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Letter from a Young Distributist: Georgism and Distributism

progressandpoverty.substack.com

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Re: Letter from a Young Distributist: Georgism and Distributism

#101

Post by anamax »

colinmhayes wrote: post #98
anamax wrote: post #93

Earlier quoted context omitted.

A shopping center without parking is almost always less valuable than one with parking. Yet, Georgists think that a shopping center without parking, one with parking, and a parking lot should all be taxed the same.

Taxing people for doing good things disincentivizes people from doing good things. Taxes shouldn't be a punishment for being successful. Georgists think real estate should be taxes based off the unimproved value of the land, what the owners do with the land is up to them, but if they don't use it well their taxes will put them underwater and someone else will make better use of it.

My point is that parking lots can easily be the best use.

Re: Letter from a Young Distributist: Georgism and Distributism

#102

Post by skybrian »

bombcar wrote: post #91
skybrian wrote: post #84

Earlier quoted context omitted.

If people move out of bigger cities to rural areas, why isn't that increasing sprawl? (That is, there is more low-density development in those places.) To some extent this already happening. Many people moved out of the city during the pandemic. The people in desirable rural areas aren't necessarily happy about it. They are often upset about all the outsiders with more money moving in. They probably wouldn't be very…

The theory goes that as those new rural communities develop the land value will begin to increase - which will in turn encourage densification to keep up. We see this historically in frontier towns that had absolutely no limits on sprawl (as land on the outskirts was available to anyone willing to stead it) but still had city centers develop and usually to the construction limits of the time.

"Encourage densification" is kind of bloodless, abstract language.

How does this mechanism work in concrete terms? My understanding is that Georgism advocates raising taxes on people with property in desirable locations. They decide they can't afford the taxes, so they sell to a developer, who tears down the house and builds a bigger building.

Another name for this process is "gentrification."

The difference is that with the way gentrification works currently, the developer pays the previous property owner lots of money, which isn't so bad. With Georgism, the previous property owner doesn't get anything, because the property tax is so high that the land isn't worth anything. It's similar to being a tenant in a rapidly gentrifying area where rents go up but there's no upside for you.

I guess if you're pro-density and don't own property, that might seem appealing, but this mechanism seems likely to be very unappealing to home owners.

Re: Letter from a Young Distributist: Georgism and Distributism

#103

Post by colinmhayes »

anamax wrote: post #101
colinmhayes wrote: post #98

Earlier quoted context omitted.

Taxing people for doing good things disincentivizes people from doing good things. Taxes shouldn't be a punishment for being successful. Georgists think real estate should be taxes based off the unimproved value of the land, what the owners do with the land is up to them, but if they don't use it well their taxes will put them underwater and someone else will make better use of it.

My point is that parking lots can easily be the best use.

If parking lots are the best use the LVT will be low enough to be negligible. If the LVT is causing the owner to not be able to afford parking lots the area needs more buildings and less parking lots, even if that's just a parking structure.

Re: Letter from a Young Distributist: Georgism and Distributism

#104

Post by geocon »

dragonwriter wrote: post #74
geocon wrote: post #28

Earlier quoted context omitted.

Well, while Georgism is most famous for advocating for land value taxation the LVT itself is not the only Georgist tax. All forms of economic land, including such things as natural resources and intellectual property, also generate economic rents and are candidates for taxation. Furthermore, cutting taxes on labor and capital increases the value of land significantly, so much of the revenue "lost" by cutting income t…

> All forms of economic land, including such things as natural resources and intellectual property, also generate economic rents Natural resources are consumed inputs and don't generate rents (extraction rights, which are a subset of property rights in land, do); intellectual property isn't land in the usual economic sense (it is not naturally occuring, so not land; it is durable and created, and therefore capital in…

Well yes, natural resources are dealt with under severance taxes on extraction. By intellectual property rents I mean monopoly rents from government enforced IP law.

And yes, neoclassical economics classes land under capital and that is a fundamental disagreement of Georgist economists with neoclassical economists.

Re: Letter from a Young Distributist: Georgism and Distributism

#105

Post by geocon »

skybrian wrote: post #102
bombcar wrote: post #91

Earlier quoted context omitted.

The theory goes that as those new rural communities develop the land value will begin to increase - which will in turn encourage densification to keep up. We see this historically in frontier towns that had absolutely no limits on sprawl (as land on the outskirts was available to anyone willing to stead it) but still had city centers develop and usually to the construction limits of the time.

"Encourage densification" is kind of bloodless, abstract language. How does this mechanism work in concrete terms? My understanding is that Georgism advocates raising taxes on people with property in desirable locations. They decide they can't afford the taxes, so they sell to a developer, who tears down the house and builds a bigger building. Another name for this process is "gentrification." The difference is that…

Gentrification is a boogeyman- all gentrification means is that land has become more desirable to live on (that's why its value increases). That's good. We want to improve quality of life. If you follow the logic of gentrification to its end, we should be destroying improvements in vulnerable locations in order to keep them affordable. It is the rationality of the slumlord.

Re: Letter from a Young Distributist: Georgism and Distributism

#106

Post by snidane »

skybrian wrote: post #84
brightly-salty wrote: post #82

Earlier quoted context omitted.

Yes, I agree with you on what will happen in big cities where the land value is already high. The idea is more that in the Montana's and the Kansas's - where they already give land away free to people who promise to build improvements - there will be even more of an economic incentive to move to underdeveloped states, giving more families economic opportunities, which will then cause network effects as more families…

If people move out of bigger cities to rural areas, why isn't that increasing sprawl? (That is, there is more low-density development in those places.) To some extent this already happening. Many people moved out of the city during the pandemic. The people in desirable rural areas aren't necessarily happy about it. They are often upset about all the outsiders with more money moving in. They probably wouldn't be very…

Urban sprawl is an expansion of a single city as the land in its center rises. It applies to both small and large cities and it doesn't mean people moving from a larger city to a smaller one, unless the smaller city's area overlaps with commuting radius of the bigger city.

Under a georgist system there is no such thing as real estate speculation. Real estate there doesn't cost multiples of peoples' net worth and increase of land tax rate is hardly noticed because the base value of land is a number hovering close to zero. Price for land and tax rate in that system is just an allocation mechanism of geographical area to the most productive use, preventing hoarding. In other assets where hoarding is risky, since inventory can expire (groceries) or go bust (stocks, bonds), speculation by holding inventory is valuable because it provides liquidity to other market participants. Speculation in land is pointless The land is always there and will not run away. The speculators are just pocketing private taxes that otherwise government could've collected and reallocated elsewhere.

Re: Letter from a Young Distributist: Georgism and Distributism

#107

Post by pyradius »

TimPC wrote: post #77
pyradius wrote: post #67

Earlier quoted context omitted.

These are not show-stoppers, nor are they something that Georgists have failed to consider. "Another basis on which it is argued that greatly increased taxes on land are infeasible is that if land values were to fall precipitously, the financial system would collapse. It is true that many properties have mortgages that would exceed the value of the property if land taxes were increased significantly. This makes it ne…

Tideman's proposal is for the costs to the system to be absorbed by the current holders of property. As a first approximation, people would continue to hold title to the land to which they now hold title, and would continue to owe whatever money they now owe. But compensation could be sought on a case-by-case basis, by individuals who stood to bear the costs of the moral accident disproportionately and did not have s…

The problem isn’t vastly understated, and the retirees have largely been subsidized by the current system, they aren’t losing anything. That said, I’m just as favorable to a writedown of the asset and liability. The banks can now invest in productive enterprise.

Fred Foldvary also discusses the transition and who would ultimately need compensation in https://www.progress.org/articles/the-transition-to-land-val...

I see no evidence that it would be difficult in the slightest to disentangle such things but I’m willing to be convinced otherwise by those who have done an actual analysis of the issue.

Of course, as Foldvary notes, “First of all, compensation for the loss of land value is not morally required. The typical landowner has been receiving an implicit subsidy from the government, as public goods generate higher rent and land value. One could argue that justice requires the title holder to pay back the past subsidies.”

What you see as a problem is not an ethical or economic problem merely a potentially political problem.

Re: Letter from a Young Distributist: Georgism and Distributism

#108

Post by Thorentis »

skybrian wrote: post #7

It seems like the US already has widespread ownership of property? Home ownership isn't exactly rare. NIMBYism is a consequence of widespread ownership; it's small land owners exercising political power. In the cities, converting apartment buildings to condos is another form of this. Of course, many people believe this is inadequate and we need to go further, with low-income housing and the like. But it's been a long…

Distributism is primarily about widespread ownership of the means of production, and does not necessarily include home ownership, though this should be a logical down stream effect.

One early way in which this could be easily done - and which tech companies are leading the way in - is to normalise the idea of workers in a company being given company equity. While it is still a long way off from actually owning the means of production, it should become normal and expected for full time salaried employees to be given a share of ownership in the company. Otherwise, full time employees are simply contractors with extra perks. Having a stake in the company you work for means that companies are actually controlled and owned by the workers, not controlled and owned by the highest bidding investors.

Re: Letter from a Young Distributist: Georgism and Distributism

#109

Post by pyradius »

TimPC wrote: post #71
pyradius wrote: post #60

Earlier quoted context omitted.

Yep the suburbs are a money-loser for governments as noted in https://www.youtube.com/watch?v=7Nw6qyyrTeI

Suburbs are a money-loser for governments if you allocate income tax revenue at the location of the job. That isn't really a fair allocation though, as suburbs are part of the reason professionals take jobs in big cities. If you either average the income tax revenue between where someone lives and where someone works or put it entirely where someone lives suburbs easily pay for themselves.

Alas there is no relationship between an income tax and personal consumption of spatial services. There is absolutely no coherent reason to do as you suggest, and every reason for the land to pay the cost of delivering those services, along with the rest of the rental value of land.

Re: Letter from a Young Distributist: Georgism and Distributism

#110

Post by imtringued »

brightly-salty wrote: post #80
skybrian wrote: post #79

Earlier quoted context omitted.

I'm not sure what you mean by "recreating the frontier?" Are you talking about cities, suburbs, or rural areas? Changing property tax rates doesn't change cities or suburbs into something else, at least not at first. All the property is still owned by the same people. People still live in the same houses.

Perhaps I'm explaining it poorly, that's entirely possible. The frontier is where land value is zero, at the margin of production. It is possible to get value out of the land, but only with hard work. Currently this land may be held without using it for production, but it largely doesn't exist. This is because the lack of a land value tax incentivizes landholders to own all land for the purpose of speculation rather…

I am always confused when the idea is that the price of land should be 0. Yes I agree it should be low but let's be pragmatic. It would be enough if the land price is a fraction of a yearly salary. Say $20000.
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