It's almost like, having a true fixed supply, land is a separate class of economic good and shouldn't be seen the same way as everything else. Georgism ftw
Yeah, that seems like opposite of Georgism. You don't have to look very far to find examples of land being worth much more than what's built on it, that's the case in much of the US.
Georgism just makes more and more sense the more you think about it. The idea that people should be allowed to profit off unimproved land is so clearly immoral, and that’s not to say anything for the efficiency Georgism brings and the amount it would help lower rental costs.
In Georgist terms 'land' means any non-renewable natural opportunity such as thr actual land, magnetic spectrum (wifi, 5g)… deposit of oil or iron ore or even ancient sites built by previous civilizations that nobody can claim inheritance to nowadays.
Labor is in theory infinitely expandable. Capital is infinitely expandable. Land (and natural opportunities) is fixed in supply, so according to Georgists there is no moral argument for favoring somebody for its monopolization. It should be community owned and rights of use to it should be given out to people, priced by a market mechanism.
Labor and capital don't suffer from fixed supply or renewability so according to Georgists there is no need to prevent it from expanding, eg. by slapping taxes on it.
Georgist movement is also known as single-tax or zero-tax movement, because they advocate that there should be no taxes on labor, consumption or capital. The only tax implemented should be the natural monopoly tax (land value tax). They say it would be enough to finace government from it because there are crazy trillions of dollars parked in real estate. Real estate price is actually land value price (location, location, lovation), so only land tax would suffice and there is no need for property taxation, which is actually product of someone's labor.
Some Georgists say that Land Value Tax is not even a tax but a payment for exclusive rights of use. You pay for the service the government gives you directly, therefore it's not a tax. In this way they argue you can run a society with exactly ZERO taxes and paradoxically raise even more money than current tax system.
Yeah, true. But if Georgism was in place I would think you would have less people owning prime property but living 2000 miles away and completely unaware what is happening on the land.
There's an entire economic school of thought dedicated to railing against the specific problem of sitting on physical land just to keep it out of use until someone else pays you a higher price:
I think Georgism has a calculation problem, and furthermore I don't believe one can model the supply of land as a perfect vertical supply curve.
I don't think that it is possible to fairly assess the value of a location separately from the permanent improvements to the land. And I don't like systems that produce scenarios wherein a hostile party could potentially make adversarial plays to force a disadvantageous sale onto a cooperating person and profit from it.
I'm not entirely sure that the problem George was trying to tackle is even fixable. A human as an economic entity is a bundle of connections that are sometimes dependent upon distance, and sometimes dependent upon time, and other times dependent on information. These threads tangle in a way that cannot be easily unraveled. And frankly, I'm not convinced that land value is even the most significant keystone factor in modern economies any more. The new land rush seems to be in intellectual property. Having already perfected the extraction of rents from the biological necessities of breathing, drinking, eating, and sleeping, the rentiers have climbed higher on the hierarchy of needs by establishing privileged positions in education, social connections, and entertainment.
There's an entire political ideology which totally disagrees with you -- Georgism. Basically most of capitalism is fine, shares, bonds etc. but natural monopolies and value derived from land are not the same thing and must be treated specially. There's one very pithy way of expressing this which goes back to Adam Smith -- taxes on land do not cause economic inefficiencies in the same manner as other taxes.
It's not quite the same, but Georgists consider land, in general, and not entirely without reason, as a special case: https://en.wikipedia.org/wiki/Georgism
Yeah, I agree with that. I think the best answer to that is georgist; one could argue that an average piece of land is extremely cheap, so there's no problem, everyone can get one; but if people want a specific piece of land, and many people want the same ones, a distribution mechanism is needed.
It's called "land" because it is one of the three original factors of production in classical economics - labor, capital and land.
Labor is energy, Capital is accumulation of energy. Land is any natural opportunity.
Domains, patents or spectrums are portions of namespace, string space, idea space, frequency band - some kind of space, in other words land.
> Objection, your honor. Assumes facts not in evidence.
Many Georgism advocates seem to have this idea that Georgism is this magic formula that is going to fix everything, and the only alternative is catastrophe. Even by those standards, though, this statement seems rather extreme. Can you defend it, rather than simply assert it?
I don't want to defend anything. It's up to people to decide if they want to burn everything to the ground after exhausting all the economic policities with nothing much to show for it. Real estate keeps getting bigger problem than ever, birth rates plummeting. Continuing the trend will result in a collapse by one of 1. depopulation 2. war 3. revolution or similar event. Since real estate is such a big part of it, georgism - the antidote for misbehaving real estate - seems like the next tool to reach for.
Anyways - everybody who spends a bit of time trying to understand it realizes that it is logically the obvious solution, but is politically infeasible.
That's one of the arguments behind Georgism. If someone is not able to own enough land in order to provide for themselves then working for someone else isn't actually a free exchange.
land also has a fixed supply and lots of people have argued that because it's a fixed supply it should be managed/regulated differently than things that have unlimited supply like say labor or produce
Just as a note for those unfamiliar, there's a whole economic philosophy around the idea of utilizing land rents (and also all other rents) for public goods: Georgism.[0]
Georgism is the idea that, although the improvements built on land can be owned by a private person, land itself cannot, being a part of the natural world which is by right the common property of all humankind. By this idea, anyone claiming exclusive use of a piece of land owes to the community a rent equal to the value of the unimproved land. This idea extends to all that is (or ought to be) the commons: natural resources, pollution, the EM spectrum, etc.
If you think about it this makes perfect sense: why is a small lot in a city (say central Paris) worth millions while a 10ha estate in the Australian outback worth a few thousand? Because of the community that throughout the generations built the city into a place with value where people want to live. It is therefore to the community that this economic value belongs.
Beyond the moral dimension of this proposal, there is also a surprising economic depth: this rent/"tax" would discourage unproductive use of land, as speculators cannot afford to sit in a property, wait for its value to go up, and collect the income from the hard work of the community around it.
I'll leave you with some quotes:
The tax upon land values is, therefore, the most just and equal of all taxes. It falls only upon those who receive from society a peculiar and valuable benefit, and upon them in proportion to the benefit they receive. It is the takingby the community, for the use of the community, of that value which is thecreation of the community. It is the application of the common property to common uses. When all rent is taken by taxation for the needs of thecommunity, then will the equality ordained by Nature be attained. No citizen will have an advantage over any other citizen save as is given by his industry, skill, and intelligence; and each will obtain what he fairly earns. Then, but not till then, will labor get its full reward, and capital its natural return.
—Henry George
Landlords grow rich in their sleep without working, risking or economizing. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title.
—John Stuart Mill
The underlying problem is the whole structure of our economy which has become more oriented at increasing rents than increasing productivity and real economic growth that would be widely shared in our society... but a tax on land rents would actually address some of the underlying problems. This is an idea that Henry George had more than 100 years ago but the analysis that I have done says it would actually go one step beyond Henry George. Henry George argued for a land tax because it was non-distortionary but this analysis says that a land tax actually improves the productivity of the economy because you encourage people to invest in productive capital rather than into rent generating wealth and the result of that shift in the composition of savings toward more productive investment leads to a more productive economy and leads to a more equal society.
—Milton Friedman (and believe me, I don't often quote Milton Friedman!)
A fundamental idea of Georgism is that the land belongs to everybody, so rather than owning land, one essentially rents it from the people. More desirable land is rented at a higher rate. If the land you are renting could be making someone else millions with a higher productivity use, then you need to pay for the privilege of not using it for that higher productivity use.
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