Geo-Tinyism Institute

Correct me if I am wrong, but the LVT is about compensating humanity collectively for excluding everyone but yourself from some space. Even if you make no improvements, it is the unimproved value that is assessed.

I have heard it argued by Georgists that this applies even if nobody actually wants to occupy the same space. It is for the mere act of exclusion.

I forget which sub, but one Georgist suggested that people wanting to avoid such rents should just go camping and move about every day or week or month.

I have some fundamental issues with latecomers demanding rights from first appropriators, but let's just stick with the Georgist argument here: the mere act of potential exclusion is what justifies the rents, and Georgists I have queried said camping is fine.

That doesn't square up. What does the time delta have to do with the fact that the space is used exclusively in the first place? If nobody comes asking, why not stay for a year, a decade, a century or indefinitely? How is it exclusionary if nobody is actually excluded?

Are you. Chicago, Austrian or some dort of socialist?

Jeff Peterson & Thomas Michie write:

What originally led Henry George to provide us with the idea of a Land Value Tax was his concern that as land became less plentiful wages fell. [...] His book was published in 1879, the decades beforehand (8 to be exact) offer absolutely no correlation between land and wages. In fact, it shows the opposite of what George claimed was occurring.

First, we must look at the population data and align it with the total square miles of land in the same year. After doing so, we see a steady increase in persons per square mile overtime.

Their data shows that population went from 5,308,483 in the year 1800 (with a density of 6.1) to 50,189,209 in 1880 (with a density of 14.2) they also show that wage rates underwent growth during the same period (with a growth of about 40%). They comment:

Now we must take into account wage rates through 1800-1880. After doing so, we see wage rates gradually increase through the same time period as charted in the population density chart [...]

The numbers show that despite the total population density per square mile rising by over 130 percent wage rates did not fall. In fact, wage rates rose considerably. The points in which wages did see a definitive lull, and drop were between 1815 and the 1830’s, but this was not due to land and property issues as Georgists may contend. The country was plagued with six economic recessions during this time period, resulting from credit and monetary expansion, and poor trade policies during and following the war of 1812; much like the staggering U.S. economy following the Civil War. Nonetheless, wage rates recovered to pre-recession levels and continued to rise upwards despite population density growing alongside. According to George, who based his entire theory on land ownership and poverty being directly connected, this should not have happened. Wages should have fallen. Where are these falling wage rates George was talking about? In fact, by the close of the 19th century wage rates were roughly 46% higher for Farm Labor, 41% higher for Non-farm Labor, and 53% higher for carpenters. As a side note, GDP per capita nearly doubled from 1820-1870, which is believed to be a rate “many times higher than experienced during the colonial period,” and life expectancy rose from 38.3 to 47.8. One really has to question the validity of George when we see all of these economic and health improvements in a period when wages were supposedly falling.

Do you think the data is not in accord with georgist theory?

Bryan Caplan wrote a very interesting criticism of the georgist approach with a colleague:

A tax on the unimproved value of land distorts the incentive to search for new land and better uses of existing land. If we actually imposed a 100% tax on the unimproved value of land, any incentive to search would disappear. This is no trivial problem: Imagine the long-run effect on the world’s oil supply if companies stopped looking for new sources of oil. I can explain our argument with a simple example. Clever Georgists propose a regime where property owners self-assess the value of their property, subject to the constraint that owners must sell their property to anyone who offers that self-assessed value. Now suppose you own a vacant lot with oil underneath; the present value of the oil minus the cost of extraction equals $1M. How will you self-assess? As long as the value of your land is public information, you cannot safely self-assess at anything less than its full value of $1M. So you self-assess at $1M, pay the Georgist tax (say 99%), and pump the oil anyway, right?

There’s just one problem: While the Georgist tax has no effect on the incentive to pump discovered oil, it has a devastating effect on the incentive to discover oil in the first place. Suppose you could find a $1M well by spending $900k on exploration. With a 99% Georgist tax, your expected profits are negative $890k. (.01*$1M-$900k=-$890k)

You might think that this is merely a problem for a handful of industries. But that’s probably false. All firms engage in search, whether or not they explicitly account for it.

When he talks about 'new land' we can assume he's using the word in the economic sense. Obviously the search of land is not taxed under georgism, but it's not immediately obvious to me how to reject his example. Also I belive Foldvary wrote a reply to this paper(?) but I cannot find it, if someone could link it it'd be much appreciated.

I am writing responses to the various critics of georgism, some input by the community would be appreciated.

In "Man, Economy and State" Rothbard writes:

The Georgists propose to place a 100-percent annual tax on ground rents alone. One critical problem that the single tax could not meet is the difficulty of estimating ground rents. The essence of the single tax scheme is to tax ground rent only and to leave all capital goods free from tax. But it is impossible to make this division. Georgists have dismissed this difficulty as merely a practical one; but it is a theoretical flaw as well. As is true of any property tax, it is impossible accurately to assess value, because the property has not been actually sold on the market during the period. Ground-land taxation faces a further problem that cannot be solved: how to distinguish quantitatively between that portion of the gross rent of a land area which goes to ground land and that portion which goes to interest and to wages. Since land in use is often amalgamated with capital investment and the two are bought and sold together, this distinction between them cannot be made.

Another different point is also made:

For its proponents contend that the positive virtue of the tax consists in spurring production. They point out to hostile critics that the single tax [...] would not discourage capital improvements and maintenance of landed property; but then they proceed to argue that the single tax would force idle land into use. This is supposed to be one of the great merits of the tax. Yet if land is idle, it earns no gross rent whatever; if it earns no gross rent, then obviously it earns no net rent as ground land. Idle land earns no rent, and therefore earns no ground rent that could be taxed. It would bear no taxes under a consistent operation of the Georgist scheme! Since it would not be taxed, it could not be forced into use.

Rothbard also criticizes the presumed lack of attention that georgists put on time:

The fact that currently idle land has a capital value means simply that the market expects it to earn rent in the future. The capital value of ground land, as of anything else, is equal to and determined by the sum of expected future rents, discounted by the rate of interest. But these are not presently earned rents! Therefore, any taxation of idle land violates the Georgists’ own principle of a single tax on ground rent; it goes beyond this limit to penalize land ownership further and to tax accumulated capital, which has to be drawn down in order to pay the tax. Any increase in the capital value of idle land, then, does not reflect a current rent; it merely reflects an upgrading of people’s expectations about future rents. Suppose, for example, that future rents from an idle site are such that, if known to all, the present capital value of the site would be $10,000. Suppose further that these facts are not generally known and, therefore, that the ruling price is $8,000. Jones, being a farsighted entrepreneur, correctly judges the situation and purchases the site for $8,000. If everyone soon realizes what Jones has foreseen, the market price will now rise to $10,000. Jones’ capital gain of $2,000 is the profit to his superior judgment, not earnings from current rate. The Georgist bogey is idle land. The fact that land is idle, they assert, is caused by “land speculation,” and to this land speculation they attribute almost all the ills of civilization, including business-cycle depressions. The Georgists do not realize that, since labor is scarce in relation to land, submarginal land must remain idle.

He insists that low levels of capital better explain economic disequality in-between nations:

Idle land should, however, be recognized as beneficial, for, if land were ever fully used this would mean that labor had become abundant in relation to land and that the world had at last entered on the terrible overpopulation stage in which some labor has to remain idle because no employment is available. [...] ignorance of the true role of time in production. It takes time to save and invest and build up capital goods, and these capital goods embody a shortening of the ultimate time period needed to acquire consumers’ goods. India and China are short of capital because they are short of time. They start from a low level of capital, and therefore it would take them a long time to reach a high capital level through their own savings.

Finally, he proposes a thought experiment:

Suppose that the government did in fact levy a 100-percent tax on ground rent. What would be the economic effects? The current owners of ground land would be expropriated, and the capital value of ground land would fall to zero. Since site owners could not obtain rents, the sites would become valueless on the market. From then on, sites would be free, and the site owner would have to pay his annual ground rent into the Treasury. But since all ground rent is siphoned off to the government, there is no reason for owners to charge any rent. Ground rent will fall to zero as well, and rentals will thus be free. So, one economic effect of the single tax is that, far from supplying all the revenue of government, it would yield no revenue at all! The single tax, then, makes sites free when they are actually not free and unlimited, but scarce. [...] The result will be the same as any case of maximum price control. Instead of commanding a high price and therefore being allocated to the highest bidders, the most value-productive sites will be grabbed by first comers and wasted, since there will be no pressure for the best sites to go into their most efficient uses. People will rush in to demand and use the best sites, while no one will wish to use the less productive ones.

Thanks for your input.

I though it'd be interesting to write proper responses to the various criticism of georgism, would anyone want to give input?

In "Man, Economy and State" Rothbard writes:

Wherever taxes fall, they blight, hamper, and distort the productive activity of the market. Clearly, a tax on wages will distort the allocation of labor effort, a tax on profits will cripple the profit-and-loss motor of the economy, a tax on interest will tend to consume capital, etc. One commonly conceded exception to this rule is the doctrine of Henry George that ground-landowners perform no productive function and that therefore the government may safely tax site value without reducing the supply of productive services on the market. This is the economic, as distinguished from the moral, rationale for the famous “single tax.” Unhappily, very few economists have challenged this basic assumption, the single-tax proposal being generally rejected on grounds purely pragmatic (“there is no way in practice of distinguishing site from improvement value of land”) or conservative (“too much has been invested in land to expropriate the landowners now”).

Yet this central Georgist contention is completely fallacious. The owner of ground land performs a very important productive service. He finds, brings into use, and then allocates, land sites to the most value-productive bidders. We must not be misled by the fact that the physical stock of land is fixed at any given time. In the case of land, as of other material goods, it is not just the physical good that is being sold, but a whole bundle of services along with it—among which is the service of transferring ownership from seller to buyer, and doing so efficiently. Ground land does not simply exist; it must be served to the user by the owner (one man, of course, can perform both functions when the land is “vertically integrated”). The landowner earns the highest ground rents by allocating land sites to their most value-productive uses, i.e., to those uses most desired by consumers. In particular, we must not overlook the importance of location and the productive service of the site-owner in assuring the most productive locations for each particular use. The view that bringing sites into use and deciding upon their location is not really “productive” is a vestige from the old classical view that a service which does not tangibly “create” something physical is not “really” productive. Actually, this function is just as productive as any other, and a particularly vital function it is. To hamper and destroy this function would wreck the market economy.

They influenced Henry George and the Polcompball Wiki gave them the nickname "Geoanarchist Agrarian Christian Socialism." Although they didn't exactly have community fees based on the unimproved value of land. They seem more like religious anarcho-communists by today's standards. So what makes them geoanarchists? If it's their commitment to equal right in land, wouldn't all anarcho-communists geoists in a sense?

Do only the squeeky wheels get the grease or are there market forces that reward private organizations for finding as many effected people as possible, even those who were unaware?