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AFAIK owning the house but not the land is already a thing ?

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George's book is referenced (prominently) in this page of the UBI Master Directory.

https://docs.google.com/document/d/1q9AkxTmaaWBGkXrhjP8dnkT5mbZ06Xax-RkfxJV9BNI/edit?usp=drivesdk

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>Landowners however can just sit back and collect rent. Given that land is fixed, it's way easier for landowners to collude than it is for either labor or capital (sans land) to unionize.

Where I live in the Dominican Republic land prices are sky high. Comparable to coastal California land.

The land owners just wait.

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That happened here too during our Celtic Tiger boom. Property speculators mushroomed, bought up and set up land banks, then sat back and waited for the inflated price to make it worth their while. Parcels of land changed hands multiple times, at increased prices each time, with nothing being built on them because it made more money to wait a little while for the price to keep going up then sell them on.

Of course, once the bubble burst, all this land was now relatively worthless. George is right there, but like any asset, if there is demand for it price will go up. I don't see how you can fix that by a simple land tax.

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land value tax means there's no value to simply selling the land for the land - you would only buy a plot of land if you have a vision for what you want to build *on* it. in the heart of NYC, that's gonna look different than in a random small town, but in both instances, there's no value to just sitting on the land: https://www.bostonglobe.com/business/2019/07/03/one-third-acre-back-bay-location-parking-but-not-for-long-price-million/qyoEyaJMBE1qg9piuf5piI/story.html

you can't have a 'bubble' if there's no way to privatize the rise/fall in underlying land demand - those losses/gains would be shared by society - which is why LVT creates a virtuous cycle where governments and people have a shared incentive to increase land value through public works (this is stiglitz's 'henry george theorem'.

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An LVT means that you need to pay yearly in order to sit on the land. This hits from two ends: A future developer is willing to pay less for the land because of the additional tax burden, and waiting for the parcel to go up in price quickly becomes a losing proposition. It would turn real estate, where waiting earns money, into an asset more like a car, where buying it makes sense if you're using it, but just sitting on it means you're losing money.

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Landlords already have costs to sit on land...

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Yet they aren't nearly high enough to have a significant effect. That's the whole problem.

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I suspect most of this locked up land is close to the beach, so they're waiting to sell out to a resort developer.

If there is land with a high price in the DR that doesn't have beach access? No idea why.

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Yes. It seems to be true everywhere. I checked out some farm land in the interior. I thought, "I could afford that!" Turned out the price was per SQUARE METER.

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Can you please provide some evidence?

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What would an example look like?

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I know nothing about the Dominican Republic per se, but I know that real estate in third world countries in general, and Ukraine in particular, is outrageously expensive, considering.

This is because real estate isn't viewed as an investment (in the sense of generating returns) as much as it is a relatively safe place to park money. Banks aren't trusted, and everyone knows that the local stock market is a mug's game. Currency and other restrictions may prevent local gentry from investing abroad or repatriating their gains, and besides, these investments aren't really understood or trusted either.

Land, houses, things one can touch and feel and that cannot be easily absconded with, that is where value is stored. In some societies, India, for instance, gold also plays a similar role. Gold has the advantage and disadvantage of being eminently portable.

A friend of mine worked as a corporate raider in Ukraine, playing various financial hide-the-sausage games with western investors. She would squirrel away her earnings in her mattress until the mattress started getting too lumpy, then buy another apartment and start the process over again.

She didn't rent out any of the places she owned, since even a cheap apartment cost some $250,000 and the rent it paid wasn't worth the hassle of chasing down renters every month, much less tenants trashing the joint or stealing the wiring.

She lived at home with her parents.

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China's housing market is allegedly pretty crazy as well according to this source:

https://www.youtube.com/watch?v=jDIhTc6CJYY

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That makes sense about not trusting banks. I rent a house in a nice part of Boca Chica, DR. The are building an apartment building on the lot behind my house. They started over two years ago.

It was December. First a couple of workman came and stripped every green leaf from the lot. Then they dug ditches, mixed concrete, and poured footings. Then built low concrete block walls. About 3 feet high. It looks like it will be four apartments.

They did all that work in ten days. Probably the fastest crew I have seen in this area. Then they went away. FOR A YEAR AND A HALF!

Last summer they came back and in another ten days completely finished the first floor including a very precise flat concrete floor at ceiling height.

By this time I could see by the plumbing stacks that they were not stopping at one floor. Too bad I thought. They are going to block the light from the north.

Then they went away again. It has been nine months and no new activity.

What is going on with this process? I think when they have money they build. Then they wait to accumulate more money. They are not borrowing money from a bank at the exorbitant interest rates here.

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I've seen that movie before as well, even in places like Poland, which is very different and which has a different banking culture from, say, Ukraine.

My raider friend didn't owe money to any bank, FWIW. She bought her apartments for ca$h. As in "suitcases filled with bricks of green cash" like she was Tony Montana or something.

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This start-stop process I described would not work with a wood frame house, but the cement blocks and concrete are resistant to the weather.

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It seems odd given what happened to Ukrainian landowners within living memory. I would have thought portable wealth would be more popular? But I guess if land is all you got that's what you invest in.

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I have wondered much the same thing.

The old lady I used to practice my Polish on told me in her day, it was gold that people used as a store of value, not land or Yankee Dollars.

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I should have added: gold isn't hard to come by in Ukraine, but at the same time, you can drive through new housing developments that are entirely sold out, and that mostly sit empty.

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Actually I'm not sure what you're referring to. Individual (not organizational) land and property ownership was resilient both to the collapse of the Soviet Union and occupation of Crimea. And even with occupied regions it's a bit of a tossup - if you owned land in the Crimea it's massively more expensive now, if you owned land in occupied Eastern Ukraine - it plummeted in value (but at least you still have it).

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Additionally, in developing countries real estate is the only efficient source of collateral for loans for investment projects, bidding them up above their fundamental value, due to their high pledgability as an asset.

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Not so much in Ukraine, in large part because of some of the vagaries of Ukrainian real estate law (if you change the "техосмотр" -the technical description of the real property as found on the deed, for instance, by changing the square area, you can get a corrupt judge to invalidate your mortgage and you can give your lender the middle finger).

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"Banks aren't trusted"

Is this for a good reason? Do you think Ukrainians will start using any of the flashy new DeFi services?

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I heard that cryptocurrencies / tokens / IPOs were pretty popular in Ukraine ? (Or maybe just in their infocom scene ?)

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Sorry, this story about Ukraine is almost completely wrong (maybe, maybe it was somewhat true before the Russia-Ukraine war started in 2014). The reality is almost opposite - outside of the very top of the market, apartments are reasonably priced and generate nice return on investment. Prevailing rate seems to be around 800-1000 usd/sq.m., depending on condition and district., and 90% of the market is below $100k, I believe. For example, with $50k you can get a half-decent 1-bedroom apartment ("2-room"), and rent it out for maybe $300/month, so 7.2% p.a., not bad at all. New construction is abundant, as well. Of course, people still struggle as the average monthly income is around $400 or so.

Of course, at the very top, elite property is expensive, but there's very little being bought and sold, and owners are very very open to negotiation. I've been offered property at one of the most prestigious highrises in Kyiv for $2500/sq.m. which is like 50% of list price, guy owns several floors and is motivated to sell (won't be surprised if he's actually one of the corporate raider types who parked his money there).

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forgot to add: am Ukrainian, currently living in Kyiv

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Suffice it to say, very different from my experience when I lived there. You were hard pressed to find anything for less than $200K.

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There was a Henry George School in Santo Domingo in the 1990s lead by Lucy Silfa. http://georgistjournal.org/2012/09/17/an-interview-with-dona-lucy-silfa/#more-396

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Cool! I never would've guessed.

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This is great. I'm going to create a page for Henry George in the UBI Master Directory. Probably "UBI and Georgist Philosophy". Then I will link this interview.

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This is not my experience. Apart from prime beachfront land and downtown Santo Domingo, I could buy a small plot almost anywhere in the country.

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Jump links to the appendix look broken, but I found Ctrl-F "Appendix-A" or whatever seems perfectly serviceable to locate the linked section, as well as to jump back to where it was referenced after you're done.

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author

1. I still don't understand the insistence on saying that workers are paid out of production rather than capital. For one thing, it seems transparently false - the review mentions the example of workers building a ship, which might take a year, but they still get paid even before the ship is built. It argues that they are paid from the partly-built ship, but they're clearly not - they're paid out of the saved money that the person who founded the shipbuilding company brought in (or borrowed). You could even demonstrate this by having the capitalist put highlighter marks on the particular dollar bills they bring to the venture, and then you will see that the workers get paid in highlighted dollars. But also, who cares? What hinges on this totally theoretical point? I still don't feel like the review/book explained this very well.

2. Would a land value tax unfairly benefit eg Google (who maybe need a little land for their HQ and a server farm, but land is only the tiniest fraction of their costs) compared to eg farmers (who need lots of land)?

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Theoretically a land value tax should have no effect on the cost of renting land. It may even reduce the cost of rent (since just holding land is now costing you money- thus unused land maybe more likely to be rented out to recoup the cost of the tax). Thus it shouldn't be unfair to either Google or the farmer.

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Essentially it transfers the value gained from holding the land to the government.

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author

I'm confused. Homeowners seem pretty against having the government raise property taxes, which I interpret as them reasonably expecting to have to pay more money to have a house. Increased property taxes on housing would hurt homeowners relative to, I don't know, homeless people. It would probably also hurt renters since the landlords would pass along some of their costs. Why would a land value tax be different?

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Property taxes are very different, as the delta gain from the land improvement is not taxed.

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How so? Property is reassessed at points in time. It can also be reassessed after a value-add project since permits have been issued thus notifying the local government that the value has changed.

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He meant that the LVT does not tax land improvement, in contrast to how property taxes are determined.

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George wants to capture the increased ‘land value’ the other landlords see when one improves their building and the others increase their rents. It is a specific example cited. In raising the LVT George ‘takes’ what isn’t due the non-improving owners.

The pragmatic use of LVT is to tax the purposeful idling or minimizing of what should be a property, sales, income... producing parcel. It is an targeted solution to an urban density problem.

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You seem to be modelling it as if it were a tax that increased the costs associated with renting out land. It doesn't, it increases the cost of owning land.

Landlords cannot respond to this tax by raising rents to cover their losses. They remain in a competitive market. The marginal cost of supplying an additional unit of land hasn't changed because crucially the amount of land is fixed, and the tax is levied regardless of whether the land is rented out or not

Thus a land tax will indeed be awful for existing land owners, but renters will either do no worse or win somewhat. Future land owners will not suffer, because the land tax will be factored into the price.

This is because a land tax effectively devalues land by transferring its future earnings to the state.

The equilibrium price of land will thus remain the same in a standard neoclassical model of this market. Really it might even go down a bit, as land owners who were previously content not renting out their land need to cover the tax.

It actually works out more like an expropriation than a traditional tax.

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Would this only work if the land value tax was applied everywhere, all at once?

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Most land tax proposals do this in a country. Between countries, the markets are mostly separate.

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The mechanism by which taxes are passed on depends on a supplier being able to change how much they supply based on the market price.

Sure, you can just say "hey I'm being taxed, so now I'm charging more for it" and *hope* people pay it, but the *economic force* that makes the market agree your offer is a worth taking is the fact that when you tax schnozzberries by a dollar per bushel, schnozzberry farmers on marginal plots that only had a profit margin of a dollar per bushel cease production. This drives down the supply, driving up the price, and so consumers are grudgingly willing to pay a dollar more per bushel even though the tax was originally levied on the supplier and not them.

With land all you can do is refuse to rent it out, but that's not the same as taking it out of production. It still exists, and you still pay land tax for holding it regardless of whether you rent it, whereas the farmer doesn't pay taxes on berries he doesn't grow. Without the ability to constrain the supply, and having to pay the tax simply for owning the land, you have no ability to affect the market price of land and thus pass on the tax to your renters. This is pretty widely recognized in modern economics and it's why folks like Friedman called Land Tax "the least bad tax."

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Homeowners - yes.

Renters - no. Presumably they're already charged whatever could be squeezed out of them. Also, in the LVT-based system, if someone 'takes a stand' and demands a price which exceeds what they could pay - well, they'll be forced to move out. Which means now the owner pays the tax without making any profit. Which means they're son bankrupt and lose that land.

After some brief disruptions, the system should just stabilize. And now all rent goes to the state's budget. Which means it could, for example, remove income taxes. And do an UBI-lite with additional surplus (I'm assuming LVT > income taxes, but maybe not enough for true UBI sufficient for living off it). Which means surplus wealth of the labor increases (well... actually the corp. would just decrease wages, rly - it's quite obvious with Facebook paying less remote workers who moved out of high-cost areas... but that situation also shows Facebook was literally paying the USD by which they reduced the wages to the landowners!)

The bit with homeowners sucks through, very badly. Maybe the initial impl. should have some additional provisions just for that one time status quo changes.

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Landlords can pass along the costs of property taxes because property taxes move the supply curve of property to the left, increasing price. This is not so for land value taxes - since the supply of land is fixed.

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Except, by George's own definition, it's supply NOT fixed :

From the law of thermodynamics the sum of the *quantity* of land/nature/privilege + the *quantity* of wealth can only go down.

(However, their aggregate *value* can also go up, since scarcity increases the value of the item getting scarce.)

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1) Higher taxes on a good reduces the price of that good. Under Georgism, existing homeowners will indeed be shafted. That's a feature, not a bug, albeit it certainly increases the difficulty of implementation.

2) Rent is not calculated by landlords seeking a given return, it is the maximum the market can bear (i.e. the maximum renters are able and willing to pay in that particular market).

2.1) Property taxes don't change a renter's ability to pay, for obvious reasons (there's no reason there should be a relationship between the job giving me a raise and property taxes).

2.1.1) At least not in the short run - in the long run one could argue that property taxes (albeit not land taxes, for reasons outlined above) discourage building more houses, as *new* projects are determined based on whether they pass a certain profitability threshold.

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IANAGeorgist (lean Austrian, actually), I don't know what's what beyond the contents of this review, so please take everything I say with that in mind. That said:

1) I think it may be attempting to make a conceptual rather than literal point - that it's out of the expected value generated by the worker's labour that the wages are paid, and if that value wasn't being generated by said labour, then that labourer doesn't get hired. Just imagining the scenario as atemporal but still sequential - imagining that the labourer can take an arbitrary number of steps of labour in a single instant of time - makes it more understandable to me, and may help with the point being made at its root.

(Now, ours is the kingdom of the goddess Kali, she who is time and the devourer of time, and in her world, everything *doesn't* happen atemporally; additionally, in both worlds, losses are possible. But if this behaviour is repeated, the business entity or whatever doing this goes bust, so - short of an entire social-economic unit of people going collectively insane and losing their refpoints for what's up and down economically - this state of affairs can't continue for long. And even in cases of collective insanity, eventually people just die as their ability to produce even basic food is destroyed - witness Mao and his time, and the destruction of farmers' implements made of metal in a mad, quoxotic and insane quest to meet 'production quotas' for iron by throwing said implements into village furnaces that just... destroyed them, and produced useless iron. So the situation is eventually unstable - you either go out of business, or - if there are no brakes on this loop - your entire society goes insane and dies. But that's an aberrant case.)

2) I presume the expectation is that land value rent on farming is likely to be very, very low; and the gains from using modern agricultural technology (these gains would *not* be taxed, in the Georgist scheme, because it's the return on *capital*, NOT land) would be so enormously more significant than the land itself as a factor of what gets produced that it would basically be completely immaterial.

But all this is just a guess, please remember that IANAG.

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IAAG, but I'm also a big dummy, and for what it's worth I thought that was a pretty good explanation and better than I would have done.

I agree that part of the review Scott references in 1) (and peeking at my copy of P&P to see what George says about it at length) is a bit fiddly. George's apparent hand-waving about risk as a justified return to capital feels like something I'd like to get a more involved take on too, in case the review isn't doing it justice, or George provides a better explanation outside of P&P.

My only take on 1) is that I think George is probably responding to established wisdom of his time which really sees capital as this absolutely fundamental thing that labor absolutely can't in any way shape or form function without, which the review touches on a bit later, and presumably this relentless beating to death of words and concepts is supposed to help him undermine that notion somehow.

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My (possibly extremely dumb) take on 2) is that George might be less concerned with sticking it to the Googles[1] of the world then he does the EFFECT of Google moving in to Mountain view and all the landlords jacking up the rents for everybody until nobody can live there unless you work for Google. I also genuinely don't know if there's some weird ways land value taxes would actually hit Google pretty hard --- Amazon for instance actually has an enormous network of brick & mortar buildings in their distribution infrastructure that's a key part of their competitive moat. One thing's for sure -- Google's land can't send itself to Ireland and back to avoid taxation.

[1] (if they produce lots of value by hiring smart people to produce useful products without also gatekeeping access to natural resources, good for them -- though I wouldn't be surprised if George had many sharp words for them on the question of Monopolies in fields other than Land)

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> (these gains would *not* be taxed, in the Georgist scheme, because it's the return on *capital*, NOT land

I don't think land value can be divorced from the possible uses it could be put to. In the city, you can see that the value of the land depends on the community around it, but in farming, isn't the value of the land dependent on the kinds of practices available to you to benefit from it?

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Yeah the review goes into it. It gives the example of how you could have a some land with a "latent" resource in it that's worthless until someone discovers a use for it -- either by a community springing up, or someone just invents/discovers something new. The review also mentions a section where George addresses the possibility for the line between improvements & the "land itself" to start to blur (e.g. plant a forest on a plot and wait 20 years).

But you are still able to assess the value of the land separately from its improvements. Farmland being next to a good farm-to-market road increases its value, but the road belongs to the state and was paid for by taxes, the value the farmland gets from being next to it is not an improvement on the farm land itself. But if you plough the land and dig a well on it and build a toolshed and irrigate it and do all these other things, those are improvements and allegedly assessors are used to being able to suss these distinctions out already.

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That all makes sense, it's more the idea that gains from modern agriculture would not be taken into account in land value that doesn't make sense to me. When someone invented modern acricultural techniques, that increased (unearned by the owner) the value of all acricultural land, simply by virtue of it being possible to apply them to the land. Of three kinds of land - (1) land that has had modern agriculture applied to it, (2) land that is amenable to having modern agricultural techniques applied to it, (3) land that is not amenable to having modern agricultural techniques applied it, the difference between (1) and (2) should obviously not form part of land value tax, but I the difference between (2) and (3) should. That means that at least some of the productive capability of modern agriculture would find its way into LVT.

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> it's more the idea that gains from modern agriculture would not be taken into account in land value that doesn't make sense to me

Yeah I agree that the fact that *someone else* could *also* use modern agriculture on your farmland would serve to increase the unimproved value of your land. I think George says as much per the review -- improved technology increases productivity, which drives up land prices, extends the margin of production and all that.

I'm not George so I can't speak for the man, but basically his idea is not to tax capital or improvements like buildings, tractors, wells, etc, and he seems to imply that ploughing a field, planting a field, etc, all count as improvements as well (with the fuzzy boundary of some of these more organic improvements becoming indistinguishable from the land itself over time).

The potential for someone to come in and have a better use for your land then you do, which drives up its price, would be part of the base land value according to George, however, if I understand him right.

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Why would you think that gains from modern agriculture wouldn't be taken into account ?

Value is relative, gains from modern agriculture make the wealth extracted from that nature to go up.

To take another, already used example : nature with oil in it would have a lot more value if it's economically viable to extract that oil than if it's not (also, once that oil is extracted it stops being nature and becomes wealth, so nature goes down).

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Do you have a good link to an Austrian critique of Georgism (preferably not from Rothbard, whose arguments I tend find simplistic and terrible)? I would imagine such a critique leans heavily on time preference of workers and the need of capital to satisfy such high time preference. I agree that George is not claiming that the workers are actually paid from the proceeds of the sale, but that how much they are paid depends on how much the sale is expected to bring in. But again, this ignores the time value of money as well as the risk taken by the supplier of capital due to uncertainty.

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IIRC, Eugen von Böhm-Bawerk makes approximately the argument you're making: that employers essentially front payment to the workers, expecting to be compensated for the payments (plus interests forgone) out of the revenue made by selling the product(s) made by the workers.

Henry Hazlitt has a famous book about economic fallacies, I don't recall the name, where one of the chapters is called something like "enough to buy back the product". Böhm-Bawerk's argument suggests that employees will be paid enough to pay for the product minus the interests they were essentially given for free by being paid before the product was sold.

In some sense, it's a loan in the opposite direction of time: the employer pays employees in monthly installments. The employees manufacture a giant schnozzberry. Once the schnozzberry is built, they (the employees) sell it on the market and give the employer the principal of the loan (which is the entire sales price). This is of course not what it says in anyone's employment contracts, but the flow of money, labor and berries over time is the same.

But of course, the actual loan-like thing is in the opposite direction: we all prefer money now to money later (since we can easily store it if we only want it later), and the employer hires people at wages which compensates for forgoing the expenditure of money between the time of wage payments and the (estimated) time of sale.

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Google actually owns a surprising amount of land: On their balance sheet, "land and improvements" is ~50 billion out of 320 billion of total assets, or more than a seventh (IDK how much the *unimproved* land is though). Reason being, what land they do hold is likely extremely expensive per unit area compared to some pastures or farmland in the middle of nowhere. And even if it wouldn't affect them directly, a LVT would capture the increase in residential land values surrounding those tech companies, which Georgists probably see as more important.

On other tech companies:

Facebook doesn't seem to own nearly as much physical land, but it probably derives a significant portion of its revenue from network effects, which, if you squint a little, looks kinda like "land but on the internet" (physical land value = physical proximity to stuff, digital proximity to stuff = ???). Of course, it is dissimilar to land (physical or otherwise) because you can make more of it. Not actually being a Georgist, IMO it matters more that a) network effects can be taxed or regulated in similar ways, and b) taxing or regulating it competently would likely increase surplus. Same with Amazon and Twitter and Uber. Kinda similar with Netflix but clearly network effects aren't that powerful/valuable if everyone and their dog is starting a streaming service or two.

On point 1:

I feel like the issue here is that there's been a distinction between financial and economic (i.e. real, physical) capital drawn, not very clearly, and since pretty much everything can be attributed to financial capital it's more useful to talk about the future production that financial capital is attached to. But honestly I don't really care right now either.

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Networks effects are kind of stretching it..?

Though the limited IPv4 addresses, weirdly, would I guess be considered to be nature (="land") by George ?

(Then IPv6 gets popular, and IPv4 nature value goes "poof" ?)

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Also short, common-word *.com addresses! They're not making any more of those. I wonder what the weirdest, edgiest edge case of Georgist "land" would be...

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http://sms.or.th/sms/images/pdf/Why%20Tax%20Land%20Value%20-%20Bill%20Batt.pdf gives some good presentations.

"Economic Rent, also known as ground rent or Ricardian rent, is the flow of value that explains the market price of all resources of nature. Their value is a

function of the demand people place on them, certainly not due to the

investment of labor that is made in them. Many natural resources besides land (really locations) yield rents: water, air, the electromagnetic spectrum, airport time slots, fossil fuel and mineral wealth are the most readily understood. But so are DNA and all the biota of the world, language, computer code and website domains. It is not hard to think of many parts of our market economy that command a price without any labor by human beings. These rents are a large portion of our common wealth – what was classically called “the commons.”

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I was thinking, that perhaps "people capable of programming computers" is such a limited resource - this was my impression about reading about the "IQ shredders" https://www.isegoria.net/2014/07/iq-shredders/

In theory you can give birth to and bring up additional smart people, so maybe it's not exactly fitting the definition of "land", but in practice it seems that smart people busy with high paid work aren't quite keen on multiplying, so it's suggested by the article that supply of this resource is actually shrinking over time.

So increasing salaries in IT can be viewed not as "wages" for "labor", but more like "rent" for the "land", where each programmer is a land-lord of their high-IQ brain.

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Programmers are not a natural resource, they are human beings. I for one find this pretty offensive.

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> In theory you can give birth to and bring up additional smart people

More people means not only more supply of labor, but also more demand for consumer goods. Fertility and immigration work similarly in this respect. [They also have differences, of course.]

Ethically, Immanuel Kant would suggest that code monkey breeding farms would treat people merely as means and not (also) ends in themselves, and would object on those grounds.

More prosaically, it's plausible that workers in selective professions collect a good chunk of salary and a little bit of oligopoly rent. However, oligopoly rents tend to dwindle as the number of competitors grow (c.f. https://en.wikipedia.org/wiki/Cournot_competition, reading "firms" as "workers"). Also, the main mechanism which enables mono- and oligopolies to charge a higher price is that of restricting supply. Provided the labor unions are not given the power to force some people out of the profession in question, there is no way (e.g.) one programmer could reduce the total number of programmer labor hours supplied by other programmers. If each programmer is one among very many (say, hundreds or maybe thousands), each person's decision to work a little less has a negligible impact on the wage bargaining position of the rest.

So I would guess workers in most selective professions overwhelmingly earn wages and basically no rent, provided inflow of people into that profession is only limited by competence and willingness.

Earning lots of money just because the supply and demand curves intersect and a market clearing price that's comfortable for you is not an example of rent.

Cournot competition is not the only oligopoly model. There's also https://en.wikipedia.org/wiki/Bertrand_competition and https://en.wikipedia.org/wiki/Stackelberg_competition.

Compare also to the long-run industry supply curve on p. 397 of Intermediate Microeconomics (5th ed.) by Hal Varian: loosely speaking, it shows that the more oligopolistic an industry is, the easier it is for slightly inefficient competitors to enter—their share of the oligopoly profits cover for their inefficiency. They are also more strongly incentivized by the greater oligopoly profits. In the limit, this behaves like perfect competition. I apologize that I can't find this diagram online.

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Domain names in general should be taxed as land, with the taxable base = asking price for the domain name.

This should get rid of a bunch of the ridiculous cybersquatting (yes a domain name I owned was snatched up by cybersquatters because I was too busy *having a baby* to notice the warnings that my card had expired)

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Abt network effects, I'm not really sure it makes sense to try to shoehorn them into the Georgist framework. I think Georgism checks out, but a minimalistic, "single tax" idea is pointlessly restrictive.

LVT + various Pigovian taxes on luxuries & other stuff with negative externalities (so that they don't need to be illegal 'for people's own good e.g. heroin', and CO2) + some level of capital gains tax + maybe-very-minor-wealth-tax + inheritance-tax, progressive and with some reasonably high floor. That comes out the top of my head to replace all(?) other taxes (and probably still end up with a huge pile of cash to redistribute as a 'dividend' - or if not, do something else with them, or drop them in order of capital gains then wealth tax).

Network effects of Facebook are a really, really weird kind of monopoly resulting from pure inability to coordinate. The whole construct could be simply dissolved without taxing Facebook or dismantling it, actually.

I've already spoken about it online a few times, but thankfully someone elaborated on it recently. Weirdly it's Moldbug. Not sure how do links work in Substack comments, so: graymirror.substack . com/p/tech-solutions-to-the-tech-problem (just C-f "Protocol extraction" to skip the Cathedral-talk). I'll quote it below.

"One way to peacefully attack the tech behemoths is protocol extraction—analyzing and reconstructing the secret protocols that their apps use between client and server.

If these secrets were open to the world, any fool could write a Facebook client. This would set another power against Facebook: the power of the client against the server. For example, Facebook would struggle to force third-party clients to show its ads; even worse, multi-server clients would emerge and become the user’s true center of gravity, making it easy to switch servers and destroying the lock-in that is Facebook’s capital.

Obviously, these superior clients—a whole marketplace replacing a captive monopoly—would create immense consumer surplus. What Facebook has been doing is tying its monopoly in one market—social servers—to a monopoly in another—social clients. These are two separate lines of business that, if the Internet was used as the network it was supposed to be—a network of open protocols—would not be connected at all.

Obviously, this is exactly what antitrust law was meant to prevent. Obviously, the right remedy would be for a judge to order Facebook, or Congress to require all big social companies, to simply disclose the specifications for their internal APIs—and handle any packets matching these specifications, regardless of what software sent them. Congress could turn every app into an API, creating a Cambrian explosion of clients— not to mention a huge number of good American code-monkey jobs.

But of course the System will never do any such thing to itself. So that’s out, now. Still, sometimes when there’s a will there’s a way.

There is a will for one such API: the YouTube API, whose protocol is tracked by the famous youtube-dl project that—downloads YouTube videos. Even this is not easy. Still, it is physically impossible to create a protocol that cannot be reverse-engineered.

For a comparatively small amount of money, perhaps even funded anonymously, it might be possible to analyze, document and maintain the private protocols of all major social services—turning all their apps into APIs, and creating a compatibility library sound enough that a whole ecosystem of polysocial clients can stand firmly on it.

For tens of millions of dollars in code-monkey ramen (although you might want to spend at least as much on legal), you could devastate hundreds of billions of dollars in monopoly capital. Nothing personal—you’re just “commoditizing the complement.” How about it, donors? I’d maybe go with… ZCash… for this one. (Maybe the world needs a donor-advised fund that makes distributions to ZCash addresses.)

Of course, this magic library is useless if no one’s phone will let them use it. This is another good thing for donors to support: free-software phone stacks. Which will work even better if they can reverse-engineer private Google protocols…"

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I'll note that decentralized alternatives to Whatsapp and Youtube already exist : Matrix and PeerTube as an example.

Matrix is particularly relevant, because that's what Gab uses now (though they decided to split themselves from the rest of the network).

But you'll notice that Parler was still created. Why ? I'd guess that because pre-Matrix Gab was not allowed on Apple Store & Google Play, and later lots of Matrix clients went to pains to specifically block Gab (more because they hated that kind of crowd than because they were forced to ?)

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Gab is ActivityPub/Mastadon-fork, rather than Matrix btw (Matrix is more IM-focus than "general social media")—though it's not like there isn't a whole load of neonazi content on certain Matrix homeservers.

Network-effects-as-land is a stretch yeah, and on second thought I don't want to think of it that way any more than I want to think of intellectual property as land. Economically, they both attract rent though, and apparently George advocated for regulating "monopolies of scale" and that basically looks like what (I think) most people would be happy with.

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Whoops, I indeed confused both "Ms", my bad !

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But clearly georgists also consider intellectual "property" to be land/nature/privilege, and not to be wealth ?

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peak.singularity mentioned Matrix, and I'd like to add that they do have bridges to Telegram and Facebook Messenger, among others, but the UX is not great, in part due to issues with login ("oh yes, it's very suspicious you're not logging in from an official client"). Similarly, services like nitter and bibliogram tend to end up rate limited, etc. On the other hand, I did manage to find what Henry George thought of natural monopolies the following being paragraph 11 of a platform he wrote:

"With respect to monopolies other than the monopoly on land, we hold that where free competition becomes impossible, as in telegraphs, railroads, water and gas supplies, etc., such business becomes a proper social function, which should be controlled and managed by and for the whole people concerned, through their proper governmental, local, state or national, as may be."

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That's an issue with Telegram & Facebook Messenger, not Matrix.

(See also : Slack shutting down their IRC bridge.)

Also, I confused Matrix with Mastodon, but it's a great example of another federated and viable alternative.

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George speaks about infrastructure here, which by his own definition should be considered as capital, rather than land/nature/privilege ?

I guess that he's a socialist in this way, considering that this kind of capital should be owned by the government ?

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It is, and I believe many people, Georgists included, would consider it anticompetitive to a degree.

About infrastructure: A lot of it tends to already be owned by the government (roads, the post office, etc) and it's easy to see how a government can build more if it's beneficial enough to increase land rent by more than it costs. For that currently in private hands, I'd suppose it'd be most fair to have it brought back at a fair price and/or regulated to charge the marginal economic cost. Georgism seems to me as much an anti-monopoly movement as it is one specifically anti-land-monopoly, it's just that the land monopoly is the strongest: "the robber that takes all that is left", as he puts it in Protection or Free Trade.

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In EU, the monopolies of mobile cariers were forced to provide access to their infrastructure to "virtual operators", so that the physical network (which causes the network effects) must be shared (at reasonable fee) with new players. I strongly believe a similar thing should be forced on Facebook (enforce that GraphAPI etc. give enough functionality to application developers that they can essentially run their own "social network" on the subgraph of the whole FB's graph), Slack (enforce that IRC bridges are again functional), Messenger (so that XMPP bridges work) etc. What do you think?

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On first thought, yeah, but…

- this level of the Internet is way less standardized

- during the last years Facebook has been on the countrary clamping down on what it used to share, because some companies abused it (Cambridge Analytica, the recent phone numbers leak)

- I'm not sure that Facebook can even be 'retooled' this way : going from centralized to decentralized ?!

- the bridges kind of suck anyway, much better to have the functionality directly in the protocol, but what's even left of XMPP in Facebook Messenger ?

- Facebook (& its other companies like WhatsApp) is probably to big anyway at this point, it must be shut down

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Actually, you might be onto something with these network effects :

https://astralcodexten.substack.com/p/your-book-review-progress-and-poverty#comment-1768690

"After thinking about it, it's not just about fungibility, but about ease and durability of storage and transport :

At one end of the spectrum you have stuff like ice, oysters and strawberries, then further long the spectrum you have apples,

then in the middle (?) of the spectrum : stuff like grain and gold,

while the other end of the spectrum would be things like hawala, Internet-carried conventional banking and bitcoin."

And what does hawala, conventional banking (even with paper money) and bitcoin have in common ? They all require a network ! (And their "value" most likely rises with the usual network law, as the square of nodes ?)

Coming back to Facebook, remember Doctorow's "Whuffie" ?

(social reputation replacing money - note that that book predates Facebook by a year)

https://en.wikipedia.org/wiki/Down_and_Out_in_the_Magic_Kingdom

Also, remember how Facebook wanted to launch their own cryptocurrency ?

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I read the ship thing as saying something like this:

Before anything is done, the laborer has some time T and the capitalist has some amount of capital K (which is some combination of money and shipbuilding resources I guess).

The laborer spends T and the capitalist spends some fraction of K (say aK, a < 1) to build half a ship, which is more valuable than T + aK.

But the ship is owned by the capitalist, so really all that's changed so far is that the capitalist has gained some value larger than T (since the capital transfer was just K -aK +aK). Thus, when the capitalist pays wages to the worker, you could say it's coming out of the value the capitalist and laborer generated together.

I'm not sure whether that makes any sense though, I Am Not An Economist.

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Yeah that's mostly how I see it. If you are in the ship building business, then except for the first ship you build, you can see wages as coming from the sale of the ship. Your capital is all the stuff you bought to make the ships, dry docks, cranes, welding equipment. The first ship you build is a little special, and you have to borrow to make payroll.

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> you have to borrow to make payroll [on the first ship]

Or save up money (or other payment forms).

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Re: 1, I think George's point is that that capital didn't simply fall out of thin air or get plucked off a magic money tree. Those highlighted bank notes came from selling goods or providing a service, not by "and I reached under my mattress and there they were", before they were socked away in the bank as savings. So it all comes out of production - if the employer is paying his workers to build ships, he must be selling ships, so the money from selling ships yesterday pays today's wages. But you can't sell a ship until it's produced (well, you can build it on commission and get paid in stages until it's finally built, I guess), so it's the fruits of former production that give you that money. If the employer borrowed that money to set up a shipyard, then the money from the bank came from depositors who had saved it there from the proceeds of buying and selling.

It's the same notion about usury being a sin, where Dante includes moneylenders/bankers in the Seventh Circle of Hell (the violent) on the liminal edge where that circle transforms into the Eighth Circle (fraud). Usury is violence against nature, as it makes a sterile instrument (money) 'unnaturally' breed by interest, not by doing anything fruitful as being used for buying and selling but simply "pay me for letting you hold this money in your hand". If I lend you 100 nobbles, you can't just pay me back the 100 nobbles, you have to pay me back 120 nobbles. Where did the extra 20 nobbles come from? What is this charge for? It's an invisible cost, pulled out of the air.

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I don't think that quite works that way. Sure the money paid back to the banks, the banks can pay back to the treasury, decreasing total currency in circulation. But the interest paid on the borrowed amount is not paid back to the treasury but is spent on paying workers, rent, and as profits to the owners of the bank. That money continues being circulated.

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As the review says, "money isn't wealth".

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> If I lend you 100 nobbles, you can't just pay me back the 100 nobbles, you have to pay me back 120 nobbles. What is this charge for?

It is a charge for lending the money rather than the other guy who's willing to pay you 119.99 nobbles.

And at root (and in a world with only one borrower) it's something to compensate you for your patience: you're spending money later rather than now, and you're giving up the flexibility to spend it whenever you want, until the loan is repaid (compared to just keeping the money in your mattress).

Can I borrow your car for 5 years at no charge if I promise to repair any damages? Would you feel entitled to compensation for something you lost? Should I pay at least your bus tickets in that period?

> Where did the extra 20 nobbles come from?

The borrower.

> it makes [money] breed by interest

Setting up a loan is not the same as creating new currency. Or rather, it can be in some banking systems, but the two don't necessarily have to go together.

Coming at it another way: the money in my bank account breeds not only when I lend it out, but also when I add my monthly wages and spend less (over time) than I earn. Are labor and lending equally unnatural acts of violence against nature?

[I'm not sure I'm arguing against your or Dante or both, but I want to put this out there anyways.]

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Land is defined as stuff from nature. not land as land on earth

one example of land for google I presume is the https://www.google.com/ domain name. follow the idea, I assume that google gain value from other website existing and the stance is to tax google to subsidize society at large

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founding

So with this definition the government can tax whatever they want at whatever value they define and you can't argue?

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uhm 2 things, 1. this already happened

2 I am just saying that domain name is in a certain way analogous to land, I am not saying anything else

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founding

It has absolutely not happened. The government, despite all the things it taxes, is pretty constrained in what it taxes and how much.

and 2 yes my complaint is that if you start reasoning like that everything is in a certain way analogous to everything else

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I am just saying I can't argue how much money is being taken from me as tax and I am a citizen of 2 countries which meant I tried 2 taxation systems.

I was under the impression that Scott asked what would be analogous to land in the case of Google, hence my respond

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I guess the core question would be : "Is it not wealth and can you monopolize this thing ?"

If yes to both, then it's nature-like and *should* be taxed to near 100% by the georgist Nature Value Tax ..?

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The government (in a democracy) represents the people / voters, so yes...

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I would point out that although there are some parallels with domain names to practices in real estate speculation (e.g. domain name squatting) a major difference is that you can create new domain names. I guess you can't create another www.google.com, but nothing in theory stops whoever mints new domains from spinning off www.google.fart

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I wonder, how does trademark law applies to www.google.fart ?

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According to randos on Quora it's a legal grey area at best and google would probably wrest it from you one way or another:

https://www.quora.com/What-is-the-legality-of-purchasing-a-competitors-domain-name

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Arguably, though, the total value if you integrate over the space of domain names is bounded, i.e. the set of even slightly desirable domain names is finite. So in practice I think a kind of Georgian tax on domain names could be enacted by assessing the general desirability of your domain at regular intervals, e.g. using search trends or something more sophisticated. This would mean that a squatter would suddenly have to pay a hefty tax if their domain suddenly became culturally relevant.

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Yeah might be worth considering! A use it or lose it fee for this kind of thing seems like it would solve some things whether or not you go full George with it or not.

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I think the use of the term "land" here is unfortunate, because what George really means, I think, is "natural resources." But then people might not include land in that category, so perhaps we should use "land and other natural resources," understanding that this includes things such as the EM spectrum and domain names.

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I've settled on calling it "land/nature/privilege", until a better term is found. I guess "that which generates rent" might work too ?

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2. Google does own a lot of land, and patents/IP count as economic land. Oracle should be considered a landlord as much as it is an innovator- the patent wars were pure rent-seeking. (There's a balance here to encourage innovation, prizes for IP, or taxing IP ownership like land, could help).

Part of why, imo, george's movement got out-flanked aesthetically by marxism is precisely because he didn't care about *how much* wealth a person or company had, but *how* it was acquired. That's a little less straightforward than "eat the rich," so after george died it was difficult to keep the raggedy alliance of libertarians and socialists and labor together. The government also did some straight up monopoly-busting, land redistribution, etc, to address some of the problems. All property taxes are, in part, land value taxes- they just *also* are taxes on improvement, disincentivizing improvements.

Thus: https://www.bostonglobe.com/business/2019/07/03/one-third-acre-back-bay-location-parking-but-not-for-long-price-million/qyoEyaJMBE1qg9piuf5piI/story.html

To your first point, i think the other comments have responded better than I could've.

Really glad you put this review up - I've often thought that reading between the lines, the places where you tend to see government intervention as just vs unjust roughly align with georgist principles- and to be clear, henry george popularized them in the english-speaking world in the 19th century in this form, but the ideas have been talked about everywhere for most of human history (mencius, ibn khaldun, as mentioned some indigenous conceptions of ownership). 'Legal systems very different from our own' covers one or two of these examples, I believe.

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> Part of why, imo, george's movement got out-flanked aesthetically by marxism is precisely because he didn't care about *how much* wealth a person or company had, but *how* it was acquired.

While you're right about Twitter meme content, when they talk theory Marxists and Georgists make the same distinction about "how it was acquired". The difference is that George says we'd be better off minimizing rent*, and Marx says we'd be better off minimizing both rent* and interest*.

(*where "rent" and "interest" are defined in the Georgist way as in the book review above)

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marxism as an aesthetic is diff than marxism as written (though there are criticisms that apply to both).

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Marxism "as written" is correct. Aesthetically they have cool flags and such.

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"Part of why, imo, george's movement got out-flanked aesthetically by marxism is precisely because he didn't care about *how much* wealth a person or company had, but *how* it was acquired."

Marxism makes plenty of criticism about how wealth is acquired in a capitalist system.

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Re: 1) I asked a Georgist friend of mine about this and here's his reply:

> I partly agree with Scott about the importance George puts on this question. The wage-fund, was a popular idea at the time and still has spin-offs today, like the idea that artificially enriching people who are already rich is a good way to increase capital creation.

> As for the merits, George made a strong case. Any exceptions, like the one George outlined, where labor accidentally produces nothing of value, are outliers. Remind Scott to stick with George's definition of 'capital' and it will make more sense. I've worked on a ship. I've repaired a ship. It wasn't done when I finished; it was just better. The ship was better and worth more. That was 'capital' I created with every hour of my work. It was not removed from anything that the ship owner had.

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Re 2, land-based agglomeration effects are HUGE in Silicon Valley; Google has enriched landlords in the Bay Area by an amount that far exceeds its market cap. So in that sense, Google needs valuable land more than most businesses, though it pays for it indirectly through higher salaries. But the key point of Georgism is that people who are able to put land to _productive_ use actually benefit since they will be able to buy the land they need for much cheaper and pay the rents out of the value they extract.

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> they're paid out of the saved money that the person who founded the shipbuilding company brought in (or borrowed)

As per the article, money is not capital. If that money was earned via production, the workers are paid out of production.

The boat, on the other hand, can be used for shipping, in which case it would be functioning as capital. So to summarize, the workers are paid from production (saved money) rather than capital (the ship).

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Not really transparently false any more than saying that you're "spending the Bahamas trip money" on car repairs - all money is fungible so no money belongs to anything, right? But the only reason you loan the capital to build the boat is because you anticipate the labour put into the boat will pay back the capital. In a perfect-information world with zero percent interest, the capital wouldn't be relevant, but the labour still would be. That's the point Georgists are trying to make.

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1) The consensus position he wants to debate is that it there’s too little capital chasing too many laborers.

2) The positions of “farmer” and “farmland owner” are already in practice quite distinct. Georgism would obliterate the returns on owning farmland but not on working it. Setting aside corporate tax, Google pays a kind of “tax” to the landlords of Mountain View through what are nominally wages. It argues we would all be better off if Google could grow even larger with that weight off its back.

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I don't think that George would be happy with Google's monopolistic practices.

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1. (paid out of production rather than capital) George is fighting the idea that without capital, there is no production and no work for workers. He says this is not true: only land is required. As long as you have land you can work and generate wages.

Capital does increase efficiency, and it does make longer-term project possible or at least more practical, but in the en it is not required.

It's all in support of its ultimate conclusion: land enables production and land only should get taxed.

Regarding highlighted dollars: sure, when profit is far in the future, workers are paid in capital. But this is only an advance on the proceeds of production. If you remove production, capital wouldn't flow to the workers as wages. If you remove capital, the workers could still generate wages (e.g. by picking berries and selling them, or whatever).

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Yeah, though that's really stretching it : even non-human *animals* make capital in the form of tools !

And you're not going to be able to carry a lot of berries with your hands alone...

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founding

Philosophically, our bodies are both 'land' AND 'capital' (and thus 'wealth').

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"Thus, every patent reduced to an ownership claim over an expression of nature."

- https://mises.org/library/copyright-and-patent-benjamin-tuckers-periodical

By George, ideas are land. Google may hoard access to land they discovered value in [trade secrets], and Google may be granted temporary monopoly over land they discovered value in in exchange for making their discovery public [patents], but in any case Google is using a *lot* of land. Furthermore, the land *value* of the Googleplex and other properties is likely very high compared to farmland.

Thus, to your presumed point that a modernized land value tax might greatly shift the modern tax burden, that seems to entirely depend on the details of a specific proposal, the extent of its definition of "land", and the tax bill determined for modern "land". How much might Google be charged in comparison to WeWork or ExxonMobil?

As for the farmer, I think a quick search for the effective tax rate actually paid by America's largest corporations will show that the farmer already frequently pays a higher rate under the present system.

As to the fairness of who pays how much land value tax, I think the more interesting comparison would be between farmers and J. K. Rowling (as George seems to have a rather different view of copyrights than of patents). Indeed, a LVT seems like something where the farmers pay more than Rowling.

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Regarding the highlighter marks: the way I read this, it seems to me like George's reply should be that, since dollar bills are not wealth, but merely a pointer to wealth, exactly which physical bills are being used to pay wages has no influence on where the actual wealth is coming from.

That being said, it also seems to me like the sort of counter-example mentioned (where wages are higher than the wealth labourers generate) should be fatal to this view, even if these examples are not sustainable (after all, they are certainly possible and might even be metastable if the person paying the wages is inefficiently juggling many different enterprises but not suffering net losses). I suppose George insists on this because it makes labourers seem less dependent on capitalists than the alternative, and he is trying to shift attention away from that particular interaction. I assume it is also possible to strengthen the position somehow with the sort of atemporal approach mentioned in another comment, but I can't see how that can ever both account for the aforementioned counter-examples and make any meaningful difference.

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founding

In accounting (?), there's a notion of a 'going concern', i.e. a profitable business/enterprise that 'should' continue to exist (and operate) indefinitely.

'Assuming' a going concern, workers are paid out of production – 'on average', e.g. from the perspective of a profitable ship builder.

Arnold Kling has a phrase/acronym that I think covers this pretty well, PSST – patterns of sustainable specialization and trade.

You're totally correct that _creating_ such a pattern requires capital and thus, in a very real sense, workers are paid from 'capital' – at least initially. And, when those patterns _cease_ to be sustainable that's also in a very real sense equivalent to a farmer 'eating their seed corn'.

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"As for compensation for risk, George says that risk averages out and disappears when you take the God's eye view and sum all of society's transactions together. If I take the winning side of a bet and you take the losing side, I enjoy gain, you suffer loss, but the amount of wealth in the world hasn't actually increased as a result of our bet."

But there are many bets which don't have people on both sides, an consequently a societies total transactions and economic activities can be more or less risky in aggregate.

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what bets don't have someone on the other side? those just sound like 1 vs society, or the present beneficiaries of the status quo the gambler expects to change, the 'other side' is diffuse but exists

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I was actually curious about this part of the review as it seemed like a bit of a hand-wave, can you give some more detail?

I'm a small business owner and I regularly find myself in situations where you hear "Okay, I'll pay you a good reasonable wage to do this work, and then I'm going to be taking a risk on whether it pays off, if it goes big then I get my big cut as I took nothing up front, if it doesn't pay off then I basically got nothing from the project." So there's this natural sliding scale between upfront compensation and revenue share (or equity) based on the risk someone takes on. How does this fit into the framework about the Georgist notion of capital?

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Any bet against nature might qualify, e.g. saving money by constructing a weaker building is effectively betting against a catastrophic weather event. My understanding us that a lot of farming is essentially betting on the weather.

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Tons of bets are not zero-sum! If I'm a miner I'll make a bet on where to excavate, and if it turns out I'm wrong, I lose, and in aggregate humanity loses too. (Still, it is probably true that in aggregate the win:loss ratio of all humans together is nearly constant)

If I bet my art collection will be stolen, but actually it would not have been, I can hire security, but no benefit accrues to me from that (a fact I cannot know, so I keep paying the guards anyway). btw you might point out that the security guard benefits from the wages, but the security guard would benefit equally from doing a productive job like "factory worker", and in the latter case aggregate wealth of society becomes higher. A malfunctioning society suffering from higher risk of theft (for whatever reason) will waste more labor on security guards and suchlike. By George, of course, the malfunction can print be traced somehow to landlords.

Collectively, most of humanity has spent the last 30 years making a bet that switching to clean energy isn't worth the cost, so let's just keep burning Georgian land (oil) until we run out. The consequences of that bet, good or bad, are largely independent from what the cost of switching to clean energy would have been. (aside: of course, there were some countries and businessmen who did invest in clean energy, and so we're finally starting to see some light at the end of this tunnel) By George, this is a special case though, a case in which human actions can affect the total supply and value of land.

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Yeah, though wages are a distraction here - wages are value but they aren't wealth.

However, if the alternative to being a security guard is staying jobless, then *something* is gained by the whole society by you being hired as a security guard. It isn't wealth, but it isn't *just* value - what is it ?

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In that case the gain is from wealth redistribution, as the marginal dollar is much more valuable to the security guard than the wealthy art-owner. The art-owner might have used the marginal money to buy an extra or upgraded car, while the otherwise-jobless security guard would use the same money for basic things like rent, food and furniture. Mind you, in a normal no-UBI society with a poor job market (so that the guard would otherwise be jobless), the art-owner has good reason to hire security guards, as unemployment tends to cause theft (crimes of desperation).

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(edit: art theft isn't a normal crime of deperation, but working for the mafia could be, the latter being the sort to do this kind of theft)

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Yeah, you're onto something - this is probably also related to network effects...

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So how does this work empirically? I Googled Land Value Tax experiments, and the first result is a write-up on Harrisburg in 1982 and Allentown in 1996, which fixed blight and helped protect vulnerable groups through the use of LVT. Pennsylvania lets you tax land value more than building value.

https://www.strongtowns.org/journal/2019/3/6/non-glamorous-gains-the-pennsylvania-land-tax-experiment

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It's worth mentioning here that there is at least one Philadelphia City Councilor who is serious about an LVT, which could have excellent results for the southeast part of the state. (The current Philadelphia wage tax is an excellent example of "if you want less of something, tax it". Many high-income jobs and individuals have moved to the suburbs because of the wage tax.) https://www.youtube.com/watch?v=QomEl3rV2LU

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IANAGeorgiat - pretty committed Austrian, in fact - and I am enormously impressed by this review, and by the conceptual elegance of Georgism.

Like many other theorists, I find his analysis of the situation into its constituents astute, but am not sold on the solution until and unless it's empirically tried thoroughly. So here is what I've updated on, and the questions that have opened up for me as a result of reading this:

1) This summary has convinced me that the Austrian account of the 'mixing of labour' theory of ownership WRT that not created by the hand of man is not complete (it is hand-wavish as the best of times), and that a greater nuance is needed there to flesh it out. Good opportunity for theoretical *and* practical work!

2) The question of the equilibrium dynamics that result from this theoretical lacuna - the equilibrium being critiqued here being that of nearly all the gains of productivity and wealth (in the Georgist sense of those terms) being captured by rent, and the resultant unjust and overall shitty results - I am now convinced is a real one.

3) George does not address some very important question - who, whom? being the biggest one. There may be ways to fairly calculate how much the various levels of aggregation - neighbourhood, town, county, larger level entity, state, country, etc (and in some sense the world? potentially applicable to question of pollution, etc, and other commons problems?) - contribute to land value, thus leading to the rippling everywhereward of positive incentives. But who can be trusted to actually do this calculation, and not be a dickwad about it? What prevents higher-level landlords, etc, and all the resultant garbage just happening at a higher level - thus making everyone the milch cow of the state instead of Ms. Nguyen?

4) The problem of identification and sentiment is real, and I'm not going to pretend it's not. Stability is power, transience is impotence, as the ever astute Sir Appleby said of the civil service and elected politicians, respectively. I damn well want to be able to buy land in a city I expect to be a nice place and continue to live there because I saw the opportunity and took a risk on it. If I'm not renting to anybody, what the fuck, man, how can you just tell me to get up and get out?! This is outrageous! I live here! My friends and community are here! My extended family lives here! Fuck you and your economic optimisation, we're human beings, not soulless automatons in the service of economic efficiency (as *YOU* conceive of it - what happens if I don't agree with you?!). Completely unaccetable.

But... the problems are real, too! What is to be done?

Here's a proposed solution that immediately suggested itself to me:

a) If you rent out your land but do not use it yourself, then you have to pay the LVT.

b) If you use the land yourself, then you do not pay the LVT while you're using it, but your capital gains tax is massive - so there's still *some* gain to speculation, but very little/modest compared to what it is now.

c) If you sometimes own/use the land and sometimes rent it out, then some combination of the above two that I haven't though of but I'm reasonably confident exists and someone may be able to elucidate as a fun intellectual puzzle?

This clearly prevents the situation where I don't actually have property rights in the land which is my property, thus forcing me off my land; yet it also ensures that the only reason I'd have to *not* move off it and move somewhere else - or even better, develop it, pay the land rent, and collect on my investment in the improvement - is because I *actually want to stay there and/or use the land*, not just because I'm usuriously/avariciously HODLing.

I presume this has already been thought of by *someone*. (If not, you may thank me for making this not inhuman and Molochically horrible!) Any Georgists care to help me with this?

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Addendum: this seems a clean refinement of the Austrian theory of ownership, in that it is claiming that your ownership of something you have mixed your labour into should be qualitatively and quantitatively matched with the labour you have mixed into it - and since it is not in fact your labour that has created the land ex nihilo, it is impermissible to claim that your ownership extends to it - but it *is* in fact completely permissible to claim your ownership extends to it *in a way qualitatively and quantitatively matched with the labour you have put into it*.

This exposes a cleavage - that of 'property because labour mixed in' and 'property because it prevents disputes and resultant violence, and allows planning and action at all, and also man is a territorial animal and it's a basic instinct of his and you try to mess with this and it'll end horrifically', both of which are implicit in the Austrian analysis but not so clearly delineated.

(More about this an another top-level post; I believe it deserves independent discussion. There are also *serious* problems with Georgism's conceptual framework which I believe lead to tyranny and atrocity quite naturally in their full development/unfolding, but I think that I may be able to extract the *kernel* of the good idea from the oft moralistic and ressentiment-tinged *shell*...)

Georgism solves the first but not the second - it does not address my objection 4, which I hope the (seed of a) scheme I outlined above addresses and solves, in preventing expropriation, which is a terminal goal for me.

In general: Bravo, bravo! I have rarely if ever seen anyone actually a) show a real weakness/point of incompleteness in the Austrian categories, and then b) *refine* the conceptions it was working with, instead of just using it as a political cheap shot. Wonderful! I had become jaded by reading things which were clearly incoherent and not even rising to the level of being wrong for so long that I'd given up hope of constructive contributions from economic discourse. This was like a draught of cool water in the parched and dessicated heat of the desert of discourse today. Great good fortune to you, stranger, for this!

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Re 3, the difference is that rent paid to a landlord doesn't come back to you in any meaningful way. But money paid to a state comes back to the citizens. (Not with perfect efficiency but significantly greater than the landlord)

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I'd say its the opposite, the landlord at least faces some competition/incentive to add value and make more money. It's much easier for a renter to switch landlords than states.

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> If I'm not renting to anybody, what the fuck, man, how can you just tell me to get up and get out?! This is outrageous! I live here!

I regret to inform you that property taxes already exist.

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Yes, and that's also outrageous.

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Another solution to (4):

You don't have to pay LVT on the first $750,000 of your primary residence.

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Or make LVT a progressive tax, tied down to the net worth. Say, <$100K, none. >$500K, full. Some percentage at (several points) in between. $500K might be higher, dunno.

Or maybe it'd actually work to make it so that a person isn't charged a LVT on a land which is both a) owned by them, b) their primary residence. I'm not sure how enforcible is b), so maybe even "1 location of their own choosing". Where 'location' is restricted in various ways to fit only actual homeowners and not someone who owns a square kilometer of land or sth.

But it doesn't necessarily solve the problem of a family living in one place but one member just gave out property rights amongst them. Or a (criminal) landowner making an informal deal with some homeless people and giving them the property rights (enforced in ...criminal... ways)

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" What prevents higher-level landlords, etc, and all the resultant garbage just happening at a higher level - thus making everyone the milch cow of the state instead of Ms. Nguyen?"

Nothing. The rents would still gobble up the value like they do now. Other than removing the speculation component from the equation - which doesn't work even if LVT is cautious, say, targeting 50% - you're paying indefinitely a huge sum of money _hoping_ land value will rapidly increase. Soon.

If you model 'the government' to which taxes flow as a third party, not a 'society' - then typical reaction is "government is stealing from these people, why are you supporting taking from them, why is their wealth a concern at all?". But that perspective reduces to nonsense given that government has power to take anything. So modelling it as a third-party enemy is pointless. All useful conversation needs to happen in the frame of "should WE tax it?".

If we approach it from that frame, it's the question of moving current system, with its sources of the budget -- to another one. Right now we tax various stuff, it goes into the budget. What if we do the LVT? Now all of the rent goes to the budget. Presumably it'd exceed income taxes. We _could_ drop them. Or not - it's a completely different question.

Assume for a second we move 50 years into the future. Now ~all owners of the land just inherited it. Should society's wealth really flow to them. What are the incentives? Why tax income, just to preserve their - ultimately based solely on status quo - property rights.

If we make "have a certain national budget" an invariant, why would we want to depress economic growth by _not_ shifting tax burden to the unavoidable sink - which extracts massive amounts of value in ways completely independent from the owner merit?

Rents can't be avoided if land is 'free'. If it's communal, you can't use it to build fixed structures on it - otherwise they're effectively not yours. If it's managed by the command economy.... well, it's just bad at allocating it properly. LVT seems like a sanest idea yet. Land is still allocated by market forces, but wealth isn't gobbled up by the - ultimately - feudal lords.

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Also - recently I sort-of came up with a similar thing without hearing about LVT but couldn't figure out how to deal with common ownership of land while letting people actually... live. Now that I think of it, separating structure-value (improvement) from the land seems definitively doable to some extent. Details would be iffy, but suppose someone owns a piece of land with skyscraper plopped up on it.

All that is necessary to do is calculating the cost of building said skycraper - building the building - on a nearby, empty piece of government-owned land. Add some safety margin. Look into the documentation of an actual skyscraper.

Determining value of land seems a bit harder, but it could involve looking into the transactions of renters, for example. Not like state doesn't track renters and landlords.

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AFAIK separating land ownership from structure-value ownership is already not that uncommon ?

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The value of the land is the market price for the property minus the cost to recreate the building and other improvements.

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The issue of the commons that you raise might actually have some very interesting implications. If the government now has a more direct financial stake in the wellbeing of the land then policing negative externalities becomes a way higher priority. If a company dumps toxic waste in a river and spoils the adjacent farmland, it is destroying the revenue base of the government.

Climate change is set to reduce a whole lot of land value and the resulting revenue projections in a hypothetical LVT state would align its priorities with mitigating it.

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Anchor links (to appendices) are once again broken, linking to a different page entirely. Please replace them with relative links. (Or to this same page, which should work, although relative is of course better.)

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Just a really great article!

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Best mind-shifting thing I’ve read in a while. Thanks for the great write-up.

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While I find Georgism tempting, my problem with it is that, essentially, exclusion of rival uses for land is an externality, thus LVT is a Pigouvian tax, and "Coase plus Pigou is too much of a good thing" (http://www.daviddfriedman.com/Laws_Order_draft/laws_order_ch_4.htm). The issue, as I see it, is not that land is enclosed, but that that enclosure was accomplished by force (as in TFA's Henry VIII example) meaning that the market never had a chance to compensate the victims.

Whereas in a Friedmanite ancap utopia, I only recognise your title to some land because my protection agency has made a contract with your protection agency which includes some kind of land registry. Which *maybe* means that if an LVT works as well as advertised, then one would get written into those contracts, on a bilateral basis? This went in an unexpected direction...

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>...exclusion of rival uses for land is an externality...

No, it's opportunity cost; distinct concepts.

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It's both. From the perspective of society as a whole, it's an opportunity cost; but from the perspective of the individual using the land, the cost is borne by the other people who wanted to use it, which means it's an externality. (I mean, yes there's also the internal opportunity cost of the different potential uses a single person might have for that land, but precisely because that's not an externality it doesn't pose any problems of political economy.)

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Great review! So what are some good arguments against Georgism? The link "If the Land Tax Is Such A Good Idea, Why Isn’t It Being Implemented?" doesn't really answer the question IMO, it reads more like a guide for how to argue for Georgism at the local level. Why aren't land taxes common and popular?

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they were *extremely* popular while george was alive and roughly up until 40-years after. but the political structures at that time in countries like the UK where Churchill supported a 'People's budget' funded by a LVT included landowners in explicit power - the house of lords! Who could strike down LVTs. Georgism as a philosophy also lives in a weird space where it doesn't have as many punchy boogeymen as marxists, so it was out-competed by the left.

Georgist ideas were very influential on Sun Yat-Sen and wolf ladejinsky, who then impacted asian politics with some real-world tests on some of these principles.

In america, half of FDR's cabinet were georgists, but the LVT movement already 'failed', outcompeted by the income tax movement as the primary new funding mechanism. They tried to 'spread the manure' by encouraging suburbanization, which for a time worked as 'new land' to help laborers. But eventually, as pikkety points out, the bill comes due, and rents started picking up again, and ofc with the 07 crisis, we started building heaping mounds of speculation on land.

I would say the idea is once again gaining popularity. Georgists insist that the discipline of economics intentionally and systemically shut out the 3-factor model of production, but I think it was more stupidity than malice - suburbanization gobbled up the effects of land rents and things seemed to be going well for a few key decades, and marxism gobbled up the idea of political activism in the economics profession, it wasn't 'cool' to be a georgist after he died in most of the world.

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Marxism doesn't have "punchy boogeymen", it has a completely rational and sensible analysis.

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Can't it be both?

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I don't think laying out the problems of society in a rational and very detailed manner should count as a "boogeyman". Marxist writings are very incisive.

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I think you might be conflating Marxism, the economic analysis lens, and Marxism as it exists as a political tribe with political enemies.

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As a political tribe the Marxists are correct and pick their political enemies wisely.

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Oh god, here we go...

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Hey, at least in *this* discussion Marx is actually relevant !

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The pragmatic answer is because owners of land are politically and economically extremely influential, so their preferences take precedence over the common good

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It seems like at least in built-out suburbia where houses have similar values, property taxes sufficiently approximate land taxes already, other than a few odd vacant lots, so turning it into a proper land tax would make little difference? Very high property taxes tend to be unpopular for the usual reasons. Saying "oh, it's a land tax now" isn't going to make higher property taxes popular, and neither is saying "plus, the point of this is to crash real estate prices."

Also, the main barrier to change is now zoning laws. Fixing this might allow single-family houses to be replaced by duplexes, triplexes, and so on, which would be a very good thing and some loosening up is happening already. But it's not clear we need higher property taxes to force the issue by getting a bunch of home owners to sell because the property tax is too damn high.

The spirit of land taxes might be preserved by not assessing new duplexes, apartment buildings, and so on at a higher rate than a regular house? Sort of a YIMBY discount. This won't appeal to people who want to stick it to the landlords, though. And, possibly there could be a gradual adjustment leaving property taxes at around the same rate on average for existing homeowners, but technically based on land value.

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I'm still having trouble picturing how a land value tax is supposed to work.

If someone just doesn't pay, do you seize the land? That's how property taxes work. But if you seize the land and not the buildings on it, what happens? Or, if you don't seize the land, how do you collect?

If the tax exceeds what anyone reasonably expects to collect in rent or use-value, can they renounce ownership? What happens to the land then? Or does it become a hot-potato?

Is the tax based on the rent the land does receive? The rent it could receive? The rent, minus that part which is secretly the super's wages? The sales price? All these things seem gamable.

If an owner-occupier can defer the tax until sale or death, does this include a corporation? Because they can defer indefinitely, or be bankrupt when the time finally comes. For that matter, do we expect individuals to be able to pay when the tax finally comes due?

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No need to be complicated here I think. Its just a tax like any other from an enforcement perspective.

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There is a need to be complicated. How does the state collect the tax, and what happens if someone doesn't pay?

If there are no consequences to not paying, then why pay?

A lot of silliness would not show up if people had to consider how to implement the ideas they come up with.

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The same way that property taxes are levied currently. The state sends you a bill; if you don't pay it, the consequence is that the state seizes it to pay your bill.

A private analogue of this is unpaid mortgages being seized by the bank via foreclosure. If you can't pay your monthly mortgage payment, you are forced to sell the property to someone who can.

I agree that in the edge case, the tax rate is so high that the expected value of the land is negative (no valuable non-taxed improvements, tax rate set incorrectly), and no one will buy it. Then you may need a mechanism to renounce ownership short of losing all your other assets via bankruptcy. This is why an 85% tax rate rather than 100% is suggested, but there's also a clear feedback mechanism where if the tax rate is inappropriate, everyone renounces/declares bankruptcy, and the locality recalibrates their tax rate.

But the point here is that this is a fundamental recalibration of land ownership as valuable only in so far as you have a productive outlet in mind for the land, so if you aren't using the land for an appropriate amount of labor/capital production, then it *should* be negative value (think depreciating/expensive-to-upkeep car, not appreciating urban plot).

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But the land is "common", so it can't be seized. The only thing the state could seize would be any improvements - which apparently George is against.

So I'm really not sure how this would work.

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The land isn't truly collectivized, it's still owned by a person -- the state is instead taxing 100% of the land-based rent. The point is to make owning raw land unattractive from a speculation/rent-seeking perspective, it is still valuable from a "Having a place to invest capital/labor" perspective.

The state could seize it from that person, then resell it to an entrepreneur who is willing to pay the tax rate in order to develop the land and profit from the improvements/labor they put in.

The state in this case would also be seizing any improvements on the land, but if they were valuable enough to matter, the owner could sell out to escape the tax burden instead of being seized (as gentrified residential-neighborhood owners currently might do when property taxes increase).

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No, there really is <B>no</B> need whatsoever to be complicated.

What happens when you owe the government money for any other reason? It makes you pay the debt, one way or another.

That Georgism does not do <i>general</i> expropriation of improvements like Marxist collectivization doesn't mean it prohibits ordinary means of debt collection. Ordinary debt collection includes liens, seizures of assets, and garnishment of wages.

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To add to this: how does the government collect if someone refuses to pay taxes on their labor income? Confiscate that person's labor??

One presumes there is a currently existing solution to this; you suggested some means. Using those means seems like the obvious idea to me.

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The review mentioned that we already assess both the underlying value of the land as well as the value of improvements. This would be a tax based on the underlying value only. It's not the value of rent obtained, but for a well functioning assessment system, it would be pretty close to the value of the land without improvements if we were taxing 100%. Also as mentioned, many Georgists apparently say 85% would be a better number. So if the land's value, absent improvements, is able to extract $X in rent, the tax would be $X*0.85. If the landlord is able to provide improvements beyond $X (meaning, beyond the base value of the land's rent value, for instance by building better housing on it), then the landlord could collect much higher rent and make a tidy profit above the taxes.

The real kicker here is that the land would have to be productively used and could not sit idle. The main effect would be to reduce or remove speculation as a portion of the cost of land. A lesser but still significant effect would be to eliminate long standing rent charges when no additional value is being added (slum lords barely maintaining an apartment building but still charging steadily increasing rents).

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>If someone just doesn't pay, do you seize the land? That's how property taxes work. But if you seize the land and not the buildings on it, what happens? Or, if you don't seize the land, how do you collect?

It doesn't have to work the way property taxes work. The assets they seize might not be the same as the assets being taxed. So maybe they would seize land and buildings together, or maybe some other asset.

Also, at least in spherical cow world, you should always have enough money to pay the tax, since what's being taxed is the money you earn above and beyond your wages and the return from your capital.

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"Also, at least in spherical cow world, you should always have enough money to pay the tax, since what's being taxed is the money you earn above and beyond your wages and the return from your capital."

This is the part that makes the least sense, at least in places with a reasonably high proportion of homeowners. In a suburban area, most landowners will own a house with a yard, which they will live in, rather than rent out. They are paying their mortgage using the wages of their own labor from somewhere else.

Do mortgages suddenly disappear in Georgist spherical cow world? Or do the middle class stop owning their houses, and everyone rents?

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You might be conflating houses with the land they are built on ?

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Yes, that's definitely the part that's hard for me to conceptualize.

I don't live in a land of slumlords with fully paid off properties, so most rentals are a part of someone's house, that they are now, or were recently, paying off in the form of a mortgage. Thus, rents are priced at something approximating a percentage of the mortgage roughly corresponding to how much house I have reserved for me, plus annualized improvements, plus whatever makes it worthwhile for the landlord to do this. So maybe my rent is $600/month (real number from outside a big city), for a duplex apartment built into someone's house. I live near some other, similar houses, and some apartment buildings.

So now the government wants to tax 100% of the land value of this house. How will they do that? One way to calculate it seems to be whatever's left over after accounting for materials and labor. The house was built 70 years ago. So the cost of the original materials and labor plus maintenance will be... annualized over those 70 years? That can't be right? Compared to the rent for an entire house? To the rent for an empty field? There are no empty fields of comparable size anyone in the town is renting.

Maybe they do an appraisal, and decide that the house is worth $200,000, and $50,000 of that value is "unimproved land." Since nobody rents unimproved land, but some people buy it, how will that value be annualized into a "rent"? 1/30 o the cost of a 30 year loan? 1/x where x is the average amount of time the land is held?

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Why do you think that nobody rents unimproved land ?

Yeah, valuation is hard and so is a whole discipline on its own, see this post by someone working in that field :

https://astralcodexten.substack.com/p/your-book-review-progress-and-poverty#comment-1761512

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Owners are their own landlords; they're implicitly paying themselves rent.

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"According to Ralph Gabriel's Course of American Democratic Thought, in New York alone 200,000 people came to see his body lying in repose, half of which had to be turned away. For context, that one crowd was roughly the size of 1% of the entire population of New York at the time."

I'm assuming this is a typographical error. Shouldn't it read "10 % of the entire population of New York at the time"?

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I can’t be the only one who read that sentence as “half of his body had to be turned away” and had to reread it a couple of times to understand he meant *the crowd* was turned away

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Lazy googling suggests New York had 2,000,000 people in 1897.

https://www.history.com/topics/us-states/new-york-city#:~:text=In%201895%2C%20residents%20of%20Queens,more%20than%202%20million%20people

Which, holy $#!+, does imply 10%! Either a typo or as I imagine, even the author of the review couldn't fathom it and assumed they'd made a mistake.

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Gonna take a wild guess that some portion of that 200,000 crowd were visiting from out of state and abroad, but still, that's absolutely huge.

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author

I've updated the post to read "10%" - if the author disagrees, they can email me at scott@slatestarcodex.com and tell me to change it back.

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The page linked in support of this claim estimates the population of the "New York Urbanized Area" in 1890 at 2,693,000 and in 1900 at 3,802,000. Taking those as lower and upper bounds for the population in 1897 would yield an estimate of ~5-7.5% for the percentage that showed up at the funeral (linear interpolation would peg it at ~6%).

Having updated the post to read 10%, you ought for consistency to update the corroborative link to one estimating the population of NY circa 1897 at ~200,000.

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I'll always be happy to read an excoriation of the British over the Famine, but the tragedy was that it wasn't *deliberately* engineered, it just crystallised out of a set of conditions that had been set up for various historical and political reasons, and that only needed one little push for the entire thing to topple. I suppose George would feel vindicated in the post-famine era in Ireland, where people learned the (wrong?) lesson and "land hunger" became a thing - if you owned your own land, you couldn't be evicted. More land = more success and security. George would say "this is my textbook example of the wrongful use of land and how you set up further poverty and misery down the line".

Okay, let's step back from Irish history for a moment.

"Okay, but won't the landlords just pass the land tax on to their tenants?

By George, no. Rent is a price, and price is governed by supply and demand. Supply of land is fixed, so land value tax has no effect on supply. What about demand? Except in cases where it causes the economy to boom (a good thing), land value tax won't increase land value – what it always does, however, is reduce the demand for land by speculators. If it costs nothing to hold on to land, of course I'm going to want to grab some and HODL. If the rent I could hope to gain is taxed away, I won't bother."

Except that (a) if it's not profitable to charge high rents, I'll just hold on to my land. If it's not worth the while of speculators to pay me an inflated value for it, it's not worth me doing anything with it. Even renting it out, because you'll tax me on the value of the land and the rent will go to paying that, so I lose nothing even if I gain nothing by letting it lie idle for weeds to grow on. Indeed, if I manage things correctly, I may even be able to offset my tax liability against it as a loss! (b) land is valuable in proportion to demand. Large English estates often went under due to being "land rich, cash poor" and the shift in generation of income from 'rental income' to 'returns on investment' in the 19th century was driven by this (c) landlords will *always* find a way to pass on taxes to the tenants.

Let me tell you about a deliberate little fiddle of a rent scheme that everyone, including the government, winks at. HAP http://hap.ie/ is a new scheme that came in a few years ago to replace the former rent subsidy schemes in operation. At the time, still in the throes of the aftermath of the economic collapse, many landlords were willing and indeed glad to take on tenants who were in receipt of rent subsidies. However, as the economy improved and rents began to rise to the market rate, landlords were now reluctant to take those tenants as they could only afford a certain fixed rent. They preferred to go for tenants that they could charge full whack.

What to do? You had a problem of people waiting for social housing, who could not by themselves afford private rented accommodation, and thus a resulting homelessness problem. On the other hand, you're paying out taxpayers' money. If the rental allowance is *too* generous, this will lead to rent hikes because landlords *will* charge up to the limit. You as the government are caught between the rock of paying more and more in subsidies as landlords up the rent - which makes the voters angry - and the hard place of increasing homelessness - which makes a different sub-set of voters angry.

So, despite the fact that this is not supposed to happen, prospective tenants were given "nod and a wink" advice. When signing the rental agreement, the landlord would put down the notional value of rent charged - whatever the amount of the allowance was. Then the tenants would pay, out of pocket, a top up on that so the landlord was getting as near to market rate as possible. So the scheme to help the low-paid and those on social welfare avoid having to pay most of their money on rent ended up with... the low-paid and those on social welfare still having to pay most of their money on rent.

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My point about land value is that George is right in one way, and wrong in another. It's only worthwhile for speculators to hold onto that land until they get higher prices, in his example of the village that will get the railway in ten years time, *because* demand will boom with increasing opportunity, increasing trade, increasing employment. It's not worth the while of very many people to buy that cheap land and set up a business there if there is no local demand and no convenient means to ship their goods to market. They probably won't build housing either as the influx of population for the thriving town hasn't happened yet, so there is no demand.

So it makes more sense, if you have money and want to maximise your return on it, to buy now while the land is cheap and hold on to it in the expectation of the boom in value. He can certainly make a *moral* argument for why this is undesirable behaviour, but I don't see an *economic* one. Setting up a factory on the patch of land that will probably fail due to lack of outlets is wasting your money. Building houses that lack tenants is a waste of money. Maybe you can farm it, though if we're talking land in and around a village, that's probably not effective.

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I've just skimmed your post but I feel you misunderstand, that the proposed tax is not only on the current rent. but it is tax on theoretical rent that can be extracted which again theoretically equal to the value gain by just holding the land [I am not sure how he propose to assess that]. if you have rental income it would be deducted to that. if you don't have rental income it would keep accumulating until you sold the land and realize your gain at which point the gov would collect the accumulated tax. this way owner occupy or inheritor would not have to pay the tax unless they sell the land

it is suggested that improvement [house, trees] would not be taxed but I don't understand how that would be enforced.

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"but it is tax on theoretical rent that can be extracted"

Yeah, these are the kind of tricky little details that, should a Georgist land tax ever get passed, everyone is going to loophole the *hell* out of.

For example, in the case of Carl from "Up", his land tax would be based on where he's living. Formerly, this was in a residential area, so whatever the average value of houses in that area would be a basis for the tax on the land he occupies, let's say $300,000. He's not getting any rent on it because he owns the house and lives in it. Now, however, all the other houses have gone. This is now high-value development land, and the tax rate goes up accordingly. *Theoretically*, Carl can sell his plot for $1 million because it's the last plot that the developers need so they can go ahead. *Now* Carl has to pay land tax based on a value of $1 million. A retired man on a fixed income probably *would* have no choice but to sell his house, whatever George says about "no compulsory sale or purchase".

As to land tax for rental properties - suppose the property is in an area that is now gentrifying? Properties now become more valuable, land tax goes up accordingly. Landlord of rental property - be it a house or block of flats - is going to pass that on in rent increases to the tenants, let's be real here. Maybe he'll even sell the property as it is worth more now than any rent he is currently getting, in which case, good luck with finding new housing former tenants.

Or maybe the value of the tax will be pegged to the value of the property. This is a huge incentive not to maintain and upkeep it or add value in any way. "But that means low rents for the landlord?" Oh, my sweet summer child. Perhaps. But as long as the landlord can juggle "rent that I can charge for my slum apartment is just enough more than the land tax", they'll do it. And again, any tenants that don't like it can lump it and go trek twenty miles outside the city to find someplace to live that they can afford and is in better condition. Oh, you can't get public transport to your job from twenty miles outside the city? Well then, guess you have to put up with living in a slum apartment - after all, beggars can't be choosers.

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I just want to make clear that I just want to add a minor correction to your post above. I do not understand the idea enough to say it is good or bad. I am just trying to steelman it for you.

now to derail the thread completely:

again Carl would not have to pay any tax unless he start renting it out or sell the land, as long as it is not used for rent extracting purpose [by actually renting or holding to push price up to sell] the tax remains theoretical [i.e. not collected].

I believe that the book addressed it as follow:

renter rent place A because it gives 10 ultis more than place B only on the land [assuming capital like the actual house/ apartment/ trees are simplified elsewhere], landlord extract 9.5 from renter. giving only 0.5 actual ultis to renter.

Gov, therefore, should tax the land from the landlord 9 ultis then redistribute to both now renter has 5 ultis [0.5+4.5]. landlord has 5 ultis [9.5-9+4.5]. Land lord can not raise the ultis extraction anymore else renter would just leave for place B.

again I am also confused as to how the 9 ultis would be calculated to tax, but if I am reading correctly, this should be the broad idea.

I was under the impression that the book proposed that land tax would replace tax on the house/appartment therefore incentivize house/apartment investment.

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> again Carl would not have to pay any tax unless he start renting it out or sell the land,

That's not how land value tax works, it applies if you improve and rent out, or if you leave as an empty field, or if you live there or if you build a factory. The same amount in all cases. Clearly if you own the land, you are forced to "make use" of it and gain value of at leave the LVT, or else you'll need to sell.

That's the point.

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"Landlord of rental property - be it a house or block of flats - is going to pass that on in rent increases to the tenants, let's be real here"

I think everything hinges on this. George asserts this won't happen, as do a lot of modern economists. I guess the real thing to do here is look for examples of LVT applied in practice and see if it holds up.

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That’s the point I don’t understand. Each slum lord would be taxed the value of his rents (or 0.85 of it, say). Wouldn’t they all just raise their rents? The tenants have nowhere to go because every slum lord is doing this. So they either pay or become homeless.

If the Land Tax is converted to a universal basic income, then maybe the tenants will have more money, but it’ll go back to their landlord, wouldn’t it?

I guess what I’m asking is: What is the mechanism by which a LT eliminates slums? I think I get that it should happen, but I don’t see how.

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The slum lords have to pay the LVT whether they have tenants or not. If they raise rents above what tenants are willing/able to pay, they lose money.

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Actually, no, landlords cannot just pass on the land value tax to tenants. Landlords get what tenants can pay, not what landlords think they need.

Carl from "Up" could defer the tax until he dies, at which point it would be taken from the sale price of the house and land.

The tax will never go up with improvements to the property, as it is a tax on land values _alone_ and not improvements, ever. So the landlord can freely improve the building and charge more rent for that with no penalty.

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This would seem to dovetail magnificently with old school Space Libertarianism, and the allure of the Endless Frontier.

On the desolate icy expanses of Callisto and Pluto, and especially home on Lagrange, where the only land is locked up in cylinder habitats and is vacuum is free, virtually all of the value of land will have to come from capital.

Until some wiseguy buys up the rights to all the asteroids and starts speculating on rocks in the Kuiper Belt...

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"George notes that the mass die-off of the Black Death in England in the 1300's significantly reduced the productivity of the individual laborer, and yet wages went up. That's because the decreased population also caused a massive drop in competition for land, in turn causing rents to plummet. (For more detail on this read about the Peasants' revolt, also known as Wat Tyler's rebellion).

George says the opposite happened during the reign of Henry VIII, who seized the lands of the church and those held in common by the peasants, and handed them out to newly minted aristocrats, which was followed by suppressed wages."

Yeah but it wasn't just "after the Black Death, land was cheap". Before, if there were three jobs for ploughmen going and you had ten peasants, then you can get away with paying a groat and a kick in the pants to your prospective employees. After the Black Death, if there are three jobs for ploughmen but also four jobs for blacksmiths, five jobs for millers, and six jobs for gravediggers (since the previous holders of these positions all took sick and died), and you have ten peasants, then you have to offer more than a groat and a kick in the pants. Maybe you have to go as high as three groats and no kicks to get a ploughman. Particularly if you took advantage of the low rents to add on twenty acres to your farm, now you *really* need ploughmen to make this profitable. Land can be zero to rent but it does you no good if all the peasants who would have worked it keeled over dead from the plague.

You've mentioned the Famine, but does George say anything about the Highland Clearances, where the value of land now lay in sheep-rearing rather than having tenantry on it?

"In the first phase, clearance resulted from agricultural improvement, driven by the need for landlords to increase their income (many landlords had crippling debts, with bankruptcy playing a large part in the history). This involved the enclosure of the open fields managed on the run rig system and the shared grazing. Especially in the North and West of the region, these were usually replaced with large-scale pastoral farms stocked with sheep, on which much higher rents were paid, with the displaced tenants getting alternative tenancies in newly created crofting communities, where they were expected to be employed in industries such as fishing, quarrying or the kelp industry. The reduction in status from farmer to crofter was one of the causes of resentment from these changes.

The second phase (c.1815–20 to 1850s) involved overcrowded crofting communities from the first phase that had lost the means to support themselves, through famine and/or collapse of industries that they had relied on (such as the kelp trade), as well as continuing population growth. This is when "assisted passages" were common, when landowners paid the fares for their tenants to emigrate. Tenants who were selected for this had, in practical terms, little choice but to emigrate. The Highland Potato Famine struck towards the end of this period, giving greater urgency to the process."

Going back to the Famine, the effects would have been mitigated if the landless labourers, who relied on the potato crop as their main food source, could have been absorbed into industrialised towns and cities as in England during the period of agricultural collapse post-repeal of the Corn Laws. But again, for various reasons, Irish industry had been deliberately crippled in order not to be competitor with British industries and to keep Ireland open as a market and as a producer of agricultural goods to feed Britain.

The appeal of "One Weird Trick" - in this case, the introduction of a land tax - to solve tangled problems is a perennial temptation to the human race, but simple answers generally don't work that well for complex problems.

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> Yeah but it wasn't just "after the Black Death, land was cheap". Before, if there were three jobs for ploughmen going and you had ten peasants, then you can get away with paying a groat and a kick in the pants to your prospective employees.

From my own understanding of P&P, and this review, George might be agreeing with you! You see, he is asserting that it is the total monopolization of land that drives laborers to compete with one another. In a world where land & natural resources aren't gatekept at the price of rent, they wouldn't have to bid against each other for labor -- the would just do whatever productive activity they wanted. We're so used to a world in which laborers "supply" themselves to "capital" for employment, that we take a simple # of laborers / # of paid jobs = price of labor formula for granted, but it's only "Hey I own the land, what will you agree to pay in rent for the privilege of working/living on it?". This is how labor productivity can skyrocket without laborers seeing any of the benefits.

So what I think George says about the black death is not "Well land is cheap now" but that it temporarily broke the back of land monopoly, and so labor didn't have to compete with itself and bid itself down to nothing.

RE: Highland clearances -- here's a full text of the book, CTRL+F didn't turn it up, but he might have mentioned it in another work?

https://oll.libertyfund.org/title/george-progress-and-poverty

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