Georgism/Geoism and the Land Value Tax

[Topazan]

We had a discussion about this before in 420's fair tax thread.  I decided to start a new thread specifically devoted to this topic.

I finally finished reading Progress and Poverty, and I'm even more convinced than I was before that geoism is completely compatible with libertarian moral views and necessary to create a truly just and free society.

George talked about the various forms on income secured through land ownership, which he described using the umbrella term "rent".  He argues that rent always tends towards the highest point the economy can sustain.  Unlike other goods, demand for land cannot be balanced out by increased production, so the price tends higher.  Whenever society becomes richer, whether through technology, population, infrastructure, etc, land value rises enough to absorb the extra value in rent, so that labor gets little-no benefit from the increased wealth.

The rewards of labor and capital comes from the value they add to the economy.  People can rightly claim ownership over these things, because people produce these things.  If I want to use a machine, it is completely reasonable to pay the creator a fair price, because if he didn't exist I couldn't have that particular machine at any price.  If I want to use land, well, if it weren't for the owner and those like him, I'd have it for free.  It's almost a form of extortion to have to pay him to not prevent me from using the land.

Keep in mind we aren't talking about the value of improvements such as buildings.  Some will object that even unimproved land gains value through human activity.  This is true.  However, it is not the activity of the owner.  Land gains value from the surrounding community.  Landholders collect revenue from surrounding businesses that they had nothing to do with.  This is not to say that landowning is a risk-free enterprise, but when they do make money it's at the expense of others.  Labor and business make their money by production of new goods, landowners simply leech off of them.

If you think about it, the tyranny of modern governments is based on control of land.  Most governments exert force within their borders and take relatively little interest in what happens outside.  Yet, "love it or leave it" is not an acceptable principle, because we need land to live on and live off of, and pretty much all of it is under the control some government or another.  Why is it acceptable for individuals to practice this level of control if not governments?

More than once in the other thread the objection of scale was brought up.  Private landowners do not generally control enough land to exert the kind of coercion that governments do.  There are at least three problems with this.  The first is that there is nothing, in theory, to prevent any individual from coming to possess as large a quantity of land as necessary.  The second is that while an individual landowner may not control that much, landowners as a class can literally control an entire country, and exert their collective will on the landless as a class.  The final problem is that pointing out that competition exists among landowners in no way justifies it on a moral basis.  If it is wrong for one person to own all the land, how can it be less wrong for several people to each own a part of it?

Then there's the fact that much land has not followed an unbroken chain of voluntary transactions from its rightful owner under the homestead principle to its current possessor.  People may object that these thefts happened long enough ago that they are irrelevant.  George discusses this issue in his book The Irish Land Question.  Basically, his point was that while stealing an object is a one time thing, robbery of land is an ongoing process.  The families who stole land centuries ago have collected rent ever since, and those from whom it was stolen have been obliged to pay.  While we might overlook the robbery that occurred far enough in the past, the robbery of land never stops.

So, I think that the land value tax is both morally and practically necessary.  While I believe in a free market of labor and capital, for an individual to claim ownership of land  is an act of aggression against others who need that land to live.  In order to gain exclusive possession, one must pay compensation to the community in the form of the land value tax, which may be divided up among the community.  It's a clean solution to historical injustice and it helps ensure that everyone will get to keep the value of their labor rather than losing it to rent.

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[herzmeister]

yeah, my words, libertarianism with land ownership is merely feudalism.

The problem with taxes is of course the question of power. Who is the executive that is allowed to collect those taxes? We want to decentralize everything after all. I'd also say a normal, modest home should not cost any taxes, I believe there is enough space for those. We should be able and free to live in a self-sufficient way after all like the Garbage Warrior. Only if someone claims excessive land ownership, there must be resistance, otherwise it would be like a cancer spreading in an organism.

I'm afraid this problem won't be solved in a satisfying way until we start colonizing the solar system anyway though. In fact issue this might be the very cause that will drive outer space colonization. It's evolution baby.

[Topazan]

I would counter that after enough time has passed, one should be careful about giving nepotism too much weight. Why should people who, by a freak of nature just happen to be the descendants of someone who had his land stolen many years ago, become lucky winners in a genetic lottery?

I'm not saying we should track down the descendents of the original owners.  That would be almost impossible.  It's just an illustration of one of the problems of private ownership of land.

The Georgist perspective is that people who want to take land for their own use should pay rent (land value tax) to the community.  The money can either be used for public works, like you said, or simply redistributed as a citizen's dividend.  I think there are advantages and disadvantages to both approaches.  The original owners of the land were also wrong to hold it without paying the community.  Under this system,  everyone will be entitled to an equal share of the land's value, regardless of what happened in history.

The problem with most governments today is that even when they mean well, popular philosophies are tainted by Marxism.  They see wealth itself as evil, and make no distinction between wealth created through production, and wealth stolen through land rent.  People are happy to take from the wealthy because they're wealthy and give to the poor because they're poor, with no regard to right and justice.  They also forget that the wealthy have much more influence on the government than the poor, and never bother to question who really benefits when a new policy is made allegedly to help the poor.

I'd also say a normal, modest home should not cost any taxes, I believe there is enough space for those. We should be able and free to live in a self-sufficient way after all like the Garbage Warrior. Only if someone claims excessive land ownership, there must be resistance, otherwise it would be like a cancer spreading in an organism.

It would have to depend on the demand for the land, not the quantity.  A normal, modest, home in the middle of nowhere would cost nothing or at least very little, a normal modest home in the heart of New York that's standing in the way of a skyscraper that will create thousands of jobs should be taxed accordingly.

[grantbdev]

I definitely consider myself a geo-libertarian, especially in consideration the Enlightenment views of property as spelled out in Thomas Paine's Agrarian Justice.

While I believe there is room for public property, I think that a single tax on land would push governments toward privatization to increase revenues. Think about all the unused federal land that could be sold...

I am curios though, does Henry George indicate how the the values of the land are calculated? That is the most important criticism I have heard.

[Topazan]

I am curios though, does Henry George indicate how the the values of the land are calculated? That is the most important criticism I have heard.

Agreed.  Unfortunately, he doesn't give a magic formula like I hoped he would, but he did point out that land value assessment is already done in the private sector, and that renters often do make expensive improvements even though they won't keep them forever.  There may not be a perfect solution, but if we could get "close enough", it would be a big improvement. 

I keep hoping to find some perfect, objective free market solution, but we may just have to rely on subjective assessments.  I've seen it pointed out that if land was over-valued, no one would rent it, and it would have to come down, so that's one balancing mechanism.  Again, it wouldn't be perfect.  There's still the possibility of corruption, but the corruption would be much more visible than it is in our current system.

In the other thread Fjordbit mentioned an auction system, where the purchaser of the land has to either come to an agreement with the owner of the improvements or compensate by "re-creating" the improvements elsewhere.  That seems incredibly impractical to me. 

[grantbdev]

I am curios though, does Henry George indicate how the the values of the land are calculated? That is the most important criticism I have heard.

Agreed.  Unfortunately, he doesn't give a magic formula like I hoped he would, but he did point out that land value assessment is already done in the private sector, and that renters often do make expensive improvements even though they won't keep them forever.  There may not be a perfect solution, but if we could get "close enough", it would be a big improvement. 

I keep hoping to find some perfect, objective free market solution, but we may just have to rely on subjective assessments.  I've seen it pointed out that if land was over-valued, no one would rent it, and it would have to come down, so that's one balancing mechanism.  Again, it wouldn't be perfect.  There's still the possibility of corruption, but the corruption would be much more visible than it is in our current system.

In the other thread Fjordbit mentioned an auction system, where the purchaser of the land has to either come to an agreement with the owner of the improvements or compensate by "re-creating" the improvements elsewhere.  That seems incredibly impractical to me. 

But for the value of the land year from year, how could value of land be determined when it is not currently for sale? People could claim that it's worth a million dollars with no intention of actually buying the land and then someone's taxes will go up. It seems the most fair thing would be a flat rate per area, which could also have benefits in increasing property distribution and thus the tax base but might have other stupid consequences. Would people give up ownership of their lawn just to pay lower taxes in such a system?

[Topazan]

But for the value of the land year from year, how could value of land be determined when it is not currently for sale? People could claim that it's worth a million dollars with no intention of actually buying the land and then someone's taxes will go up. It seems the most fair thing would be a flat rate per area, which could also have benefits in increasing property distribution and thus the tax base but might have other stupid consequences.

Well, the difficult part is defining "area".  Certainly it would be unfair to assess one suburban house significantly more than its next door neighbor, and it would be readily apparent that something was wrong if that happens. 

Would people give up ownership of their lawn just to pay lower taxes in such a system?

Well, the value of the land is what they're willing to pay for it.  So, if they're not willing to give it up, the worth has not been exceeded.

I just reread one section where George talks about this.  He says that only relatively recent improvements should be excluded from value assessments.  "A swamp drained or a bill terraced by the Romans constitutes now as much a part of the natural advantages of the British Isles as though the work had been done by an earthquake or glacier."

That sounds reasonable to me.  What if, whenever we make an improvement to land, we report how much we spent on it, and that much is deducted from value assessments for as long as the same person holds the land?  That opens up the possibility of an auction based system.

[myrkul]

It seems the most fair thing would be a flat rate per area...

No, the most fair thing would be to not steal money and call it tax.

[Topazan]

@myrkul - You and I agree on more things than we disagree, and we had a good discussion in the other thread.  What's happened to you?  You've been so combative and non-constructive lately.  Maybe you need a break from this forum...

You should know by now that the moral position being discussed here holds that claiming natural resources as private property is theft.  This is what you need to refute if you want to convince anyone.

[myrkul]

You should know by now that the moral position being discussed here holds that claiming natural resources as private property is theft.  This is what you need to refute if you want to convince anyone.

Do I steal from you when I breathe? No?

But I'm taking from you the ability to breathe that specific air. There is, after all, only so much air on the planet. If not for the plants continually regenerating it, we'd all die in fairly short order. (Still waiting on Randall to do that What If?) What about when I take a drink of water? Am I stealing from you? Even more than air, the amount of drinkable water on the planet is limited. Yet when I breathe, or drink, I am taking that material into my own body, and certainly you cannot get more "private property" than ones' own corpus. And getting to that... you happen to be made of meat. Sweet, tender long-pork. Are you stealing from me by denying my right to eat that delicious meat?

I can't steal what was never yours, and you can't steal what was never mine. Claiming natural resources is not theft, no more than taking a drink of water is.

[Topazan]

Breathable air is not scarce at this time, and there is no reason to believe you are taking more than a reasonable share.  If, on the other hand, you declared, "The air is mine.  No one can breathe it without my permission.", then we would have a problem.  Would you allow someone to do this?  If a factory pollutes the air around my home until it's unbreathable, then I would absolutely feel justified in demanding compensation for using up all "my" air.

Are you claiming that water can't be stolen?  If we were lost in the desert, and I drank all the water in your canteen when you weren't looking, would you say that is not theft?  If I shoplift a bottle of evian, is that not theft?  And again, if someone poisons the local water supply, then they have certainly wronged the community that depends on it.

Aside from long pork, the only thing special about the resources you mentioned is that they're relatively abundant and sometimes free.  If they were scarce or if someone tried to claim private property over them, then these principles would indeed apply.

[myrkul]

Aside from long pork, the only thing special about the resources you mentioned is that they're relatively abundant and sometimes free.  If they were scarce or if someone tried to claim private property over them, then these principles would indeed apply.

You're saying that taking them into your body, where no one else has even the slightest possibility of using them is not claiming them as private property? If that's not your water, what's it doing in your body? And no, I'm not talking about a bottle of Evian, I'm talking about a drink from a stream or spring out in the wilderness. Just like land, air and water are scarce resources, relative abundance notwithstanding.

So, given that, should you be getting paid for every drink taken from every mountain stream? Are campers stealing from you this very instant? And if not, what is the difference between claiming a place to lay my head at night, and claiming a few moles of water to keep my metabolism chugging along?

[Topazan]

If it's in the middle of the wilderness and only drank by campers, and they only drank a few gulps, the demand for that quantity of that particular water approaches zero, and so the amount they owe is zero.

They can drink all they like, but if they want the legal authority to use force prevent to others from drinking as they please, that's when they have to pay.

Really, you talk about charging to drink from a stream as if it's absurd, but claiming the stream as private property gives one the authority to do just that.

EDIT: So, to answer your question, yes putting things in your body is claiming them as private property, but the value of what you put in your body is typically going to be trivial.  When I talked about claiming air or water as private property, I meant in the sense of claiming the atmosphere or a stream as your property.

[myrkul]

So, to answer your question, yes putting things in your body is claiming them as private property, but the value of what you put in your body is typically going to be trivial.  When I talked about claiming air or water as private property, I meant in the sense of claiming the atmosphere or a stream as your property.

So, then, where do we draw the line? Where does "trivial" end and "you need to pay everyone for what you just did" begin?

[Topazan]

At the point where what you're taking has market value.  That means that there is demand for the resources, which means others want to use them and are prevented from doing so by you.

[myrkul]

At the point where what you're taking has market value.  That means that there is demand for the resources, which means others want to use them and are prevented from doing so by you.

So you're saying that there's no demand for water, and drinking it does not prevent others from doing so with that same water?

What I'm saying here is that your answer was not an answer. If people use it, and it is not infinite, it has market value. Even one sip of water from a stream has some market value. What I am looking for is a cut-off point of what amount of market value is considered "trivial," and what is considered "theft."

[Topazan]

Ok, so it's a blurry line.

The same dilemma exists in a private property system.  If some camper's drink from an owned stream, can the owner sue them for compensation?

[myrkul]

Ok, so it's a blurry line.

The same dilemma exists in a private property system.  If some camper's drink from an owned stream, can the owner sue them for compensation?

No, trespass. What were they doing on the land that the stream passes through without permission?

[Topazan]

What if they had permission to camp on the land, just not to drink from the stream?

Also, how exactly do you compensate someone for trespass?

[myrkul]

What if they had permission to camp on the land, just not to drink from the stream?

Camping on the land includes drinking from the stream. Unless you have a funny definition of "use the land?" (as in use the land for camping)

Also, how exactly do you compensate someone for trespass?

Typically monetarily. The amount would likely be small. Possibly even enough for the owner to forgive, assuming the offenders vacate immediately. ie: "Get of my land, you dirty hippies!"