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One person's unearned increment is
another's — and likely many others' — lost birthright.
Who is
entitled
to
it? All of us! How do we implement this? Land value taxation.
Mason Gaffney, correspondence (used with permission)We, like you no doubt, are
basking in the unearned increment of the land under our house,
turbo-charged by tax-exemption. Two of our older children in
Marin County are basking, too, and we take comfort in their
well-being. We deserve this, right? Are we not of The
Greatest Generation (how we love that toadying title)? But how will your grandchildren afford a
home at today's prices? We get the increment, but they get the
excrement. Oh, well, the plunging dollar, crumbling
infrastructure, far-called navies and troops melting away, soaring
interest rates, higher taxes, incredible public debts coming due ...
it'll all be different soon. We may all grow poor together.
Henry George: The Wages of Labor
The worst evil of poverty is not
in the want of material
things, but in the stunting and distortion of the higher qualities. So,
in another way, the possession of unearned wealth stunts and distorts
what is noblest in man.
The evil is not in wealth itself – in its command over material things: it is in the possession of wealth while others are steeped in poverty; in being raised above touch with the life of humanity; from its work and its struggles, its hopes and its fears, and the kind sympathies and generous acts that strengthen faith in man and trust in God! God’s commands cannot be evaded with impunity. If it be His command that men shall earn their bread by labor, the idle rich must suffer. And they do! See the utter vacancy of the lives of those who live for pleasure; see the vices bred in a class who, surrounded by poverty, are sated with wealth; see the pessimism that grows among them; see that terrible punishment of ennui, of which the poor know so little that they cannot understand it!... read the whole article Henry George: The Single Tax: What It Is and Why We Urge It (1890)Our plan involves the imposition
of no new tax, since we already
tax land values in taxing real estate. To carry it out we have only
to abolish all taxes save the tax on real estate, and abolish all of
that which now falls on buildings or improvements, leaving only that
part of it which now falls on the value of the bare land, increasing
that so as to take as nearly as may be the whole of
economic rent,
or what is sometimes
styled the "unearned increment of land values." ... read
the whole article
Henry George: The Condition of Labor — An Open Letter to Pope Leo XIII in response to Rerum Novarum (1891)
Charles B. Fillebrown: A Catechism of Natural Taxation, from Principles of Natural Taxation (1917)
Winston Churchill: Land Price as
a Cause of Poverty (1909 speech in Parliament) When the Leader of the
Opposition seeks by comparisons to show
that the same reasoning which has been applied to land ought also in
logic and by every argument of symmetry to be applied to the unearned
increment derived from other processes which are at work in our
modern civilisation, he only shows by each example he takes how
different are the conditions which attach to the possession of land
and speculation in the value of land from those which attach to other
forms of business speculation.
"If," he inquires, "you tax the unearned increment on land, why don't you tax the unearned increment from a large block of stock? I buy a piece of land; the value rises. I buy stocks; their value rises." But the operations are entirely dissimilar. In the first speculation the unearned increment derived from land arises from a wholly sterile process, from the mere withholding of a commodity which is needed by the community. In the second case, the investor in a block of shares does not withhold from the community what the community needs. The one operation is in restraint of trade and in conflict with the general interest, and the other is part of a natural and healthy process, by which the economic plant of the world is nourished and from year to year successfully and notably increased. Then the right hon. gentleman
instanced the case of a new railway
and a country district enriched by that railway. The railway, he
explained, is built to open up a new district; and the farmers and
landowners in that district are endowed with unearned increment in
consequence of the building of the railway. But if after a while
their business aptitude and industry create a large carrying trade,
then the railway, he contends, gets its unearned increment in its
turn.
But the right hon. gentleman cannot call the increment unearned which the railway acquires through the regular service of carrying goods, rendering a service on each occasion in proportion to the tonnage of goods it carries, making a profit by an active extension of the scale of its useful business - he cannot surely compare that process with the process of getting rich merely by sitting still? It is clear that the analogy is not true. ... Read the whole piece Clarence Darrow: How to Abolish Unfair Taxation (1913)
Louis Post: Outlines of Louis F. Post's Lectures, with Illustrative Notes and Charts (1894)
Upton Sinclair: The Consequences of Land Speculation are Tenantry and Debt on the Farms, and Slums and Luxury in the Cities
The Special Challenge to
Economic Thinking
The Search for Surrogates Sources of Nonpoint Pollution What Problems are Created? What Problems are Unsolved by Excise Taxes on Surrogates? The Case of Forestry The Case of Urban Settlement The Case of Agriculture The Common Theme from Forest, City and Farm Solutions THE SEARCH FOR SURROGATES The frustrated economist, unable to tax runoff, still has a bag of tricks. He looks for surrogates to tax, something in a sack or bottle that moves through a market: Aha! pesticides, fertilizers, salt, they'll do nicely to tax. Thus we will "internalize the externalities" and have "proper pricing of inputs" to create incentives for correct "trade‑offs" in the "production functions," and we're nearly home. Well, halfway home. Well, we've made a start. A few problems remain. One is that a plurality of economists don't like the effluent charge approach anyway, even for point sources. They follow Coase and prefer to grant pollution entitlements to be traded in a free market. Incredibly (to me) this view has prevailed. In principle they profess not to care what worthy few get the original entitlements, but in practise a select company of ancient and honorable polluters get them. We now call these "offset rights," a new form of property. In the L.A. Basin (South Coast Air Quality Management District), a few have grown rich by establishing their respective histories of pollution which they can now sell to others who wish to continue this wholesome tradition. The demonstration effect on those contemplating new and as yet unregulated forms of pollution may be imagined. Those needing air to breathe? Well, according to the modern philosophers they can enter the market, buy up offset rights and retire them. Thus is fulfilled Robert Ingersoll's forecast a century ago that if some corporation could bottle the air they would charge us to breathe. It seems to confirm this dour warning from a former Secretary of Labor: "We soon discovered ... the danger of allowing economic policy to be dominated by business or financial interests or, which usually comes to the same thing, orthodox economic analysis." (Marshall, p.ix) (emphasis added) The public has learned what is being done to it, finally, and is rebelling at the Coase logic, which only a Chicago economist could love. Offset rights are on the ropes. To simplify, therefore, I am not going to speculate how Coase might be applied to nonpoint, but just ignore it. I will treat effluent charges, and taxes on surrogates, as the conventional economic solution to pollution. But before leaving this there is a lesson in it. The holders of offset rights, whether "ancient and honorable" or "innocent purchasers," are demanding compensation. Never mind about asking them to pay the victims; they demand payment to stop! (Polakovic, 1987) They will probably get it, for if the system be changed, there will be a taking of something, which they claim is property. Such is the force of the Great Secular Superstition, that unearned gains are sacred, even those originating with something as unworthy as dumping crud on other human beings. This superstition is why effective control seems so expensive. My remarks will not be instructed by it. ... This perversion does not occur
by accident.
Spread and sprawl in forestry, cities and agriculture are common
results of the dominant force driving American politics, the quest for
unearned increments to land value. ... Read
the entire article
Walter Rybeck: The Uncertain Future of the Metropolis The single element that makes me
apprehensive about the future of our cities is our land system.
Tentacles
of our misguided land policies are choking almost every vital aspect of
metropolitan life. This is doubly worrisome, because the full
dimensions of the land problem have barely surfaced in the public
consciousness. To put it in the
vernacular, most of us don't know what's eating us.
Mason Gaffney: Sounding
the Revenue Potential of Land: Fifteen Lost ElementsWe have scarcely begun to identify the causes of today's city land problems. This is not to denigrate the legions of good folk -- officials and citizens alike -- who are trying desperately to cope with the daily disasters. But without a better notion of what is producing these disasters, we are unlikely to stem the flood. A major problem, certainly, is our distorted land system that operates around the clock and around the calendar, and under the full sanction of the law. It rips off the poor, saps small business, and deprives municipalities of their rightful revenue. The people as a whole create land values, not only by their presence, but also through participation in government, as taxpayers. Schools, firehouses, streets, police, water lines -- the whole gamut of public works and services that enhance a neighborhood are converted into higher land values. The taxpayers of the entire country, through federal aid for our multi-billion-dollar Metrorail project, have been boosting Washington, D.C. land values mightily. Not all land values are manmade. Inherent qualities also give land special advantages: fertile soils in farming districts, scenic views in residential areas, subsurface riches of coal, oil, and minerals. None of us, as landlords, tenants, or governments, can lay claim to having created these values. The people who have been drawing up an international law of the Seas have characterized these natural endowments as "the common heritage of mankind", where no people, individually or collectively, produce these land values, it is difficult to argue with the conclusion that they belong to all people equally. If the institution of private property has a sound foundation, and I believe it does, then it rests on the principle that people have a right to reap what they sow, to retain for themselves what they themselves produce or earn. Land values, produced by all of society, and by nature, do not conform to this prescription. ... Decade after decade, billions of dollars in urban land values are being siphoned off by a narrowing class that has no ethical or economic claim to them. To be outraged when a few ghetto dwellers, in an occasional frenzy of despair, engage in looting on a relatively miniscule scale, but to remain indifferent to this massive, wholesale looting, is worse than hypocritical. It is to ignore a catastrophic social maladjustment, more severe, I believe, than anything the U.S. has experienced since slavery. ... But I sense that we are drifting rapidly towards a landlord-dominated society. ... Before that happens, the opportunity awaits to see whether a reasonably free economy can still be made to work. Unless we tackle the land question, and the looting of America, that game may be forfeited. The future of the metropolis is uncertain. The choice is ours. We can intervene in the way society is now headed, to preserve the American dream. Or, we can continue along the present path and await the American nightmare. Read the whole article Taxing
unearned
increments as current income. There is a swelling of land
gains as a
component of income. Gains on land value are a form of land rent,
eminently taxable. Great is the need for objective economists to
establish the taxability of capital gains, to show how to tax
unrealized gains as they accrue. It’s surprisingly easy: levy a
property tax based on the market value of appreciating land. That is
just what the property tax was, before the current movement to limit
assessed valuations to capitalized income from current use only. Read the whole article
Mason Gaffney: The Taxable
Capacity of Land
Those getting the cold shower,
meantime, may resist it. In
California, the land of extremes, we got Howard Jarvis and Prop.
13. This Constitutional Amendment capped the property tax rate at 1%,
and virtually froze assessed values until land sold. Then the
boom really went wild. I myself, after campaigning hard against
Jarvis, unexpectedly made $200,000 in a few months after it passed.
Buyers were chasing me around the block, just to buy a scrap of land
I happened to have in the right place at the right time. It was blind
luck, but the money was as good as though I had earned it honestly:
better, in fact, because 60% of the gain was not even reportable as
taxable income. It was a once-in-a-lifetime experience, but buyers
and sellers came to regard it as normal, and only fair. They saw
regular annual increments as a divine right of property. For a few
mad years, they were. ... Read
the whole article
California homeowners are wallowing in unearned increments beyond the dreams of avarice, while its governments are courting bankruptcy. Warren Buffett dared point this out, and overnight changed from the Oracle of Omaha into the Numbskull of Nebraska because he does not understand the "reality of California politics," the oxymoron du jour. Most candidates for Governor fled like startled deer. Buffett's sponsor, well-tailored Mr. Muscles, recalled meeting a tearful widow who said she would have been taxed out of her home were it not for Prop 13. Poor thing, her home had risen in value. No one asked her name, or whether she knew what she was talking about, or had her claims audited - being a tearful widow "on a fixed income" insulates one from reality checks. The press chimed in with pix of poster oldsters, gazing from their multi-million dollar perches over the blue Pacific, fretting about Buffett's solecism and its possible effect on them, never mind anyone else. Fact
is, unearned increments ARE income, at the time they accrue. Illiquid?
They are better than cash income because you can turn them
into cash by borrowing on them, and pay no income tax on the cash.
If you have trouble with that, the tax man himself will arrange it
for you by placing a tax lien on your appreciated home, rather than
foreclose and evict you. This helps explain why we never actually
see one of these evicted widows suffering from unearned increments --
they are maudlin figments for mythmakers. The evictees we do see
are renters who couldn't pay, and had no equity to mortgage. Who
cries for them? ...
Governor Gray Davis, supposedly
fighting to close a deficit,
chimed in endorsing Prop 13, citing the mythical widow again to
explain why non-residential property, about 2/3 of the tax base,
should enjoy low rates. Faced with a negative poll, he backed right
down from his "land tax on wheels," the higher vehicle registration
fee.
Michael Hudson: The Lies of the Land: How and why land gets undervalued Turning
land-value gains into capital gains
Hiding the free lunch Two appraisal methods How land gets a negative value! Where did all the land value go? A curious asymmetry Site values as the economy's "credit sink" Immortally aging buildings Real estate industry's priorities THE FREE LUNCH Its cost to citizens Its cost to the economy Hiding the free
lunch
BAUDELAIRE OBSERVED that the devil wins at the point where he convinces humanity that he does not exist. The Financial, Insurance and Real Estate (FIRE) sectors seem to have adopted a kindred philosophy that what is not quantified and reported will be invisible to the tax collector, leaving more to be pledged for mortgage credit and paid out as interest. It appears to have worked. To academic theorists as well., breathlessly focused on their own particular hypothetical world, the magnitude of land rent and land-price gains has become invisible. But not to investors. They are out to pick a property whose location value increases faster rate than the interest charges, and they want to stay away from earnings on man-made capital -- like improvements. That's earned income, not the "free lunch" they get from land value increases. Chicago School
economists
insist
that no free lunch exists. But
when one begins to look beneath the surface of national income
statistics and the national balance sheet of assets and liabilities,
one can see that modern economies are all about obtaining a free
lunch. However, to make this free ride go all the faster, it helps if
the rest of the world does not see that anyone is getting the
proverbial something for nothing - what classical economists
called
unearned income, most
characteristically in the form of land rent.
You start by using a method of
appraising that undervalues the real
income producer, land. Here's how it's done.
Read
the whole article
Herbert J. G. Bab: Property Tax -- Cause of Unemployment (circa 1964)
Ricardo believed that ground rents and the value of land have a
tendency to rise continuously and that this benefits solely the
landowners. The progress of
industrialization and urbanization in the
second half of the 19th century resulted in a rapid increase in the
value of urban land and the owners of such land reaped tremendous
profits. This led John Stuart Mill to observe, that "Only the
landowners grow richer, as it were in their sleep without working,
risking and economizing". He called for the taxation of land in order
to recapture the unearned increment accruing to the land owners.
Henry George: Justice
the Object -- Taxation the Means (1890)The apostle of land taxation is Henry George. In his famous book Progress and Poverty he develops his single tax theory. He tries to show that poverty and unemployment and other evils are caused by the land monopolists. Henry George's theory is similar to that developed by John Stuart Mill. Land values are based on ground rents which are created by the community and not by the land owners. Therefore the community is justified in recapturing these rents by a single tax on land. For these reasons increases in land values can be prevented by taxing land at an appropriate rate. Yet urban land values have increased tremendously during recent years. For instance in Los Angeles county the assessed value of land increased from $1,972 millions in 1952 to $4,002 millions in 1962, an increase of a little over 100%. The assessed values, are supposed to represent 25% of the market value. Thus the unearned increment in land values during this period amounted to not less than $8 billions. Even this figure is an understatement because it is based on assessed values and land is greatly underassessed. While land values have risen by about 10% yearly, property taxes assessed on land averaged about 1.5%. Thus a person owning vacant or underimproved land would have earned about 8 1/2% per year just by withholding land from its proper use. Read the whole article We used to be confronted
constantly by the question: "Well,
after you have divided the land up, how do you propose to keep it
divided?" We don't meet that question now. The Single Tax has,
at least, this great merit: it suggests our method; it shows the way
we would travel — the simple way of abolishing all taxes, save one
tax upon land values. Now, mark: One tax upon land values.
We do not propose a tax upon land, as people who misapprehend us constantly say. We do not propose a tax upon land; we propose a tax upon land values, or what in the terminology of political economy is termed rent; that is to say, the value which attaches to land irrespective of any improvements — in or on it; that value which attaches to land, not by reason of anything that the user or improver of land does — not by reason of any individual exertion of labour, but by reason of the growth and improvement of the community. A tax that will take up what John Stuart Mill called the unearned increment; that is to say, that increment of wealth which comes to the owner of land, not as a user; that comes whether he be a resident or an absentee; whether he be engaged in the active business of life; whether he be an idiot and whether he be a child; that growth of value that we have seen in our own times so astonishingly great in this city; that has made sand lots, lying in the same condition that they were thousands of years ago, worth enormous sums, without anyone putting any exertion of labour or any expenditure of capital upon them. Now, the distinction between a tax on land and a tax on land values may at first seem an idle one, but it is a most important one. A tax on land that is to say, a tax upon all land — would ultimately become a condition to the use of land; would therefore fall upon labour, would increase prices, and be borne by the general community. But a tax on land values cannot fall on all land, because all land is not of value; it can only fall on valuable land, and on valuable land in proportion to its value; therefore, it can no more become a tax on labour than can a tax upon the value of special privileges of any kind. It can merely take from the individual, not the earnings of the individual, but that premium which, as society grows and improves, attaches to the use of land of superior quality. Read the entire article Winston Churchill: The People's Land...If the railway makes greater
profits, it is usually because it carries more goods and more
passengers. If a doctor or a lawyer enjoys a better practice, it is
because the doctor attends more patients and more exacting patients,
and because the lawyer pleads more suits in the courts and more
important suits. At every stage the doctor or the lawyer is giving
service in return for his fees, and if the service is too poor or the
fees are too high, other doctors and other lawyers can come freely into
competition. There is constant service, there is constant competition;
there is no monopoly, there is no injury to the public interest, there
is no impediment to the general progress.
Unearned
increment Fancy
comparing these healthy processes with the enrichment which comes to
the landlord who happens to own a plot of land on the outskirts or at
the centre of one of our great cities, who watches the busy population
around him making the city larger, richer, more convenient, more famous
every day, and all the while sits still and does nothing. Roads are
made, streets are made, railway services are improved, electric light
turns night into day, electric trams glide swiftly to and fro, water is
brought from reservoirs a hundred miles off in the mountains -- and all
the while the landlord sits still.To not one of those improvements does the
land monopolist as a land monopolist contribute, and yet by every one
of them the value of his land is sensibly enhanced. He renders
no service to the community, he contributes nothing to the general
welfare; he contributes nothing even to the process from which his own
enrichment is derived. If the land were occupied by shops or by
dwellings, the municipality at least would secure the rates upon them
in aid of the general fund, but the land may be unoccupied,
undeveloped, it may be what is called 'ripening' -- ripening at the
expense of the whole city, of the whole country, for the unearned
increment of its owner. Roads perhaps may have to be diverted to avoid
this forbidden area. The merchant going to his office, the artisan
going to his work, have to make a detour or pay a tram fare to avoid
it. The citizens are losing their chance of developing the land, the
city is losing its rates, the State is losing its taxes which would
have accrued if the natural development had taken place; and that share
has to be replaced at the expense of the other ratepayers and
taxpayers, and the nation as a whole is losing in the competition of
the world -- the hard and growing competition of the world -- both in
time and money. And all the while the land monopolist has only to sit
still and watch complacently his property multiplying in value,
sometimes manifold, without either effort or contribution on his part;
and that is justice!
Every one of those improvements is effected by the labour and at the cost of other people. Many of the most important are effected at the cost of the municipality and of the ratepayers. Unearned increment reaped in exact proportion to the disservice done. But let us follow the process a little further. The population of the city grows and grows still larger year by year, the congestion in the poorer quarters becomes acute, rents and rates rise hand in hand, and thousands of families are crowded into one-roomed tenements. There are 120,000 persons living in one-roomed tenements in Glasgow alone at the present time. At last the land becomes ripe for sale -- that means that the price is too tempting to be resisted any longer -- and then, and not till then, it is sold by the yard or by the inch at ten times, or twenty times, or even fifty times, its agricultural value, on which alone hitherto it has been rated for the public service. The greater the population around the land, the greater the injury which they have sustained by its protracted denial, the more inconvenience which has been caused to everybody, the more serious the loss in economic strength and activity, the larger will be the profit of the landlord when the sale is finally accomplished. In fact, you may say that the unearned increment on the land is on all fours with the profit gathered by one of those American speculators who engineer a corner in corn, or meat, or cotton, or some other vital commodity, and that the unearned increment in land is reaped by the land monopolist in exact proportion, not to the service but to the disservice done. ... Now let the Manchester Ship
Canal tell its tale about the land. It has
a story to tell which is just as simple and just as pregnant as its
story about Free Trade. When it was resolved to build the Canal, the
first thing that had to be done was to buy the land. Before the
resolution to build the Canal was taken, the land on which the Canal
flows -- or perhaps I should say 'stands' -- was, in the main,
agricultural land, paying rates on an assessment from 30s. to L2 an
acre. I am told that 4,495 acres of land purchased fell within that
description out of something under 5,000 purchased altogether.
Immediately after the decision, the 4,495 acres were sold for L777,000
sterling -- or an average of L172 an acre -- that is to say, five or
six times the agricultural value of the land and the value on which it
had been rated for public purposes.
Now what had the landowner done for the community; what enterprise had he shown; what service had he rendered; what capital had he risked in order that he should gain this enormous multiplication of the value of his property! I will tell you in one word what he had done. Can you guess it! Nothing. But it was not only the owners of the land that was needed for making the Canal, who were automatically enriched. All the surrounding land either having a frontage on the Canal or access to it rose and rose rapidly, and splendidly, in value. By the stroke of a fairy wand, without toil, without risk, without even a half-hour's thought many landowners in Salford, Eccles, Stretford, Irlam, Warrington Runcorn, etc., found themselves in possession of property which had trebled, quadrupled, quintupled in value. Apart from the high prices which were paid, there was a heavy bill for compensation, severance, disturbance, and injurious affection where no land was taken -- injurious affection, namely, raising the land not taken many times in value -- all this was added to the dead-weight cost of construction. All this was a burden on those whose labour skill, and capital created this great public work. Much of this land today is still rated at ordinary agricultural value, and in order to make sure that no injustice is done, in order to make quite certain that these landowners are not injured by our system of government, half their rates are, under the Agricultural Rates Act, paid back to them. The balance is made up by you. The land is still rising in value, and with every day's work that every man in this neighbourhood does and with every addition to the prosperity of Manchester and improvement of this great city, the land is further enhanced in value. The shareholders and the ratepayers I have told you what happened to the landowners. Let us see what happened to the shareholders and the ratepayers who found the money. The ordinary shareholders, who subscribed eight millions, have had no dividend yet. The Corporation loan of five millions interest on which is borne on the rates each year, had, until 1907, no return upon its capital. A return has come at last, and no doubt the future prospects are good; but there was a long interval -- even for the corporation. These are the men who did the work. These are the men who put up the money. I want to ask you a question. Do you think it would be very unfair if the owners of all this automatically created land value due to the growth of the city, to the enterprise of the community, and to the sacrifices made by the shareholders -- do you think it would have been very unfair, if they had been made to pay a proportion, at any rate, of the unearned increment which they secured, back to the city and the community? ... Read the whole piece Bill Batt: Painless Taxation Bill Batt: The Nexus of Transportation, Economic Rent, and Land Use What
is Land Rent?
John Houseman, an actor perhaps most widely known as Professor Kingsfield in the long-running TV series, The Paper Chase, later became the pitchman for Smith Barney. In that advertisement, his tag line was "We make money the old-fashioned way -- we earn it." That we should earn our money rather than live off the efforts of others seems a simple enough moral tenet. But it seems to have lost its cogency in contemporary economic thought. More than a century ago John Stuart Mill noted that Landlords
grow richer 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.(1)
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. One 9-acre site south of the United Nations Building was recently sold to a developer intent on building luxury condominiums facing the East River. That site sold for $680 million, and would have been higher had the existing structure, an obsolete power plant, not have to be razed.(3) Land values in any given area tend to rise and fall together, and tend also to form a contour somewhat comparable to a topographical survey map. In a city's center are the highest value locations, analogous to a mountain peak. Once one departs from that center, land values fall in direct proportion to the value of their use, made more or less attractive by whatever social attributes are provided in the proximate areas. Two illustrations from small and medium sized cities in the United States illustrate the point. ... read the whole article Bill Batt: The Compatibility of Georgist Economics and Ecological Economics As with all nineteenth century
moral philosophers, Henry George
subscribed to a belief in natural law. The natural order of things as
he saw it required that land be held in usufruct and that rent from
such should be returned to society. The theory was inspired by his
deeply religious roots and grounded in his reading of the prominent
thinkers that predated him. The natural order was also a moral order,
and the failure to comply with the order of nature and society as he
saw it was a perversion of justice. The fruits of the land belonged to
everyone, just as the fruits of one’s own labor were uniquely one’s
own. Since one owned one’s body, one was entitled to keep the product
of one’s physical efforts. Society had no more right to confiscate the
earnings of one’s sweat and brow than it ought to leave in the hands of
rich landowners the rent that was everyone’s inherent birthright to be
shared. There were just and unjust
taxes, and the only just tax was that which grew out of rent, of the
unearned increment that visited certain land sites as windfall gains
because of the efforts and investments by the community. Income
and
excise taxes were unjust and confiscatory — even theft, as especially
were tariffs. Taxing or collecting land rent alone was the means of
ending poverty and restoring progress. Indeed many Georgists reject use
of the word tax entirely, preferring instead to talk instead about rent
collection. There is even a lapel button Georgists use that says
“Abolish all taxes; collect ground rent instead.”... read the whole article
Bill Batt: How the Railroads Got Us On the Wrong Economic Track In classical economics, the
definition of capital grew out of
labor mixed with earlier capital. Land, by conventional definition,
was not capital, nor was it a component of wealth. Rather land was
its own category. Conflating land into capital allowed land rent to
be hidden and diluted in ways so that the unearned increment arising
from social improvements fell to speculators rather than being returned
to society in rent.... read the whole article
Mason Gaffney: Nonpoint Pollution: Tractable Solutions to Intractable Problems The public has learned what is
being done to it,
finally, and is rebelling at the Coase logic, which only a Chicago
economist could love. Offset rights are on the ropes. To
simplify, therefore, I am not going to speculate how Coase might be
applied to nonpoint, but just ignore it. I will treat effluent
charges, and taxes on surrogates, as the conventional economic solution
to pollution.
But before leaving this there is a lesson in it. The holders of offset rights, whether "ancient and honorable" or "innocent purchasers," are demanding compensation. Never mind about asking them to pay the victims; they demand payment to stop! (Polakovic, 1987) They will probably get it, for if the system be changed, there will be a taking of something, which they claim is property. Such is the force of the Great Secular Superstition, that unearned gains are sacred, even those originating with something as unworthy as dumping crud on other human beings. This superstition is why effective control seems so expensive. My remarks will not be instructed by it. ... THE COMMON THEME FROM FOREST, CITY AND FARM Market failure, public programs and perverse incentives in the land market create a gross bias towards spreading out too much. This aggravates otherwise fairly tractable runoff problems. The more Tierra Desnuda, the more runoff. This perversion does not occur by accident. Spread and sprawl in forestry, cities and agriculture are common results of the dominant force driving American politics, the quest for unearned increments to land value. Thorstein Veblen in his final testament, Absentee Ownership, noted that American farmers ...have
always, ... wanted something more than their ... share of
the soil; not because they were driven by a felt need of doing more
than their fair share of work ..., but with a view to ... getting
a little something for nothing in allowing their holdings to be turned
to account (Veblen, pp. 138-40).
To enhance those values they will now invoke any complaisant higher power, and since God already did His bit by donating the Earth, they turn to Government. But the profile of land values is like a volcanic island. To raise the top and the slopes and the shores we must also raise the shallows above sea level, where they shed the waters and come into use. Rising population is one factor pushing up the profile of values, but not the strongest one. Increased demand per capita is the main factor. These demands include all the spurious demands described above, like the demand of government for land to "bank" and hold idle, and the demand of speculators "with a view to getting a little something for nothing." ... Read the whole article Frank Stilwell and Kirrily Jordan: The Political Economy of Land: Putting Henry George in His Place
Peter Barnes: Capitalism 3.0 — Chapter 6: Trusteeship of Creation (pages 79-100)
from A History of Pennsylvania, by Phillip S. Klein and Ari Hoogenboom, p. 441
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Wealth
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... because democracy
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