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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

#111

Post by imtringued »

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…

>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.

You have a 500m^2 plot of land. This plot pays $50k land value taxes. If one person lives on the land that person pays the full tax. If 10 people live on the property they each pay $5k taxes per year. If 50 live there then the tax is $1k.

Property taxes scale with the building so housing more people means higher taxes. That is being avoided by only taxing the land.

Alternatively, people hate taxes, they want to avoid paying taxes. If you want to avoid land value taxes, the only way to do that is to use less land more efficiently.

Re: Letter from a Young Distributist: Georgism and Distributism

#112

Post by imtringued »

geocon wrote: post #105
skybrian wrote: post #102

Earlier quoted context omitted.

"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.

People think gentrification is "evil" but they don't seem to think why people leave their old communities to begin with. By stopping gentrification you are unknowingly abandoning far more people by forcing them to stay in a bad area.

Gentrification is primarily a problem with the current system. I can easily imagine an economic system that decentralizes economic activity akin to Distributism which will make it easier to rebuild and improve run down communities without having to move somewhere else.

Re: Letter from a Young Distributist: Georgism and Distributism

#113

Post by imtringued »

TimPC wrote: post #4

Georgism and Distributism is interesting but short of a plan to actually transition the tax infrastructure in that direction this article reduces to an unactionable history lesson. Still worth reading, but not powerful enough for those who want economic change. I'd argue that transitioning is an extremely hard problem. The Georgist system taxes property at extreme rates. In particular, the taxes on property ownership…

It's a tough nut to crack. It only worked in Singapore. In my opinion the "homeopathic" land value tax in Baden-Württemberg is the only thing in recent history that was adopted without much violence or urgency.

The German property tax is very low, well under $1k for the vast majority of the country so the switch isn't that big of a deal but it also won't have much of an effect on anything other than abandoned buildings/land in city centers.

You gotta start small.

Re: Letter from a Young Distributist: Georgism and Distributism

#114

Post by imtringued »

clairity wrote: post #45
geocon wrote: post #36

Earlier quoted context omitted.

One of the nice things about LVT is that it aligns those incentives though, since what increases tax revenue the most is investment in public infrastructure and services. It's the Henry George Theorem at work: https://en.wikipedia.org/wiki/Henry_George_theorem

that's assuming politicians are compelled at least a little bit by the public good. unfortunately, our politico-economic systems have become more and more captured by moneyed interests, insulating politicians from those wider incentives. but to be fair, that's not unique to georgism. we need to solve for that problem generally.

When politicians want more money they often raise taxes because passing good policies is difficult and the relationship between their policy and tax revenue is not obvious. With a land value tax politicians have a very easy way of increasing tax revenue, do something productive.

The countless times a government has cut important services and investments to get a short term cash influx have always lead to misery. Greece ended its public healthcare for the sake of austerity and now they are further in debt. Operating a hospital should be something that is a revenue stream for the government (through land value taxes), not a burden to be distributed across people through taxes.

Re: Letter from a Young Distributist: Georgism and Distributism

#115

Post by imtringued »

smeeth wrote: post #100
hushpuppy wrote: post #62

Earlier quoted context omitted.

> 'economic rents' are not the colloquial 'rent' we pay for housing we don't own. economic rents are UNproductive, meaning simply income produced by ownership itself, rather than in the productive delivery of service (in this case, housing). LVT only seeks to tax away that unproductive part (economic rents). the productive part would include the costs of mortgage(s), insurance, utilities, upkeep, and a small profit (…

You appear to be arguing that if you spend income in a productive way then the income was productive income. That's simply incorrect, it's not how economics works. For example, if I stole $2000 from you and used it to fix houses/invest it would not magically become productive income. The comment above you is pointing out that excess income a landlord makes because people are willing to pay a premium to lease a scarce…

One of the absurd things about our modern economy (it's actually a recurring problem) is that we keep spending more and more on the same on already existing values. People complain about ever increasing debt and borrowing but most of that money isn't even being spent "into" the economy, it's just used to buy land from rich individuals.

The reason why this is not "productive", is pretty straight forward. It's unproductive because nothing is being produced. We are selling what's already there long before humans existed.

Re: Letter from a Young Distributist: Georgism and Distributism

#116

Post by skybrian »

snidane wrote: post #106
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…

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 incr…

Seems like if the increase in the tax rate is hardly noticeable then it isn't going to lower land prices very much? You'd need a hefty tax to make desirable locations not worth spending money on.

Re: Letter from a Young Distributist: Georgism and Distributism

#117

Post by imtringued »

User23 wrote: post #85
klyrs wrote: post #69

Earlier quoted context omitted.

Regardless of my vehement disagreement with GP, you're attempting an [appeal to authority]( https://en.m.wikipedia.org/wiki/Argument_from_authority ) which is utterly unconvincing.

Compounded by the fact that there are no Nobel Laureate economists. And that those supposed authorities have been teaching absolute nonsense like loanable funds. If you want to learn about the economy, the only useful option is to look to working market participants. Some rando at the fixed income desk has forgotten more about how the economy works than those pompous frauds.

Hey, I like loanable funds in a 100% reserve system with demurrage but that is not the world we live in

Re: Letter from a Young Distributist: Georgism and Distributism

#118

Post by dragonwriter »

geocon wrote: post #104
dragonwriter wrote: post #74

Earlier quoted context omitted.

> 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.

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

Perhaps, but your proposed construction (I’m not familiar enough with Georgism to know if it is the standard there) seems to be equivalent to that in equating classical categories of land and capital, but simply reversing the terminology, making durable (and thereby serving as rent-producing property) non-human factors of production, whether natural (and thus classically “land”) or created (and thus classically “capital”) all “economic land”.

Re: Letter from a Young Distributist: Georgism and Distributism

#119

Post by imtringued »

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.

That's a recipe for corruption. If a politician receives no strings attached income taxes even if those are intended to be spent to improve location and pay for infrastructure, he is sure to spend them as if they have none of those strings attached.

Re: Letter from a Young Distributist: Georgism and Distributism

#120

Post by imtringued »

anamax wrote: post #93
larsiusprime wrote: post #41

Earlier quoted context omitted.

Two things: 1) "In particular, the taxes on property ownership are supposed to capture the entire value of renting the property." Not true. Only the unimproved value of land is meant to be taxed. This amounts to a complete exemption on taxes on buildings. The current proposal that is often on the table is not to go for classical 100% Georgist LVT, but to simply collect the exact same amount of property taxes we do no…

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.

You mean Georgists think that taxes on all of those should be $0? Yes, that is the entire point of Georgism, only the land is taxed because land can be used for anything and if the land value is higher than the shopping center can afford, then it means people want something more valuable than a shopping center there.
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