This is a response to another Blog, titled “Georgism is Insane“
I have full screenshots of the post I’ll provide at the end for posterity, but for the most part, this post is merely to archive a reply I gave to the post. It appears the author of the original blog deleted my reply, as it no longer appears on the post, so I shall be recreating it here instead:
I’d like to answer a few of the questions you’ve asked, and comment on a few of the statements you’ve made. It’ll be a bit scattershot and I can clarify any questions you have:
“Essentially, its a property tax, but its based on the value of the land alone, not the improvement per se.”
This is a dangerous conflation. If you tax property, production can change on a dime. But by taxing land, there’s no distortionary effects. It’s a phenomenon well noted in economics; when you tax something of perfectly fixed supply, the tax burden can’t be passed off. It works from pro basketball players to antiques, and it works on land too.
I have a post here on it, but feel free to check outside sources if you don’t trust my math.
“Who assesses the value of land? Georgists seem to say that the value of land is not the same as its sale price, which is of course ridiculous. Sale price is value.”
To answer your question: it’d probably be in the same fashion the government currently assess the value of all goods: it looks at the market price. But on what you said, “the value of land is not the same as its sale price” I’m simply unaware of where Henry George ever made this claim. If you have links, I’ll appreciate them.
“And value to you might be different than value to me. I may want an acre of woods, and value it very much. A friend might find the same to be near worthless. As we know, value is subjective. They seem to think there is an immutable value of land, and its not entirely clear whether they think the value of land can change.”
Your assertion that we don’t think the value of land can change/there is an immutable value of land, once again, is contrary to everything Henry George ever wrote. The value of land, according to Georgists, is about the social activity surrounding it. A 1km^2 parcel fo land in the Yukon is far less valuable than 1km^2 parcel of land in Manhattan. I’m now slightly concerned whatever form of Georgism you’ve been exposed to, is merely a caricature of what we actually believe because twice in a row now you’ve cited claims that are perfectly contrary to some of our key beliefs.
A quote from Henry George himself:
“It is never the amount of labor that has been exerted in bringing a thing into being that determines its value, but always the amount of labor that will be rendered in exchange for it.” — The Science of Political Economy, p. 253
This is perfectly in line economic thought during the Marginalist revolution at the time, and entirely separate from Marx and the supporters of the labor theory of value.
“They assert that because these two said that land cannot be totally owned, only rented from the community, that makes it so. But what even is that community?”
Different counties and municipalities have different tax codes, and so local legislatures would be in charge of creating the assessment of land value, just like assessments on all other tax values are created.
“I want my land to myself, who are you to say otherwise!”
A fair point! We all want land… no, we all *need* land in order to survive. As a thought experiment… imagine you were on a sinking ship, and managed to swim to an island. 10 meters in front of you is another swimmer, and he reaches the island before you. By the time you get there, he tells you to stop and turn around. “The land is mine, I own it now. Go drown in the sea.” Is this fair, that he is able to stake a permanent and exclusionary right to land simply by arriving on it 30 seconds before you? What about a few hours? What about a year? 10 years? At what point does a man have the right to decide the earth is his forever, and that all who trespass upon it lose all of their own rights?
While obviously this is an extreme example, and not one we expect to see regularly in our own lives, the basic moral principle on negative rights holds true. You are demanding that others not exist on a certain portion of the earth. All Georgists say is that if you want such exclusionary rights, you need to pay a tax – no nationalization, not public ownership, just a tax on the rent; the scarcity of the land (and have the rents given back as a UBI). For 90%+ people in America, the calculus comes as a net benefit. This does not deprive the poor of anything, it allows you to have exclusionary rights, and I believe it has a strong moral basis as it means those exclusive rights to land don’t harm anyone else. I hope that answers that question.
“Once landowners have paid “the community” for monopolization of the land, what happens with this money? Some have suggested an equal dividend to all, but where does this begin and where does it end?”
You answered your own question: it begins with the payment by landlords, and ends with the dividend to every individual. It’s far simpler than our current mess of a welfare system.
“What is the reason for all this? Well, Georgists assert without any evidence that everyone has an equal right to any land. So by using it, you are depriving everyone else of it.”
I’d caution you against using the word “evidence” with respect to a moral assertion, unless you yourself can provide an evidenced moral assertion to counter ours – Hume would be greatly interested as well. But as for the statement “by using it, you are depriving everyone else of it” that is an undeniable fact. For some locations this is a problem and an economic rent occurs, for other locations, it does not.
“They point to the fixed amount of land as the reason. However, there is a fixed amount of everything. If I use some iron, you cant use it. Should I pay you? And everyone else in the world? Georgists say this does not apply to anything except land, without explaining why.”
This is wrong for a few reasons… first, I think you’re a bit light on your readings of Georgist literature. Many Georgists *do* want to tax *scarce* resources that are being monopolized by a few, but with your example for iron, it is such an abundant resource, the minuscule amount of rent you’d have to pay would probably be worth less than the bureaucratic costs to calculate the tax! Keep in mind, we’re not trying to inflate the budget massively, we’re replacing all the taxes on toil and labor – no income, sales, VAT, capital gains taxes, etc. We just have a problem with the monopolization of scarce natural resources. So a land value tax in the middle of the Yukon… it won’t garner much revenue. In downtown Manhattan? A considerable amount.
“The thought is this will prevent land speculation and claiming up of land without using it all, but is this really a problem?”
Yes, land speculation is a massive problem. If you look at the commercial blight in New York City (http://www.vacantnewyork.com/) 90%+ is from landlords refusing to lease out to small businesses, waiting for a larger bank or big business to pay a higher rent bill. This causes property values of nearby businesses to drop, equity value to drop, and businesses to move out from the city center, increasing urban sprawl and urban blight. It’s a massive drain on personal wealth, and is very highly linked with poverty and higher crime rates. It’s also not a great model for having a stable social fabric.
“If the tax goes up on a plot, people might lose their homes. Of course, the rate could be locked in for life, but then can I bequeath it to my descendants or a chosen heir?”
- Keep in mind the calculation is LVT+UBI from the rents; land taxes are highly progressive, so nobody is going to be hurt to an extent they might lose their rents.
- Yes you can leave your house to your descendants, we don’t want nationalization of land, we just want to tax the economic rent on land.
“Given that same high tax in a dense and productive area, how would housing work? Would there be individual owners forced to pay the tax regardless of their ability? Who are Georgists to demand they earn more than they may want to? Or what of rentals?”
- Single family housing in cities could still exist, you have to keep in mind the UBI+LVT structure. If there’s no added benefit from rent over your neighbors by owning a disproportionate amount of land, then you’re *at least* going to come out revenue neutral.
- Rentals would still work, we’re only taxing land, not the structures upon land. You can still rent out an apartment/building.
“It seems that a land value tax would take up 100% of the “surplus” rent. Therefore, a landlord makes no profit unless he provides other services, and he probably will, but why do anything at all?”
Because we think it’s morally egregious that someone can take an almost feudalistic notion of a right to land, and then proceed to make a living off of that without having any productivity or helping the economy in any way. Or at least we see that as slightly more moral than taxing some random person’s hard work (income tax) or taxing some business for investing (capital gains) or taxing someone for consuming something (sales tax). At the very least, as Milton Friedman described it, it’s “the least bad of all taxes.”
“And will a beautiful peace of land with a nice view become unavailable to the poor?”
This doesn’t affect parks… so no? I’m confused to why you think poor people could see less land now.
“I also foresee this creating some ridiculous property maps where people do their best to use as little land as possible and create blobs that are connected by paths, which end up leaving random splotches of vacant land everywhere.”
Absolutely no offense, but as someone who has worked in urban planning the hilarious irony of this statement… it tickles me. The truth is that in Detroit, New Orleans post-Katrina… in plenty of big cities this is what we *already* see. Plenty of large buildings, with roped off vacant lots surrounding them, waiting for future development. There’s not a lack of demand for people wanting to build in many of these areas (depends on how the economy is), rather there’s a lack of willingness on the landlord speculators to rent out the land. For more proof that the LVT has the opposite effect, here’s studies out of Pittsburgh and Harrisburg showing the number of vacant structures *decreased* due to the LVT, as did Urban Sprawl
I have plenty of other resources I can link you to, as I think whatever Georgists you’ve been in contact with, might actually be some random strain of geoist, as some of your early assertions are fairly blatantly against Georgist theory.
Also if any of this has come off as rude, I do apologize, it’s late and I can be a bit blunt in my writing. In any case, I’ll check back here periodically to see if you reply, but I also have an FAQ up on my blog that has cursory answers to other questions about Georgism.
As promised, the screenshots to the original post are here:
The op blog has put up a response to my reply here which I think is a nice rejoinder on the matters discussed. I think we have differing moral precepts of the justifications for a state and some of our other moral tenets might conflict… but as for the more technical issues I had a problem with, I’m glad that much of the confusion around georgism/geoism could be cleared up.
It was also noted that there was no mal-intent in my original reply not appearing, and having dealt with wordpress comment sections myself in the past, I’m entirely ready to believe this is the case. It’s not so common that you can have a pleasant exchange through indirect blog posts online, but I’m glad to say that this is one such case.