, but miss the basics becuase their own ideology is closer to that of the Ottoman Empire than it is to a European in the pre modern period).
These days property is far less securely held – whether in land or anything else. So those who wished for an end to both the English “feudal” law an the further corroption of European Roman Law, have got their wish.
Indeed in things like contract law (say in a politically important bankruptcy) I would rather be before a French or German court (in the Roman tradtion) than before an American “Common Law” court – as the Common Law has become more debased than the Roman Law.
“Absurd” no, I would argue that we are now seeing that America (and Britain) have many “laws” but are actually even further from the “rule of law” than is (for example) Germany.
Although (sadly) the vague (i.e. lawless) practices of E.U. law may trump French and German (and so on) law.
For example, Roman law demands things to be defined (whether it be private landownership or anything else), but Common Law just works “case by case” without the demand for clear principles from which things can be deduced.
This means that, for example, vague and contradictory doctrines of “anti trust law” are acutally better suited to American courts than the are to French or German courts (as, for example, a German court will demand clear definitions of the concepts of “anti trust law” and these vague, in reality arbitrary power for the government, doctrines can not be clearly and specifically defined).
However, sadly, contrary to the idea that the European Union court follows French and German law – it is actually following the (arbitrary and, in reality, lawless) principles of American courts.
Let us hope that this growth of arbitrary power for the government does not spread to things like bankruptcy law – for if it does German courts will be become as corrupt in this area as American ones already are. And Switzerland will be left isolated and exposed.
The British courts I will leave to my fellow countrymen (I find the subject too depressing), but for those who doubt what I say concerning the American courts…….
In private landownership – the Kelso judgement declared that any level of government may take land by force and give it to some other person (all they have to do is to express the pious hope that they will get more tax revenue that way – a doctrine that some of the French Revolutionaries would have supported as private ownership could only be “justified” if the land was being used in the most efficient way for the “common good” – and if someone else came along who said he could use the land better……).
Remember the person who President Barack Obama has just nominated for the Supreme Court is not just a vicious racist bigot – the lady is also a fanatical hater of private property rights. So expect “Kelso on steriods” type rulings.
On general contract law:
The lower courts refused to rule on the matters of substance raised by the State of Indiana police and teachers pension funds against the ripping up of centuries of contract law concerning Chrysler. And the Supreme Court even refused to hear the case
And if the State of Indiana can not get justice – what chance has a private person got?
I put it to you that a private person has no chance of justice in contract law in the United States now – and that, therefore, people who invest in companies based in the United States are mistaken.
This is not “just” bond holders – I repeat the law of contract has finally collapsed (with hardly any protest).
We have gone from the 1930’s “do not be paranoid – we are not robbing you, we are just giving you paper Dollars instead of gold” to open robbery – (and for a blatantly political purpose – i.e. to payoff the United Auto Workers union).
I like to think that this could not happen in, for example, a German court – that the rule of law (in some sense) still exists under German law (having been restored after the fall of the Third Reich).
But in the United States only the forms of the rule of law still exist (the court rooms, the people in funny robes and so on) the content of the rule of law is falling apart.
And the corrupt practices that are being built on and used go back long before Obama.
See F.A. Hayek’s “The Constitution of Liberty” and “Law, Legislation and Liberty” for the decline of law in the Common Law countries, and for the even weaker understanding of the principles of the rule of law in those countries (especially the United States – among the “Progressive movement”) than in modern Germany and so on – when the results of the collapse of the rule of law are better understood (at least for now – although vague E.U. principles may change that).
In short – in the United States the Progressives are winning. The rule of law is dying.
Land Value Tax is a tax on productivity, but so is ground rent, as the two are identical. The “tax” will still be paid whether the landowner is “public” or “private”. I’m glad you’ve recognised that the value of land is not merely due to the production it can support, but also its location next to other production, which has a value in itself. The man who owns a plot of land in the middle of the city can therefore “tax” the production of the rest of the city by renting out his land; even if it’s empty, and he is therefore producing nothing, his land will still have a value. If you wish to deny this, you would have to tell me that if someone gave you a plot of empty land in the middle of London, you would consider it worthless and would be prepared to give it away. Otherwise you would have to recognise that it has some value, thanks to the production being carried on by the city-dwellers around you.
The point of LVT is to internalise the positive externality that production of value generates for landlords who don’t contribute towards it. This encourages production of value, rather than discouraging it. The truth of this is seen in the vastly superior infrastructure enjoyed by Hong Kong and Singapore as compared with the UK and USA.
“if someone gave you a plot of empty land in the middle of London, you would consider it worthless…”
If someone gave me a plot of land and I did nothing with it – just left it there – how would it profit me? The value of the land to me is what I can do with it. It is the proceeds of the business that I can carry out by virtue of owning it. The land itself means nothing, it is the productive use of it that has value.
The fact that it is in the middle of London means of course that owning it gives me cheap access to London, (itself a product of human labour,) which makes the work I can do on the land more profitable. But again, note that the value LVT taxes is a product (access) produced by an improvement, and the productive business I conduct on it. It is the improvements and my own labour that generate the value that LVT taxes, therefore LVT is a tax on the improvements and productivity.
“…even if it’s empty, and he is therefore producing nothing, his land will still have a value.”
First, it’s not just the existing production that gives it value, it is the anticipated total future production (discounted by inflation).
Second, he is producing something. In the same way that traders who buy and sell goods without actually manufacturing any produce something. If a shopkeeper buys in 500 tins of soup and stacks them in the corner uneaten, he (and the tins) are in exactly the same sort of way “producing nothing”. The present value of the tins is in their future use of constituting a good meal (so if something happens to make them uneatable, they immediately lose all their value). The shopkeeper in storing the tins uneaten is providing a service, which is the more efficient allocation of resources. It is his job to find someone who can use the goods (whether soup or land) to its best potential, to gather the information by which an efficient market price can be set. It is in fact a very valuable economic activity.
I think this may be one basic source of the disagreement. If you charge shopkeepers huge ground rent, then instead of stockpiling goods they’ll work hard to make sure their stock is always at an absolute minimum, they only buy what they can immediately sell, they’ll never buy in bulk when prices are low and wait until the goods are most needed, they’ll heavily discount goods that aren’t selling just to get them out of their shop, and they’ll take greater risks of goods running out if they sell faster than expected.
And while there will be a lot less tinned soup sitting around uneaten and therefore “unproductive”, the result will be higher and less stable prices, and a less reliable supply of goods.
It was the same error Marx made. He saw traders buying and then selling for a profit, who did not actually produce anything. The labour theory of value does not recognise this as “productive”, and hence the trader must effectively be swindling somebody to profit – in this case the poor worker.
You’re misrepresenting the nature of LVT. It taxes the value of the access you receive by owning the land, but does not tax the increase in the value of land provided by your own labour (it is a tax on unimproved land value). It taxes other landowners the value your labour produces for them, because your labour increases the value of others’ land, making it more desirable by proximity to your improvements. The benefit of this is then returned to you via public goods/citizen’s dividend cheques, to compensate you for the positive externality your labour has provided, thus encouraging you to produce more value for the community, not less.
You continually make the presumption that all land value is monetised by its owners, and thus continually ignore the criticism that those who are not benefitting from their rising land value are penalised by the tax. The only people who benefit from rising land value are rentiers. People actually using the land do not benefit. A home owner does not benefit from their rising land value, neither does a factory owner, nor a farmer. You are deliberately penalising those who owner occupy.
Firstly, we know full well that taxes are only occasionally used for the “public good”. Expenditure of taxes is mainly driven by special interest groups. The public goods will be lavished on others. Those who pay the most LVT will get the least public goods, as with taxes now. While this does not make it worse than any other tax, it is disingenous to claim it as a benefit of LVT.
“You’re misrepresenting the nature of LVT. It taxes the value of the access you receive by owning the land, but does not tax the increase in the value of land provided by your own labour (it is a tax on unimproved land value).”
I’m not misrepresenting it, I’m saying you are. That’s been the sole point of my entire diatribe!
Virtually the entire value of the land that you’re taxing is due to the increase in value provided by my own (future/potential) labour. The value of access is the value of the more profitable business done by means of that access – again, added labour. Sentimentality aside, there is no intrinsic value to land. You are simply taxing the added labour, but by an indirect route that makes it less than obvious what’s going on.
Like I said, it is tantamount to taxing a shopkeeper’s stock-on-hand, on the basis that it motivates him to sell it. Or taxing a workman’s tools, on the basis that it motivates him to use them, or sell them to someone who will. It seems to be based on this odd idea that simply keeping something ready to use/sell is not an economic activity, and should be discouraged.
I think this idea that LVT does not tax the added labour is an economic misunderstanding. While I honestly don’t expect to persuade you, I’m hoping that I can get you to at least understand what my claim/argument is. LVT is constantly being sold as not taxing people’s production, but it is. There’s nothing else to tax.
Having looked around the web about this thing before, I’ll just add that this is touted by many LVTers as the purpose of LVT- that is, to force land into “productive” use. As Gabriel (if memory serves) pointed out here in a previous discussion, it was widely supported by businessmen of a liberal party type persuasion because it would force landowners to sell up to capitalists.
It’s a deliberate tax on any “unproductive” use of land, such as home ownership, gardens, parks, nature reserves, etc and, indeed, if you’re a farmer who has the misfortune of a development nearby forcing up your hypothetical land value, it forces you off your land as well.
Just as an aside, half the residential property in the LVT nirvana of Hong Kong is social (council) housing.
I’ve found this thread interesting to follow, but, as with prior conversations that I’ve had with Georgists, frustrating.
Property rights are quite clearly one discrete topic. Raising public revenue is another. Much of the thread above reflects discussions I’ve previously been involved in, where Georgists conflate the two issues, leading to an ‘apples and oranges’ conversation.
Property rights theory obviously needs to cover three different areas: (1) acquisition of unowned assets, (2) transfer of owned assets to another party, and (3) disposal/abandonment of owned assets into an ‘unowned’ state.
I’d be grateful if one the pro-LVT parties here could briefly explain the Georgist position towards each of these three aspects of property rights, including explaining who may interact with whom for each aspect, without bringing the question of taxation into your response?
Listen to what the ever-patient Richard Allan is saying @2.00 yesterday.You are already paying LVT but to the private sector.
Everytime you sit down in central London
you pay a premium of about a pound a pint just for being there; if you are reckless enough to lie down you pay fifty quid over the odds for a hotel room.
Private sector LVT is incredibly repressive: working people cannot live in London because of a system more subtly brutal than the old pass laws in South Africa .Andrew Oswald of Warwick University has shown categorically that private home ownership increases unemployment:I would suggest because of the private sector LVT.
Nationalising the LVT would save people from paying public sector taxes which have to be imposed because private LVT is taking top slice; it would force a lot of speculatively withheld banked land onto the market and bring down land values overall.
Landowners benefit twice; while the land value is rising, they benefit from the increased variety/reduced cost of goods and services in the area (they must exist, or the land value wouldn’t be increasing), the reduced time and money cost of getting to work, etc. They benefit from these while living in the area, and when they sell up, they benefit again from having the value of these improvements capitalised into their land price as a nice lump-sum payment.
Renters pay twice for the same benefits. They pay taxes on the product of their labour which provide the public goods, and then they pay again in order to rent land in the catchment area. If there are no taxes I would suggest that these public goods would be underprovided, reducing economic welfare overall (to put it in terms the readers of this blog would understand, perhaps the lack of a professional military and security services would result in daily attacks by Islamic fundamentalists). The purpose of LVT is to allow for the provision of public goods via a means by which those who benefit pay for them – once.
How? If these really are public “goods” (as opposed to “bads”) then they should raise the land price, shouldn’t they?
That’s strictly false. If you bought land and held it for ten years, doing nothing with it, are you really disputing that you would be able to sell it for more than you bought it for (assuming general economic growth in the meantime)? The increase in value then derives from the production of others around you, regardless of whether you use it to aid production or consumption.
Correct. But as DBC Reed has just reminded us, it’s a tax that already has to be paid out of production. LVT merely redistributes the benefits of this tax from “private” to “public” uses. Of course with any collective activity there are problems with consent and corruption, but collective land ownership with safeguards (regular proportional elections, free temporary appropriation of unused land) has to be better than throwing the baby out with the bathwater in allowing total private capture of common resources. And if you don’t believe those resources are “common”, fine, but you’re clinging to a monarchical principle whose time has come.
To take your second benefit first- the benefit from land sale is irrelevant, since you are taxing rental value not sale value. Your tax is continual, not a tax on the sale of land. Additionally, a plot of land may never be sold, staying in a family by inheritance for generations, and thus never monetised. The fact that any good may have value if it were sold is meaningless.
On your first point, you are double accounting, to create a supposed profit where none exists. Consider a town with four plots of land- A, B, C and D (it’s a very small toytown). Plot A gains value from the presence of the improvements to plots B, C and D. That is, the land itself does not contribute to A’s land value- it is the presence of businesses, shops, railway stations, residences etc on B, C and D which create A’s land value. So then you say that A is gaining from the presence of B, C and D, so has to “pay something back to the community” (the community being B, C and D). But you’ve ignored the fact that improvements on plot A is also contributing 1/3 of the land value to each of plots B, C and D. The same is true for each of the other plots. Each is contributing as much as it receives. There is no “surplus value” to be claimed by “the community”. Each plot is giving, and receiving, land value in the same (approximate[1]) proportion. Residential land is worth more because it is near shops; retail land is worth more because it is near houses (whose residents are its market).
You seem to be arguing that the land value is proportionate to supply of “public goods”. As I’ve shown above, it is proportionate to the supply of private goods by other land users, and this is already balanced out with no net surplus or loss. I can see you could argue that many city plots gain from publicly supplied goods such as railway stations or buses or garbage collection, but these things can be provided privately anyway, and in many places are. What proportion of land value is provided by e.g. the police or fire brigade I have no idea, but it’s certainly not all of it, and probably a quite small proportion. You have no “calculated” right to claim all the land value as an ongoing tax to pay for hordes of coppers. Most of that value, (which I remind you again is not monetised unless the land is sold or rented) comes from private productive activity, not public. The land rental-value simply isn’t proportional to anything useful to you.
Basically, you’re saying that if a thousand people build houses (with their own money) and fifty people build shops and other businesses (with their own money), they’re all getting something for nothing and you therefore have a moral duty to tax it!
_
[1] You may argue that different plots provide differing amounts of land value to other plots, which is probably true, but it would be an impossible task to calculate how much value each plot is contributing. Some may be net gainers, and some net losers. All we can say is that their contributory status is not reflected in the sale or rental value of the bare land under the differing developments on each plot.
“That’s strictly false. If you bought land and held it for ten years, doing nothing with it, are you really disputing that you would be able to sell it for more than you bought it for (assuming general economic growth in the meantime)?”
No, I am disputing that this is “doing nothing”, and that profits from labour ten years down the line don’t count as anticipated future profits. The future consists of more than just the first ten years of it.
If I buy land, do nothing for ten years (or twenty years, or a hundred), and then do something with it to make money, that still counts towards the initial value of the land. Selling it to someone else for them to do something with it is equivalent. It just substitutes their labour for mine. (I should have said the increase in value provided by its owner’s labour, rather than my labour. That would cover this case.)
Selling it to the right person, who can make the best use of it, at the right time, when it is most needed, is a productive and profitable use of my time. Figuring out which bit of land is going to have increased in value in ten years time, reserving it for that future use, and taking the risk of being wrong is productive work. If we know that the distant future is going to have vastly better and more profitable technology, we don’t want to get there and find we have no land on which to put it because it’s all taken up with old-fashioned, barely profitable industrial junk that’s expensive to clear. We want to reserve some land ready for that future technology. The market in land enables this sort of long-range planning to take place. It isn’t doing “nothing”, at least it isn’t in economic terms.
At the time I sell it, the price I can get is the profit the buyer expects to be made from its future use. If I can anticipate that by ten years or more, and the gain is great enough that even when discounted by inflation it’s still higher than the current price, I’m in profit. (It would have to go up quite a lot faster than inflation to be worthwhile, compared to putting my money in another business.) But the value I’m banking on is the profit to be made from its use ten years on, and still the product of added labour.
Or to take the analogous situation I just discussed, suppose a shopkeeper buys a large amount of stock (antiques, rare stamps, fine art, etc.), leaves it in the store room for ten years, and then sells it, he will of course get money for it. If the choices were good, he may get a lot more money for it than he started with. Do you think that because the stock is hidden in a bank vault, that this is “doing nothing”? Or would you agree that applying the skill needed to anticipate future prices and needs constitutes useful work?
Firstly, the value of keeping land idle is a tiny fraction of the land’s actual value; it might as well be doing something in the meantime. Holding agricultural land idle could perhaps increase its value by allowing the fertility of the land to replenish itself; but if that’s the case, then someone who plans to hold the land idle should be able to outbid someone who plans to farm it anyway (if he genuinely is being more productive by holding land idle compared to using it, which I would dispute in anything except this specific case).
The situation is exactly analogous to ground rent, because ground rent and LVT are the same thing. If you want to buy land from a private landlord, then you have to outbid the person who wants to buy the land and use it. And that probably means convincing a bank lender that your use will be more productive than his, so that the banker will extend you more credit.
Firstly, if all the land is appropriated, as at present, the inventor knows that some of the benefit of his invention will be captured by the positive externality for landowners, which will discourage him from inventing.
Secondly, as all land is appropriated at present, the fact that the land is “empty” means nothing because you have to pay for it either way. Under my system, a large proportion (probably the majority) of the Earth’s land surface would be empty, as at present, because it’s no good to anyone; but it would also be free for appropriation by anyone who comes along (unlike your system, where it has already been appropriated). Thus there would be more free land for the inventor to use under my system, not less.
Thirdly, as I said above, if he really is being more productive by keeping land idle, then he should be able to outbid people who want to use the land, and therefore under LVT the land will be kept idle, exactly as it would under the system of ground rent, because the amount you pay for the use of land is the same either way. Estimating the appropriate use of resources is indeed useful work; I just think people should have to justify their use of common resources to the community in terms of the production of value. As the stock of a shopkeeper’s goods constitutes private resources rather than common resources, this situation is therefore not “analogous” as you claim. It’s simply none of my business what a shopkeeper does with his stock.
That’s exactly what the price of land measures! If a plot of land receives more positive externalities from the other plots, then it will carry a higher price, because as Pa Annoyed has pointed out multiple times the value of land is due to the labour expended by the community around it. If all four plots of land are exactly balanced out in the way that you describe, then the price of each plot will be the same as the others. In this instance there is no “positive externality” justification for LVT, but there still can be the justification in terms of protecting the equal rights of all people to the land (ie. if the population of the community is larger than just four landowners). As soon as the price of one plot of land moves ahead of the others, then the positive externality justification springs back into action.
If a plot of land receives more positive externalities than it gives back, the difference will generate its price. Thus it is overridingly easy to see how much positive externality is being generated or captured.
The land value is generated by both public and private goods. I didn’t say the land value would be zero in the absence of public goods, just that it would probably be lower. Out of interest, are you arguing for the privatisation of the military and the security services? I don’t mind either way, I’m just wondering where you stand. Anyway, to say that “this is already balanced out with no net surplus or loss” is an assertion that you can’t possibly back up unless all land somehow had the same price, as I said above.
“Firstly, the value of keeping land idle is a tiny fraction of the land’s actual value; it might as well be doing something in the meantime.”
So long as that something can be done with minimal investment, and doesn’t make it hard to change its use later on, yes.
If you spend 9 years building a steel works, run it for a year, and then sell it to be knocked down and turned into a housing estate, it doesn’t make much sense. Using land often requires that you commit it to a particular purpose, and the overhead of converting it for that purpose and then back again is an additional cost.
Certainly if there is a profitable use for it in the meantime, any businessman would use it. They don’t need any extra encouragement to do so.
“because ground rent and LVT are the same thing”
Ground rent is paid to the owner of the land to compensate him for not having full use of it. If LVT is the same, then is the government the owner of the land? Haven’t you nationalised land ownership?
“because the amount you pay for the use of land is the same either way”
Is the amount the landowner receives the same either way?
“As the stock of a shopkeeper’s goods constitutes private resources rather than common resources, this situation is therefore not “analogous” as you claim.”
If you want to define it that way, all matter is a “common resource”, and tinned soup is made of matter.
Ownership is about the exclusive right to control and use something. The right to control and use manufactured goods is the same as the right to control and use land, or buildings, or tools, or information. It’s an agreement with other people. There is nothing special about land.
“Firstly, if all the land is appropriated, as at present, the inventor knows that some of the benefit of his invention will be captured by the positive externality for landowners, which will discourage him from inventing.”
I thought you said LVT was the same as rent? So wouldn’t he be discouraged just the same?
Anyway, it will discourage him from inventing anything that isn’t so amazingly profitable that it’s not worth buying the land. The point of reserving the land is not simply so that land will be available, it is so that it will get allocated only to the most beneficial applications – the one that can pay the most. The market price and the current owner’s self-interest seeks to maximise the productivity of land. The price is based on what the most profitable businesses can afford. Less profitable ones are priced out of the city.
Of course, if the current owner gains no advantage from charging higher rents, he has no incentive to maximise them.
“Thirdly, as I said above, if he really is being more productive by keeping land idle, then he should be able to outbid people who want to use the land, and therefore under LVT the land will be kept idle, exactly as it would under the system of ground rent,”
If he has to pay LVT on it in the meantime, it will be less profitable than if he can leave it idle for free. That might tip the balance, so that even though it would be more efficient to leave it idle, it’s more profitable to use it for something sub-optimal, because of the tax.
As I’ve said before in this thread, I consider “landowner” and “state” to be synonymous, if a “state” is defined as an entity with a geographical monopoly over dispute resolution, and if you believe that the landowner has the right to determine whatever happens on his land, and can impose whatever conditions he likes on the people within his land (like forbidding them from carrying guns, for instance), then I can’t see the difference between them. So land ownership can never not be “nationalised”, but only under “inclusive” or “exclusive” ownership (democracy vs. monarchy).
If you refuse to draw a distinction between land and labour, then you are pitting conservatism (ownership of land by monarchical states, ownership of the product of labour by labourers, or at least as much as they don’t have to pay out in rent) against socialism (ownership of land and labour by a bureaucratic state).
In that instance, because I’m rich, I would vote for conservatism, and buy up as much land as possible for the purposes of advancing “liberalism” (common ownership of land, private ownership of labour). But I certainly wouldn’t blame the landless population if they wanted to vote (or fight) for socialism if that’s the choice you’re going to give them. As I’ve said before, adhering to the outdated monarchical principle (where the landowner has absolute rights over the land and everyone on it) will doom “libertarianism” to irrelevance.
He would know that some of the benefit would come back to him via the citizen’s dividend, or he could convince the electorate to vote to give him a bounty for his invention (as he would be raising their citizen’s dividends too).
If he has to buy the land in order to leave it idle, then he will pay more up front and less over time, unless he can negotiate for a long-term lease from the government (which again, he should be able to do, if this is going to be so productive). You can’t therefore assert with any certainty that it will be more expensive one way or the other.
Patrick:
That just reflects the fact there isn’t a uniform group of Georgists. There are people who are deontological Georgists (those who think asserting equal rights to land is morally right), there are consequentialist Georgists (those who think that asserting equal rights to land is a good idea because it produces positive results) and there are those who sit somewhere between the two. By the same token, some disagree with LVT on principle, some disagree with it because they don’t believe the positive benefits are as claimed and some do a bit of both.
I can only talk for myself and my position is:
(1) People should have ownership of physical raw materials they extract from the natural world recognised, but that shouldn’t give them ownership of either the location they extract the materials from or the location they move them to.
(2) Anyone who owns assets should be free to sell or gift them as they wish.
(3) Aside from complete destruction of an object, such as by incineration, an owner of property should be responsible for it until it is voluntarily transfered to another person.
I suppose I should be to blame for encouraging the Georgists to come out in force on this blog. Almost 100 comments. Kerist.
I have been away from the internet this weekend but caught up with some remarks. Some quick reax:
Richard Allen said this: I’m a Stirnerist, I don’t believe in any objective morality.
Really? I usually find that people who say they don’t believe in objective morality engage in what Ayn Rand called the fallacy of the stolen concept, in that they betray a belief in moral values in the very act of denouncing said; Mr Allen, in one of his comments, said that people have an “equal right to property”. Now, leave aside whether they do or not (I agree with J. Narveson that such a comment is meaningless and if it were to be enforced, produced a form of socialism. But to say that people have an “equal right to X” is a moral statement, a statement of what should be in the real world, ie, an objective statement about reality. QED.
Semantics again, Mr Lockett. There is a bit of a difference between the state protecting the right of individual ownership and other freedoms, and a state enforcing the idea that everyone owns everthing, which means that no-one actually owns anything in any fundamental sense. The state exists, if it has any moral basis whatever, to protect individuals and their rights.
One fellow, Patrick, has challenged to LVT advocates to be clear whether they regard LVT as primarily a good revenue-raiser or something they want because of a doctrinal issue over property and the supposed problems of property rights. That is a good question to ask.
Richard Allen seems to have repeated the point that LVT was a reason for the success of some economies such as Taiwan and Hong Kong. For sure, in countries where land is incredibly scarce, LVT might be a good revenue raiser if you want to encourage income; but to be honest, the real reason these places are rich is because their governments, especially HK, have been relatively light-touch.
Paul Lockett is opposed to ownership of a location from which raw materials or whatever are extracted from. That overlooks one important feature of property rights, as the Narveson article I linked to makes clear: the right to exclude, the right to sole use of something. If I have a flat, a lake, or a field, then part of the bundle of rights that come with ownership is the right to prevent all and sundry entering it without my permission.
Now of course states invade such a thing all the time, but we are talking about ideals of ownership, not the grubby compromises we are forced to endure due to the impact of socialistic ideas or because of reasons of brute utilitarianism.
Anyway, thanks to all for what was a great discussion. You cannot score these things like a tennis match, but I come away from it not at all persuaded that the Georgist position is correct. I am afraid he gets a “F” grade.
@Paul Lockett
Thanks for trying to deal with the issue of property rights separately.
OK, so why should land be any different? Yes, it’s a finite resource, but so is every other non-renewable resource (all the stuff dug out of the ground)? Again, purely from a property rights perspective, please.
Do you (or Georgism generally) not entertain the concept of ‘unowned’ property? That’s quite different from destruction, and is why I phrased my original question as “disposal/abandonment of owned assets into an ‘unowned’ state“.
If you do entertain the idea, but for land only, I hope that you’ll address why in responding to my point above?
A final one: if land is unowned, in what specific manner do you mean? Is the idea that the state owns it, that it forms a commons (in the ancient truly ‘unowned’ sense, or the later owned with rights for others sense), or some other mechanism which I haven’t thought of?
The difference is a matter of opinion as to where the right to own should give way to the right to act freely (I’ll ignore the “everyone owns everything” comment, as it is an obvious straw man which contradicts my support for property rights in intangible objects). There is always a trade-off between freedom and ownership rights and everybody has a slightly different take on where the balance between the two should be struck. You expressed what I think could fairly be described as a lukewarm attitude to intellectual property rights. I’ve expressed a similar belief to the one you expressed earlier and been described by others as a commie and an enemy of freedom, in much the same way you described me as a socialist and “no defender of liberty” for putting freedom to act above freedom to control when it comes to location rights.
No doubt, there is someone out there who thinks that there should be private ownership rights over the atmosphere and that we should all be forced to pay the asking price to the owner if we want to breathe and doubtless they would consider anybody who disagrees with that approach to be a commie.
It’s all a matter of opinion, but you appear to view your current opinion on how the balance should be struck as a divine truth rather than a matter of opinion and unfortunately that pretty much destroys any scope for debate, as it makes the whole thing a matter of religious faith.
Patrick:
It’s a matter of opinion about what property rights are for. I see them as a way to determine who gets to use scarce resources when there is competition for them, in the most just way. I consider the best way to do that is to use a system which enables people to enjoy the fruits of their labours while restricting individual liberty as little as possible. Individual ownership of physical objects with equal rights to access locations seems to satisfy that requirement well to me.
I can only speak for myself, but in any case, I don’t think this issue is anything to do with Georgism as such, but a completely separate question: once you’ve exterted ownership over an object, can you then unilaterally declare it to be unowned, or does ownership carry with it a responsibility to retain ownership until somebody else agrees to take it from you? I tend to go for the former. If I’m eating a chocolate bar and I walk past your house, I don’t think I should be able to declare the wrapper “unowned” and push it through your letter box to dispose of it.
I do entertain the idea of unowned property for resources which haven’t been extracted, but not once they have been extracted and declared owned.
I’d say it’s in the unowned sense. I certainly don’t think the state has any right of ownership. The result is then what I said previously:
In principle, that means that all rights to exclude others from locations should be achieved through mutual consent, i.e. person A and person B agree to stay off the land that the other wants exclusive use of. The problem with that approach is that, once you have more than a handful of people, the transaction costs become prohibitive, but using a central collector to obtain the market value of each plot and then pay it out in equal shares achieves the same result without the excessive negotiation.
Paul, let’s be a bit more blunt: I happen to think that the idea that we all own each other’s property “in common” to be bunk and socialistic; I think that if you and one or two others think I am being unfair then perhaps you should try to explain how such ownership “in common” is compatible with a political philosophy of freedom in any coherent sense. But I sense that we won’t get a clear answer or just go around in circles, so I have lost patience at this far down the thread.
And as several critics of the Georgist argument have said, there is no difference, in logic or principle, between saying “All land should be used in common and its proceeds distributed to all”, and the statement, “All human talents are owned in common and proceeds of them should be shared”, etc. I don’t “deserve” the benefits of the land that my father owns, any more than a person might “deserve” his talents as a computer scientist, architect or lawyer. And our talents become more, or less valued often as a result of external factors over which we have no control. Does this mean that we should be taxed for these “unearned gains”? A socialist would presumably say yes, and the LVT folk claim that only land should be taxed in this way, while human talents are not comparable. But their position is nonsense.
The charge of socialism against the Georgist stands.
My statement that I believe in equal rights to land is a statement of objective fact, that actions in accordance with this principle are physically pleasing to me and actions not in accordance with this principle are physically displeasing to me, and that I believe the majority of humanity to feel the same when they consider the issue. I’m not “denouncing” anybody’s ability to make moral pronouncements; simply stating that in my experience it is symptomatic of intellectual dishonesty and an inability to carry on argument without resorting to argumentum ad lapidum and argumentum ad hominem.
The point is that they could afford to be “light-touch” because the private appropriation of the benefit of land generates social inequalities and a two-tier society; thus the people on the bottom tier vote for social welfare spending in the hope of increasing equality. The “common ownership” principle obviates the desire for social welfare spending, while simultaneously providing a non-distortive source of revenue for central government, allowing them to reduce distortive taxes.
By repeating this point, referring to Georgism as “everyone owns everything”, you are repeatedly misrepresenting that ideology. Until you can accept the difference between land and labour, you’re right that this discussion will only ever go around in circles. People are entitled to their own bodies; they own them, absolutely. People are entitled to the product of their labour; they own it absolutely. But the land they use to produce this product remains common property, and they can only ever get temporary title to use it and exclude others from it.
Look, socialists HATE this principle; it totally destroys any legitimacy their nonsensical ideology may ever have had in the minds of the people (which is the only place it really matters). If you persist in defending landlords against workers, then you can’t blame the workers if they start to think that the socialists are the only ones looking out for their interests.
Great news for the Labour Land Campaign that “the charge of socialism against the Georgist stands.”This left-wing Georgist organisation has been involved in friendly and indeed co-operative banter about the nature of Georgism with other Land tax organisations and individuals such as Alter (LIB/DEM),the Greens, UKIP members such as Mark Wadsworth and Tim Worstall and even the occasional Conservative ( Robin Smith).
And then there are the journalists (only the best) Martin Wolf,Samuel Brittan (FT) and Ashley Seager (Guardian) who support LVT without being partisan Socialist.
In fact the organisations have recently formed the Coalition for Economic Justice to press for LVT from all political directions .
As a Georgist for 30 years, I never fail to be surprised that people don’t get it.Opponents of LVT are quite happy that fiscal stimuli inflate private ground rents to the point where young people are de facto homeless,or lose a lot of their purchasing power to paying mortgages,half for houses half for land underneath as long as they (LVT’s opponents) get their share .They then have to pay public levies on top because the righteous source of public revenue has been privately appropriated.
The enemies of LVT also defend the present privatisation of ground rent,even though it reduces their chances of getting well-paid work (as Andrew Oswald has demonstrated) and is profoundly anti-libertarian: you cannot live where you want,not in the town you want,not in the district you want.The chances of selling your pit cottage in the Yorkshire coalfields (which the miners were urged to buy) and moving to the SE for work and housing are nil.
I had Surrealist contacts in Prague who could not use certain cafes because the Secret Police would n’t let them; come capitalist liberation and they could n’t afford to go there,private ground rents being aggregated into the price of drinks.
One of the problems is that the benighted see the present situation as normal,when it is,in fact, horribly distorted.
No I am not, I think that the Georgists are – or most of them are – failing to be honest about their own views and the implications of what they are saying. If you say that the increase in the value of X is unearned, and that land is a given fact of nature over which ownership should be limited, and that the proceeds of this allegedly unearned wealth should be redistributed among the whole community, then that is not a belief that I consider to be compatible with a free, liberal order. That is not just my subjective view, either. Without repeating myself endlessly, the same argument that we are having over land was had over the labour theory of value.
There is something else that I do not like about the LVT argument and IanB, among others, has picked up on it: it is a tax that tends to hit the little guy with a small plot of land that he or she has bought for a retirement home and suddenly finds that its value has soared because of a change in the use of land nearby. Now some LVT advcocates try to ameliorate that by tax breaks, or temporary suspensions, or whatnot. But as soon as you start to do that, you blunt one of the allegedly declared purposes of LVT, namely, to force owners of land to sell it to supposedly more high-value users. The beneficiaries of such sales will, in many cases, be large business developers. Quite how this fits with other aspects of Georgist thinking is beyond me.
On some Asian countries, you write:
Hong Kong, operating as it has under various forms of benign dictatorship for years (under the UK, for instance), may have been able to set a LVT in return for very low other taxes, but Hong Kong, to stick to that example, operated very low levels of public spending overall. Imagine the UK, with its heavy debt and Welfare State spending, and imagine that funded almost all through LVT. I don’t see that working remotely well.
And your remark about the private appropriation of the benefits of land, which suggests that you are opposed to private ownership, and think we should all rent off the state (there is no other logical alternative), repeats the mistake that has relentlessly and repeatedly knocked down in this thread: under capitalism, an entrepreneur, for instance, takes a chance and buys a bit of land that has come up for sale, and as a result of his guess being vindicated, benefits if the value of what he has bought goes up, or will suffer a loss if the value goes down. This happens all the time.
Anyway, enough.
Johnathan, I think a big part of the problem with Georgist thinking is that it is based on a particular view of land use which is rather old fashioned- that is a model in which all land is owned by fabulously wealthy rentiers, and all land is rented from them by the poor masses, and thus all land is being used as a source of exploitation. It simply doesn’t philosophically accomodate the owner-occupier, who by that Georgist definition is “exploiting” nobody. Thus the Georgist has to fall back on this convoluted argument of landowners gaining unfairly from externalities generated by other landowners.
I think I should clearly enough in my “4 plot experiment” that there is no surplus- the developments on each plot are each contributing as much to the land value as they are receiving. If the plots are unrented, nobody is getting something for nothing. They are all gaining land value by their own efforts and, that land value can only be monetised once when they sell the land. Other than that, they are gaining no benefit from it. There is no ground rent being siphoned off. The land value is not proportionate to anything in particular, and Richard’s claim that the assessed land value (sale price, rental value, which?) is proportionate to the difference in externalities gained and externalities contributed is simply arithmetically false.
So really the only moral objection is to rentiers with great holdings who one can at least argue are getting something for nothing- making a living just trotting around collecting rents. And there is a reasonable argument that Britain’s biggest landlords often just inherited the land and are thus beneficiaries of bad history. Now personally I don’t think this is justification for the rest of Georgist thinking, but if one really wants to solve this problem, then it would be “fairer” and simpler to simply have the state confiscate all the land off the Duke Of Westminster or Prince Charles and give it to the tenants, in a one off deal. Once you have a society in which the majority are either owner-occupiers, or renters who acquired their land by fair means rather than foul, the justification for LVT disappears entirely.
The countries that follow this principle (and there aren’t many of them, because landed vested interests are so powerful), are more economically free than those that do not. Your position is factually incorrect.
As I’ve said, it was the LVT that allowed it to survive with low public spending. If the UK had implemented LVT in 1909, I would imagine the British welfare state to be much smaller and cheaper than it is today, taken from the experience of other countries that have implemented LVT.
I’m saying that the increase in value that is caused by the fact that the land is being held idle is miniscule compared with the increase in value caused by general economic growth in the meantime, which would have occurred regardless of whether the land was idle or not. In any case, an entrepreneur would in no way be prevented from renting land and holding it idle if it genuinely was more productive this way.
Ian, I am sure you are right that Georgism took hold at a time or place where land was concentrated in the hands of very few big landowners and lots of tenants. That must have been very appealing to those looking for a supposedly quick and easy way to clobber “the rich” and raise revenue for broad projects.
Richard Allan, if HK was able to raise vast amounts of revenue from LVT because there was so much demand for land in a densely populated area that it was impossible to avoid; you have a captive taxpayer base from the start. If the average Hong Konger has to pay HK$ x,000 per year based on the value of his flat to the Hong Kong government, then that is no different, as far as I can see, from paying a high income tax rate. Ultimately, the money has to come from somewhere and at the expense of economic activity. LVT is not, as its advocates claim, a pot of gold that can be extracted at minimum cost to economic efficiency, though no doubt LVT is better in some ways that some other taxes.
Your logic makes no sense. If the public want higher public spending and can convince enough folk to vote for it, that is what we will get, and have indeed got. LVT was not the primary reason for a small state in Hong Kong, as you know perfectly well. If the LVT had not generated enough revenue for a high-spending government, then other sources of revenue would have come along.
if we want small government, we need to cut back the state, there is no way around that. LVT will not suddenly lead to UK public spending falling dramatically.
So what? I have news for you, mate, your Surrealist contacts in Prague cannot afford to pay the market rate for their coffees because being a Surrealist sucks as a paying job.
The whole notion that LVT has *anything* whatsoever to do with ‘liberty’ is simply arrant nonsense. Moving around the mechanism of state depredation to justify just another kind of nationalisation of land (more in the fascist scene of decoupling nominal ownership and nominal control rather than the marxist sense of nationalisation) is just one group of haters of the notional of severalty having a theological argument with different sects of the same basic statist collectivist creed.
Johnathan Pearce:
So do I, so that’s something we agree on.
That all all depends on whether or not you believe that recognising self-ownership is right in principle.
This is begging the question again. You are saying that land should be viewed as being absolutely owned because you say it is. Of course, I could declare that the atmosphere should be subject to absolute private ownership, declare it my property and demand that you pay me every time you take a breath. Would you pay up, because to refuse would violate my property rights, or would you refuse, because my system of property rights doesn’t accord with yours and therefore you view my claim as illegitimate?
Ironically, the idea that people deserve full ownership of the economic value of their talent is what leads some to call for absolute property rights over ideas, something you’ve expressed a lack of enthusiasm for. Your approach to property rights would have you labelled as anti-property in some quarters in the same way that my approach to property rights has resulted in you labelling me as anti-property.
This doesn’t reflect any argument I’ve put forward. My support for LVT stems simply from the fact that I view forcibly denying somebody access to a location without them having consented to that arrangement as an unethical act of aggression, just as it would be to deny people the right to breathe. In contrast, I don’t believe that refusing to give my labour to benefit others is in any way an act of aggression, because I believe my body and mind are mine to do with as I wish.
I’m sure to you it does, just as others would label you a socialist for not vigorously defending property rights over ideas. It’s an accusation which often gets levelled when you deal with somebody who believes that the trade-off between liberty and property should lean further towards property than you believe it should. However far along that continuum you sit, there will almost invariably be someone who sits further along, so eventually, almost everyone is going to be labelled a socialist by someone else.
Well, what the hell is it proportionate to, then? Is it random?
Prove it. Let’s say each landowner produces £10 of value for the community yearly, so that the fourth landowner derives £30 of benefit from his proximity to the other three, independently of whether he works or not. If he works he will get, say an extra £10 a year less the cost of a year’s labour. Whichever of these is higher is the amount he will be prepared to pay for land. But if he decides not to work, the other three plots of land will only be receiving £20 worth of positive externalities, and £10 minus the labour cost in private benefits, whichever is higher. If P = MC, as it should be in competitive market equilibrium, then the worker/owners are getting £20 of benefits and the idle owner is getting £30 worth of benefits. The capitalised value of the benefits of his land will be higher because he obtains more benefits than he produces. QED. However, it doesn’t take a genius to see why this would discourage the working of land!
Well, if everyone (not just the “majority”; I’m opposing any two-tier society, not just a ‘very unequal’ one) owned exactly as much land as he personally was working/living on (and not over-generously), then the equal rights justification for LVT looks weak (except how the hell do you judge how much land a person is really using, as opposed to owning without use?), but the public goods/positive externalities justification would still exist. In your much-loved “four-plot” justification, even if the four landowners were the only members of the community, LVT could still encourage them to work by returning the benefit of the positive externalities to their producers. I can spell out this example for you if you like, but probably not when I’m at work.
But your situation where everyone is an owner-occupier of just the right amount of land could never possibly hold in reality, and in any case could only last until one extra child was born or one immigrant arrived above the population replacement rate; at which point the two-tier society would reassert itself.
It’s no different from paying the high rents which he would have to pay in the absence of LVT, except for the fact that it comes back to him via public services.
John Cowperthwaite may have been a fiscal superhawk in the mould of Albert Gallatin, but the fact remains that people’s spending demands are not made in a vacuum. Allowing private ownership of land creates the two-tier society that I’ve mentioned above, which generates demands for public spending. These spending demands are not made in a vacuum.
And as for Perry, did you write this on the White Rose blog? (If not, who did?) And do you believe in privatising the military and security services, or in having a night-watchman state?
I do. Er, it is a core principle of liberalism in the classical (ie, correct) sense of that word. I own myself, my body, my mind, and the fruits of what I have produced, etc. Now, if I want to pool all of that with others in a common project to share out the benefits, fine. The key proviso is that if folk want to break away from this commonwealth, so to speak, they can.
If you deny the principle of self-ownership in this sense, then I don’t see how your views chime with liberalism. It sounds more like communitarianism. Which is fine, but let’s have some clarity.
I haven’t defended property rights over ideas. I have quickly said that it is difficult to do so and that there are good reasons against that. I have, in the past, written about the problems of things like patents, etc. Please don’t put words into my mouth.
Oh, and what Perry de Havilland said.
Sorry Paul, I think I was mistaken: you did not accuse me of saying that ideas can be owned. My error.
However, you write:
“Desert” is the villain here; to say that X or Y “deserve” their talents or whatever is to imply that some other entity, such as a Deity, has the omnipotent ability to figure out who is the most deserving of something or who has made the most of whatever it is that they have. That is impossible, and there are good reasons why any income/wealth distribution system based on “desert” would lead to tyranny. (FA Hayek makes this point brilliantly in the Constitution of Liberty)
Rather, I say that I am entitled to have ownership over myself and to the fruits of my labours and to the property acquired under whatever agreed rules I can strike with my fellows; that says nothing about whether I “deserve” to be rich, or handsome, clever, or whatever. One of the hard things for supporters of free enterprise to accept is the richest people are not necessarily the most “deserving”, but to make that judgement would involve a level of power that belongs only to an imaginary Deity.
Obviously, in most societies where private property exists, most people, most of the time, respect the rights of others because they expect a reciprocal respect for their own property; I don’t tresspass on your property, and you don’t trespass on mine, etc. But of course the problems start when people, be they burglars or governments – but I repeat myself – demand to grab a slice of that property and its value for various purposes, such as broadband access (the subject of this post in the first place)
I’m sure neither I, nor Paul, nor Mark would disagree with you. But you forgot to say “I own the land which I’ve mixed labour with once.” If you had, that is where the disagreement would arise. I believe wholeheartedly in the principle of self-ownership, but I also believe that that principle is meaningless if the land is owned by private individuals who have absolute rights over it, because in reality the landowners will be able to demand whatever conditions they like from those living on it. As I’ve said numerous times before, I don’t see the difference between a landowner and a state in this regard; they both have a geographical monopoly over dispute resolution.
And what of the man who lives on his own land? He is not limiting anybody’s rights, is he? As I keep saying. You keep presuming that everyone is a tenant, and everyone always will be a tenant.
Did you miss this?
The problem I have with the LVT crowd is that at base, they want to constantly break up and force property owners to sell off bits of their land so that new wannabe owners get the chance to do so; in that sense, LVT is a bit like how some folk view anti-trust law. Richard Allan’s previous references to redistribution also make it clear that for him, if not for all Georgists – they are a varied lot – there is a strong egalitarian bent to all this, although to be fair they do seem to want to get rid of most other taxes.
Being entirely selfish I would be quite happy to pay LVT on my place and pay no income tax, at present. But when I hit retirement in a few years I might think differently. And that is the problem; LVT has different effects on different groups, and if one tried to create various tax breaks or exemptions to keep it fair or to appease competing groups, much of the original simplicity of the idea from which it derives its superficial appeal will fade.
I never claimed anything about “just the right amount of land”. What on earth is “just the right amount of land”?! Do you have an opinion of how big a garden I’m entitled to?
See, part of the problem here is this LVT presumption of maximising land productivity. I’m not interested in that. I don’t see any divine law stating that productivity in a free society should be maximised. As I said way up at the start of the thread, Adam Smith said quite rightly that homes are not productive. They’re not intended to be productive. That’s not the point of them. They are a cost to the inhabitant. And LVT is intended to force people off their land because they aren’t “entitled” to it, so somebody else can be productive on it. Which leaves us with the slight problem of where the fuck people are supposed to live when they’re not working.
The whole LVT thing is predicated on a variety of dubious presumptions, the above is just one of which. Liberty is based on a different presumption which has the virtue of making sense, which is that people should own property and do with it as they wish, because it is their property. And, honestly, if I save up and buy some land and plant a big garden on it for my retirement, I don’t care whether you think it would be better used for a glue factory because that would return you some externality that you can double charge for via your tax.
This is why liberty and georgism are incompatible; you keep making claims on behalf of the community. Screw this “community” of yours. It has no rights or claims on me beyond the right to freely interact with me. The LVT is a crude social engineering plan. It attempts to maximise productivity of land. Liberty is not about maximising any statistical value- it is simply the principle that the person may do with themself and what is theirs what they wish. So long as they produce enough by whatever means to survive, there are no other demands upon their economic activity. The LVT is a direct contravention of that.
I’m certainly in agreement with that. The key issue is the interpretation of the phrase “fruits of what I have produced.” From my perspective, if I grow a tree, cut it down and form a piece of furniture from it, any just system of property rights should acknowledge that I have a right to use that piece of furniture. What I don’t agree with is the idea that I should have a right to hold the location where the tree grew as my absolute property in perpetuity, nor hold the location where I put the furniture as my absolute property in perpetuity.
In retrospect, I used the world “deserve” because it was in your previous comment and I skewed the comment in the process. However, even using the word “entitled”, the issue remains, where ownership of ideas is concerned; there are people who consider themselves entitled to absolute control of their ideas because they are a fruit of their labour and for refusing to acknowledge that as an absolute right, they would view you as a socialist in much the same way you view me as one.
In some respects, that mirrors my previously stated justification for LVT. As far as I am concerned, the only way anybody can justly acquire exclusive position of a location is to form mutual agreements with everybody else to stay off the land they each want exclusive use of. LVT is just a shorthand way of getting that result without the huge transaction costs which would result if everybody had to negotiate individually with everybody else.
You’re worried about people who can afford land outright not having anywhere to live? Where the fuck are the people who can’t afford land supposed to live under your system? Under LVT the free market would apportion land to its most productive uses naturally, as it would under ground rent, because the two are one and the same; the landlord is the state and the state is the landlord. The only differences are that the rent comes back to you under LVT, and that under LVT unwanted land is free for appropriation, unlike under your system where it’s already appropriated. That’s where people can live, if nowhere else; but in the vast majority of cases that obviously wouldn’t be necessary, because LVT in no way raises the cost of land. The “Old Widow Bogey” might need an exemption, but she represents such a tiny proportion of the population that the exemption imposes no significant costs in terms of administration expenditure or forgone revenue.
It’s not the justification for LVT that it increases productivity, because you can argue that it doesn’t (if the free market will take care of everything anyway, which it might). I think the experience of countries with LVT suggests that they are more productive than those without. Some people do believe in maximising productivity, it’s true; they might say “Exploit the Earth or die: it’s not a threat, it’s a fact.” But I think the free market can better determine the appropriate amount of productivity.
The justification for LVT is protection of equal access to land by those who have equal rights to it. You’ve expressed your contempt for this principle; fine. I’m just saying that it’s a natural principle to most people; that it works in the real world for delivering freedom and prosperity; and recognising it alongside private ownership of the product of labour is the best way of defeating socialism, which even the socialists recognise. If you cling to the monarchical principle, then your “movement” is doomed to irrelevance.
Just a word about the Surrealists Perry de Havilland disparages above.They included the Svankmaiers who
created several cinematic masterpieces including a pretty definitive version of Lewis Carroll’s “Alice”.
Thats it really.Which kind of society would you prefer to live in?A creative society with low rents,good art and cheap cafes ?(Perry would obviously be shocked to learn that Surrealists are not much into coffee of an evening in Prague) Or the non-lvt society when every increase in the money supply, feeds first into the property market and sets off a bout of house price inflation,leading to collapsed bubbles that damage capitalism and which only self-employed conformists can continue to make money throughout.
We don’t have a choice: we are stuck with the second option which has been so fantastically successful that only bank nationalisation has saved it.We are stuck with a political system where all the parties are united in wanting to support house prices no matter the cost.We have no democratic choice: we have the Homeowners Party across three name-only parties engaged in sham debate.
The questions are: do you agree that house prices are still too high; how is this possible when we live in the best of all possible worlds;what can be done about it?
Land taxers patiently proffer solutions: their opponents
lose their threads,blow hot and cold,can’t keep to the point,carp ,cringe, bluster,generally act like management.
DBS, your comment is surreal!
Paul, I am not going to go over the issue again: we’ll have to agree to disagree on some of this stuff, but I appreciate your civil response to what I said. Rgds.
On the contrary ,the situation where building plots well served by amenities supplied by nature,+ the public and private sectors and costing a million quid is truly surreal.
And you have to pay Income Tax on top!And housing bubbles have brought down world capitalism!
You LVT sceptics are in denial IMHO.
The pity is we have to live in your world.
I characterised certain reactions as typical of management because there is never much sign of the views of highly managed workers in this thread.Say what you like management has never been as intrusive ,interfering and repressive as now when it has ,post Thatcher, extended its control into the professions as well as industry.
If you have an inflated money supply – and this blog’s contributors tend to be opposed to state central banks and favour real banking, not fiat currencies – then this inflates not just asset prices, but also things like wages and consumer goods. LVT will not solve the fuckups caused by foolish monetary policy. If we want to prevent property bubbles, we should not blow air into them with cheap credit in the first place. LVT is an attempt to deal with a symptom, not the cause. I should also point out that at times, in countries such as Hong Kong (which has LVT), there have been sharp rises in property prices.
Here endeth today’s economics lesson.
Henry George correctly noted that as more people arrive in an area the price of land tends to go up and it is harder for poor people to buy land – and that landowners tend to get higher rents without them “producing anything”.
He then went on to make the assumption that the above is somehow a scandal and that the law (tax law) should do something about it.
I do not agree.
People forget that post-war the UK had a long period of relatively flat house prices in the fifties and sixties ending with an inflationary spike induced by the bubblemeister Tony Barber.
Rather than make unsupported assertions,like Johnathan Pearce,it might be as well to ponder the factors that produced this benign interlude: credit controls; a lot of local authority housing at slightly subsidised rents: most significantly a tax on on owner occupation called Schedule a which came straight out of income (if your house value went up,even by dint of the owner’s own efforts like extensions ,your income tax went up.)
Rather than a simple pragmatic attempt to reproduce these economic conditions with the difference of replacing schedule A (which has its modern supporters,however) with the more subtle LVT,which does not merely tax houses but increases supply by discouraging landbanking,Johnathan Pearce talks both wildly and vaguely of getting rid of central banks ,fiat banking and, a new one on me ,instituting “real banking”,I take it ,since he offers no supporting evidence,on a Trust the bankers basis (presumably to keep the aggregate money supply below the productive capacity of the national economy)
So instead of slightly varying existing property taxes like Council Tax and Unified Business Rates to tax not buildings and land together but just the land underneath so as to stop cheap credit being hedged into landed property ,he is talking of restricting the flow of credit completely ,even for orthodox demand management purposes.Too much credit going into housing? Then stop all credit!
In a recession.
Yeah, right!
DBC, you contradict yourself, because as your correct reference to Tony Barber’s “dash for growth” makes clear, there was a strong monetary stimulus to the UK economy during the 1970-74 Heath administration, which helped fuel what was to be a disastrous property boom. The idea that up until that point, property speculation had been held in check by taxes is not very credible.
There is nothing “wild” or “vague” about my critique of central banks issuing fiat money to expand the money supply far in excess of economic growth, either. Fractional reserve banking, fiat money, very low interest rates and the rest have led to the current mess we are in now; this is, by far and away the dominant cause of the property bubble, and as I said, LVT, even if it has the effects that its advocates claim, is a way of curbing the symptom, and not the cause. And of course the LVT Georgists need to answer whether they want a 100 per cent tax on “unearned” increases in land values or something far more modest.
Ignoring the role of monetary policy is also strange, since I know Georgists who share my critique of central banks and want a return to things like gold-backed currencies. Go check out the literature.
Please do not tell me to check out the Georgist literature. I am quite familiar with it.
None of the UK Georgist organisations which I referenced in an earlier mailing are so eccentric as to advocate the gold standard .There are some stray American libertarians who believe in it despite the clear evidence that in the UK for instance ,coming off the Gold Standard in the Depression provided the low interest rates that led to the building of three million owner-occupied homes 1933-1939.That and low land prices also caused by the Depression.(Ref Alan Crisp “The working-class owner-occupied house of the 1930’s”on the Net).
Are you saying that the Tony Barber dash for growth would,on the balance of probabilities, have been just as disastrous had Schedule A still be in place and not previously abolished by the Tories ,(purely to buy the owner-occupier constituency) ?
I cannot understand why you privilege the abolition of fiat currencies before a simple amendment to existing property laws,which the evidence shews can restrain the diversion of useful credit flows into housing bubbles.
DBC, then your familiarity is a delusion. I know a couple of guys – one man by the name of Don Riley, who has argued for the LVT to tedious extent – who shares my views on central banking.
And you talk about a “simple amendment” to property laws. I thought the Georgists are talking about taxes, not changing laws, although I have read enough of this stuff now to believe that Georgists, or at least some of them, want to significantly hamper, if not overthrow, private ownership of property and turn us also into de-facto tenants of the state.
I suppose it is possible that if you slapped a heavy tax on land, it would have a similar impact to jacking up interest rates heavily and hit land speculation; what the state giveth, the state taketh away, etc. But as I said, you guys regard land speculation as an evil, but there are all kinds of speculative bubbles, and land is by no means the only one. Pray tell us what other great tax ideas you have to prevent all this terrible speculative activity. A dotcom tax, maybe? A commodities tax?
You guys really don’t get the free market at all, do you?
Don Riley is a nice guy but a lone wolf whose otherwise excellent “Taken for a ride”,rightly concludes that a land value tax down the length of the Jubilee Line would have paid for this infrastructure many times over but he then says the landowners could pass the tax onto their tenants.This is considered heresy by orthodox Georgists,though I am not bothered either way,to tell you the truth.He is not a member of any of the main organisations as far as I know,though on good terms with all of them ,I think
Don’t you think that the insight( which he shares with the more orthodox Georgists) that infrastructure improvements can, by LVT,be made self-financing is more immediately practicable than speculation about monetary reform which the orthodox Georgists won’t touch.
I cannot see how you guys (since you wish to maintain an adversarial stance) understand the free market either: you cannot have a free market where landowners are collecting ground rent as a private tax.
The market is freer for this ground rent being collected as public tax and the market relieved of the burden of other taxes ,on income etc.
Since housing land is a class of asset so many people invest in I would have thought its worth starting there,especially since the malfunctions of this market have precipitated a worldwide recession.
People cannot escape the market in land but you don’t
have to invest/overinvest in shares,collectibles etc.
But I would have thought its a case of doing first things first.
DBC, wrong again. First off, if a guy happens to think that monetary expansion plays a part in land bubbles and that is bad, well, that is true whether or not the guy is a “lone wolf” of an “official Georgist”.
That is not really true, since people who do not own land of their own, and rent, might also be speculators in stock market, for example. I know of several people who have, for reasons of economic calculation – like Michael Jennings of this blog – chosen to rent rather than get an expensive mortgage, and Michael has also earned a good living in the financial markets.
Land speculation is not, qualitatively speaking, different from other markets where speculative manias or even more gentle market rises are concerned. The dotcom bubble, for instance, created undesirable effects, as well as good ones. Come to that, even land bubbles might have long-term good effects, like encouraging lots of building, like the railway bubble of the 1840s in the UK.
I also deny your point about ground rent as a tax. No, if the owner of X is entitled to own what he owns, then he is entitled to charge others for use of said if he can agree that with people in a free market. But then you don’t accept the legitimacy of private property in the full sense, which surely puts you at odd with pretty much the mainstream of liberal thinking.
The point of my remarks about Don Riley was that you challenged my knowledge of Georgist writing and then adduced Don Riley whose LVT work I know well.The fact that he writes outside the Georgist box is neither here nor there.You do not appear to accept his thoroughly Georgist views which are very practicable and would provide self-financing infrastructure but approve him for idle monetary reform speculations which if they are gold-backed will get nowhere, having failed the world economy once and for all.
Land speculation is different : land is one of the three factors of production.Inflation of land values impacts on the other two.
I do not follow your point about the benefits of land speculation= railway mania.Over-investing in railway companies was not a product of the inflated market for British land.
Your alleged point about people renting and then speculating on the stock market gets nowhere.Those involved have to live somewhere and some part of their rents will go to paying for the land bought by their landlords.You have to live somewhere; this involves land; you don’t have to speculate in other markets.
If you cannot see that ground rents are a form of private tax ,why are you so upset if the government takes over. If they are not a private tax, LVT is not a tax either.You will exclaim, loudly I would imagine, that’s it s not the government’s land but everything which gives the land value does come from the government and its people.
DBC writes: “,you cannot have a free market where landowners are collecting ground rent as a private tax.
The market is freer for this ground rent being collected as public tax and the market relieved of the burden of other taxes ,on income etc.”
But it is not a private tax; if the landowner is the legitimate owner of the land – assuming we agree that private ownership is legitimate, which I suspect you don’t – then that landlord is entitled to set whatever price he or she can for its use. In a free or freeish market, it is highly unlikely anyway that ground rents will not vary, assuming there are a number of landlords. As IanB says, even though ground rent might look like a tax, in practice, it is better to have competition between different landowners, rather than have it all owned, defacto, by the state. And so the state will extract a surplus and spend it: but we cannot be sure it will spend it in ways that maximise the public good, however one defines that. There is a collectivism implicit in such an idea.
I raised Don Riley – he happens to be a bit of an old pal of mine, a likeable New Zealander who lives near me in Pimlico – because unlike “official Henry Georgists” (?), he places importance to the role of central bank-induced monetary madness when it comes to things like asset price bubbles. If that upsets some Georgists, well too bad. There is no need to get huffy about my raising this point.
I don’t know why Georgists should, for some reason, ignore this issue, or try to fix it entirely via a tax. Suffice to say that even in regimes like Hong Kong, which for years was linked to the US dollar, there were big gyrations in the price of accomodation, which hardly suggests LVT did much to alleviate the situation. In fact I would say that proves pretty conclusively that LVT is not the benign, anti-bubble force it is cracked up to be.
There is another, even more fundamental problem with the Georgist position about land. The problem is that it does not distinguish between the fact that while land is, by definition, fixed, available land is not. This is why the likes of John Bates Clark, an economist of the late 19th Century, demolished the land value tax movement’s arguments as did Murray Rothbard half a century later. Both men pointed out that the LVT argument ignores the fact that the price of land is driven by its marginal productivity, and in that sense is no different from labour or physical or human capital. To single out land for special tax treatment will lead to a misallocation of resources, encouraging more building density than is rational, etc.
The total amount of land is fixed – obviously – but the total amount of sellable land is determined by the amount of marginal buyers and sellers, a very different thing. This is a central feature of free markets.
And that is all that I want to add to the matter. I’d rather we ended this debate here, not because I want the last word, although I am convinced I am right and you guys are mistaken, but because I am not going to agree with you or vice versa, and we’ve got better things to do than endless digital ping-pong.
rgds
I’m not aware of John Bates Clark’s argument (I’ll take some time to look it up), but Rothbard’s has been thoroughly demolished. I’m surprised anybody still references it.
Yeah,you can count me out too.The first time I’ve agreed with you.
I might be persuaded that the state has some business taking measures to prevent the destruction of property – flood defences are not a bad example, for example. But then, I’m from a place which has had excellent experience with both private and public flood defences – maybe the only place in the world that ever has. In virtually every other place, state control of flood defences has almost-always become just another opportunity for political profit and simple graft, and the water comes anyway. From NOLA to the Three Rivers to the Thames Barrier, state-controlled flood defences almost-always turn into second-rate defences bought at first-rate prices, and a rent-seekers paradise.
ohr
@ Johnathan Pearce
The anti-LVT arguments have all been discredited. LVT is superb at financing infrastructure, which creates economic growth.
Many on here are clearly fining it difficult to grasp LVT…..
THE PROBLEM
Three million children today are living in poverty. Children born to the poorest families suffer little or no social mobility. Successions of governments, of different parties, can’t change this due to the tax system.
Are politicians to blame?
The biggest scam in history was instigated on the people centuries ago by the Lords, Barons and Knights of the land. Governments used the tax system to milk the poor. The injustice has never been put right.
Why did the Lords, Barons and Knights do it?
To enrich the people who own land. It is operated by all democratic governments around the world. The biggest winners are those who own land or homes in the best locations.
People who rent pay rent to landlords and taxes to the government. People who rent pay taxes to fund the service that they receive: police, rail, roads, army, etc. That sounds fair. They pay for what they receive.
Britain’s top earners pay on average £1.25 million in taxes in their lifetime. The people who rent their homes are generally in the lowest income bracket. Over their working lives the poor pay over £0.25 million in taxes. The rich on average pay 5 times more in taxes.
That sounds fair. Doesn’t it?
Income tax is the more you earn, the more you pay. Called Progressive taxes. Sounds fair as the richer pay more. But!!! Progressive taxes has exactly the opposite effect.
Rich people complain that they pay a lot of money to the government. But, the government pays it all back to them.
How do they do this?
Governments spend our tax money on infrastructure, such as:
* Schools
* Universities
* Hospitals
* Rail networks
* Roads
This infrastructure raises the productivity of the economy resulting in economic growth. Because of the way the market economy works, those economic gains are crystallised as land values. Then these gains surface as windfalls or capital gains in the property market.
Those capital gains are not shared out equally amongst all of us, as the taxpayers who rent their homes for example, are excluded.
The windfalls are pocketed by people who own land. The rises in property values more than offsets the taxes they pay into the public purse.
Then who pays for the services the rich people use?
The families on the lowest incomes.
Every increase in house value for top earners offsets any tax they contribute. During boom times it’s possible to claw back a lifetimes taxes in just three years. Meanwhile…the lowest earners and those who pay rent, pay more overall.
Families on the lowest incomes subsidise the lives of the rich.
Is that fair?
There is only one way to make the tax system fair. Parliament has to tell the taxman to stop collecting taxes from people’s wages.
We need a kind of tax reform that Winston Churchill and Lloyd George nearly introduced in Parliament 100 years ago. But, the landlords blocked them.
The only war Winston Churchill lost was the war against the British landlords.
If we cancel the tax on people’s wages, how do we pay for public services?
By levying a charge on the value of land. People who live in valuable locations will pay much more than those who live in less expensive properties. That’s fair. It also happens to be the most efficient way to fund the service we all share in common.
THE SOLUTION
There is a simple solution to this injustice.
* We should place the cost of public services on the values of land.
Remove Income tax from people’s wages.
Owners with houses in valuable locations would pay more than those who rent their homes.
Owners with houses in valuable locations wouldn’t be able to claw back their taxes.
That way everybody pays for the services they receive and we are all treated as equals
I have read many odd views on LVT here on Geoism. Geoism is more capitalist that what we have now.
Among Geoism is:
* Taxation of land values only
* No income tax
* No inheritance tax
* No tax on savings
* No speculation of the resources of land – so no copper derivative, etc.
* Relaxed planning system to promote productive use of land and give larger, quality homes for people
This creates a wonderful free enterprise level playing field that will not create booms & busts. LVT funds the prime points of a community especially economic growth in infrastructure.
The Jubilee Line in London costed £3.4 billion when it increased land values by £14 billion, which went directly into private pockets. LVT would have reclaimed that economic growth to fund the essential economic growth creating infrastructure.
Oh right, that settles it then 😀
Hmm, because only confiscated wealth spent on infrastructure by a government creates economic growth? The whole utterly preposterous basis of LVT is that a TAX is somehow the key to either prosperity or fairness. It is beyond absurd.