Land is capital. And the importance of land in economies have lessened quite a bit from the 19th century.
And even Henry George wasn't really a Geoist. He criticized all forms of unearned income, and called for e.g. abolition of intellectual property and nationalization of banks.
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.
Yes, Henry George had some good ideas, but nobody is perfect. His ideas about the business cycle were also rubbish.
The supply of land is fixed. We can make more capital.
If you tax land or labour, you get less of them. If you tax land, it's still the same amount. Land is also hard to hide [citation needed], so tax evasion is harder.
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.
> 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.
It's hard to visualize just how much more valuable land is in high-value areas. It far far outweighs the amount of land. And remember that it's a tax on the value of the land, not the amount of land. $1M of land in the Bay Area is not often enough to place even a house, but $1M of farm land far from economic opportunity will buy hundreds of acres.
What this does is make the Ricardo/Georgist of land more relevant in the current times than it was for agricultural land hundreds of years ago. The difference between good and bad land is amplified, not reduced.
Check out this map of the US, that switches from pixels proportional to acres to pixels proportional to real estate value. Georgism applies most extremely to these areas that metastasize:
It's also worth pointing out that the primary "critique" of Piketty's analysis of wealth inequality, with wealth increasing towards capital owners, by Matthew Ronglie, was two fold 1) depreciation wasn't properly analyzed, and 2) most of the wealth transfer went to capital in the form of real estate rather than other forms of capital. And the part of real estate that doesn't depreciate is the land, not the structure. So I view Ronglie not as a refutation of Piketty, but an addition that points the way to the real problem with capital: land.
For George, land was not capital, it had to be separated out because it behave differently than a set of tools. And for George, land doesn't refer just to the dirt on which we build structures, it also applies to things like patents and other monopolies that the HN crowd understands to sap wealth from society.
Georgism is a very unintuitive understanding of political economy, but I think that the HN crowd is far more likely to find it a natue thing to understand, since our "capital" in the form of computers are cheap and plentiful, most of us live in places where real estate demonstrates George's insights dramatically (the Bay Area), and we also encounter other forms of economics land like patents/IPv4 addresses/domain names.
As much as I am a fan of Henry George's basic take on things, I also have an issue with the fundamental concept of "productive use of land". To require that any use of a piece of land generates sufficient income to pay taxes on that land which reflect the highest financial value it could have ... just seems wrong to me.
I don't want all land in its most productive use, and neither, I suspect, does the rest of the world.
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]"
I suspect that "productive use" of capital has simply worn away. What's left is buy and hold of property.
Henry George is credited with land rents taxation as a theory. He built on Ricardo's work to posit a complete theory of taxation based purely on land rents.
It's true that I'm talking about all different types of rents in the article. I've written about land rents and land taxes here, if you're interested: http://esoltas.blogspot.com/2012/06/on-land-taxes.html. Also, as old as the Henry George analysis of land rents is, it is still quite relevant. If you look at some of the rebuttals to Piketty's capital (eg., this one: https://ideas.repec.org/p/spo/wpecon/infohdl2441-30nstiku669...), what you see is that most the growth in capital/income ratios comes from increases in the value of land capital. That would suggest George is still relevant to our world, and that conversations about IP might be secondary.
> "A simple pen" is a nice example, but the real interesting question is what to do about common goods like natural resources and land.
This very question is what is addressed with Henry George's concept of private property in land (aka Georgism, aka Geolibertarianism, aka geoism).[0]
To quote the Wiki page to tie this into the article: "Austrian economist Friedrich Hayek credited early enthusiasm for Henry George with developing his interest in economics."
Georgism is deeply rooted in the Law of Rent and David Ricardo's work on the matter. So to say Henry George was a crank is sorta like saying Ricardo and the law of rent is bunk. The reality is that all land (be it physical land, IP, or some other natural or non-natural monopoly) always leads to its owners extracting surplus value in the form of rent. Be that rent coming in it's literal form or as something masquerading as fees.
I think the worse problem is that some Georgists are bad at explaining that integral point which leads to confusion as to what their contention is all about.
Interesting line of thought. What’s your take on Henry George? (Arguing for distributing land rent equally, which would counter your concerns somewhat)
Cudos for mentioning the godfather of this line of thought, Henry George. However, limiting the theory to housing is too restrictive, and land for non-housing productive purposes follow the same laws of monopolistic supply and inelastic demand.
"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.
And even Henry George wasn't really a Geoist. He criticized all forms of unearned income, and called for e.g. abolition of intellectual property and nationalization of banks.
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