[Truth To Power]

Of course I understand TTPs Georgist feelings.

Just not the facts they are based on.

I do not disagree with George that (especially in his day) land rent tend to capture some of the surplus from economic progress.

It takes all the surplus, and often even more, as George explained; and the fraction of GDP taken in land rent is significantly larger now than in George's day, as the Law of Rent dictates. Even more recently, in my grandfather's day, you could buy a single family building lot in a newly developed area for a year's after-tax wages. Now it's 5 years' wages, 10 years', or even more, because THE MORE WE HAVE TO PAY IN TAXES ON EVERYTHING BUT LAND, THE MORE WE HAVE TO PAY FOR LAND.

This was certainly more marked in George's time than it is now.

Garbage. It is far more marked now, as the astronomical value of land relative to labor just flat-out PROVES.

I am certainly no economist but Stiglitz is and he also agrees with a land tax versus other forms of taxes aimed at income redistribution and it is hard to argue with him.

Most of the greatest economists have known that location subsidy repayment is the fairest and most efficient form of taxation. Here is an open letter to Mikhail Gorbachev signed by dozens of eminent western economists including four (count 'em, FOUR) Nobel laureates, urging him to retain land in public ownership and recover its rent as the principal source of public revenue in the desocializing USSR:

Dear Mr. Gorbachev:

The movement of the Soviet Union to a market economy will greatly enhance the prosperity of your citizens. Your economists have learned much from the experience of nations with economies based in varying degrees on free markets. Your plans for freely convertible currency, free trade, and enterprises undertaken and managed by individuals who receive the profit or bear the losses that result from their decisions are all highly commendable. But there is a danger that you will adopt features of our economies that keep us from being as prosperous as we might be. In particular, there is a danger that you may follow us in allowing most of the rent of land to be collected privately.

It is important that the rent of land be retained as a source of government revenue. While the governments of developed nations with market economies collect some of the rent of land in taxes, they do not collect nearly as much as they could, and they therefore make unnecessarily great use of taxes that impede their economies--taxes on such things as incomes, sales and the value of capital.

Social collection of the rent of land and natural resources serves three purposes. First, it guarantees that no one dispossesses fellow citizens by obtaining a disproportionate share of what nature provides for humanity. Second, it provides revenue with which governments can pay for socially valuable activities without discouraging capital formation or work effort, or interfering in other ways with the efficient allocation of resources. Third, the resulting revenue permits utility and other services that have marked economies of scale or density to be priced at levels conducive to their efficient use.

The rental value of land arises from three sources. The first is the inherent natural productivity of land, combined with the fact that land is limited. The second source of land value is the growth of communities; the third is the provision of public services. All citizens have equal claims on the component of land value that arises from nature. The component of land value that arises from community growth and provision of services is the most sensible source of revenue for financing public services that raise the rental value of surrounding land. These services include roads, urban transit networks, parks, and public utility networks for such services as electricity, telephones, water and sewers. A public revenue system should strive to collect as much of the rent of land as possible, allocating the part of rent derived from nature to all citizens equally, and the part derived from public services to the governmental units that provide those services. When governments collect the increase in land value that results from the provision of services, they are able to offer services at prices that represent the marginal social cost of these services, promoting efficient use of the services and enhancing the rental value of the land where the services are available. Government agencies that use land should be charged the same rentals as others for the land they use, or services will not be adequately financed and agencies will not have adequate incentive or guidance for economizing on their use of land.

Some economists might be tempted to suggest that the rent can be collected publicly simply by selling land outright at auction. There are a number of reasons why this is not a good idea. First, there is so much land to be turned over to private management that any effort to dispose of all of it in a short period would result in an extreme depression in prices offered. Second, some persons who could make excellent use of land would be unable to raise money for the purchase price. Collecting rent annually provides access to land for persons with limited access to credit. Third, subsequent resale of land would enable speculators to make large profits unrelated to any productive services they offer, resulting in needless inequity and dissatisfaction. Fourth, concern about future political conditions would tend to depress offers. Collecting rent annually permits the citizens of future years to capture the benefits of good future public policies. Fifth, because investors tend to be averse to risk, general uncertainty about the future will tend to depress offers. This risk aversion is sidestepped by allowing future rental payments to be determined by future conditions. Finally, the future rent of land can more justly be claimed by future generations than by today's citizens. Requiring annual payments from the users of land allows each year's population to claim that year's rent. While the proceeds of sales could be invested for the benefit of future generations, not collecting the money in advance guarantees the heritage of the future against political excesses.

The attached Appendix provides a brief technical discussion of issues of the duration of rights to use land, the transfer of land, the assessment of land, social protection against the abuse and subsequent abandonment of run-down property, and redistribution among localities to adjust for differences in natural per capita endowments. While these issues need to be addressed, none of them present insoluble problems.

A balance should be kept between allowing the managers of property to retain value derived from their own efforts to maintain and improve property, and securing for public use the naturally inherent and socially created value of land. Users of land should not be allowed to acquire rights of indefinite duration for single payments. For efficiency, for adequate revenue and for justice, every user of land should be required to make an annual payment to the local government, equal to the current rental value of the land that he or she prevents others from using.

Sincerely,

Nicolaus Tideman, Professor of Economics
Virginia Polytechnic Institute and State University

William Vickrey, President for 1992
American Economic Association

Mason Gaffney, Professor of Economics
University of California, Irvine

Lowell Harriss, Professor Emeritus of Economics
Columbia University

Jacques Thisse, Professor of Economics
Center for Operations Research and Econometrics
University Catholique de Louvain, Belgium

Charles Goetz, Joseph M. Hartfield Professor of Law
University of Virginia School of Law

Gene Wunderlich, Senior Agricultural Economist
Economic Research Service, U.S. Department of Agriculture

Daniel R. Fusfeld, Professor Emeritus of Economics
University of Michigan

Elizabeth Clayton, Professor of Economics
University of Missouri at St. Louis

Robert Dorfman, Professor Emeritus of Political Economy
Harvard University

Carl Kaysen, Professor of Economics
Massachusetts Institute of Technology

Tibor Scitovsky, Emeritus Eberle Professor of Economics
Stanford University

Richard Goode
Washington, D.C.

Susan Rose-Ackerman, Eli Professor of Law and Political Economy
Yale Law School

James Tobin, Sterling Professor Emeritus of Economics
Yale University

Richard Musgrave, Professor Emeritus of Political Economy
Harvard University

Franco Modigliani, Professor Emeritus of Economics
Massachusetts Institute of Technology

Warren J. Samuels, Professor of Economics
Michigan State University

Guy Orcutt, Professor Emeritus of Economics
Yale University

Eugene Smolensky, Dean of the School of Public Policy
University of California, Berkeley

Ted Gwartney, Real Estate Appraiser and Assessor
Anaheim, California

Oliver Oldman, Learned Hand Professor of Law
Harvard University

Zvi Griliches, Professor of Economics
Harvard University

William Baumol, Professor of Economics
Princeton University

Gustav Ranis, Frank Altschul Professor of International Economics
Yale University

John Helliwell, Professor of Economics
University of British Columbia

Giulio Pontecorvo, Professor
Graduate School of Business, Economics and Banking, Columbia University

Robert Solow, Institute Professor of Economics
Massachusetts Institute of Technology

Alfred Kahn
Ithaca, New York

Harvey Levin, Augustus B. Weller Professor of Economics
Hofstra University

http://www.earthrights.net/docs/letter_ ... achev.html

I guess it is fair to say that there is widespread support for increased land value taxes and I agree with many of them.

No, the support for location subsidy repayment is quite narrow, as it is restricted to those who are intelligent, informed, and honest.

The problem is that as a practical matter they are devilishly hard to administer

No. Land value taxation is so simple, it was used successfully even in ancient societies where hardly anyone could read.

and politically almost impossible to enact.

True. Political parties, even of the left, are completely in thrall to landed interests.

How do you decide how to fairly do it?

It would be almost impossible to do it in a way that was less fair than not doing it.

Does the urban farmer with an extra quarter of an acre have to build on the property to pay the taxes?

The rule is quite simple and indisputably fair: you are preventing others from using the land; so either use it productively enough to make just compensation to them for what you are taking from them, or relinquish the land to someone who will.

Will elderly urban homeowners find themselves unable to keep the family home?

Possibly. One of the benefits of liberty and justice is that they encourage more efficient and productive allocation of scarce resources.

The more important question is: By what right do elderly urban homeowners prevent others from accessing and using the services and infrastructure government provides, the opportunities and amenities the community provides, and the advantageous physical qualities nature provides at that location? They did not create that location, and they did not create its value. By what right do they appropriate it for themselves, and stop others from using what they would otherwise be at liberty to use?

Will the complexion of our cities change as land taxes encourage/force people to cram more and more folks onto less and less land?

They will certainly be better, as more compact development enables better use of infrastructure investment. Cities, in case you hadn't noticed, are places where cramming more and more folks onto less and less land is the best way to solve many problems. And before you make a fool of yourself with more false claims, consider the implications of the fact that a park can increase the value of nearby land by more than the value of the land it occupies. Land value taxation, uniquely of all taxes, aligns government's financial incentives with the public interest in efficient public spending and optimum land use.

Do we want cities with only multifamily housing

Those who could afford to make just compensation to the community for what they are taking from others would still be able to afford single family homes. Why do you want some people to be privileged to steal from others and not make just compensation for their thieving?

and the possibility of single family home ownership beyond the dream of the average worker?

WHAT DO YOU THINK HAS ALREADY HAPPENED, IN THE ABSENCE OF LVT, HMMMMMMMMMMMMMM?

The truth is, single family homeownership would be much MORE accessible for the average worker under LVT, because he wouldn't have to pay for a ticket on the landowners' escalator, and would only have to pay for government services and infrastructure once, instead of twice. Until you can wrap your head around such facts, nothing you have to say on this subject will be accurate or of any interest.

How do you phase such a tax in without bankrupting landowners forced to repurpose their land to pay the tax.

Two major ways: a uniform per-capita individual exemption analogous to the individual income tax exemption, and an amortizing exemption for the purchase value of the land.

And FYI, it is factually incorrect to claim that any landowner would be "forced" to "repurpose" their land: if they did not want to use it productively enough to make just compensation to the community of those whom they are depriving of it, they would have a simple remedy: relinquish the land, sell the improvements at their market price, and seek a location better suited to their needs and means.

So I tend to agree with Hayek that the challenges of assessment nearly insurmountable.

And you are consequently just as wrong as Hayek. Every professional real estate appraiser proves Hayek wrong, and a fool, an ignoramus, or a liar, every working day of his life.

What everyone agrees on though is that addressing income inequality through land taxes (and that is where this ultimately goes) would take decades to implement and would be devilishly hard to do.

Not everyone agrees with that, because it is false. It could be done in one year, and would actually be easy -- except POLITICALLY, because too many people have made themselves financially dependent on injustice, much as they did by buying slaves in former times, making it devilishly hard to emancipate the slaves. The only difference between slavery and landowning is that slavery removes people's rights to liberty one person at a time, landowning removes them one right at a time. This is enough to fool most thoughtless people into believing landowning is meaningfully different from slavery. It's not.

And the process would involve making profound decisions about what we want our future to look like.

Right: do we want to continue with the current system where our future will look like more tyranny, oppression, injustice, instability and poverty, or do we want a future of liberty, justice, and prosperity with LVT?

More importantly though is that there are steps we can take immediately to help deal with the problem.

But nothing we do will actually solve the problem until we address the land problem. Everything we try to do for workers and consumers will just end up increasing the subsidy to landowners at the expense of workers, consumers and taxpayers.

We can work on health care.

Landowners will just charge everyone else full market value for access to it.

We can end business subsidies (especially those that depress wages).

That would be a positive step, as subsidies typically just go straight to landowners. But that isn't going to solve the poverty problem.

We can consider public sector employment programs.

Nope. Won't work. If you put people to work supplying desirable services or infrastructure, it will just increase the rents they have to pay landowners for access to those services and infrastructure.

We can look at minimum wage levels.

Won't work. They'll just have to pay more rent to their landlords for access to minimum wage job opportunities.

That kind of stuff.

None of which will solve the problem until you solve the land problem.

We've been here. All this stuff has already been tried, and it has never worked. The only thing that can possibly work -- solving the land problem -- is the only thing the socialist left refuses to try, because it involves liberty, justice, and truth, and socialists will have none of that.

One thing that a LVT could theoretically do is raise so much revenue that the state might consider some sort of national earnings floor for all citizens.

Yes, but it would be better to implement a universal individual LVT exemption, restoring people's right to access opportunity, and invest more in public services and infrastructure the market can't provide efficiently, making access to that opportunity even more valuable.

That will not play well with competing ideas in American politics though I would be willing to risk trying.

Americans love universal individual tax exemptions. It would certainly have been impossible to pass an income tax without one. So that solves that problem.

[Drlee]

I see TTP has posted his usual wall of text again.

Of course there is no value in it as usual.

As I said TTP. I am wasting no more time on you. An intelligent, thoughtful and respectful poster like Comrade Tim is another thing altogether.

[Truth To Power]

I see TTP has posted his usual wall of text again.

I do like to be thorough. IMO it is important to demonstrate that NOTHING those who try to rationalize privilege, justify injustice and excuse evil have to say has any merit, that ALL their substantive claims are false, ALL their arguments fallacious, absurd and dishonest.

Of course there is no value in it as usual.

Drlee knows better than that. What he is actually saying here is that he has been comprehensively and conclusively refuted, he knows it, and he has no answers. I have shown that it is, rather, HIS "contributions" that are utterly without value.

As I said TTP. I am wasting no more time on you. An intelligent, thoughtful and respectful poster like Comrade Tim is another thing altogether.

You mean, someone who doesn't call you on your factual and logical errors. Sorry, but I am never going to be that person.

[Drlee]

Learn to be respectful and people might bother with you.

[Truth To Power]

Learn to be respectful and people might bother with you.

I prefer to be clear, honest and right. So those who are interested in liberty, justice and truth will read what I write, those who aren't, won't. Simple.

[Drlee]

I prefer to be clear, honest and right. So those who are interested in liberty, justice and truth will read what I write, those who aren't, won't. Simple.

Yes. I think we finally agree. You have used a good word to describe your political and scientific acumen. "Simple."

[Truth To Power]

I prefer to be clear, honest and right. So those who are interested in liberty, justice and truth will read what I write, those who aren't, won't. Simple.

Yes. I think we finally agree. You have used a good word to describe your political and scientific acumen. "Simple."

You are aware of the fact that I did no such thing.

It's always the same.

[quetzalcoatl]

TtP sees truth through a narrow slit. This slit is called Georgism. I have nothing against Georgism - Frank Lloyd Wright, Leo Tolstoy, and Admiral Raymond Spruance were Georgists at some point in their lives. Some Georgian reforms might even be beneficial, as part of some larger package.

But Georgism is not the answer. It may be some slice of some part of the problem, but it doesn't tell the whole story. It is transitional ideology, like Freudianism or Behaviorism. So no, TtP has not correctly identified either the Truth or the Power.

[Truth To Power]

TtP sees truth through a narrow slit. This slit is called Georgism.

Though I do not call or consider myself a Georgist, maybe I do see through a narrow slit many like to call Georgism -- but if so, it is a narrow slit in the wall of a small room that others, who don't see through the slit, can't see out of at all. And what can be seen only through that slit explains much of what everyone else sees in the little room they believe to be the whole world, but do not understand.

http://www.henrygeorge.org/catsup.htm

I have nothing against Georgism - Frank Lloyd Wright, Leo Tolstoy, and Admiral Raymond Spruance were Georgists at some point in their lives. Some Georgian reforms might even be beneficial, as part of some larger package.

They would certainly be beneficial -- massively; and for reasons already explained, they have to form the basis of that larger package, or none of the other parts will avail anything because their benefits will just be taken by landowners. That's the key insight you haven't yet attained.

But Georgism is not the answer.

It is not the whole answer; but it is the answer in the sense that it is the biggest part of the answer, and without it, there can be no answer.

It may be some slice of some part of the problem, but it doesn't tell the whole story. It is transitional ideology, like Freudianism or Behaviorism.

Certainly 19th C Single Tax Georgism was a transitional ideology, and has been duly superseded. But very unlike Freudianism or Behaviorism, Georgism was crucially right, like Newtonian mechanics. Today, yes, we know about relativity and quantum mechanics, which supersede Newton. But just as without Newton, none of that would ever have been possible, without effective abolition of landed privilege, no genuine social or economic solution is possible.

So no, TtP has not correctly identified either the Truth or the Power.

I've definitely correctly identified the truth about land, which is why no one here is ever able to refute anything I say on the subject; and as for the power, you have only to witness the grotesque mental contortions the opposition always resorts to to see landowner privilege exercising a frightful power over the human mind. It's almost like the One Ring: it can only serve evil, and will force all who embrace it to serve evil... and in the darkness (of that little room they can't see out of because they don't want to see the truth through a narrow slit) bind them.

[Harmattan]

It takes all the surplus, and often even more, as George explained; and the fraction of GDP taken in land rent is significantly larger now than in George's day, as the Law of Rent dictates.

It superficially seems to be correct but it is easily proven wrong if you look outside of a few mega-cities. Look at this document, p18, it shows the share of bare land value in construction costs in big US cities.

Midwest: 36%
Southeast: 42%
Southwest: 38%
East Coast: 64%
West Coast: 74%
Note that the situation is better outside of cities and in most of other countries.

Here is a guess: on the average, most houses built today in the west probably dedicate less than 30% to land value (and probably less than 40% in USA). Yes it is high. But land value cannot explain alone the extraordinary rise of real estate's prices (and renting prices increased far slower than real estate prices, so far to be hardly profitable in many places today).


For the start you cannot put on the same level a house from 1960 with a modern house. Nowadays heating and cooling are everywhere, houses have better energetic and noise performances, they get more sunlight, they are prettier, they have optic fiber and ethernet connectors, they use better materials from an environmental and health perspective, they are resistant to fire, they are less vulnerable to water damages and ground collapsing, they are thought for handicapped and aging people, they use two different circuits to reject dirty water and clean water. And it is not just the houses: the neighborhoods must now have enough room for cars, there are more green spaces, endangered species are protected, etc. And workers now all have healthcare and retirement plans.

All of this costs a ton! You need more skills, more subcontractors, more administration, more delays, more workforce, more financial coverage, better and more expensive materials.


As for big cities, the demand far exceeds the offer. And this will continue as long as enterprises will continue to need more specialized talents. The only solution is to support the growth of cities, which requires high public investments. Switching to another economic model would not fix the demand asymmetry and would only cause different sort of problems.


Of course there is ALSO a financial problem. Capital concentration drives the inflation of assets' prices, including land value. But it is only one of the problems. I think Henry George's intuition was good, but as it stands his formulation is incorrect. I think it should be reformulated according to modern observations. Piketty's work provides foundations for this.

[Truth To Power]

It takes all the surplus, and often even more, as George explained; and the fraction of GDP taken in land rent is significantly larger now than in George's day, as the Law of Rent dictates.

It superficially seems to be correct but it is easily proven wrong

Without reading further, I already know I will be proving you wrong.

if you look outside of a few mega-cities. Look at this document, p18, it shows the share of bare land value in construction costs in big US cities.

Midwest: 36%
Southeast: 42%
Southwest: 38%
East Coast: 64%
West Coast: 74%
Note that the situation is better outside of cities and in most of other countries.

Of course. And your point would be....? You don't seem to be clear on just how shockingly high those numbers are.

There is a boom-bust cycle in land prices, but as a general rule, the farther back in time you look, the lower those fractions become. You can also compare them with land value fractions in crowded, older countries that don't have the USA's vast land base to draw on, like the UK, Korea, Japan, etc. That indicates how land prices soar as population and economic activity increase on a fixed land base. The landowners take everything.

Here is a guess: on the average, most houses built today in the west probably dedicate less than 30% to land value (and probably less than 40% in USA).

Depends what you mean by "houses." If you count condos, then yes, their land value fraction is typically much lower than for SFD homes. There are also more mobile homes now, which don't include any land in their selling prices.

But land value cannot explain alone the extraordinary rise of real estate's prices

It can and does. Compare the median cost of a house in a place like Detroit, where land value is near-zero, and Vancouver, where it is astronomical. The Detroit house can be as much as TWO ORDERS OF MAGNITUDE CHEAPER than a comparable structure in Vancouver. Two orders of magnitude!

(and renting prices increased far slower than real estate prices, so far to be hardly profitable in many places today).

Rental values are not nearly as speculative as exchange values. The exchange price of land reflects the anticipated relationship between the rental growth rate and the discount rate. The latter is very low now, so if the former is even moderately greater over the long run, the tax rate is the only thing stopping land value from diverging -- i.e., becoming infinite.

For the start you cannot put on the same level a house from 1960 with a modern house. Nowadays heating and cooling are everywhere, houses have better energetic and noise performances, they get more sunlight, they are prettier, they have optic fiber and ethernet connectors, they use better materials from an environmental and health perspective, they are resistant to fire, they are less vulnerable to water damages and ground collapsing, they are thought for handicapped and aging people, they use two different circuits to reject dirty water and clean water.

But none of that is relevant, because construction methods are also more efficient, so it is cheaper in terms of labor to build that bigger, fancier house.

Simple fact: the median after-tax wage cost of building a median SFD home is LOWER today than it was 40 years ago. The median after-tax wage cost of the land it sits on has increased by a factor of FIVE.

And it is not just the houses: the neighborhoods must now have enough room for cars, there are more green spaces, endangered species are protected, etc. And workers now all have healthcare and retirement plans.

THOSE ALL INCREASE LAND RENT, NOT IMPROVEMENT COST.

All of this costs a ton! You need more skills, more subcontractors, more administration, more delays, more workforce, more financial coverage, better and more expensive materials.

But in terms of after-tax median wages, it costs no more now, because production is so much more efficient. It is the LAND that costs a ton. See above. Or just go to a listings website for any large, active real estate market and compare the list prices of building lots to houses, or building lot prices now compared to 60 or 70 years ago. Correct for general inflation, and the increase is all due to land.

As for big cities, the demand far exceeds the offer.

Demand for land is simply the size of the subsidy the buyer expects.

And this will continue as long as enterprises will continue to need more specialized talents. The only solution is to support the growth of cities, which requires high public investments.

The only solution is justice -- which will support the growth of cities far better than any Band-Aid solution.

Switching to another economic model would not fix the demand asymmetry and would only cause different sort of problems.

Wrong. Eliminate the subsidy and the demand for ownership goes away, leaving only the demand for use, and immediately restoring the market balance. It is only when people can profit more by holding land idle than by using it, as in many markets today, that the market becomes dysfunctional.

Of course there is ALSO a financial problem. Capital concentration drives the inflation of assets' prices, including land value.

Wrong. Land value is driven by the market's estimate of how fast the subsidy to the landowner will grow, relative to the discount rate. It's true that bankster money creation feeds this, as banksters need the land subsidy to lend for and against. Super-low discount rates play right into their hands as it kites prices, and people have to borrow so much -- and the banksters therefore create so much -- money to buy land.

But it is only one of the problems. I think Henry George's intuition was good, but as it stands his formulation is incorrect. I think it should be reformulated according to modern observations.

George has already been superseded, which is why it is disingenuous to call location subsidy repayment "Georgism" and its advocates "Georgists." IP monopolies and banksters' debt-money issuance are much more important today than they were in George's time, though still much less important than the subsidy to landowners. In addition, modern geoists recognize the need for a universal individual land tax exemption (or, second best, a citizens' dividend) to restore the individual right to liberty that landed property removes.

Piketty's work provides foundations for this.

Piketty is a ninny who, like socialists and capitalists (and other neoclassical economists), simply doesn't know the difference between capital and land. His data are almost all worthless, because they conflate land and capital. His famous graph of increasing wealth inequality is almost entirely a record of increasing land value (i.e., increasing subsidies to landowners).

[quetzalcoatl]

Getting back to the question of income inequality, I'd like to tie it in a bit with the issue of land rents. Certainly I don't mean to disparage the role land rents play in the formation of income inequality - nor would I ignore the role of land speculatiion in housing and rental markets. The basic Georgian idea of land being a gift of nature and a community resource is a valuable insight, and worthwhile counterweight to rapacious land use.

But land cannot be the whole story. As nations have become more technologically advanced, and as much of the economy has transitioned into a literal non-physcial space, the question of the land it is housed upon fades further from the main narrative. While land tax addresses the private appropriation of wealth from land, it does not address the appropriation of wealth from other sources. It doesn't even begin to address the creation of money by private banks and the rent charged for its use (this ability is directly embedded in capitalist nation's legal infrastructure, and is structurally independent of land ownership).

Inequalities are generated by unequal access to capital, educational and employment opportunities, and yes by unequal access to land. All of these play a role in income inequality.

[Truth To Power]

But land cannot be the whole story. As nations have become more technologically advanced, and as much of the economy has transitioned into a literal non-physcial space, the question of the land it is housed upon fades further from the main narrative.

Well, the main narrative has its own uses, but just look at where people's money goes: a huge portion goes for land, with the poor often paying more than half their income purely for location. If you want to know how important something is in the economy, look at its economic value. The astronomical value of land today just flat-out PROVES its role is grossly -- and increasingly -- understated in the "main narrative."

While land tax addresses the private appropriation of wealth from land, it does not address the appropriation of wealth from other sources. It doesn't even begin to address the creation of money by private banks and the rent charged for its use (this ability is directly embedded in capitalist nation's legal infrastructure, and is structurally independent of land ownership).

It's legally independent, but I think you underestimate how tightly it is linked structurally. Private commercial banks' business model is based on their legal privilege of creating debt money when they lend. The vast majority of bank lending is mortgage lending, and most mortgaged properties' value is mostly land value. If land were taxed enough to remove the subsidy, its value would fall to near zero, people would be able to buy housing without assuming massive debts, and banks would then not be able to force people into enough debt to accommodate economic growth -- or even stave off deflation. That's why monetary reform has to either precede or accompany reduction of the land subsidy through fairer taxation.

Inequalities are generated by unequal access to capital, educational and employment opportunities, and yes by unequal access to land. All of these play a role in income inequality.

Many factors play a role in income inequality. The problem is to distinguish between income inequality that arises from unequal contributions to production -- which performs valuable incentive and allocative functions, making the economy more productive and efficient -- and income inequality that arises from privileges like land titles, bank charters, IP monopolies, etc., which usually implies perverse incentives and makes the economy less productive and efficient as well as less just and equal.

[quetzalcoatl]

Many factors play a role in income inequality. The problem is to distinguish between income inequality that arises from unequal contributions to production -- which performs valuable incentive and allocative functions, making the economy more productive and efficient -- and income inequality that arises from privileges like land titles, bank charters, IP monopolies, etc., which usually implies perverse incentives and makes the economy less productive and efficient as well as less just and equal.

In general, I can agree with eliminating privileges based on land titles, bank charters, an intellectual property rents. That would an encouraging step, but not be enough for me. I would also like to see legal changes that empower workers with ownership and representative control rights within the enterprises for which they labor.

The vast majority of bank lending is mortgage lending, and most mortgaged properties' value is mostly land value. If land were taxed enough to remove the subsidy, its value would fall to near zero, people would be able to buy housing without assuming massive debts, and banks would then not be able to force people into enough debt to accommodate economic growth -- or even stave off deflation.

Would you support an exemption from land use tax for personal dwelling (homestead), or do you see that as unnecessary?

[Drlee]

vast majority of bank lending is mortgage lending, and most mortgaged properties' value is mostly land value.

This is not true. Roughly half of bank lending is mortgage lending and far less than 1/2 in community banks. Nor is it true that the majority of value in mortgaged properties is the bare land value. So the entire premise is false.

[Harmattan]

@TruthToPower

* Only 10% of Americans live in the top 20 US cities. Outside of those cities the land value is decent when compared to the total construction cost. I know a couple who are ordering a house 1h30 far from Paris, one of the most expensive cities in the world, and 20 min far from a medium-sized city. They are spending 200k€ on the construction and 30k€ on a piece of land with a nice view, enough space for a large agriculture garden, a personal warehouse, and an outdoor leisure place. The corresponding prices would be higher in the USA but the ratio would be similar.

* Construction prices did increase a lot: the construction prices index increased ninefold since 1970 while the general inflation only increased threefold during the same period. Outside of big cities constructions costs have been the main driver behind costs rise. And this is to a large extent due to new norms: in France the norm for handicapped people led to a 30% increase in collective residential costs (large rooms with enough space between every element, large corridors, large elevators, additional parking space, enough room for smooth slopes, etc)! And bureaucracy and delays exploded in all countries, for the sake of norms and rules.

* The demand-offer asymmetry is not primarily caused by speculation: in NYC only 12% of residential apartments are usually vacant. And a third of those are nevertheless used at some point of the year, a eighth are between two occupants, and others are derelict places in derelict blocks or would require investments. Anyway a 8% increase in offer is likely to produce a price variation between 4% and 16% only. Certainly not a 10x price variation.

[Truth To Power]

Many factors play a role in income inequality. The problem is to distinguish between income inequality that arises from unequal contributions to production -- which performs valuable incentive and allocative functions, making the economy more productive and efficient -- and income inequality that arises from privileges like land titles, bank charters, IP monopolies, etc., which usually implies perverse incentives and makes the economy less productive and efficient as well as less just and equal.

In general, I can agree with eliminating privileges based on land titles, bank charters, an intellectual property rents. That would an encouraging step, but not be enough for me.

How do you know justice is not enough for you when you have never experienced anything remotely close to it, don't understand it, and wouldn't know it if you saw it?

I would also like to see legal changes that empower workers with ownership and representative control rights within the enterprises for which they labor.

If you ask for justice and something else, then you might get the something else, but you will not get justice. And then when the something else turns out not to be justice, you will be blamed.

The vast majority of bank lending is mortgage lending, and most mortgaged properties' value is mostly land value. If land were taxed enough to remove the subsidy, its value would fall to near zero, people would be able to buy housing without assuming massive debts, and banks would then not be able to force people into enough debt to accommodate economic growth -- or even stave off deflation.

Would you support an exemption from land use tax for personal dwelling (homestead), or do you see that as unnecessary?

No, I would support -- in fact, insist on -- a universal individual land tax exemption sufficient to ensure everyone free, secure access to enough of an available advantageous location to provide reasonable access to economic opportunity (call it half the median per-capita residential land rent). It is crucial to exempt persons, not properties. The latter would just shovel more money into landowners' pockets in return for nothing.

[Truth To Power]

vast majority of bank lending is mortgage lending, and most mortgaged properties' value is mostly land value.

This is not true. Roughly half of bank lending is mortgage lending and far less than 1/2 in community banks.

Though lending to governments has increased greatly since the GFC, mortgages are still the bulk of bank lending to private borrowers.

Nor is it true that the majority of value in mortgaged properties is the bare land value.

We already saw how large a fraction of NEW CONSTRUCTION was land value. After that, the structures depreciate while the land appreciates. The exponential nature of structure depreciation and land appreciation means that even when improvements start out being worth much more than the land, over the whole life of the property, the improvements are worth very little compared to the land.

So, please post evidence for your claim. Thank you.

[Drlee]

You first. You are the one making the claims. Go for it.

[Lexington]

Since I was curious, page 82