[TheRedBaron]

Several years ago I was active in the now defunct forum of Attac in Germany. There another member urged me to study the property theory of Heinsohn and Steiger. He had convincing arguments, and at the time I was still naive, so I obeyed. Of course it was a disappointment, for it is no coincidence that this theory is not a part of mainstream economics. Nevertheless, the ideas of Heinsohn and Steiger are sufficiently interesting for a presentation on this forum, where land value taxation is sometimes advocated.

The basic point is that property is indispensable for supplying credits. Property generates rents, and it can be sold. Therefore it is an excellent security in order to back up credits. Thus property involves a premium, namely the right to receive a credit. Liquidity originates from property. Since a bank receives the security in exchange for the credit, the interest originates from the premium of the property. Its height is still determined by the premium of liquidity.

In general capitalism emerges as soon as land becomes a private property, for land is a reliable security. Securities must maintain their value during the currency (term) of the credit. Land is durable, so that its premium remains intact. Credits create money. In other words, money is simply a claim on property, and solvency corresponds to property. So the amount of money is determined by the available property. The debtor must pay (transfer) the premium of property to the creditor.

Note that the debtor retains the right to use his property. Entrepreneurs compete for credits. They exchange their premium on property with the premium on liquidity (the opportunity to make profits). In fact the interest on credit forces the entrepreneurs to become profitable. This in turn furthers innovation. So the driving force for productivity is institutional, namely the creation of debts, which must be served. During a crisis the state can stimulate the economy by supplying additional property, for instance by selling state-owned land.

Heinsohn and Steiger do not discuss land value taxation. However, it is clear that land will be a poor security, as soon as its taxation becomes a heavy burden. Its ability to support credits would diminish. Thus a rigoruous taxation of land is not desirable.

[Boggart]

I am a little confused with your use of property vs land. Are you talking about a property tax or a land tax or both?

[Truth To Power]

The basic point is that property is indispensable for supplying credits.

No, that's incorrect, as property long antedates credit and debt. The basic point is that property is indispensable for accurate incentives to production and efficient allocation.

If by "property" you actually mean land (in which case, please be more careful in your expression), then again, the basic point is not that people can use ownership of it to assume debts, but that it is necessary to production, while not itself having been produced by anyone.

Property generates rents, and it can be sold.

You seem to be talking about land, not property. Please express yourself more accurately if you want to have a fruitful discussion (though IME, anyone who thinks they can present arguments against land taxation is not interested in a fruitful discussion).

Supermarginal land generates rents by definition, and if it is owned as property, it can be sold. The same is true of slaves.

Therefore it is an excellent security in order to back up credits.

The best. Banksters love lending for and against land, because it makes their parasitism safer and easier than other forms of security. Banksters are very much like landowners: they want the land rent; they want all of it, they want it every month, and they don't want to make any productive contribution in return for it.

Thus property involves a premium, namely the right to receive a credit.

That's not a right, it's a privilege.

Liquidity originates from property.

Nope. Liquidity originates from market conditions that make assets easy to sell.

Since a bank receives the security in exchange for the credit, the interest originates from the premium of the property. Its height is still determined by the premium of liquidity.

What do you mean by, "premium," and "height"?

In general capitalism emerges as soon as land becomes a private property, for land is a reliable security.

More accurately, capitalism requires private property in the means of production: land and capital. Capitalism does NOT require banksters or debt money, although finance capitalism does.

Securities must maintain their value during the currency (term) of the credit.

If we want their owners to be privileged above the productive who actually make contributions.

Land is durable, so that its premium remains intact.

Much more than that, land enables its owner to take from society and contribute nothing in return. That is very much what banksters are interested in doing.

Credits create money.

Only in a debt money system.

In other words, money is simply a claim on property,

Wrong. Money is a medium of exchange, and also confers claims on labor.

and solvency corresponds to property.

But not land. Get them straight.

So the amount of money is determined by the available property.

Utter bollocks, as proved by Zimbabwe.

The debtor must pay (transfer) the premium of property to the creditor.

If you want to privilege creditor parasitism above honest production of goods and services.

Note that the debtor retains the right to use his property.

But the bankster takes the rent in return for nothing.

Entrepreneurs compete for credits.

When banksters are privileged to create debt money, and entrepreneurs have their productive contributions taxed away by income tax, forcing them into debt if they want to invest in productive capital.

They exchange their premium on property with the premium on liquidity (the opportunity to make profits).

I.e., they are forced to give banksters something for nothing, in return for permission to produce. Thus the bankster fulfills the same "function" as the landowner: to take, and contribute nothing in return.

In fact the interest on credit forces the entrepreneurs to become profitable.

No it doesn't. The interest just transfers a portion of production from the entrepreneur who earned it to the bankster who didn't. Your claim is logically equivalent to a claim that taxation, or the depredations of a protection racketeer, "force" the entrepreneurs to become profitable. It's just baldly false. That is normal, routine, and expected from disingenuous apologists for privilege and injustice who presume to present "arguments" against land taxation.

This in turn furthers innovation.

GARBAGE. It just deprives the producer of the fruits of his labor for the unearned profit of greedy, evil, privileged parasites.

So the driving force for productivity is institutional, namely the creation of debts, which must be served.

So, how, exactly, does the creation of these debts to banksters differ, materially, from the protection racketeer's creation of business owners' debts, hmmmmmmm? Both of them stimulate the entrepreneur to be profitable; both of them drive innovation and productivity. According to your absurd nonsense, that is.

Blank out.

During a crisis the state can stimulate the economy by supplying additional property, for instance by selling state-owned land.

Yes, and see how beautifully that worked in Russia.....

You are just another apologist for greed, privilege, and evil. Full stop.

Heinsohn and Steiger do not discuss land value taxation.

Let us be thankful for small mercies.

However, it is clear that land will be a poor security, as soon as its taxation becomes a heavy burden.

I.e., as people won't have to go into debt to gain access to the opportunities land represents, and it won't be good security against debt, it won't be useful for forcing producers into debt for the unearned profit of greedy, privileged parasites.

That about it?

Its ability to support credits would diminish.

I.e., its ability to transfer wealth from its producers to greedy, privileged, parasitic banksters (and landowners) would diminish. Right.

Thus a rigoruous taxation of land is not desirable.

Right: too much justice; too much liberty; too much prosperity. Not good for people. They need the discipline of serving their masters, the threat of starvation and homelessness. It's easier, of course, just to enslave them and whip them to make them produce. But whipping is hard work, and landowning and debt money creation are much easier.

[TheRedBaron]

@ Truth-To-Power
I wish you a Happy New Year.

You seem to be talking about land, not property. Please express yourself more accurately

I will try. But I prefer to avoid being compulsory pernickety. So, property is defined as a legal title. This title can be used as a security for a credit from a bank. However, not all titles are equal. For instance, Japanese banks accept only land as a security, and not buildings. I have the impression that on this point we agree.

Supermarginal land generates rents by definition, and if it is owned as property, it can be sold. The same is true of slaves.

In a property economy the debtor must be innovative in order to repay the interest. In a society with slavery the debtor must buy back the claim on the product of his labour. However, he is no longer free to improve his productivity, because he is a slave. Therefore societies with slavery are not innovative.

Nope. Liquidity originates from market conditions that make assets easy to sell.

The argument is like this: A producer obtains a credit and uses it to finance his productive activity. Subsequently the proceeds from the sale allow him to pay off his debt. However, additional money is needed in order to pay of the interest. This money can only enter the circulation, when another producer borrows money from a bank. For only the banks can create money. The argument can also be reversed: thanks to the interest, the bank can supply new credits.

Capitalism does NOT require banksters or debt money, although finance capitalism does.

What is the difference between capitalism and finance capitalism?

Wrong. Money is a medium of exchange, and also confers claims on labor.

Here the question is: how can money enter the circulation?

I.e., they are forced to give banksters something for nothing, in return for permission to produce. Thus the bankster fulfills the same "function" as the landowner: to take, and contribute nothing in return.

The argument is that the producer obtains the premium on liquidity. The credit of the bank allows the entrepreneur to produce and make a profit.

Your claim is logically equivalent to a claim that taxation, or the depredations of a protection racketeer, "force" the entrepreneurs to become profitable.

I agree that such claims require an increased production. Incompetent producers are expelled. By the way, you omit one alternative in your list. Workers can make a demand for higher wages, and thus force the entrepreneur to increase his productivity. This argument is often used by labour unions in order to justify their wage demands.

However, the heart of the matter is that money must be available in order to satisfy the claim. And only banks create money. So extra credit money must enter the circulation. Neither taxation nor predation nor wage rises create money.

[Truth To Power]

@ Truth-To-Power
I wish you a Happy New Year.

And you.

But I prefer to avoid being compulsory pernickety.

In this case, accuracy is necessary to correct understanding.

So, property is defined as a legal title. This title can be used as a security for a credit from a bank.

Some can. Others can't.

However, not all titles are equal. For instance, Japanese banks accept only land as a security, and not buildings. I have the impression that on this point we agree.

Land is certainly considered better security than buildings.

In a property economy the debtor must be innovative in order to repay the interest.

No. Someone who borrows to buy land, for example, might simply charge the user rent, and use the rent to pay the interest on the debt. No innovation -- in fact, no productive contribution whatsoever -- is needed.

In a society with slavery the debtor must buy back the claim on the product of his labour.

I don't understand this sentence. Which debtor? What claim?

However, he is no longer free to improve his productivity, because he is a slave. Therefore societies with slavery are not innovative.

Non sequitur, and historically false. Ancient Athens, the most innovative society in history on a per capita basis, had an economy based on slavery.

The argument is like this: A producer obtains a credit and uses it to finance his productive activity.

But in point of fact, he is more likely to use his own savings. One of the purposes of income tax is to stop producers from accumulating savings, so that they are forced into debt to banksters if they want to be more productive. This makes it harder for them to offer competition to the greedy, idle, privileged, parasitic rich.

Subsequently the proceeds from the sale allow him to pay off his debt. However, additional money is needed in order to pay of the interest.

No, the existing money can just circulate faster.

This money can only enter the circulation, when another producer borrows money from a bank. For only the banks can create money.

No, banks typically don't want to lend to producers. Too risky. They prefer to lend to land speculators, as land rent is much more reliable than profits from productive investment. And it is only in a debt-based monetary system that banks are the only creators of money.

The argument can also be reversed: thanks to the interest, the bank can supply new credits.

No, the bank does not need interest income to extend new loans, just willing borrowers.

What is the difference between capitalism and finance capitalism?

Capitalism doesn't have to be based on debt.

Here the question is: how can money enter the circulation?

What kind of money? In a debt money system, it enters circulation by being borrowed from a bank.

The argument is that the producer obtains the premium on liquidity.

I don't know what that means. What premium?

The credit of the bank allows the entrepreneur to produce and make a profit.

Only if he is prevented from accumulating savings, borrowing from friends and family, etc.

By the way, you omit one alternative in your list. Workers can make a demand for higher wages, and thus force the entrepreneur to increase his productivity.

Nope. That just forces the entrepreneur to fire the less productive workers. Which is what makes the remainder "more productive."

This argument is often used by labour unions in order to justify their wage demands.

And explains why unions cause bankruptcy and unemployment.

However, the heart of the matter is that money must be available in order to satisfy the claim. And only banks create money.

In a debt money system. But the only reason to have a debt money system is to provide unearned income to banksters.

So extra credit money must enter the circulation. Neither taxation nor predation nor wage rises create money.

But government can, if it chooses to serve the people rather than just the banksters.

[TheRedBaron]

@ Truth-To-Power

Someone who borrows to buy land, for example, might simply charge the user rent, and use the rent to pay the interest on the debt.

In theory the price of land is determined by capitalization, which is based on both the rent and the interest. So this act is profitable only if the buyer can get a higher rent than the seller expects.

No innovation -- in fact, no productive contribution whatsoever -- is needed

The classical economy distinguishes between productive and nonproductive activities. There is no theoretical justification for those categories, and in practice the separation is impossible. The landlord performs a useful task, when he selects the most productive tenant.

Which debtor? What claim?

Remember that I draw upon the work of Heinsohn and Steiger. At least Heinsohn is not unknown on PoFo. They identify three types of social economies: the tribe, the command system, and the property system. The command system encompasses slavery, feudalism, and Leninist central planning. I will try to be more clear. They argue that in antiquity a debtor was enslaved in case of default with regard to his redemption. He must pay back his debt in order to free himself.

Non sequitur, and historically false. Ancient Athens, the most innovative society in history on a per capita basis, had an economy based on slavery.

Heinsohn is a historian, not me. He argues that Theseus led a civil revolution against the feudal king. The land was redistributed among the new free citizens. However, due to defaulting debtors the ownership of land became soon more concentrated. Heinsohn maintains that the polis was innovative mainly during the first centuries of their existence. He even cites Adam Smith: "Great improvements are least of all to be expected when they employ slaves for their workmen. ... Whatever work he (the slave) does beyond what is sufficient to purchase his own maintenance, can be squeezed out of him by violence only, and not by any interest of his own". Heinsohn gives additional citations, so you may want to buy the book. Evidently I read the German edition, but there is an English one: Ownership Economics: On the Foundations of Interest, Money, Markets, Business Cycles and Economic Development.

No, the existing money can just circulate faster.

I can not find an answer in the book. I kept those threads, and thus can reproduce it here, an act of necromancy, which I hope will not infuriate our present moderators. The problem is that a credit can not be paid off by multiple payments with the same money. For as soon as the creditor receives the money, it annihilates (disappears from the system). It is the hallmark of credit money, that it exists only during the currency of the credit.

No, banks typically don't want to lend to producers. Too risky. They prefer to lend to land speculators

Evidently the producer must supply a security. So yes, the producer must be an owner of estate.

Capitalism doesn't have to be based on debt.

Perhaps not. But entrepreneurs want to invest, and for this their assets must take on a state of liquidity. The credit system performs this task. Without it, the monetary means for investments would be much smaller.

What kind of money?

Debt money, yes. Not shelves or women.

What premium?

According to Keynes there is a liquidity preference, so that a premium is attached to liquidity.

Only if he is prevented from accumulating savings, borrowing from friends and family, etc.

Let it be clear from the start that forum members are not friends. But even friends will demand for a security, at least if they are wise. And by doing so they perform the task of a bank.

And explains why unions cause bankruptcy and unemployment.

This is off-topic. Let us concentrate on the price for the efficient allocation of land. However, you can start a new thread, if you like,

But the only reason to have a debt money system is to provide unearned income to banksters.

Apparently, you do not only object to land leasing but also to the banking business. These seem to be separate topics.

But government can, if it chooses to serve the people rather than just the banksters.

Perhaps government can. However, I doubt that this system would serve the people. Bank credits (the property economy; what you call the debt money system and finance capitalism) incites entrepreneurs to be productive and innovative. It gives them additional opportunities, and indeed exerts some pressure (the threatening loss of the security of the debtor).

[Truth To Power]

In theory the price of land is determined by capitalization, which is based on both the rent and the interest. So this act is profitable only if the buyer can get a higher rent than the seller expects.

Or, as is more commonly the case, the buyer has only borrowed a portion of the land price, and is just obtaining a return on his own savings.

The classical economy distinguishes between productive and nonproductive activities. There is no theoretical justification for those categories,

That is incorrect. There is every theoretical justification. Neoclassical economics just ignores the justifications, because it exists to rationalize and justify the parasitism of the privileged.

and in practice the separation is impossible.

No, it most certainly is not. In particular, the participation of the owner of natural resources like land in economic activities is always non-contributory by definition, because the resources would have been available had he never existed.

The landlord performs a useful task, when he selects the most productive tenant.

Nonsense. The landowner qua landowner does no such thing. The market identifies the most productive potential user; the landowner just accepts the rent, which he could just as easily do while comatose. He is just a pure parasite, a pure thief, pure evil.

Remember that I draw upon the work of Heinsohn and Steiger.

I.e., two stupid, ignorant, and dishonest propertarian apologists for privilege and parasitism. Check.

At least Heinsohn is not unknown on PoFo.

As an ignoramus.

They identify three types of social economies: the tribe, the command system, and the property system. The command system encompasses slavery, feudalism, and Leninist central planning.

But they are wrong. Feudalism is based on hereditary land-tenure contracts and private landowners discharging some of the functions of government. It is based entirely on property, not commands, and arose historically when the disappearance of government compelled private landowners to take up the reins of military power in defense of their landholdings.

They argue that in antiquity a debtor was enslaved in case of default with regard to his redemption.

And they are wrong. The great majority of slaves were simply captured and fettered by force. There was no debt involved.

He must pay back his debt in order to free himself.

Debt slavery is a relatively recent innovation.

Heinsohn is a historian, not me.

He is a crackpot in the tradition of Immanuel Velikovsky.

He argues that Theseus led a civil revolution against the feudal king.

Theseus was a figure of myth, and no such thing happened.

The land was redistributed among the new free citizens. However, due to defaulting debtors the ownership of land became soon more concentrated.

No, the ownership of land becomes concentrated because the more land you own, the more wealth you can take from everyone else in return for nothing.

Heinsohn maintains that the polis was innovative mainly during the first centuries of their existence.

Because he is an ignoramus.

He even cites Adam Smith: "Great improvements are least of all to be expected when they employ slaves for their workmen. ... Whatever work he (the slave) does beyond what is sufficient to purchase his own maintenance, can be squeezed out of him by violence only, and not by any interest of his own".

Non sequitur. Slaves have almost never constituted the majority of the population, and slave-owning societies like ancient Athens have been notably innovative. Heinsohn is just a propertarian, trying to concoct some sort of justification for the parasitism of the privileged.

Heinsohn gives additional citations, so you may want to buy the book.

I will definitely not want to encourage or reward such idiotic and dishonest blather.

Evidently I read the German edition, but there is an English one: Ownership Economics: On the Foundations of Interest, Money, Markets, Business Cycles and Economic Development.

Which belongs in a trash can.

But eight years ago I did propose this idea on the Attac forum, and the above-mentioned member was kind enough to answer. Yes, I kept those threads, and thus can reproduce it here, an act of necromancy, which I hope will not infuriate our present moderators.

I'll demolish his nonsense if you like.

The problem is that a credit can not be paid off by multiple payments with the same money. For as soon as the creditor receives the money, it annihilates (disappears from the system).

Nope. Only the repayment of principal annihilates. The interest is income that the bank then has available to spend.

It is the hallmark of credit money, that it exists only during the currency of the credit.

Indeed. But the bank's bookkeeping distinguishes debt money received as repayment of principal and debt money received as interest. The former annihilates itself and a portion of the loan asset, the latter does not.

Evidently the producer must supply a security.

Nonsense. Why would he? He can produce without a thief to take rent or interest from him in return for contributing nothing.

So yes, the producer must be an owner of estate.

Absurd garbage with no basis in fact. The estate owner qua estate owner is by definition not a producer; he is just a parasite, charging others a fee for access to what nature provided free of charge.

Perhaps not. But entrepreneurs want to invest, and for this their assets must take on a state of liquidity.

Nope. What stops them from investing their own illiquid assets?

The credit system performs this task.

No, it just creates interest income for parasitic banksters at the expense of producers.

Without it, the monetary means for investments would be much smaller.

Only if the productive have their profits stolen and given to the privileged. You don't seem to understand that it is only the theft of operating profits from the productive to create the unearned rent income of landowners that necessitates creation of debt money to finance investment, and the associated unearned interest income for banksters.

Debt money, yes. Not shelves or women.

Or fiat money or commodity money, which do not enter circulation the same way.

According to Keynes there is a liquidity preference, so that a premium is attached to liquidity.

But bank loans are customarily spent immediately on illiquid assets.

Let it be clear from the start that forum members are not friends.

But even friends will demand for a security, at least if they are wise. And by doing so they perform the task of a bank.

Garbage. A loan from a friend does not create money. A loan from a bank does.

Let us concentrate on the price for the efficient allocation of land.

No, let us concentrate on who should receive that price: the government and community that create its value, or a parasitic private landowner who does not.

Apparently, you do not only object to land leasing

I only object to the lease payment being made to a private parasite, rather than to the government and community that make the land valuable.

but also to the banking business.

I have no objection to banking as financial intermediation. I object to the banksters' exorbitant privilege of creating money de novo.

These seem to be separate topics.

Appearances can be deceiving. In point of fact, you have chosen to hang your defense of landowner parasitism on the fact that it enables and even requires bankster parasitism.

Perhaps government can. However, I doubt that this system would serve the people.

But you are incorrect. Not having to support rich, greedy, privileged parasites is definitely good for the people.

Bank credits (the property economy; what you call the debt money system and finance capitalism) incites entrepreneurs to be productive and innovative.

Only in the same sense that stealing half of what a man produces incites him to be productive and innovative.

It gives them additional opportunities,

No, it only makes them PAY for restoration of the opportunities that landowners stole.

and indeed exerts some pressure (the threatening loss of the security of the debtor).

Much as the whip exerts pressure on the slave to produce.

[MeMe]

But even friends will demand for a security, at least if they are wise. And by doing so they perform the task of a bank.

If someone lends a sum to another one, and in return asks for a security, then evidently he does not create money. For afterwards he no longer posesses the sum of money.

[MeMe]

[Paradigm]

So, ignoring TTP's rather...shall we say..."brash" style, I think it should be pointed out that the argument presented in the OP actually does a good job of explaining the argument for land value taxation. See, the use of land for credit is precisely the sort of thing Georgists are critiquing. The fact that rising rents are used for credit expansion is why land is such a central component in economic bubbles. Since land is a fixed commodity, its value is bid up by speculators until it becomes too expensive for continued economic activity, at which point the bubble bursts, and the whole house of cards comes crashing down. The idea with land value taxation is to take this asset out of the equation so that economic activity can be based on the actual goods and services available, rather than on speculative assets.

[Truth To Power]

If someone lends a sum to another one, and in return asks for a security, then evidently he does not create money. For afterwards he no longer posesses the sum of money.

Bingo. Modern commercial banks do not lend out their money. They do not engage in financial intermediation, putting lenders in touch with borrowers. They have a legal privilege permitting them to ISSUE money in order to charge interest on it. You and I are not allowed to do that. If we do, we are charged with fraud, or counterfeiting.

[Truth To Power]

So, ignoring TTP's rather...shall we say..."brash" style, I think it should be pointed out that the argument presented in the OP actually does a good job of explaining the argument for land value taxation. See, the use of land for credit is precisely the sort of thing Georgists are critiquing. The fact that rising rents are used for credit expansion is why land is such a central component in economic bubbles. Since land is a fixed commodity, its value is bid up by speculators until it becomes too expensive for continued economic activity, at which point the bubble bursts, and the whole house of cards comes crashing down. The idea with land value taxation is to take this asset out of the equation so that economic activity can be based on the actual goods and services available, rather than on speculative assets.

Right, and it's actually even worse than that, because the land "asset" is actually just a legal entitlement to take from others while contributing nothing in return. The OP's "argument" is logically AND MORALLY equivalent to an argument for retention of slavery on the grounds that a slave deed could function as loan collateral, or that government should issue literal licenses to steal so that they can serve as loan securities. When you understand the actual content of objections to land value taxation, they always turn out to consist simply of preferring injustice to justice, evil to good.

[benj]

Aside from anything else, the high selling price of land excludes those who cannot access to large amounts of capital, whereas an LVT does not.

Rents are the best method of allocating scarce resources. The only real question is to whom should those rents belong? Only the creation of a good or service confers property rights. For sure freeholds do perform a service regarding the timing of development. An LVT doesn't tax this service, it merely internalises the costs of doing holding land out of production.

[Truth To Power]

For sure freeholds do perform a service regarding the timing of development.

No, they only entitle the freeholder to extort money from the producer for PERMISSION to develop the land. There is no reason to suppose that land must be left unused for some period of time, to "ripen," in order that it might be used most efficiently and productively. The market is just as capable of measuring and accounting for expected future rents as any landowner.

An LVT doesn't tax this service, it merely internalises the costs of doing holding land out of production.

It's not a service. It's just extortion.

[benj]

No, they only entitle the freeholder to extort money from the producer for PERMISSION to develop the land. There is no reason to suppose that land must be left unused for some period of time, to "ripen," in order that it might be used most efficiently and productively. The market is just as capable of measuring and accounting for expected future rents as any landowner.

It's not a service. It's just extortion.

I disagree. And Georgist economists would disagree with you. Certainly a number of papers I've read by Tideman and Arnott do, and they don't come with higher credentials than that.

http://www.wealthandwant.com/docs/Tideman_LTaELS.html

[Truth To Power]

I disagree.

That's your prerogative.

And Georgist economists would disagree with you.

So? I'm not a Georgist.

Certainly a number of papers I've read by Tideman and Arnott do, and they don't come with higher credentials than that.

I'm also not a credentialist.

http://www.wealthandwant.com/docs/Tideman_LTaELS.html

I see the argument being made here, but I think a subtle error is being made. The problem of changes in the most productive use of land is not that the land is more productive when left unused, but that unpredictable changes in circumstances can lead to inefficient allocation of capital. The arguments for freehold ownership preventing such inefficiencies make a tacit assumption that institutional arrangements that are commonly made under the current system would continue under a just system of location subsidy repayment (LSR). In particular, when land is privately owned, changes in designated land use are so fraught with corruption and rent seeking opportunities that speculators take over the process through political influence, often leading to bizarre outcomes as professional planners struggle to ensure efficient planning and use of infrastructure while fending off efforts by their political masters to shovel publicly created land value into politically connected land speculators' pockets. In an institutional LSR environment where this sort of thing was not possible, infrastructure planning and designated land use changes would be transparent and predictable. The risk of inefficient allocation of capital would be the same as in any other business, and would be assumed by the capital owner as a matter of course, just as in any other business. There would be no reason to expect a private landowner to be a better judge of the matter than the capital owner, so his input would be superfluous, and his supposed "service" of extorting money from prospective users therefore spurious.

[D Z]

@TTP - So you would have land communally owned but auctioned or leased off in a type of competitive bidding process?

[Truth To Power]

@TTP - So you would have land communally owned but auctioned or leased off in a type of competitive bidding process?

Land can never rightly be owned by anyone, but government administers its possession, tenure, and use because that's what government IS: the sovereign authority over a specific area of land. Efficient allocation and productive use of land requires an open, competitive bidding process: a free market. The main reforms that are needed are a voluntary, beneficiary-pay, market-based allocation system that recovers publicly created land value for public purposes and benefit, and equal, free, secure tenure for every resident citizen on enough of the available good land of their choice to give them access to economic opportunity.

[D Z]

Land can never rightly be owned by anyone, but government administers its possession, tenure, and use because that's what government IS: the sovereign authority over a specific area of land. Efficient allocation and productive use of land requires an open, competitive bidding process: a free market. The main reforms that are needed are a voluntary, beneficiary-pay, market-based allocation system that recovers publicly created land value for public purposes and benefit, and equal, free, secure tenure for every resident citizen on enough of the available good land of their choice to give them access to economic opportunity.

Ok I follow until your reform portion. How can the system be beneficiary-pay and market-based while also offering free tenure for every resident citizen? Is certain land just held back from the bidding for assured residency of all citizens?

Also, how can citizens have a choice over available land without a pricing system? What happens if multiple citizens want the same land? Is it just dictated by a ruling power or drawn from a hat?

My last thought on a whim is what happens as the population changes from resident citizens leaving and entering the domain? May people need to give up a portion of their land for new residents?

[Truth To Power]

Ok I follow until your reform portion. How can the system be beneficiary-pay and market-based while also offering free tenure for every resident citizen?

Everyone gets a flat personal exemption for the location where they live, analogous to the universal individual exemption from income tax. I've suggested half the median per-person land rent as a reasonable value of free, secure, exclusive tenure for each individual. Obviously -- by definition -- most people will want to use more than that, and will pay for the additional rental value they want to use.

This is the crucial reform that Henry George and the Georgist Single Tax campaign missed: requiring repayment of the subsidy to landowning only addresses half the problem, the unjust advantage obtained by the landowner. It does nothing to redress the removal of people's liberty by private landowning, and the resulting economic vulnerability that makes them pay full market value for access to opportunity. The proposed universal individual location payment exemption solves that problem, restoring people's liberty to use land and giving them free, equal access to economic opportunity.

Is certain land just held back from the bidding for assured residency of all citizens?

It's more like a voucher, like food stamps, except that every citizen living in the jurisdiction gets one. So it is the same for both tenants who live in accommodation provided by others who hold tenure on the land and land "owners" who pay the community directly for the land they exclude others from.

Also, how can citizens have a choice over available land without a pricing system?

It is a market pricing system, but the price is effectively a rental price, not an exchange price.

What happens if multiple citizens want the same land?

The one who is willing to pay the community the most for exclusive tenure gets to use it, everyone else gets that much more compensation for being excluded from it.

Is it just dictated by a ruling power or drawn from a hat?

It's allocated by market bidding.

My last thought on a whim is what happens as the population changes from resident citizens leaving and entering the domain? May people need to give up a portion of their land for new residents?

Whether someone is entering, leaving, being born or dying, there is always some desirable land that is currently unused, even if it is only the tiny share of very desirable land represented by a vacant apartment in a downtown highrise building. The proposed system of market rent payments and individual exemptions inherently encourages provision of a healthy surplus of accommodation for both rental and purchase, so people would always have lots of attractive and inexpensive alternatives to choose from. Those with modest location wants would be able to get accommodation for free by using less than their share of location value, and getting use of improvements in return (e.g., by boarding in the home of someone who is using more than their free share of location value). People who wanted to buy would be able to purchase an older but perfectly serviceable house for a few months' after-tax wages.