That was a relevant passage indeed - hadn't heard of George before:
> George was in a position to discover this pattern [mere land possession harms the poor, and can be discouraged through a land tax], having experienced poverty himself, knowing many different societies from his travels, and living in California at a time of rapid growth [1870s]. In particular he had noticed that the construction of railroads in California was increasing land values and rents as fast as or faster than wages were rising.
> You’ve got to think of “land” as a metaphor for all unproductive forms of capitalism... Goldman...
Banking existed in George's day too and when he said land I think he meant land. Land issues are still relevant today - in SF/silicon valley much of the value created by the tech industry has ended up with landlords who did nothing to produce it. You could make an argument for taxing that and spending it on social stuff. Also places like Monaco and Hong Kong have been successful in having low / zero taxes on wages etc by the government keeping ownership of much of the land and getting income from that.
"In 1879, Henry George...published Progress and Poverty, a scathing polemic that blamed all economic ills on the private ownership of land.[he] found it perverse that we tax productive activities like work and innovative investment while letting landowners grow rich simply because they scooped up property at the right time. "
People don't really get rich simply by owning land -- well, not since the Industrial Revolution in early 1800s. One tax on land would have made sense then, but it would not make sense now. People now make money on land by buying and selling it -- as an investment. By taxing land now, you would be doing what you are trying to prevent, namely, taxing productive behavior.
I can't think of a modern day equivalent to land 200 years ago. The closest I can get is inheritance -- tax people for winning the lucky sperm club.
Interesting line of thought. What’s your take on Henry George? (Arguing for distributing land rent equally, which would counter your concerns somewhat)
Seems like he didn't directly address property ownership (or did I miss it?) I was expecting to see some mention of Henry George, and becoming rich by owning land:
I think this is what they were referring to[0] in part:
"Mason Gaffney, an American economist and a major Georgist critic of neoclassical economics, argued that neoclassical economics was designed and promoted by landowners and their hired economists to divert attention from George's extremely popular philosophy that since land and resources are provided by nature, and their value is given by society, land value – rather than labor or capital – should provide the tax base to fund government and its expenditures.[90]"
The article ends with the comment that the automobile broke the land ownership monopoly by creating suburbia. It took about fifty years to fill out surburbia, but that's been done.
Henry George's single tax plan has been implemented in two cities in the US. One is Fairhope, AL.[1] The Fairhope Single Tax Corporation owns most of the land in the town, including the downtown area, and rents it out on 99 year leases. The ground rent cover all property taxes, plus some public facilities the Single Tax Corporation runs. The corporation sets the rent based, as Henry George wanted, on the most productive use of the land. This encourages development. This just covers the land; you can build, and own the building, but must keep up the rent payments on the land to continue owning the building.
What you can't do in Fairhope is buy land and wait for it to become more valuable. You cannot get a capital gain out of owning land there. So no one can become rich by owning land.
For what it's worth, I find the "landlords" explanation here extremely compelling. In the last year, I've happened upon the works of the 19th century economist Henry George (who identified landlordism as the root cause of poverty) and found his distinction between land and capital to explain many of the "paradoxes" we have in modern economics.
I recommend checking out his work, but if anybody is curious about details of his economic theories, AMA.
Henry George was more or less opposed to our current conception of capitalism. He believed all land and narual resources should be held in common. He stated that a person should be entitled to the product of their personal labor and that was about it.
But being a practical man he realized the horse was well out of the barn on private ownership of land and felt that a land value tax was essentially the next best thing. He maintained collective ownership of natural resource beside land though.
I'm impressed to learn that the metaphor was first coined by Henry George, better known for his advocacy of a tax on land rent (also the inspiration for the game Monopoly).
Until those cities inevitably become too expensive, too, just like Austin did. (I desperately hope I'm eventually proved wrong)
"I asked a passing teamster, for want of something better to say, what land was worth there. He pointed to some cows grazing so far off that they looked like mice, and said, 'I don't know exactly, but there is a man over there who will sell some land for a thousand dollars an acre.' Like a flash it came over me that there was the reason of advancing poverty with advancing wealth. With the growth of population, land grows in value, and the men who work it must pay more for the privilege." -- Henry George
> Yes, we should probably treat land as much more of a public good
This is the central idea of Georgism, and it extends neatly to other things which are not the product of anyone's labour, like natural resources, pollution, or even issuance of credit (currently the banks have a monopoly on the power to create money/credit).
It's all very interesting, a nice balance which retains the good features of markets but prevents or at least limits the harmful stuff: rent-seeking leeches, pure speculation divorced from fundamentals, etc.
> especially in cities
This reminds me of the “Lockean proviso”:
Nor was this appropriation of any parcel of land, by improving it, any prejudice to any other man, since there was still enough and as good left, and more than the yet unprovided could use.
That is to say, taking natural resources, labouring, and keeping the profits of that activity, is only legitimate insofar as there is still “enough of it, and as good, in left in common for others”.
> The true value of land has much more to do with the services nearby
Oh absolutely! If a road is built, shops, the neighbourhood improved, schools, businesses, jobs, and therefore the desirability of your land increases... it's you that has to pay society back for what it has given you! It's not the resale value of your land that should rise.
Progress and Poverty was once the most popular economics book ever written. The Georgist Theory in it, and the land value tax proposed by it is still endorsed by economists today.
This review clearly illustrates the ideas from George that land captures gains that in a more fair society we'd want to go to labour.
Henry George thought that land was our common inheritance, but was in favor of free markets. He did not support rent control. He thought of rent as a fact owing to the value of the location, and the question is not how to make the rent lower. The question is who gets to profit off the fruits of nature.
Rent control, in effect, converts tenants into pseudo-landowners with less fungible rights.
If locations are valuable, and by extension the rents, that is good. But to whom does the rent belong?
If rents are unaffordable, it is because wages are too low and the rent is not shared... which comes back to bargaining power and the overall health of the economy.
Taxing production, for instance, harms economic health.
But allowing speculators to hold the land for ransom creates stagnation, sprawl, and harms the bargaining power of labor... by worsening everyone's best available options for living and working.
> George was in a position to discover this pattern [mere land possession harms the poor, and can be discouraged through a land tax], having experienced poverty himself, knowing many different societies from his travels, and living in California at a time of rapid growth [1870s]. In particular he had noticed that the construction of railroads in California was increasing land values and rents as fast as or faster than wages were rising.
https://en.wikipedia.org/wiki/Henry_George#Political_and_eco...
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