Ground Rent
Louis Post: Outlines of Louis F. Post's
Lectures,
with Illustrative Notes and Charts (1894) — Appendix: FAQ
Q46. How can it be possible that speculative land values cause business
depressions when, as any business man will tell you, the whole item of
land value — whether ground rent or interest on purchase money — is
one of the smallest items in every business?
A. You overlook the fact that the item of speculative rent is the only item which
the business man does not get back again. The cost of his goods, the expense
of clerk hire, the rent of his building, the wear and tear of implements, are
all received back, in the course of normal business, in the prices of his goods.
Even his ground rent, to the extent that it is normal (i.e., what it would be
if the supply of land were determined alone by land in use, and not affected
by the land that is held out of use for higher values), comes back to him in
the sense that his aggregate profits are that much greater than they would be
where ground rent was less. But the extra ground rent which he is obliged to
pay, in consequence of the abnormal scarcity of land, is a dead weight; it does
not come back to him. Therefore, even if infinitesimal in amount, as compared
with the other expenses of his business — and that is by no means admitted — it
is the one expense which may break a thriving business down. Besides, it is not
alone the ground rent paid by the business man for his location that bears down
upon his business prosperity; the weight of abnormally high land values in general
presses upon business in general, and by obstructing the flow of trade forces
the weaker business units to the wall. It is not altogether safe to deduce general
economic principles from the ledgers of particular business houses.
... read the book
John Dewey: Steps to Economic Recovery
You cannot study Henry George without learning how intimately each of these
wrongs and evils is bound up with our land system. One of our great national
weaknesses is speculation. Everybody recognizes that fact in the stock market
orgy of our late boom days. Only a few realize the extent to which speculation
in land is the source of many troubles of the farmer, the part it has played
in loading banks and insurance companies with frozen assets and compelling
the closing of thousands of banks, nor how the high rents, the unpayable
mortgages and the slums of the cities are connected with speculation in land
values.
All authorities on public works hold that the most fruitful field for them
is slum clearance and better housing. Yet only a few seem to realize that
with our present situation this improvement will put a bonus in the pockets
of landlords,
and the land speculator will be the one to profit financially — for
after all, buildings are built on land.
So with taxation. There are all sorts of tinkering going on, but the tinkers
and patchers shut their eyes to the fact that the socially produced annual
value of land — not of improvements, but of ground-rent value —
is about five billion dollars, and that its appropriation by those who create
it, the
community, would at once relieve the tax burden and ultimately would solve
the tax problem. Of late the federal government has concerned itself with
the problems of home ownership, but again by methods of tinkering that may
easily
in the long run do more harm than good. The community's acquisition of its
own creation, ground-rent value, would both reduce the price of land and
entirely eliminate taxes on improvement, thus making ownership easier. And
how anyone
expects to solve the unemployment question by putting the sanction of both
legality and high pecuniary reward upon the ability of the few to keep the
many from equal access to land and to the raw material, without which labor
is impossible, I do not see — and no one else does. For the tinkerers
assume that unemployment must continues, only with government assistance
to those
who are necessarily out of work. By all means let us help those that now
need it, but for the future let us prevent the cause instead of merely mitigating
the effects. ... read the whole speech
Frank Stilwell and Kirrily Jordan: The
Political Economy of Land: Putting Henry George in His Place
Georgism has a distinctive ethical basis. So a review of the contemporary
relevance of Georgist political economy can usefully begin by making this
explicit. The key moral issue is the private appropriation of public wealth.
As George recognised, land is a ‘gift from nature’ and, as such,
is rightfully a community resource. Hence, those deriving benefits from the
private ownership of land should recompense the community for the privilege.
This principle has strong echoes of the idea of ‘usufruct’, a
pre-capitalist term denoting a person’s legal right to use and accrue
benefits from property that does not belong to them. In return, the user
is obliged to keep the property in good repair and pay all costs as a ‘ground
rent’ (‘Lectric Law Library, n.d). The concept of ‘usufruct’ has
fallen out of common usage, so one hesitates to try to revive it. Moreover,
as Richards (2002) notes, ‘it is difficult to image how this word could
be employed, or brought back into circulation, in the modern world, since
we live in a world in which people tend to be remarkably unsympathetic to
the property rights or claims of others.'
However, the principle of ‘usufruct’ goes to the heart of the
question of how best to balance collective and individual rights and interests.
George’s solution of a tax on the value of land squarely addresses
this issue. By returning a proportion of the land value to the community
in the form of taxation revenue, restitution would be paid for the use of
a community resource. This is an ethical justification for land taxation.
... read the whole article
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