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THE SOURCE OF PUBLIC REVENUE
What are the factors that cause land to have market value and to whom does this market revenue advantage properly belong? Land has market value for three reasons:
Land rent is the price that people and businesses are willing to pay for the exclusive right to possess and use a good land site for a period of time. For example, people prefer to use sites of good location because it gives them an advantage of spending less time in travel by being near what they choose to do and where they work. A businessman can sell more goods at a site where many people pass each day, compared to a site where only a few people would pass.
The collection of land rent should be used as revenue, by the community for supplying public needs. This returns the advantage an individual land possessor receives from the exclusive use of a land site, to the balance of the people who live within the community and have allowed the land possessor the exclusive use of the land site for the period of time.
It is the responsibility of the local communities to insure that the market rent of land is collected for public purposes. When a major part of land rent is not collected, which is the case in most of the world today, land title holders obtain rights to sell the value of the public improvements which were made by the whole community. The community added to the market value of land by making improvements which increases demand and rent for the land. The longer the possessors hold the land out of use the greater will be the bonus they obtain.
By prohibiting people from using good land, the possessors force the premature use of other less desirable land, which is more distant from the city. This raises the cost of community improvements and the rental value of the unused, but better located, land. This precipitates the degradation of the rural environment by using city land inefficiently -- and creates huge unnecessary pressures on the natural environment.
A problem that we face is that cities throughout the world are spreading out and using land prematurely which is not needed and should not be used. That is because failure to collect land rent subsidizes the waste of natural resources and clutters the environment. Cities that collect the full rental value of land are more compact and provide greater and less costly amenities for their citizens.
Any moves to enact good government principles without collecting the full market rent of the land may result in a failure. People are guided by the profit motive. When people can make a larger profit by doing nothing, but keeping the land they possess out of use for a long period of time, they will do so. When the community collects the full market rent of land, they eliminate the motive for keeping land out of efficient use, because the unearned profit has been collected as public revenue.
Efficient land use appeals to all people because it surpasses the political constraints of most people. Everybody understands that the earth belongs equally to all people. They want a clean environment on earth and to leave a healthy inheritance to the future generations, regardless of their political viewpoints.
The major function of a competent
city government is to provide
good community services by collecting the land rent created within
the community to ensure the efficient use of land and equal
opportunities for all of its citizens. Transportation
is an important
function of government which would facilitate the creation of a
compact city, where people can easily find the facilities they desire
for education, commerce, religion and recreation. Good
land use, with the freedom of individuals to achieve the highest and
best use of land, would ensure a desirable community. A compact city
would reduce the need to invade the wilderness and devastate the
environment. ... Read
the whole article
Winston Churchill: The People's Land
The drag on enterprise It is monopoly which is the keynote, and where monopoly prevails, the greater the injury to society the greater the reward of the monopolist will be. See how all this evil process strikes at every form of industrial activity.
Every form of enterprise only undertaken after the land monopolist has skimmed the cream off for himself It does not matter where you look or what examples you select, you will see that every form of enterprise, every step in material progress, is only undertaken after the land monopolist has skimmed the cream off for himself, and everywhere today the man or the public body who wishes to put land to its highest use is forced to pay a preliminary fine in land values to the man who is putting it to an inferior use, and in some cases to no use at all. All comes back to the land value, and its owner for the time being is able to levy his toll upon all other forms of wealth and upon every form of industry. A portion, in some cases the whole, of every benefit which is laboriously acquired by the community is represented in the land value, and finds its way automatically into the landlord's pocket. If there is a rise in wages, rents are able to move forward, because the workers can afford to pay a little more. If the opening of a new railway or a new tramway or the institution of an improved service of workmen's trains or a lowering of fares or a new invention or any other public convenience affords a benefit to the workers in any particular district, it becomes easier for them to live, and therefore the landlord and the ground landlord, one on top of the other, are able to charge them more for the privilege of living there. ... Read the whole piece
Karl Williams: Land Value Taxation: The Overlooked But Vital Eco-Tax
I. Historical overview
II. The problem of sprawl
III. Affordable and efficient public transport
IV. Agricultural benefits
V. Financial concerns
VI. Conclusion: A greater perspective
Appendix: "Natural Capitalism" -- A Case Study in Blindness to Land Value Taxation
A simple model will serve to illustrate. Presently, rail/metro infrastructure is almost prohibitively expensive because the windfall benefits are effectively handed over to landowners. To partially recoup the outlay, authorities are forced to set fares so high as to act as a disincentive to potential low-impact commuters.
Enter LVT. Land values enhanced by the infrastructure are "recycled" by LVT back into the public purse. This enables fares to be reduced, which makes the adjacent land more valuable because it now has access to cheaper public transport. These resulting enhanced land values are again recycled back to the community coffers, which again allows low fares which allow more recycled enhanced land values, which allow lower fares which allow..... While illustrating the process, in practice such iterations would be bypassed as authorities would cut to the chase and set the most economically and environmentally desirable fare structure, which equals the marginal cost of traveling, and not have to dig into scarce public funds to finance such projects. ...
But LVT has much more to contribute to the question of low-impact urban function, in the form of affordable and efficient public transport and other desirable infrastructure. The principle reason why public transport options are presently so limited is because the taxpayer-funded investment in this and other forms of infrastructure effectively disappears, in an almost unseen manner, into the "Black Hole" of landowners' pockets.
That is, not only is the resulting compact cityscape more amenable to the provision of public transport (not to mention walking and riding), but LVT makes the investment in such infrastructure affordable because the resulting enhanced land values are "recycled" back into public coffers. The extension of London's Jubilee line underground network, which opened in 1999, provides a good case in point of how desirable infrastructure can be self-funding if land values are recaptured. An independent study was performed which assessed the increase in land values extending to 800 yards from each of the 10 stations. The accumulated gain (to private landowners) was estimated to be around £13 billion, courtesy of the £3.5 billion of taxpayers funds it took to build the line! ...
A simple model will serve to illustrate. Presently, rail/metro infrastructure is almost prohibitively expensive because the windfall benefits are effectively handed over to landowners. To partially recoup the outlay, authorities are forced to set fares so high as to act as a disincentive to potential low-impact commuters. read the entire article
Karl Williams: Social Justice In Australia: INTRODUCTORY KIT
Under the current system, public expenditure enriches private landowners courtesy of unwitting taxpayers. For example, if a government invests $millions in a new railway line, the value of land near the railway line is enormously enhanced. Because the value of this public investment has effectively disappeared into the "Black Hole" of private land values, prohibitive rail fares must be charged. But imagine this: what if we collected some of the boosted land values through Land Value Taxation (LVT) - couldn't we could lower the fares? And if we lowered the fares, this would enhance the land values now that the accessible train service is cheaper to use. Enhanced land values means more LVT to collect which could lead to lower fares and so on and so on.
While these iterations wouldn't need to be done in practice, the above scenario illustrates how enhanced land values (created by the community) are recaptured or recycled back to the community. Whether we build a bridge, a park, a bike track, a community centre or rehabilitate creekside vegetation - all these sort of life-enhancing investments also enhance land values, which can be fully recouped for further projects. This is just one aspect of Geonomics and one more piece of the unemployment puzzle, but let's now take a peek at how this tax shift can improve our neighbourhood and lifestyle. ... Read the entire article
Ted Gwartney: A Free Market Strategy to Reduce Sprawl
Jeff Smith and Kris Nelson: Giving Life to the Property Tax Shift (PTS)
John Muir is right. "Tug on any one thing and find it connected to everything else in the universe." Tug on the property tax and find it connected to urban slums, farmland loss, political favoritism, and unearned equity with disrupted neighborhood tenure. Echoing Thoreau, the more familiar reforms have failed to address this many-headed hydra at its root. To think that the root could be chopped by a mere shift in the property tax base -- from buildings to land -- must seem like the epitome of unfounded faith. Yet the evidence shows that state and local tax activists do have a powerful, if subtle, tool at their disposal. The "stick" spurring efficient use of land is a higher tax rate upon land, up to even the site's full annual value. The "carrot" rewarding efficient use of land is a lower or zero tax rate upon improvements. ...
The segment of the economy wasting the most resources is probably transportation. Sprawl exacerbates the need for mobility while infilling reduces it. Presently, cars claim 50% of urban surface. Land dues would motivate owners to put their asphalt devoted to cars to higher and better uses, ones that serve humans. A higher human density provides mass transit with more riders so that the system could expand and automobile dependency contract, letting both city and suburb blossom. ...
Owners paying higher land dues feel pressured to develop their land in order to pay their dues, and development is already blighting many suburbs and farmland. Won't the PTS force premature or excessive development, losing open space and ecologically sensitive areas? Environmentalists should understand that development is actually needed to spare land. Using some land more intensely means using other land not at all. The PTS stimulates construction in the most intensely-used locations; compact urban form leaves more surrounding countryside pristine. Since about one-fifth of urban areas are vacant or underused land, and half is devoted to cars, there's plenty of room in cities for growth. While suburban commercial centers compete with downtown for redevelopment, each new building, whether for business or residents, must find tenants.
Higher density is the expected result of the PTS, yet many people oppose higher density. However, the noxious component is not a higher density of population but of automobiles, creating congestion, noise, noxious smells, and danger. The PTS, by clearing out the infestation of vehicles, makes human habitats more livable and the added people unnoticeable.
Without coercion or remote planning, the PTS improves our settlement patterns. Regulations and zoning, some assume, might be vitiated or obviated, become obsolete. Instead, the PTS makes it easier for regulations and zoning to do their job. Since the land tax lowers land price, buying land for parks and reserves is more easily afforded. The loss in revenue from removing the newly public lands from the tax rolls would be offset somewhat by the corresponding rise in value of sites near the protected open space. Creating green spaces raises the density of already developed land, and thus its value. Furthermore, land dues reduce the profit from land development, making it a less attractive investment, and land use decisions of less economic consequence. After a while, people with deep pockets would turn to investments that, post-shift, would be untaxed. Reserving land for recreational or natural uses becomes less contentious; people could more easily determine an optimum proportion of green space to developed space.
Redirecting land rent from owner to government might merely pass the motive to exploit from owner to state, possibly the next implacable force against conservation. However, while an individual must use their own land most intensely to maximize profit, a government must optimize land use to maximize its land tax base. That is, land value thruout the jurisdiction is lower when there is border-to-border development; overall values are higher when some space is kept open. From the government's point of view, there's more rent to be collected when highest and best use includes nonuse. ...
A big problem needs a big solution which in turn needs a matching shift of our prevailing paradigm. Geonomics -- advocating that we share the social value of sites and natural resources and untax earnings -- does just that. Read the whole article
Jeff Smith Share Rent, Transform Society
If society decided to share among its members all the annual value of society's sites and resources and air space, what would happen?
In the past, land owners owed services to king, but in this age of equality then we owe our neighbors. We have an equal right to the earth.
The community creates rent. Land value rises when infrastructure goes on land. Technology progresses when the community becomes more tranquil and density goes up. Density is a really good measure of land value. No one owner by himself is responsible for density. Rent from land value is justified because all should share in the rent.
If the community collected the rent, it would motivate owners not to speculate in anticipation of a higher future return. There would be a tendency to infill in the city and make cities more efficient. It would make mass transit more efficient. ... Read the whole article
Jeff Smith: How Profit Shapes Urban Space
This property tax shift (PTS) "helps cities recover from auto-dependency," notes Gihring, author of The Journal of the American Planning Association’s first article on revenue reform (1999 Winter). The PTS turns lots for cars into structures for people. By densifying a city, it provides more riders for mass transit, justifying more routes and times. As riding becomes convenient while remaining a bargain, and parking grows inconvenient while rising in cost, more people switch from driving to riding. Less traffic lets cities transform streets for bikes, pedestrians, sidewalk cafes, and street performers. ... Read the whole article
Jeff Smith: Sharing Natural Rents to Sustain Human Society
To get rich, or more likely to stay rich, some of us can develop land, especially sprawling shopping centers, and extract resources, especially oil. While sprawl and oil depletion are not necessary, they are more profitable than a car-free functionally integrated city. Under the current rules of doing business, waste returns more than efficiency. We let a few privatize rent -- ground rent and resource rent -- although rent is a social surplus. As if rent were not profit enough, winners of rent have also won further state favors -- tax breaks, liability limits, subsidies, and a host of others designed to impel growth (20 major ones follow herein).
If we are to sustain our selves, our civilization, and our eco-system, we must make some hard choices about property. What we decide to do with rent, whether we let it reward our exploiting or our attaining eco-librium, matters. Imagine society waking up to the public nature of rent. Then it would collect and share its surplus that manifests as the market value of sites, resources, the spectrum, and government-granted privileges. Then we could forego taxing labor and capital. On such a level playing field, this freed market would favor efficiency - the compact city - not waste - the mall and automobile. ...
Drawing their cue from the public, governments tolerate "rentention", the private retention of publicly-generated land values. Lacking this Rent, states turn to taxes. But to grow the economy, all governments -- left, right, or undecided -- hustle to stimulate development; they cut taxes and slop subsidies. Going beyond the call of duty, the state excuses producers' their routine pollution and limit liability, thereby cutting the cost of insurance. Companies that don't impose on nature, worker, or customer are not benefited at all but lose a competitive advantage. On this tilted playing field, one with the lumps of subsidies and the tilts of taxes, technologies lean and clean have a hard time competing as suppliers of materials, homes, food, rides, and energy. ...
Transportation - Cars vs. a Mix of Modes
To sustain that which we love, we must transform our relationships to nature, to government, and to each other. We need to become geonomists in worldview, theory, discipline, and policy. Geonomics creates an economy that's not at war with but aligned with the natural world. ... Read the whole article
Bill Batt: The Nexus of Transportation, Economic Rent, and Land Use
Today, on the other hand, the unearned surplus which classical economists called rent attaches to monopoly titles -- largely the scarce goods and services of nature like locational sites, and has totally disappeared from economic calculus. Yet this is the primary vehicle by which wealth is captured by economic elites. If government recaptured the socially-created economic rent from land sites that comes from the investment of the collective community, we could eliminate other taxes that are both more onerous and create a drag on the economy that makes us all poorer. There are many websites that explain how this can be done, ways that not only beget greater economic efficiency but also bring about economic justice.(2) The surplus economic rent that derives from community effort is its rightful entitlement.
Where does economic rent most tend to lodge? In the center of cities where people are. And also proximate to heavy social investments -- such as railroad and metro stations, public and office buildings, hotels and conference centers, and anywhere there is high traffic in personal or market exchanges. The land value in New York City is higher than all the rest of the New York state combined, even though it is only a minute fraction of the area. ...
The failure to collect site rent leads to a distortion in land use configurations. If patterns unfolded along the lines of both social preference and economic efficiency, high value landsites would tend to have high value buildings, and low value landsites would tend to be vacant or have very modest buildings. Consistent with this, urban centers sites would tend to have office and commercial use, surrounded by lower-value residential land uses, and still further out would be farms and forests. The ratio of building to land value, land to total value (or for that matter any other ratio between buildings, land, and total values) would be relatively constant throughout a region. Instead, the ratio of land value to total value consistently tends to reveal a patchwork of random development. This inefficient settlement of land sites is what we know as sprawl.
Land Rent is Capitalized Transportation Cost
There is another dimension to the distortion of land use in contemporary life. That is the heavy subsidy granted to motor vehicle transportation services. Estimates are that the typical driver pays only about a tenth of the true cost of his travel; society picks up the rest. This profuse subsidy paid to private automobile and truck transportation further encourages people to locate on sites at far greater distances from where they would choose than if they had to pay the full burden of that travel.
From the standpoint of an economic geographer, and for some land economists, land rent is simply capitalized transportation cost. Land rent is the surplus generated by social activity on or in the vicinity of locational sites which accrues to titleholders of those parcels. Whether or not it is recaptured by public policy, rent is a natural factor deriving from the intensive use of natural capital. More intensive use of high value landsites leads to site configurations that are less dependent upon transportation services. People can access them easily even by walking. One must remember that transportation is not an end in itself but rather a means. This is something often forgotten even by urban planners, the distinction between accessibility and mobility. ...
Site Rent and Transportation Costs Linked
Higher density development has all the economies of scale, savings in cost, reduction in externalities, dividends in community and political enhancement, and benefits to urban areas that we all say that we want. The greater the proximity to points of desirable accessibility, the lower are typically the transportation costs. Conversely, sites remote from the urban centers of greatest locational value will have higher transportation costs. ...
This relationship has been demonstrated more empirically in a recent study by the Urban Land Institute. The author concluded that, for Portland Oregon,
each additional mile [traveled] translated into slightly more than $5,000 in housing costs; closer-in locations command a premium, those farther out save money. A ten-mile difference, all other things being equal, would amount to about $56,000 in new home value.
For a household in which one worker drives downtown (or at least to a more central location) to work, that ten-mile difference may amount to 4,600 miles annually, assuming 230 days of commuting and a round-trip of 20 miles each day. Moreover, if non-work trips to the central area and elsewhere doubled that amount, the tradeoff would be about 9,000 miles annually, which could mean a higher/lower driving cost of $3,000 annually, not counting the time saved/spent.(7)
That's the savings for living closer to the urban center by ten miles. If the urban resident has to rely upon a car nonetheless, subtracting some $3,000 annual travel expenses will still leave him paying again that much, and likely more, to own a car. Seven years ago James Kunstler put the true costs along with other experts at about $6,100 annually.(8) The American Automobile Association calculated that a car driven 15,000 miles in 2001 cost 51¢ per mile or $7,650.(9) Even that figure reflects only direct costs to the driver, not those passed on to society. One study calculated that the total costs of motor vehicle transportation to our society equal approximately one-fourth of our Gross Domestic Product (GDP).(10) In 1991 road user fees totaled only about $33 billion whereas the true costs to society were ten times that;(11) put another way, drivers paid only 10% of the true costs of their motor vehicle use.(12) ...
Public opinion polls are practically unanimous in their demonstration of the kind of environment most Americans say they would like to live in.(16) Sociological studies have documented graphically how alienating the car-dependent environment really is. There is an inverse correlation between the ability of a street to move and to park cars and trucks, and the amount of social interaction between neighbors on that street. One study two decades ago compared three similar residential streets in San Francisco, with different levels of traffic volumes. Residents on the different streets were asked to indicate on the base maps of their streets where friends and acquaintances lived. Those living on streets with the least traffic volume had three times as many friends and twice as many acquaintances as those living on the streets with heavy traffic volumes.(17)(18) More recently Harvard Professor Robert Putnam has made similar findings in his book Bowling Alone, and concluded that every ten minutes of additional commuting time means ten percent less time devoted to communal activity. Driving is no longer regarded as fun, not on today's typically congested highways. There was a time when most people drove cars for pleasure; today people resent their having to drive so much and often see driving as a burden.(19) It is also no accident also that on measures of livability, those locations regarded as most attractive are also the ones that are most bicycle-friendly.(20) A number of recent books and their popularity reflect resentment over our forced dependency on motor vehicle transportation Jane Holtz Kay's Asphalt Nation, Clay McShane's Down the Asphalt Path, Wolfgang Zuckerman's End of the Road, and Katie Alford's Divorce Your Car are only a few such examples.(21) But despite their vague discomfort people typically lack the perspicacity to incorporate these non-pecuniary costs into their decisions about locational choice. ...
Correcting Distortions by Pricing: Increasing the Collection of Land Rent
Recovering the economic rent from urban parcels helps people to appreciate the true costs of the transportation versus location trade-off. It brings the carrying costs of site choices back to the present time and makes them comparable with travel choices. The payment of site rent becomes an operating cost. The other corrective policy needed is to raise transportation costs to a level commensurate with their full value as private goods. Transportation user fees, in the form of motor fuel taxes, green taxes, congestion fees, and administrative costs (for the administration of drivers' licenses and registration fees) could easily provide the needed price corrections to bring into balance marginal transportation costs and land rent collection. Doing so would equilibrate choices between people living and working in high rent urban centers and those in peripheral low rent (but higher travel cost) locales.
Figure 2 shows how a tax on land value (or alternatively the tax on land rent) coupled with the proper design of transportation fees can equilibrate the competitive advantage of markets in urban areas relative to suburbs, thereby reducing, and perhaps even reversing, the centrifugal forces of sprawl development. The land tax cannot alone redress the problem, especially so long as such inordinate social subsidies are granted to private motor vehicle transportation services. Nor can transportation fees, raised to a level fully commensurate with the social and private costs they incur, alone ensure that the price of locations will be matched. But to the extent that both are assessed, they reach far toward correcting this disequilibrium. One could even argue that all site rent should be recaptured by society and that all transportation costs that are identifiable as consumption of private goods should be priced accordingly. Some advocates even suggest that doing so will not only foster economic efficient behavior but also provide sufficient revenue for a citizen's dividend consistent with economic justice. ...
Correcting Distortions by Pricing: Increasing the Recovery of Transportation Service Costs
With respect to charges upon transportation services and externalities, there are several components to a proper pricing design.(25) The first step to proper pricing is to identify the proportion of transportation services that ought rightly to be seen as private goods as opposed to public goods.(26) Although this is a daunting task, the frequent figure used is 80 percent - 20 percent proportion.
It is easy to distinguish five elements of transportation service cost:
Each of these calls for a different treatment with respect to revenue design.
... capital investments affect the market value of locational sites by conveying rent to those in any way benefitting from the service. That rent accruing to proximate sites and can easily recaptured to pay off the debt service of project construction. Typically rent collection is ignored, however, left instead in the hands of titleholders whose sites are serviced by the infrastructure investment. This drives speculation in land, with all the negative effects it brings both economically and politically. In fact the rent created by capital investment in transportation can be enormous.
The component of transportation costs constituting capital expenditure can and should be recaptured through the collection of land rent since it accounts for the creation of that value particular to proximate locational sites.
Maintenance costs on the other hand are best paid for from user fees, and can range from excise taxes on motor fuel, tires, heavy truck charges and others still. ...
Separate from maintenance operations are the costs involved in the regulation and supervision of drivers and motor vehicles themselves. License and registration fees should ideally be designed only to recover the costs involved in their administration. ...
Charging for pollution externalities of motor vehicle travel invites more complex issues. ...
The last dimension of motor vehicle transportation charges can be designed to reflect the costs of congestion. ...
These pricing approaches taken together offer the prospect of both recovering costs in their varied forms as well as fostering efficient transportation services. There are grave misconception in how much fiscal policies distort social and economic behavior. And the fiscal policies that foster the greatest distortions of all are those involving road costs and the failure to collect economic rent. Rather than resort to traditional command-and-control approaches which are frequently just as cumbersome and distorting as current unthinking fiscal measures, now is an opportune time to consider models which will help us to get things right. ... read the whole article
Bill Batt: Stemming Sprawl: The Fiscal Approach
The Costs of Poor Taxes
Society pays a price for not adopting taxes which follow the principles developed over the centuries. Here I want only to show how the resulting distortions that arose in the use of land ultimately caused the railroads to fail in being able to serve society. While in the short term the railroads certainly saved themselves from having to pay taxes on their vast land holdings, the most valuable of which were right around their own investment in tracks and stations, they ultimately lost the frequency of traffic which that tax structure would have induced. This is because the population and improvement densities needed to make public transit traffic economically viable did not come about. Taking the long view of society, George Kennen notes in one of his books that:
The railway. . . was capable of accepting and disgorging its loads, whether of passengers or freight, only at fixed points. This being the case, it tended to gather together, and to concentrate around its urban terminus and railhead, all activity that was in any way related to movements of freight or passengers into or out of the city. It was in this quality that it had made major and in some ways decisive contributions to the development not only of the great railway metropolises of the Victorian age particularly of such inland cities as Moscow, Berlin, Paris, and Chicago but even certain of the great maritime turnover ports, such as London and New York.
The automobile, on the other hand, had precisely the opposite qualities. Incapable, in view of its own cumbersomeness and requirements for space, of accepting or releasing large loads at any concentrated points anywhere, but peculiarly capable of accepting and releasing them at multitudes of unconcentrated points anywhere else, the automobile tended to disintegrate and to explode all that the railway had brought together. It was, in fact, the enemy of the concentrated city. Thus it was destined to destroy the great densely populated urban centers of the nineteenth century, with all the glories of economic and cultural life that had flowed from their very unity and compactness. ...
Transportation planners know that public transit typically takes a density of at least 8-10 households per acre in order for it to be economically viable. Because tax policies have been instituted that have the effect of deliberately fostering low density suburban sprawl, society has become dependent upon motor vehicle transportation rather than transit service. Had taxes been imposed heavily or solely upon land value, just the opposite would have occurred: development would have been most intense on the high land-value parcels, right by the transit services, making our society less dependent upon motor vehicles.
We face a far greater problem on account of the way in which America has allowed its landscape to be configured than most people today realize. Over-reliance upon the car causes inefficiencies in transportation patterns and thereby disenfranchises the poor, the disabled, the young and the old from their right to mobility. One 1993 study concludes that "when the full range of costs of transportation are tallied, passenger ground transportation costs the American public a total of $1.2 to $1.6 trillion each year. This is equal to about one-quarter of the annual GNP and is greater than our total national annual expenditure on either education or health." Just the costs of motor vehicle accidents nothing else represents a figure equal to 8 percent of the American Gross Domestic Product. Conventional American land use configurations and the automobile dependent lifestyle that goes with it sap our resources and what effort could be used for other ventures and activities. Since so much of this activity is consumption and not production, it weakens America's world economic position and precludes reinvestment in more productive areas. Because of the way in which we have encouraged development, people who need jobs are frequently too poor to own the cars necessary to get to them. ... read the whole article
Wyn Achenbaum: Eminent Domain and Government Giveaways
... near me is a beautiful parkway which runs about 40 miles. For most of its length, it is a rather straight highway. But near its western end, the straight road has some huge curves, designed to take it around some properties which the builders of the highway did not seek to acquire via eminent domain after the owners chose not to sell. Every driver who uses the westernmost section of the Merritt Parkway must drive extra miles in order to protect those wealthy 1930s landholders and their successors. I estimate that at least 1.3 billion extra miles have been driven by the general public. Had the builders of the parkway exercised eminent domain, this mileage, and the pollution and expense involved, would have been saved. Instead, the costs are shifted onto every driver and onto the taxpayers who maintain the highway and its services. Eminent domain would, I think, have been an appropriate step to prevent that. Today, the properties are among the most valuable residences in Connecticut, but their owners don't compensate the rest of us for our inconvenience and expense. ... read the entire article
Bill Batt: The Compatibility of Georgist Economics and Ecological Economics
So also in the case of the auctioning of “pollution credits” or tradeable permits, what in fact constitute the right of power industries to treat the air as a dump to the full extent which environmental tolerances allow.45 These “credits” are now “owned” by the private sector and traded back and forth among corporations, even though all people experience the consequences of its treatment. Airport landing slots, “prime time” broadcasting, and many other time-sensitive dimensions have all been handed over to the private sector with nominal benefit to the public. London Mayor Ken Livingstone has been a strong supporter of renting the landing slots at Heathrow and Gatwick Airports, and is at this very time exploring a rent recovery scheme to pay for the upgrade of components of the Jubilee tube line.46 ...
The collection of land rent has other consequences for the smooth and effective functioning of the economy as well. With respect to the configurations of land use in urban areas, the collect of land rent neutralizes, and even reverses, the centrifugal forces which the current real property tax (i.e. that on both land and improvements) exerts on the values of locational sites. In fact one eminent economist argues that a tax on land sites is “better than neutral,” because it fosters activity in the highest value areas and removes the factor of adverse timing that often stalls economic investment.51 This all leads to the economic vitality of high-land-value cities, simply by virtue of concentrating activity in central areas instead of peripheral and remote regions. It discourages the extravagant and careless development of land sites, thereby also fostering development densities conducive to community welfare and to the success of public transit services.52 Experts agree that the minimum density necessary to make public transit services economically viable is 10 to 12 households per acre; without this, there is little prospect of altering private automobile dependency.53 And given the widespread environmentally and socially destructive consequences of motor vehicle dependency, collecting rent is half the answer toward the goal of engendering livable urban areas. (The other half — see below — is pricing motor vehicle use at its true marginal cost to society.)
The more cohesive the development of communities is, the greater the synergy exists among its members. Sprawl development not only increases the cost of transportation and other infrastructure needed to service these sites, it also reduces the extent to which people are accessible to one another. There is considerable indication that American society is losing this elusive quality of community. When Harvard professor Robert Putnam published his celebrated article Bowling Alone in January, 1995, it was remarkable as much for the resonance that it generated throughout the nation as for the message itself. David Broder of the Washington Post pronounced Bowling Alone the most important academic article that year. Putnam argued that our communal relationships are declining, and that an ever smaller proportion of the population is involved in social activities of a cooperative and communal nature.54 We used to be a nation of joiners; increasingly now we’re a nation of loners. As Tocqueville noted 150 years ago, affiliative groups used to be the unique strength of American society.55 Several hypotheses were offered in this and subsequent studies to explain the decline in the civic engagement of Americans — various demographic changes, technological innovations such as television, the changing role of government, the cultural revolution, and so on. The land-use and transportation patterns that have evolved in the post-war period are a factor as well. The concepts of neighborhood and community today no longer mean the same thing as they did in the past. ...
Recent days have witnessed a profound and growing awareness of the problems due to sprawl development. In fact one opinion poll marked sprawl as the highest current concern among American voters.60 The answers being offered, however, don’t address the root causes of the problem. The most talked about panacea is the institution of urban growth boundaries, but these have failed to be demonstrably successful even in the two communities most often cited (Portland and Boulder) where they were instituted over twenty years ago. Solutions such as these reflect the penchant of policy makers to rely upon so-called “command-and-control” (CAC) approaches to government rather than “pricing” approaches. The extension of government reach and weight to impose policies deemed appropriate is burdensome, expensive, and inefficient.
Such means reflect a lack of understanding and imagination according to authors David Osborne and Ted Gaebler, who urge adoption policies of “steering rather than rowing.” 62 As long as drivers personally are able to pass off to others the true costs of their travel, it guarantees, along with the failure to collect land rent, that sprawl development will continue. One 1993 study concluded that "when the full range of costs of transportation are tallied, passenger ground transportation costs the American public a total of $1.2 to $1.6 trillion each year. This is equal to about one-quarter of the annual GNP and is greater than our total national annual expenditure on either education or health."63 Japan, by way of comparison, spends an estimated 10.4% to satisfy all its transportation requirements, although the figure might be a bit low because not all externalities are included in the calculation.64 One reason we are spending so much on motor vehicle transportation is that our public policies encourage it. Road user fees represented about $33 billion in 1991 but the true costs to society were ten times that;65 put another way, drivers pay only 10% of the true costs of their motor vehicle use.66... read the whole article
Ted Gwartney: A Free Market Strategy to Reduce Sprawl
Public Finance by Self-Financing
In the public sector, capital investment in infrastructure projects would no longer be a debt burden, because the projects would become self-financing. User charges for the public services, when combined with the rental income created by these projects, would cover the cost of creating and running a public service.
It was estimated that the BART transportation system in San Francisco produced two times more land value than it cost to build. The public recaptured only a small part of the cost from benefits provided by land taxes and user fees. Most of the cost came from external sources, unrelated sales and income taxes. Most of the profits went into only a few pockets.
Thus, the claim that a community is short of capital is misleading. ... Read the whole article
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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper