WHY LIBERTARIANS SHOULD SUPPORT A LAND VALUE TAX


by D.J. Webb

Libertarians support low taxation on principle, in order to free people and the economy from the burden of the state. If the writings of Adam Smith and John Stuart Mill are anything to go by, however, there is an important exception: land taxation. Land taxation is not just a necessary evil that affords the state some revenues with which to perform the very few necessary functions of government; it is a positive good, in that it tackles monopoly and speculation, and should ensure efficient use of land. If land taxation had remained the key source of government revenue in the UK, the current economic crisis would not have taken place.

The Common Law and taxation

English Common Law is the fundamental “law of the land” in England, and by extension, in the other common-law jurisdictions founded by English settlers (Australia, America, Canada, New Zealand, etc). Parliament’s right to sit and pass laws, and the Queen’s right to approve legislation, are ultimately based in the pre-Conquest traditions of the Anglo-Saxons, where Parliament is an extension of the pre-Conquest folkmoots and Witanagemot and the current House of Windsor the heirs of the ancient Royal House of Wessex. Statutes passed to institute “income tax” and “corporation tax” and the like are a considerable overturning of the Common Law, which provided for no such exactions or impositions. Rather, the king was required to live “of his own”. The royal lands provided the king with an income, part of which subsidised his lifestyle and part of which was used to finance the Royal Court.

Beyond the king’s own income, there were feudal duties and a number of customs duties. The first record of an “income tax” was the graduated tax on certain incomes levied only twice in mediaeval times as far as I can tell, in 1435 and 1450, but these were unusual developments at the time, and the modern income tax dates back rather to the tax levied on and off since 1798. Understood correctly, in time of war or other extraordinary turmoil, Parliament could supplement the Common Law by statute to allow for the continuance of the nation: the Napoleonic war income tax can be understood in that light. But a permanent imposition of a tax not provided for in the Common Law in peacetime and in good times as well as bad amounts to a coup d’état by the political élite of this country against our Constitution.

What is different about land taxation is that it is based on the feudal duties that vassals owed to their lords in ancient times. Land in England has never been absolutely owned by the freeholder. Freehold property is property held “of the Crown” in fee simple: it is not allodial title to the land, i.e., land held without reference to any superior lord. This provided the basis for feudal duties, such as knight service, often commuted into a money rent, forming the basis for land taxation to this day.

The Crown has no general right to enquire as to our sources of income, but land title is held of the Crown, and the Crown does have the right to establish ownership of land and impose a levy on such ownership. English Common Law is based on natural relations within society, and not arbitrary decrees and statutes, and so it can be seen that the right to assess landed property for a land-related payment is merely a recognition in our law that land ownership cannot be absolute, that land anywhere in the world existed before any human society was formed, that the land that we live on forms a common social resource, and so it not genuinely “ownable” by anyone in any country, society or time period.

Land and other common social resources

Land ownership presents a conundrum to someone in the twenty-first century faced with a situation in England where the majority of land is owned by the aristocracy. How did they get it? How can they own it? In each case, if traced back to its original, you would find that land ownership had descended via a long series of purchases from land originally granted by the Crown, or has been held by virtue of such an ancient Crown grant without sale since. The original land grants made to Norman nobles could only be made in the context of English Common Law, which provided for exactions to be made by the Crown. It is clear that a common social resource—the land—a resource that naturally exists, is not the product of investment or the application of human skill and is generally not something that more can be produced of—has become monopolised by a few. This does not change the fact that land ownership can only ultimately be vested in society as a whole, as represented by the Crown, and that that land has to be the source of revenue for the upkeep of society.

The colonial societies founded by English settlers have transplanted our system of ownership overseas. Clearly, land in those countries was not originally owned by anyone in England before our conquest of those territories, and so we have been able to see, in the historical period, the process by which “ownership” of that land has been established and created. If the Crown had the right to make land grants in America, Canada and Australia, etc, it was only by virtue of its conquest of those territories, and even to this day native title to the territories remains a bitterly contested area. In fact, what we have seen in Australia and other places is merely a modern incarnation of how the Norman nobles established their rights to our common social resource—the land—nearly 1,000 years ago.

We can broaden this out to other common resources. In addition to the land, there are minerals, forest resources, fishery resources, and even the electromagnetic spectrum, all of which are valuable economic resources, but all of which are grounded in an original gift of nature. There is nothing unusual about the fact that mineral extraction rights and rights to the use of the electromagnetic spectrum are controlled by licences from the state that aim to create revenue for the Exchequer—the uses to which such revenues are put are open to much more searching questions—as ownership of these rights creates an incumbency advantage for the holder, when in fact none of these things was created by human agency in the first place.

It is right therefore that the state attempt to extract as large a proportion as possible of the economic rent derived from possession of land, minerals, forestry and fishery resources, and the electromagnetic spectrum, and land taxation should be seen in this light. Given the fact that land is a common social resource, it is doubtful whether the word “taxation” is correctly applied to a land levy. What we are talking about here is not taxation of income or profits or the restriction of economic activity, but a levy that is based on the fact that no original ownership of the common resources ever existed. The land value tax that is the subject of this article is therefore a levy or an assessment, rather than being a real tax.

Benefits of a land tax

In addition to the fact that land is a common social resource that has always been recognised by English Common Law as a source of public revenue, libertarians have always supported land assessments rather than other forms of taxation for a number of other reasons. The most important of these is that other forms of taxation impose deadweight economic losses. Income taxes and profit taxes deter economic activity—and can lead to the flight of labour and capital overseas to less greedy jurisdictions. If there were no income taxes or corporation tax, then it is undoubtedly the case that the economy would be much larger, as the take-up of investment or labour opportunities is influenced and therefore deterred by the fact that sometimes well over one-third of the economic benefit is exacted to fund the state.

Land-based taxation creates no deadweight economic losses. Because the tax does not fall on labour or capital, economic activity in a society that opted for land-based taxes would be higher than in a society that deterred investment and employment via taxes on capital and labour. Land taxes are a a a lump sum levy with a marginal tax rate of zero on economic rent, which is essentially an economic windfall. A land tax base cannot flee abroad, like labour and capital, and there is no way of using creative accounting (such as basing head offices abroad) to avoid the liability.

Much of the wealth of the country is tied up in property, and so the land value tax can raise large revenues, but its positive economic effect is also felt in that it allows for a reduction in taxes on production and consumption. Net wages increase as income taxes fall and unemployment is borne down on as employment of labour attracts a lower tax burden. Public services and infrastructure provision have a positive effect on the value of land sites that benefit from such services. This brings us to an important aspect of the land value tax: that it allows for the recapturing of the public outlay on infrastructure and services, by imposing a levy on the freeholders who have benefited therefrom in the form of higher property values. It is far superior to pay for a new London Underground line by a levy on the properties surrounding the new Tube stations—freeholders who benefit from an unexpected windfall as a result of public expenditure—than to expect all taxpayers to pay out of their incomes and profits, effectively in order to boost the property values of a few.

This brings us to a key advantage of the land value tax: its encouragement of efficient use of land and its discouragement of speculation in land. We are currently labouring with the effects of a property bubble pumped up by central banking policy errors. But the subjection of all land holdings to an annual charge, based on the unimproved value of the land, would impose higher levies on prime land sites, for example, those in central London, thus encouraging development elsewhere where land values are cheaper, with positive results in terms of regional development. Property developers would be incentivised not to hold onto large land banks without building on them, and land, as a scarce social resource, could not be hoarded or put to inefficient use without incurring regular annual levies. Furthermore, exponential increases in land values would attract higher annual levies, helping to restrain soaraway property bubbles in the same way that higher interest rates bear down on inflation; in the case of inflation, the imposition of higher interest rates depends on good central banking practice, whereas an annual land value levy based on a percentage of land values would be an automatic mechanism to ward off bubbles and speculation.

Land values would be discounted owing to the prospect of paying annual levies. In the initial period, this ought to lead to a fall in property values, although it needs to be emphasised that in the long run land values could also be enhanced, as in Hong Kong, by low income and profit taxes, creating a virtuous scenario where economic activity was not deterred by deadweight losses, and rapid economic growth still allowed freeholders to benefit from rising demand for their land. This would help to keep revenues from land value taxes high, continuing to support the few government services that are needed.

It is important to emphasise that the land value tax cannot be shifted to tenants in a way that would add to business costs. This requires some explanation, as many would argue that landlords would simply pass the annual charge onto tenants. However, classical economists, including David Ricardo, argued that rent is not a real cost of production, but merely a price determined by demand for the land, as shown by the fact that commercial rents fall in a recession. Rent does not independently affect the cost of products produced by industry, but rather amounts to the capturing of part of the value of the output created by the outlay of capital and labour by the landowners. Attempts by landowners to capture a larger part of their commercial tenants’ revenues by requiring tenants to cover all taxes and charges incurred by the landowner would, over the long run, not push up business costs, but reduce the profitability of using the land, causing tenants to go elsewhere where site valuations were lower.

This reflects the fact that landowners cannot go elsewhere—the locations of their land sites are fixed—whereas their tenants can move their businesses out of prime location sites. Excessive demand for prime land would fall, and less favoured locations, in the North of England and elsewhere, would attract more investment, with positive social repercussions. The introduction of a land value tax could also include compulsory renegotiation of rental contracts, allowing tenants to walk out of excessive rents and go elsewhere, thus forcing landowners to shoulder the burden of the land value tax and thus share the economic rent with the state.

Most proposals for a land value tax would apportion the tax between freeholders and long-term leaseholders, as long-term leaseholders have leases that are long enough to give them an interest in the value of the land and gain from an increase in land site valuations. In terms of economic theory, these freeholders and long-term leaseholders are already extracting the maximum possible rent already—this is axiomatic in a free market—indicating that over the long term, a land tax could not be passed on as a cost to tenants.

That libertarians have traditionally supported land taxation is shown by the views of Adam Smith and John Stuart Mill on the subject. Adam Smith wrote,

“Both ground-rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. Though a part of this revenue should be taken from him in order to defray the expences of the state, no discouragement will thereby be given to any sort of industry … Nothing can be more reasonable than that a fund which owes its existence to the good government of the state, should be taxed peculiarly, or that it should contribute something more than the greater part of other funds, towards the support of that government.” [Adam Smith, The Wealth of Nations, Book V, Chapter II; see http://www.econlib.org/library/Smith/smWN21.html%5D

John Stuart Mill was of a similar mind, and his comments below indicate that a land value tax is superior to stamp duty and other transactional levies, which may be avoided (by delaying sales) and which tend to obstruct the flow of land resources into the hands of the most productive:

“All taxes must be condemned which throw obstacles in the way of the sale of land, or other instruments of production. Such sales tend naturally to render the property more productive. A seller, whether moved by necessity or choice, is probably someone who is either without the means, or without the capacity, to make the most advantageous use of the property for productive purposes; while the buyer, on the other hand, is at any rate not needy, and is frequently both inclined and able to improve the property, since, as it is worth more to such a person than to any other, he is likely to offer the highest price for it. All taxes, therefore, and all difficulties and expenses, annexed to such contracts, are decidedly detrimental … All taxes on the transfer of land and property should be abolished; but as the landlords have no claim to be relieved from any reservation which the state has hitherto made in its own favour from the amount of their rent, an annual impost equivalent to the average produce of these taxes should be distributed over the land generally in the form of a land-tax. [John Stuart Mill, Principles of Political Economy with some of their Applications to Social Philosophy, Book V, Chapter V; see http://www.econlib.org/library/Mill/mlP67.html%5D

We should add here that in addition to stamp duty, conveyancing taxes on land transactions include capital gains taxes and inheritance taxes on probate transactions. Capital gains tax is a clear example of a confusion between gains produced by passive benefiting from property bubbles and gains from genuine investment in capital and labour. Real investment in industry should be encouraged, and gains from such investments (including profits on loans and stockmarket gains) should not face a capital gains tax; passive gains from property are by no means the result of an “investment”, and the land value tax would restrain soaraway gains and capture them for the public revenue.

The confusion between passive gains and gains that are the result of initiative and investment is found all the way through our current taxation system. Income tax and corporation tax are assessed on all income and profits, without attempting to break out the proportion of the earnings that relate to the three factors of production: land, labour and capital. Some income is passively gained, and some profits are passively made on the back of misguided central banking policy to promote property bubbles. By contrast, a great deal of income and profits is the result of hard work and initiative, and by obscuring the difference between the gains from land, labour and capital—three categories kept quite distinct in the analysis of the classical economists—we are unable to promote investment and hard work and deter speculation in property.

Inheritance tax would also be abolished under the proposed land value tax. In fact, at present, inheritance tax tends to be a way of trying to capture increases in land values for public revenue, but in a way that is avoidable, and in a way that leads to continual calls by landowners for the increase in their land values to be ringfenced for their estates and not be tapped to pay for their nursing home bills. Yet such increases in land values are created by social investment in infrastructure and not by personal investment.

Let us imagine the owner of a house in a northern town with a building reinstatement value of £200,000 and a market value of the property of £250,000. Let us also imagine the condition of the building is less than perfect—it is not new—and that the value of the land is £100,000, and £150,000 is the value of the ageing building. The site location value is the value of the unimproved site. A very similar house in London, also of the same condition, also with a building reinstatement value of £200,000, has a site location value of £1,850,000, with the value of the ageing building also £150,000, giving an overall property value of £2m.

Let us further imagine that the northern house has not risen in value since purchase a number of years ago, and that all other aspects (the reinstatement value, the condition, etc) remain unchanged. Upon resale at £250,000 there is no increment as a result of an increase in the site location value. Yet the same house in London, purchased at £1m before the Docklands regeneration was announced, undergoes an increase in market value—as a result of public expenditure on infrastructure in the Docklands—over the same period to £2m. The increase in the site location value is £1m. Clearly, the freeholder would try to claim this £1m increment was the result of his own “investment”, despite the fact he spent little on the house to do it up. He would like to capitalise it into his estate and leave it to his children as a legacy, even asking for his nursing home fees to be covered by the taxpayer so that this site location value increase, paid for by public investment, can be passed on as a “legacy” as a result of his “investment” to his heirs.

This is clearly fraudulent, and yet such profiteering on the back of social investment forms a large part of the “assets” of Middle England. There is a difference between a genuine investment, whether in a business or in stocks and shares, and capital gains realised from property as a result of an increase in site location values, which are not the result of the landowner’s investment. An annual site location levy would restrain such passive capital gains from property. The owner would lose nothing, as he could not expect the taxpayer to pay for the Jubilee Line and the Docklands Light Railway without recovering some of his outlay. Property owners seem to be the main beneficiaries of government policy over the long term. If we are going to deal with welfarism, we need to stop freeholder’s benefit—which is what site location value increments as a result of public expenditure amount to—this is nothing but a disguised form of social scrounging.

Consequently, land value taxation allows for a reduction in income and profit taxes, which currently restrict economic activity. It also allows for the abolition of stamp duty, capital gains taxes and inheritance taxes. This promotes the productive use of the land by not impeding property transactions. The key to this is to establish an annual land value tax on the unimproved value of land sites. This would hold property values down over the long term, allowing the young to buy properties, allowing banks to extend mortgages without a constant cycle of property boom and bust, and this would also allow more of people’s incomes to be devoted to consumption, instead of spending the majority of their incomes on taxes and mortgages to finance an economic model based on public debt and property bubbles. Genuine hard work would not be penalised as it is at present; passive profiteering would become more difficult, although some increase in land values based on strong demand in a low-tax economy could still take place, as it does in Hong Kong.

How an annual levy would work

As a common social resource, land refers to the actual site location of a piece of land. The value of a site location is entirely separate to the value of the building erected on it, which alone is the product of an individual’s entrepreneurial investment and initiative. Let us continue with our example of two properties. Both have a building reinstatement cost of £200,000. That is what it would cost to rebuild the property were it to fall down. One is located in the Docklands area of London not far from Canary Wharf, and has an estimated property value of £2,000,000, and the other is in a northern town with an estimated property value of £250,000. What is the difference between the properties? The difference is entirely the result of location. The site location values in favoured parts of London are much higher than in northern towns, and this is entirely the result of social activity. The fact that London is a large city that has good job opportunities and cultural attractions raises demand for property in London.

In fact, site valuations are often directly the result of public investment. The building of a London Underground line or other such infrastructure improvement raises the site location values of properties nearby, and by a much greater margin than the cost of the original infrastructure investment. Let us say that the value of the property in the Docklands was originally low, but once Canary Wharf had been established as a major financial centre, and once the Jubilee Line and the Docklands Light Railway had been built to that part of London, the value of the property (in our example) rose from £1m to £2m. This is not the result of the freeholder’s investment. It is a windfall that resulted entirely from public investment, paid for by many, including people who live hundreds of miles away from the area who will never visit the Docklands. It should be added that private-sector investment in shops, cinemas, gyms and cultural outlets also raises demand for property in a location, allowing freeholders nearby to benefit passively from other people’s economic activity.

Clearly, therefore, there are two components to a property value: the site location value and the the value of the building (the building reinstatement value perhaps depreciated to reflect the age and condition of the building). “Property” is an economic category that confuses these two things. Someone who invests in a property, for example, by improving the building, adding an extension or a conservatory, has indeed increased the value of the building, and can rightly expect to benefit from that. Suggestions that property values in the council tax database be adjusted by sending an army of snoopers to scout out conservatories and other improvements are therefore quite objectionable. The benefit from an investment in the building should accrue to the owner; an improvement in the site location value is not the result of the owner’s investment, and should accrue to the public and be captured via an annual levy.

Given therefore that land value taxation does not take account of improvements to the land, a valuation database should be easy to build. Conservatories and extensions become an irrelevance, and in the main all houses in the same street would face the same levy per square foot. In our example, the property in Northern England, with a land value of £100,000, could face an annual levy of 1%, or £1,000, to replace council tax, inheritance tax, stamp duty and capital gains tax. The same property in the Docklands in London, with a land value of £1.85m, would face an annual levy of £18,500. Such levies would be updated annually in line with movements in land prices.

Clearly, the political problem is that the current council tax format, which is not based on the value of unimproved sites and not designed to prevent property bubbles, imposes a much lower tax on owners of expensive properties than it does in the case of owners of low-end properties. The middle class insists on gaining from the current economic model, which still prioritises the pumping of the property market by government policy. An £18,500 levy would be high, but would price in use of a scarce social resource—land, which cannot be genuinely “owned” by anyone—and force those with cash to explore real investments instead of the tired buy-to-let supposed “investments”. Land prices in prime locations would probably ease as a result of the levy, with householders “blocking” prime land sites required to pay the annual levy, or take out a financing vehicle to cover the charge to be recovered by the financing companies from their estates after their deaths. It is clear from consideration of the furore that would result from such a policy that discussion of welfarism and benefits scrounging is quite skewed in this country: a much larger swathe of the well-to-do have benefited from a flawed economic model that has plunged the global economy into crisis, and yet they refuse to recognise the origin of their wealth, believing simply they have made wise “investments” in land locations, although unimproved land cannot be the result of an investment.

There should be no exemptions for residential property, as this would tend to defeat the purpose of the land value tax and prevent the role of the land value tax in restructuring the economy towards real investment, production and consumption. Neither should there be a graduated levy based on land use: an exemption for agricultural land would lead to distortions, including speculation in agricultural land near urban areas, and possibly attempts to rezone land. All land should pay the land value tax, with an exemption only for public land. Libertarians are already concerned about fake charities, and I would oppose any attempt to exempt charities from the land value tax, while their directors creamed off the majority of charitable donations in their salaries and pensions. Finally, land in investment portfolios should not be exempt from the land value tax either. Those who do not pay the assessment would face the docking of their bank accounts or salaries. It must be emphasised that this is not a real tax—which is an attempt by the state to defraud people of the results of their own initiative—but a levy based on the use of a resource, land—unimproved land—which cannot be the result of a person’s initiative.

Finally, a similar levy on resources that are the gift of nature would include minerals, oil, fisheries, forests and the electromagnetic spectrum. As with landholdings, the possession of the rights to any of these amounts to an incumbency advantage to those who have gained control of a common social resource. The current assessment of royalties on mining discourages the mining of low-grade ores, but a site valuation levy that took account of the depletion of resources in the form of a charge on the change in the site valuation occasioned by the extraction of resources would be an improvement on per unit or ad valorem taxes on resources.

Prospects for land taxation

We read constantly of Liberal Democrat plans for a “mansion tax”, although this is not the same as the land value tax proposal, as it is levied only on some properties, and on the whole value of the property, and not just the site location. Such a proposal is based on envy and not a constructive economic theory. Nevertheless, given our recent property bubble, interest in the land value tax proposal is growing, and the Green Party MP for Brighton, Caroline Lucas, has sponsored a private member’s bill in Parliament that would

require the Secretary of State to commission a programme of research into the merits of replacing the Council Tax and non-domestic rates in England with an annual levy on the unimproved value of all land, including transitional arrangements; to report to Parliament within 12 months of completion of the research; and for connected purposes [See http://services.parliament.uk/bills/2012-13/landvaluetax.html%5D

This bill received its first reading in Parliament on June 25; the second reading is scheduled for November 9. Nevertheless, scepticism is in order regarding the likelihood of the introduction of a land value tax, as landowners have spent centuries in England trying to get out of their land-based levies. Interestingly, a land-value tax was introduced in Parliament in 1931 by the Labour Chancellor of the Exchequer, Philip Snowden, only to be repealed by the Conservatives before the valuation work could be completed.

As long as taxation is geared towards repression of incomes and profits, economic activity in this country will be held back. Financial services, property and the public sector are keeping our economy sluggish. Libertarians who support low taxation, and in particular, forms of taxation with low or zero deadweight effects, should support land taxation as a way of moving to a more sustainable model of economic growth.

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166 responses to “WHY LIBERTARIANS SHOULD SUPPORT A LAND VALUE TAX

  1. Tom Burroughes

    Murray Rothbard has famously criticised the LVT idea, as have a number of others. One problem for me is how to distinguish the taxation of movable from immovable goods, and how to deal with the impact on efficient allocation of land if the value of so-called “unimproved” land is to be taxed. The higher the tax in percentage of course, the more severe the impact.

    Here is a good, very brief comment:http://econlog.econlib.org/archives/2012/02/problems_with_h.html

    In general, libertarians in my view should focus on reducing taxes in toto, rather than trying to adjust the methods of lifting money from our pockets.

    I also have a problem with the almost collectivist assumption that some (not all) LVT advocates have that land is, in some way, not really deserving of full respect in property rights terms as is the case with other types of property.

  2. Tom, your link shows that Disney speculates in land – and makes a good deal of its money by buying up land near where it will invest to sell off after its investment has raised the land values around its entertainment parks. I don’t know if there is more money to be made in that way than from its official line of business, or almost as much, or really how to find out. But it goes to show that speculative activity is too central to business in the West. Your link says “had George’s single tax on land been in existence, Disney might never have made the investment”, but if the land tax exists in all 50 states of America, they would have to build their entertainment parks somewhere – and so their business model would have to consist of making money from entertainment parks. Your idea boils down to the idea that every company, whatever their line of business, is basically engaged in property speculation.

    It is true that buying cheap land and by building an entertainment park on it, Disney has enhanced the value of that site location (and all those around it) and so the site valuation tax would be raised, but this would only be the case where the investment were a success. David Henderson who wrote that link hasn’t noticed that all taxes tax success – do you think that corporation tax does NOT tax corporate success? There are very few megaprojects like Disney – nearly all businesses you can think of are not single investments that dramatically raise land values in that way – it is normally public investment like Tube stations that do so – but as you point out, there are privately funded megaprojects that do so, and so are therefore incentivised not to build Disneyworld in Kensington, but to do so in a place with relatively low land values, allowing for some increase in tax where the entertainment is a success. Offset, or potentially offset, depending on the exact mode of implementation, by the lack of capital gains tax, the lack of the uniform business rate, or the lack of higher taxes on corporate profits, or the ability to pay lower wages where residential property values in the area were not rocketing. Maybe the Library of Economics and Liberty should have considered these things?

    I did not say, as your links imply (and the links that are given in the link) that 100% of the rental value of the land should be taken in a land value tax, as if the landowner should get zero rent. I do not know the exact impact of the land value tax on land revenue, and so it would be a case of trying it and seeing what happened, but my starting was a 1% annual tax on the land value. I think you will find that a 1% annual tax on the land value of Disneyworld allows Disneyworld to make huge profits.

  3. David, all praise for an excellent essay.

    One of the main benefits I see in land taxation – or levies, or whatever you want to call it – is that it requires no inquisitorial mode of collection. Income and corporation tax put us under an annual inquisition, in which we must explain ourselves to the authorities. This is demeaning in itself. It allows for punishments and rewards to be handed out by the State. It reminds us every January who is the boss. It can only be legally escaped by opting for employed status as a kind of feudal alternative – obey the boss, and he takes care of the predator with sharper teeth. VAT and excise duties are even worse.

    Land taxes require nothing more than a periodic survey, and a check of the land register to see who has the relevant titles and what address to put on the bills. There is no room for evasion or avoidance by the rich, and no excuse for the financial police state that we currently have. Exemptions and other privileges don’t need an accountancy degree to spot or understand.

    Another benefit is that they seem to be much less elastic than other forms of tax. They put the State in a tighter corset than income tax does, where a penny up or down brings immediate changes in revenue. This may be inherent in the form of the tax, or it may be the prospect of more informed resistance.

    The only objection I can see to your scheme is that the scum who rule us might see land taxation as a means of adding to the existing burden, rather than its replacement.

    All taxes are undesirable. But land taxation is probably the least bad way of milking us.

  4. It seems that the basic problem with discussions on tax is that people always seem to conclude that the best tax is one paid by other people. People who don’t have much income like an income tax. People who don’t have much land like a land tax. People who don’t have businesses like a business tax. People who don’t smoke, drink, or otherwise enjoy themselves like a Lloyd George tax. And so on.

    That’s not to say that in a high-tax economy LVT isn’t the best tax. Maybe it is. It is appealing to Libertarians as Sean says above because it avoids the need to tell the State about your income. But is it really a Good Tax?

    We have to remember that the whole LVT thing is an obsession of the Georgists (who now call themselves things like geolibertarians), the last of the Ricardian Socialists. It is based on a Just Plain Wrong economic theory of class warfare, in which three grand citizen armee’s are fighting for control of the Common Weal- The Landowners, The Bosses, and The Workers. Ricardo developed a crackpot theory which seemed to “prove” that the Landowners can expropriate all the surplus value in society (that is, all wealth above “subsistence”) via rents. So naturally a Georgist wants to take back all that “stolen” wealth via a tax. It’s worth remembering that Marxism is a Ricardian economic theory, except Marx thought The Bosses would get all the surplus value. He was a fucwkit as well.

    The major problem with it is that it taxes not values but valuations. It is not a land VALUE tax. It is a land VALUATION tax. These are different things. A value is a real data point in the economy- its existence is transient at the point of transaction. A Valuation on the other hand is not a real data point. It is a guess at what something would be worth if it were transacted under current market conditions; the most important one of which is that most of the valued commodities are not on the market right now.

    Treating valuations as values leads to gross over-estimates of the quantity of money that can be recovered from them, either as profits or taxes. The most recent, very clear, example of this was the recent economic crash, in which the financial industry had aggregated the valuations of the housing stock, confused them with a value, and thus vastly overestimated the profit that could ever be returned by it. When it was realised that this aggregated valuation could never be realised as actual economic value, the banking system collapsed.

    I’m not sure that a tax based on the same fallacy is a wise course for Libertarianism. But that’s just me. If people really object to a supposedly “unearned” income, they could tax real values- they could tax rents, they could tax house sales. They could do a one-off land redistribution, parcel up Windsor Great Park and give the plots away. People could trade them on eBay. I think you’d lose most of the Conservative vote if you did that, but you could at least feasibly do it.

    But an Land Valuation Tax taxes a hypothetical, not a real value. Even the tyrants of old only took a portion of the grain you had grown. They didn’t take hypothetical grain you could have grown if you were a farmer but didn’t because you aren’t a farmer. To tax a man for a rent he does not collect, because the one plot of land he owns is the one he lives on seems, to me, to be phenomenally unjust. But that’s just me.

  5. This is an interesting essay, especially in regard to the quality of comments it has generated. I might, if I get a moment, parcel up some of the better parts of these comments and publish them as a commentariat-reply.

    The problem remains that, if there is to be some kind of State, however minimal, and if everyone is broadly agreed that it ought to do certain tasks (but not most of what it does today), then how are these to be paid for?

  6. “The artistocracy own most land” – what percentage of land is “most” and how is this word “aristocracy” defined?

    I hope we are not dealing with a circular argument where even people who have no title are counted as “gentry” and “gentry” are counted as “aristocracy”. That is basically saying “the aristrcracy own most land – because I am defining anyone who owns land as part of the aristocracy”..

    Actually there are very few landowning families from the Norman Conquest who still own much land. Or even from the Reformation come to that – bad business judgements (over the centuries) mean the land has moved on – although sometimes marriage (into the old families) leads to the pretense they keep the land (as the husband will sometimes change his name – or the names will be combined (hence some of the weird double barrelled names – where a rich “trade” person from a “common” family has married into an established, but near bankrupt, family).

    Years ago I tried Kevin Carson with a family in Staffordshire who were losing their land (due to a bad business judgement) – they did not get their land cheap after the Reformation (Henry VIII actually intended to keep the land he took in state ownership – but his Scottish war led him to be desperate for money, hence the sales, by the way if Kevin is correct and corporate land is not “justly” private land then it was O.K. for Henry to steal Church land). or the Norman Conquest – they had held their land since Saxon times (and had cleared the wolves from it).

    DId he hate this family any less?

    Of course he did not – he hated them just as much. At least I could not get him to give this family a pass. I felt a big like President Hindenburg arguing for the Nurenburg regulations not to be applied to Jews who had faught in the First World War – no, no, says the man of principle.

    Just as he hates all large scale private landowners in the United States (corporate or individual). Produce a signed bill of sale with an Indian chief’s (such as Chief Seattle) name upon it? Does not get you a pass – Kevin and co hate you just as much.. The talk about “just acquistion” and so on is just a smoke screen for old fashioned hated of “the rich”.

    “Enough about Kevin Carson, Paul – what about my land tax?”

    O.K. then.

    Land tax used to be a very important source of revenue – in the 18th century Walpole managed to get government spending down far enough to get land tax down to about two shillings (10%) in the Pound – but he failed to abolish it (indeed he suggestion of replacing it, and taxes on imports, with a general exercise, blow up in his face).

    Domestic rates (property tax) used to be (and business rates still are) be based on the rentable value of property.

    My questions to DJ Webb would be simple ones.

    Forget all the waffle about landowners not be “justily entitled” to their land (that is just envy based sillyness) what I want to know is the following.

    Would this proposed land tax be instead of, or in addition to, existing taxes?

    And what would the level of this land tax be?

    Two simple questions.

    Would this be a new tax (on top of all the existing ones) .

    And what percentage of the rentable value would this new land tax be?

  7. Just in case my previous comment was too long.

    Would this new land tax be on top of existing taxes – or not.

    If “not” – which other taxes would be done away with?

    And what level would this land tax be set at?

    What percentage of the rentable value? Or the sale value?

    Without specific replies to these questions then talk of a land tax is just smoke and mirrors.

    By the way….

    The idea land tax is somehow less economically harmful than other forms of taxation (such as a sales tax or an income tax) is false (although one can argue about small marginal effects – either way).

    As Tom B. points out – that stuff was refuted by Rothbard decades ago (and by others long before Rothbard).

    What matters is the overalll level of taxation (the exact form of taxation does matter a bit – but only a bit) – and that depends on the level of government spending.

    Most government spending (in Britain and all other Western countries) is on the Welfare State.

  8. Paul, you’re right. The aristocracy don’t own most of the land. I was led astray by the fact that Kevin Cahill’s book, Who Owns Britain?, showed 0.6% of the population own 69% of the land, but only around one-third of the land is owned by the aristocracy. I don’t know if Crown Lands incl Lancaster and Cornwall are included or not, and I don’t know how far church lands have been whittled down either.

    It is not envy to say that no one can really own land. Because any land ownership – traced back – will lead back to a situation where someone gained the land in dubious circumstances. Because no one originally owned the land – and so there is no original owner to have doled it out or sold it off.

    In any case the Common Law does not provide for allodial ownership of land in England. In terms of the law, all land ownership rests on common law principles – that the Crown made land grants according to the principle of subinfeudation and required knight service or money commutation thereof in return.

    I am not proposing 100% of the rentable value to be exacted in an LVT, but I do think we would need to start low and see how things went first – and a 1% tax on the notional land value would be enough to replace council tax, inheritance tax and capital gains tax.

    I am not saying it should remain at 1% (I think a 7% tax would be equal to the entire rentable value, so a 1% tax is 1/7 of the rentable value), but we would have to start low and see what happened, and maybe it could go higher, and then replace the uniform business tax and lower income tax too.

    I would like to see income tax, national insurance, the council tax, the TV tax, inheritance tax, capital gains tax, the tax on income from share dividends and the stamp duty on share transactions abolished, thus taking individuals’ incomes out of the loop. I am dubious that an LVT can single handedly accomplish this, but it could form part of the answer – and so I would like to see the overall size of the state reduced below 10% of GDP anyway.

    Even the 1% initial level I have proposed would be enough to begin to restrain unsustainable increases in property prices, which have skewered this country.

  9. DJ Webb – many thanks for your civil reply.

    We differ on land ownership – I would argue that Feudal law whilst, in theory, denying private land ownership, in practice offers better protection for de facto private landownership than Roman law did.

    Still, as you point out, if government spending is reduced to about 10% of the economy (the position in about 1870 – counting both central and local government in Britain) then the problem largely solves itself.

    Local government spending was (mostly) financed by taxes on property in 1870 – and it is possible that income tax (which reached its low point in 1874) could have been relaced by a land tax (set a level that would not bankrupt estates).

    At the local level only ratepayers had the vote (including, of course, the business vote for people who paid taxes on their business but did not actually live in the place concerned).

    And at central level only landowners paying the land tax could have had the vote.

    There is no reason why the two voting systems should be the same – after all the 1832 law for Parliamentary voting and the 1835 law on the vote for local counclis were quite different (although the Act of 1867 did put them quite a bit closer togehter – it also meant that the majority of the new voters did not pay income tax, but that is another story).

    It is unlikely that a House of Commons elected by people paying the land tax (there being little indirect taxation in the early 1870s – and, under your idea, no income tax) would have set the land tax so high that it would have bankrupted estates.

    It might well have had the same general attitudes as the third chamber in the Prussian Parliament (the one dominated by the Junkers) who were actually generaly sound – and had a strong sense of personal honour (thus meaning that German intellectuals, unlike Russian ones, could not get their racial desires automatically turned into state policy – although some Polish landowners were indeed robbed).

    The problem is, of couse, that a House of Comons elected by land tax payers might well have turned Protectionist (as the Prussian Parliament did) – with policies like a return to the Corn Laws.

    However, there may be ways to guard against that.

  10. Paul Marks, what do you know about the history of the voting system? I know some places had a 40 shilling franchise – owners of land that had an annual rentable value of 40s had the vote. But as far as I know the pre 1832 system was not uniform. For a start, the counties elected 2 knights of the shire each – what was the franchise for that? – and then the boroughs also had additional seats – and I think the way the borough MPs (burgesses) were elected would have or might have varied from place to place. If you have detailed knowledge of this, please post it.

    I think the restriction on women voting was purely brought in by the late 19th universal male franchise. As far as I am aware, **some** women always had the vote in pre 1832 England. What I mean is that heads of households where landowners had the vote, and a rich widow may have had the vote, or at least in some boroughs. Is this correct? Were there any circumstances pre1832 when a woman would have had the vote, e.g. if a head of a household?

  11. On my comment that a 1% tax on land values would be 7% of annual rentable value – I may be wrong there as the rentable value would be influenced by the property (the building included), and not just the unimproved land value, especially in built up areas.

    But I have noticed that property values in the UK tend to be around 15 times the annual rentable value (180 times the monthly rent). Eg if you see a house that has just been rented out for £1,000 a month – that is £12,000 a year, and ought to equate to a property sales value of £180,000.

    Of course the relationship between sales values and rental values is changing all the time, particularly in a volatile market (and the land value tax woudl aim to reduce such volatility), and it may be that rental values are increasing relative to the property sales values. But assuming that a landlord may be able to put £100,000 in a cash ISA and get 4% (4% from the Halifax 5-year fixed ISA Saver – you can’t put £100K straightaway in an ISA, but you could have built up a large sum over years, and I am just comparing the rates here in a hypothetical example), property investments would require more than a 4% return. In fact, given the risk of fallow periods, tenants not paying, tenants needing to be evicted, as well as tax on profits (offset by mortgage interest?), I think 7% would be a reasonable assumption for what a landlord should be trying to get today. So a 15 times multiple between the annual rentable value and the sales value tends to work quite well in most cases.

    It is very interesting to see houses for sale at prices that are more than 20 times the annual rentable value – a landlord would not be interested in those, as a cash ISA would be better. So one way of working out what house prices “should be” is via salary multiples (3 or 4 times the average salary in the 1990s recession), and another is the relationship with rental values. You can use the two to draw various conclusions on house prices. At any rate, a 1% land value tax does not prevent the likes of Disney from making money on a hugely successful and well attended entertainment park…

  12. So each property is a little island and the value of the rents or imputed rents are entirely deserved by the owner? What happens if that little island were dropped into the middle of the Sahara Desert? They fall to zero.

    Now I’d have thought that the principal that you keep what make and pay for what you use would have been quite appealing to Libertarians. Obviously wrong when it comes to getting your greedy little mitts around some juicy unearned incomes though.

    Rothbard’s criticisms have been shown countless times to have had the logic of a five year old. Even if land values were to fall to zero, the rental value, as set by the market would still remain.

    http://www.nolanchart.com/article6921-a-critique-of-murray-rothbards-critique-of-the-georgist-argument.html

    The taxing of land values does not change demand, that is because there is a fixed supply of it. There fore no dead weight costs. Basic stuff.

    The dead weight costs of taxation on productive activities on the other hand amount to somewhere between 15-25% GDP. A single tax on land values would eliminate those, expanding the economy and reducing the size of government taxation %gdp. Isn’t this something you’d all like to see?

    It is also a free market tax. You get to chose your own tax liabilities. Isn’t that something you’d all approve of too? And, no more free loaders. It’s 100% unavoidable!

  13. I@Ian B”But an Land Valuation Tax taxes a hypothetical, not a real value. Even the tyrants of old only took a portion of the grain you had grown. They didn’t take hypothetical grain you could have grown if you were a farmer but didn’t because you aren’t a farmer. To tax a man for a rent he does not collect, because the one plot of land he owns is the one he lives on seems, to me, to be phenomenally unjust. But that’s just me.”

    The value that man get for exclusive use of a location is easily measured as the amount he’d have had to pay as a renter i.e imputed rent.

    The question being, who sustains that value? If it’s not the owner, which it clearly is not, then they are getting something for nothing. How is that fair?

    Now, we all want something for nothing don’t we? You, me, landlords and most of all, the biggest landowners the banks. That’s why we see never ending speculation in property and boom bust cycles. Take away land values and the banks would have to lend on productive assets. i.e bricks and mortar only. Great eh?

  14. The interesting question is that of why the Georgists don’t just make land rental illegal, if they’re that convinced that it is unjust. Then all the rentiers would have to divest themselves of their unjust land-holdings (a stated intention of the Georgist tax), without all the hassle of land value assessments and so on. I think the answer may be because they really want to, er, “…get their greedy little mitts around some juicy unearned incomes…” to spend on rather large and not at all Libertarian government.

    All this economically erroneous Ricardian stuff about a Magic Tax that doesn’t burden the economy is really just a smokescreen for that. It’s intended as a recipe for Big Government, paid for by Other People (the evil rentiers) due to classifying rents as unearned in precisely the same way as Marxists consider profits to be unearned. It is after all the same theory- in Marxism the Means Of Production is tools and factories, in Georgism it is the land itself. It’s just economically fallacious.

    There are arguments for and against Land Tax as a feature of a high tax economy, most of which are a matter of taste. But we do need to be clear, here on a Libertarian site, that the economics of Henry George really are Just Plain Wrong and thus useless as a justification of the said tax. The problem I’ve found with Georgists is that generally their grasp of economic theory is rudimentary, I’m afraid. Much the same problem as with the Marxists, in fact, for the same reason.

  15. Take this, which appeared while I was typing my last comment-

    The value that man get for exclusive use of a location is easily measured as the amount he’d have had to pay as a renter i.e imputed rent.

    Here we see the taxation of the hypothetical rather than an actual income.

    The question being, who sustains that value? If it’s not the owner, which it clearly is not, then they are getting something for nothing. How is that fair?

    This is the justificatory, and erroneous understanding of value. The Georgists argue that land has value due to other people. That is, it has no intrinsic value; that value is set by its environment.

    The problem is, that is true of all value. A loaf of bread has value because somebody else wants to buy it and eat it. It has no intrinsic value either. Nothing has. Thus every income is, by this definition, “unearned”, because it is set by others rather than the land, or bread, owner. The problem here is that Ricardo, from Smith, believed in intrinsic value produced by labour. Since land is not produced by labour, it has no intrinsic value, so the value must be “unearned”.

    The rest of economics has understood since the 19th century, though after Ricardo, that value is not created by labour. It is always and everywhere subjectively “created” in the minds of purchasers. On this fundamental point the Ricardian system fails. Only the Marxists and the Georgists are still clinging to it, because it seems to justify their desire to confiscate the “unearned”- that is, these incomes which are not generated by labour (rents for the Georgists, profits for the Marxists).

    Yes, the rental (or sale) value of land is generated by its utility to other people. The owner doesn’t create its value. But so is the value of every other good and service. The Ricardian economic theory is just wrong. Sorry.

  16. Benj, thank you for your very valuable comments.

    It is quite wrong to see Ricardo as a silly man with no logic to his ideas – Marx is also a Ricardian, but his ideas in Das Kapital are more substantial than his political theories, and it makes sense to see Adam Smith, David Ricardo and Karl Marx all as classical economists who shared a lot in common theoretically, while differing on key points.

    As far as I know, Marxists have always found Marx’s economic theories in Das Kapital problematic, as volumes 2 and 3 speak of the countervailing factors to the fall in the rate of profit that he suggested, makiing it quite unclear that his suggestion that the rate of profit would have to fall over the long term and force the proletarian revolution was indeed the logical outcome.

    I am definitely not saying that everything in Smith, Ricardo or Marx is right – clearly not – but their works were long and difficult, read in full by almost no-one, and I have long had the ambition one day to read all of Marx and produce a logical and rigorous critique of it – if I could – maybe it would require someone better than me, There are the 3 volumes of Capital, and the 3 volumes of Theories of Surplus Value (Marx’s critiques of Smith, Ricardo and John Stuart MIll as well as everyone else), his Introduction to the Critique of Political Economy and the rough draft of capital (the Grundrisse), making 8 chunky volumes.

    To critique these properly would require great study – not just a wave of the hand – which is what Ian B is doing – I know that Communism doesn’t work, and that the immiseration of the workers never happened (quite the opposite), but I would like to read and analyse these works intellectually and rigorously, which is not the same thing as dismissing quite intelligent (even if wrong) writings in a sentence without reading them. It seems to me that 19th century writers of most political complexions were more interesting and intellectual in their views than anyone today – as the quality of discussion was higher. To dismiss Ricardo because Marx borrowed a lot from the Ricardian school – well, this isn’t even an attempt at a cogent argument.

  17. DJW, excellent article. Clearly, LVT is far less bad than taxes on income, output, profits, employment, whether on a moral level or economic level (no Laffer curve, no avoidance etc).

    Then there is the basic point that without a stable nation-state, there can be no land rents (try buying, renting or selling land in Haiti, Somalia or Afghanistan!) therefore as a quid pro quo, it seems perfectly reasonable for the nation-state (i.e. the government on behalf of every citizen) to collect those rents and spend them on the core functions (law and order, defence, immigration control, refuse collection, flood defences, whatever) and dish out the rest as a Citizen’s Dividend or Personal Allowance.

    If the land rents are not taxed, then those rents will still be collected, so ultimately, land owners and bankers are just collecting taxes on their own account and providing nothing in return.

    The general idea being that a median size household in a median value home would pay plus minus zilch in tax (its CI being equal and opposite to its LVT bill. And, with the purchase price of land close to zero, the usual welfare junkies (land owners and banks) cannot cream off public value for their own benefit.

    As a general rule, any argument against LVT is completely unfounded and whoever forwards them is usually brainwashed by the Daily Mail. So there is little point debating with Ian B or Paul Marks or any of the others. They understand nothing of economics and cannot recognise state-protected monopoly profits when they are staring them in the face.

  18. DJ-

    If a theory is based on certain assumptions, and one or more of those assumptions are wrong, there is no use further studying the theory, because it is wrong. The theory of surplus value, derived from the labour theory of value, is simply wrong. It’s not a matter of opinion, any more than Newton’s Laws are a matter of opinion. It is simply wrong.

    Seeing as Mark Wadsworth is here, I’ll add that I’ve tried to explain Value Theory to him multiple times, but he doesn’t get it. The problem it seems to me with economics is that most people aren’t really interested in treating it as a science; rather they make a few rule-of-thumb judgments that seem to make sense to them, and then just build a tottering tower of justificaiton on top of that. Mark and other Georgists have access to the internet. They could spend a fraction of the time they spend typing Ricardian derived stuff on googling the Labour Theory Of Value and Marginal Utility, and thus come to understand these things. But since, like most people, they don’t wish to find out that their belief system is incorrect, they don’t do it.

    Anyway, your time is your own DJ, but it seems to me that there are better ways to spend it than on Marx. He really didn’t have a clue. He’s of historical interest, but has nothing to teach us, certainly about economics. Das Kap starts with the Labour Theory Of Value, the whole theory is predicated on it, and it goes entirely and irretrievably wrong from there. You may as well study Plato for insights into the workings of the Solar System.

    So, like I said; there may well be merits to property taxation. But the justifications offered by the Georgists are just flat wrong, because their economics are just flat wrong. There is no kinder way to say this.

  19. @Ian

    Firstly, just reviewing my comments, I can see that I’ve got overly excited because I think I can see where you are wrong, and instead of showing you some courtesy, I’ve jumped on your opinions as an opportunity for an argument. That’s the curse of the internet. It can make you forget your manners.

    Secondly, I think it is fair to say you think we are all over taxed and the Government is toolarge. So do I. I can also understand that any mention of a new tax would automatically get your hackles up. We need to be reducing taxes right?

    What I would ask from you, is to leave your scepticism to one side and judge on merit, that as a replacement for for all other taxes, would a tax on land values lead to a smaller Government.

    You say there is no evidence that LVT is more efficient i.e has no deadweight costs. I’m afraid no economist would agree with you. A little research by you on the effects of inelastic supply will confirm this. So if we had a tax with no deadweight costs the economy would expand and government spending %gdp would fall,

    Think of all the tax lawyers, accountants and employees at HMRC that would have to find another job?

    But, the biggest implications for the size of government comes from the elimination of taxes on productive activity. Uk business would be more competitive. Lower barriers of entry for new business. Costs would be lowered, barriers to employment reduced, Workers with more disposable
    income buying cheaper goods and services. A virtuous circle of productive activity and self reliance.

    All this would have profound implications on employment and how we see the welfare state. If you can keep 100% of what you earn going to work makes sense.

    It’s parasitism our economy that distorts our free market. I’m a landlord I know all about this I can assure you! This was Henry Georges message, He wanted Capitalism free from parasitism. He wanted free markets not monopolies.

    Government big or small needs revenues. A necessary evil. Does it get it from taxing productive activity or unproductive activity?

  20. @ Ian
    “The problem is, that is true of all value. A loaf of bread has value because somebody else wants to buy it and eat it. It has no intrinsic value either. Nothing has. Thus every income is, by this definition, “unearned”, because it is set by others rather than the land, or bread, owner. The problem here is that Ricardo, from Smith, believed in intrinsic value produced by labour. Since land is not produced by labour, it has no intrinsic value, so the value must be “unearned”.”

    No, because when you buy a loaf of bread you know that you are giving money to someone who had added value to it. Thus they had earned it.

    You can’t do that by laying claim to a natural resource that has value simply based on scarcity.

    Someone had to make that loaf of bread, turn by labour land, air and water in to something of utility.

    How do a landowner add value?

  21. A few comments. First: “There is no room for evasion or avoidance by the rich, ” — well why is this good? If taxes are bad, as libertarians think, it’s not obvious why it’s good if a form of tax prevents tax evasion.

    Also: I think it’s hard to argue that any form of tax is the least-bad. All taxes have various disadvantages and costs and distortions. Libertarians should not call for changing the form of tax, but only for lowering of tax rates on whatever form of taxation exists. (See links at the bottom of this post)

    Finally, you may find my post Property Title Records and Insurance in a Free Society of interest —

    “a main purpose of the Domesday Book, an English land survey in 1086, “was to determine who held what and what taxes” were owed. And as noted in the fascinating study by Mayer & Pemberton, A Short History of Land Registration in England and Wales:

    ‘The Romans introduced a form of land registration to England and Wales [, to form] the basis of a land tax called tributum soli.

    ‘Similarly the Anglo-Saxons had a land tax (Danegeld), which would have required details of land ownership. The culmination of this system was the Domesday Book (1086)—an unique and almost complete survey of landowners, at least at manorial level, it is the crowning achievement of the administrative system of Anglo-Saxon England.

    ‘… According to the Anglo-Saxon Chronicle, William the Conqueror “by his foresight … surveyed so carefully that there was not a hide of land in England of which he did not know who held it and how much it was worth”.

    ‘The Domesday Book was just about the last land register in this country for taxation purposes.'”

    ***

    **
    Links regarding problems with advocating “replacing” the income tax with a national sales tax (in the US):

    Rockwell, The Tax Reform Racket

    http://www.mises.org/story/1727

    Rockwell, Diversions

    http://www.mises.org/freemarket_detail.aspx?control=114

    Rothbard, The Consumption Tax: A Critique

    http://www.mises.org/story/1768

    The Fair Tax Fraud, by Laurence Vance

    http://www.mises.org/story/1814

    Flat Tax Folly, by Vance

    http://www.mises.org/story/2112

    Rothbard lays out a taxonomy of the methods utilized by the state to confiscate private property and how each tax uniquely distorts the free market:Power and Market

    http://www.mises.org/rothbard/mes/chap16a.asp

    As Rockwell writes in his first article noted above:

    “Is there a need to reform taxes? Most certainly. Always and everywhere. You can always make a strong case against all forms of taxation and all tax codes and all mechanisms by which a privileged elite attempts to extract wealth from the population. And this is always the first step in any tax reform: get the public seething about the tax code, and do it by way of preparation for step two, which is the proposed replacement system.

    Of course, this is the stage at which you need to hold onto your wallet.

    Bait and Switch

    Hardly a day goes by when I don’t receive an email from someone who has a grand plan to reform the tax code, replacing the current system completely, with something else. That something is usually the Value Added Tax or the National Sales Tax. The people promoting this plan long for a world in which they are permitted to keep all the money they make and only the purchasers of goods and services pay.

    Now, there are many grave problems with the VAT or the NST, not the least of which is that it would have to be more than 20% or perhaps as much as 40% in order to raise “enough” revenue. Then there are the problems of enforcement. The US would instantly become host to the world’s largest underground economy, which in turn would give a rationale to the central state to invade our businesses, homes, and bank accounts like never before. It would be essentially unenforceable and lead to even more a war of the government against all, complete with more spies, agents, and entrapments of all sorts.

    But there is another danger to promoting a VAT or a NST. It might actually convince someone in Washington to give it a try. And instead of replacing the whole tax code, the politicians might try to introduce the new one at the seemingly low rate of 1 percent or 3 percent. If they ever get away with this, look out. It will inch up year by year as the political class discovers yet another way to loot us.

    This points to a general danger of the idea of a replacement tax. I hear of these plans all the time. People say, let’s get rid of the tax I don’t like and replace it with one I do not pay. So people will propose getting rid of the capital gains tax and instead increase taxes on inheritance. Or they say, let’s get rid of inheritance taxes and put a higher tax on Americans working abroad. You can think of many of your own variations on this. The danger here is not in advocating the repeal of one tax. That is something we should all favor. The danger comes from advocating a new tax to take its place. If you know the way politics works, you know that the new tax will be enacted and the old one not repealed.


    Never Trust a Thief


    For my part, I’m a champion of loopholes, as was Ludwig von Mises. He was attending a conference in the 1950s, at which economists were all denouncing loopholes and he rose to their defense. “Let us be grateful for the fact that there are still such things as those the honorable gentleman calls loopholes,” he said. “Thanks to these loopholes this country is still a free country and its workers are not yet reduced to the status and the distress of their Russian colleagues.”

    A loophole is nothing more or less than a chance to keep your own money. It is not a subsidy. It is not tax spending. It is not corporate welfare. It is not a special privilege. It is just a window of freedom. Loopholes should be expanded as much as possible. There should be ever more of them. A completely loopholed economy, where there were maximum opportunities for not paying tax, would finally arrive at the idea of freedom.

    Thus do I suggest we never bite when someone dangles on a hook the idea of closing loopholes. And this raises the question of precisely what we should support.

    The Lower Tax

    The only tax plan anyone should trust is the most simple possible: the one that proposes to lower existing taxes. I really must say this again because it is the most important single point you can remember when evaluating whether to support a tax reform or not: the only trustworthy plan is that one that proposes a lowering or elimination of an existing tax, period. That is the bare minimum. An ideal reform would also propose equivalent spending cuts. In fact, in the most strict sense, there can be no tax cut without spending cuts since we must all pay, one way or another, for the burden of government as measured by spending. But we must leave that aside for now.


    The Red Flag of Reform


    What is the end result of tax reform? Well, we have had reformed taxes frequently in the last century, and you need only look at the rise in federal revenue to see where this has gotten us: ever more of our earnings going to Washington, ever fewer choices on how we use what remains.

    Let me close with a proposal that we abolish the income tax. It took in $873 billion last year. If we cut the budget by that amount, we would end with a completely gutted federal budget, right? Actually, that is not true. We would end up with a federal budget of about $1.5 trillion, where it was in the last year of Clinton’s second term. If anyone thinks that the federal government was too small back then, I can only recommend a complete education in economics, politics, and the truth about human freedom.

    Thus do I end this talk with a call, not for reform, but for an end to the income tax. It should be replaced with nothing at all. In any case, that would be a good first step.”

  22. This is a very interesting article. The problem in changing any taxes is that you create winners and losers. Winners will be delighted, but the losers will make a big fuss, naturally. I imagine that farmers could be big losers under a land tax. There is also the problem that land does not actually create income and unless a landowner has sufficient income he will be unable to pay the annual tax without selling all or part of his land. While I agree entirely that in theory if we were starting today to design a system this might be one element of taxation. However given where we are, we cannot easily make big changes. Clearly land cannot be moved abroad so avoidance is more difficult

  23. I don’t have time for unfruitful exchanges. My point is merely that one needs to properly understand an argument to critique it. To condemn people for saying things they didn’t say, or to ignore the refutations they made of the arguments you are making, makes for a poor quality exchange of views. I am not saying definitely this is the case of Ian’s views of classical economics, but I am saying that you do need to understand something properly and see if any refutations of your views were including in their orginal analysis to mount a proper critique of it.

    This is not an argument for Adam Smith’s views, for David Ricardo’s views, or even for Karl Marx’s views – I haven’t read any of Adam Smith, any of David Ricardo, or much of Marx – I am simply stating you need to do the primary reading to be qualified to comment. In a PhD viva voce to say “if a theory is based on certain assumptions, and one or more of those assumptions are wrong, there is no use further studying the theory, because it is wrong” would simply be an absurd way of advancing your thesis. The point about academic rigour is that you do have to understand the debate.

    We are on a level where people who haven’t read anything by any of the classical economists are chiming in in unison that none of those classical economists had anything worth saying, although I am not at all convinced that Ian B understands the labour theory of value. Note: this is not a comment in favour of the labour theory of value. It is quite explicitly a comment that people who haven’t read those works and understood those writers cannot really comment intelligently.

    I have read parts of Volume 1 of Das Kapital, and know that Marx spoke of the role of labour in creating value – and it is simple to show that the prices of goods in the shop do not simply represent the amount of labour in them. But by Volume 3, which I have not read, he was saying that there is a kind of “capitalistic communism”, which produces more equal profit rates over the various enterprises than would be indicated by what he wrote in volume 1. He explained elsewhere his methodology was “ascending from the abstract to the concrete”, and that he did not begin with the full configuration of reality in all its complexity, but began with a simple analysis that then proceeded to paint in more features of reality, becoming more concrete. Which means Volume 1 abstracts from the role of the market, and makes the claim that labour produces value (if I understood correctly – it is not certain I did), and that by volume 3 he is adding in the function of the market, where any business can try to get any price for its goods, to show that goods with more labour or less labour invested in them could still compete to sell for any price they could get. Which is for him a capitalistic communism, meaning, I think that for him the labour theory of value only operated over the whole economy and not for individual companies as a whole.

    I may have misunderstood it, or understood it in a simplistic form. I just give this illustration to show that Marx’s views were subject to various “iterations”, changing the deeper you get into Das Kapital, with some of the later volumes considerably altering the impression in early volumes. Also, the analysis he came up with is still left at the end of volume 3 in an abstract fashion, still abstracting from the world market and various things, making it unclear really how it applies to any particular configuration of the world economy at any moment in time.

    I would like to read it to understand it properly – not simply rail against a vulgarised media view of what he said, according to people who haven’t read any of the original works, as Ian B is happy to do – with the point being to produce a cogent, academic critique of it.

    The phrase capitalistic communism comes from Marx’s correspondence with Engels, and not from Das Kapital, but it refers to something that Marx wrote about in Volume 3, which I haven’t read and Ian B hasn’t read – and so we are like housewives discussing particle physics here.

    I am not a Marxist – my point is not to support Marx – my point is actually to critique Marxism, but in a cogent way – an academically defensible way – which means knowing what was originally said in the first place. You can see http://www.marxists.org/archive/mattick-paul/1969/marx-keynes/ch04.htm for some discussion of the point about capitalistic communism, which I think seriously alters the impression of “the labour theory of value” given in the early chapters of Das Kapital.

    I can’t have a low-quality discussion about something I don’t personally understand with someone who doesn’t understand it either – and so I won’t try. I think it is possible to support the LVT based on the ideas in my article above without specifically linking it to any Ricardian notion of the labour theory of value: it is perfectly understandable that landlords are already renting their land out for the maximum they can get in a free market and cannot, or cannot over the long run, simply pass on the LVT as an additional cost to business. To drag the labour theory of value in requires months of reading to understand it properly – something that concerns me, even if it doesn’t concern Ian. To go from describing Marx as a minor Ricardian to making Ricardo an early Marxist is a little too much for me, even if most of the classical economists did have a core of common theories – but once again, I haven’t done the primary reading to comment properly on this – neither has Ian.

  24. Seems to me the logic of the argument is fundamentally faulty. Land values can be affected by improvements, or damage, done by the land owner(? holder?). Farmland is a particular example, where good farming practice can increase the fertility of the land vs bad farming practice that can destroy it. Likewise, dumping waste on a land could be a profitable activity that reduces the value of the land.

    Really I can’t see how the logic of this holds… from my reading it’s just a lame excuse for a government monopoly of force to extract tribute from the individual for the “collective good.”

    Also, nowadays people can make a large income from the virtual world without owning any land – they could become immensely rich without paying any taxes according your scheme? There’s already some (libertarian) plan to live on boats to avoid paying taxes… and surely only a one world government could tax the sea or the global internet.

  25. Johnny, the LVT concept is a concept that relates to taxing the location value only. The difference between the unimproved value of 1 acre in central London and 1 acre in Grampian relates purely to location – and the fact that there are fewer people and services and lower footfall in Grampian.

    What the landowner does to the site may affect the property value, but does not affect the location value. This is why a valuation database would be fairly easy to construct – no notice is taken of what the owner has done to the site. You can see derelict buildings in central London – I am thinking of one in particular – and I am pretty sure that property would not be worth the same as a well-managed business centre on the same site. But the LVT is based purely on the price of land in the area.

    No one would even look to see if the owner deposited rubbish on his land: if unimproved land went for £500 per square foot in the area – and the owner had destroyed the attractiveness of his property by storing anthrax – the LVT would still be assessed at a given rate of the site valuation of £500 per square foot – the owner’s destruction of his property value relates to the property value, not the unimproved value of the land. My understanding of the concept is that farmland would be taxed at a rate equivalent to that levied on unused land that had not had an investment of nutrients to improve its fertility. We are talking about pure basic location value – with no attention paid to any improvements whatsoever. See http://www.wealthandwant.com/themes/Farmers.html for some discussion.

  26. Because the LVT is levied regardless of the owner’s upkeep of the property, it provides an incentive against allowing dereliction of properties. An owner who dumped anthrax on his property might find it hard to sell – but he would face the same LVT as a property nearby that was well-managed – forcing him not to dump chemicals on this property if he knew what was good for him.

    These posts asking for exact details on the rates charged and how it would work are ridiculous: libertarians are nowhere near government, and I can’t provide a full budget. I am setting out the concept, not a full budget for the country.

  27. DJ-

    I am an economics nerd. I am very well read in Marx, George, Ricardo, Smith, and Keynes as well as that economic theory I consider to be the most correct, the Austrians (Menger, Mises, Rothbard, Hayek etc). I am not arguing from ignorance. I am arguing from knowledge of what you call the Classical economists, including their mistakes. That is why I am confident in dismissing Ricardo. Because his theory was wrong. I’m merely saying that there’s little point in studying Marx (as you said you intended) from the hope of learning anything useful. It is worth studying in order to understand why it is wrong, but ploughing through the dreary bilge of Das Kap is probably unnecessary because there are briefer explanations that can be read.

    It does come back to this; if an economic conclusion is based upon an error (such as the Labour Theory Of Value), the conclusion must be wrong too (it may be “accidentally right” like a stopped clock, but that is a pure coincidence).

    As I said above, I think a lot of people involved in economic discussions on the internets really haven’t studied economics. They tend to plunge into arguing above quite advanced stuff like tax incidence, without understanding the core concepts, like the theory of value and how prices are determined, much like a person trying to argue about time dilation and the Lorentz Contraction without having first learned the basics of Relativity. It comes down to the fact that most people are only interested in the economics that supports their belefs, rather than in economics for its own sake. Which is what I am interested in.

  28. @ Dr Sean Gabb

    “All taxes are undesirable. But land taxation is probably the least bad way of milking us.”

    At the risk of seeming flippant, how is an LVT milking anybody? Isn’t it just charging a fee for the exclusive use of something that is isn’t yours in the first place? Yes you may have bought a title, equivalent to a mining licence, but the revenue for that licence remains in private hands. It does not go back to those whose work and taxes produced it’s value.

    The same point is made in the article, but it’s worth being very clear about. The natural resources supplied by nature are our birth right. All of ours. Is it right to make a profit from this merely because you have title to access and others don’t? So, it is morally correct for government to expropriate these monopoly rents and redistribute them, even if there was no government expenditure to sustain. Milking doesn’t come into it.

    • Benj: “At the risk of seeming flippant, how is an LVT milking anybody? Isn’t it just charging a fee for the exclusive use of something that is isn’t yours in the first place?”

      But the fee is not just “charged”. It’s charged by someone. Charging this fee is acting as an owner of the land–as a landlord. But the state doesn’t own the land. You say the nominal owner doesn’t own it–but the state doesn’t own it, so has no right to impose a fee on someone to use it.

  29. @Ian

    For the benefit of those less knowledgeable, could you, in concrete terms answer MW’s several points. Less the personal stuff. The original OP was quite specific and has practical policy implications. In the real World, that’s how these things are judged. A cost benefit analysis.

    I’m genuinely interested in your conclusions.

  30. Ian B,

    Nearly every blogpost here is turned into an unfruitful exchange by you. I am not prepared to waste time on an unfruitful exchange. I strongly doubt that you have read enough of classical economics – and we can include Marx here as you seem to be blaming Ricardo for being a pre-Marxist – to comment in the way you do. For a start, you have said in your post that you read “briefer explanations” that are available – do you realise how FEW people there are who have read the primary works I am talking about? Things written by university professors on such things often betray an unfamiliarity with the theories they are critiquing.

    The reason I pointed out the difference between Volumes 1 and 3 of Capital is both because you raised a connection between Marx and Ricardo, and also because I wanted to make it painfully obvious that the original theories did not posit, did not rest on, and actually rejected the idea that prices observable in the economy reflected labour values. Yet your post a few posts back seemed to suggest you thought that! And if you thought that – then you have not appreciated the ideas you are commenting on – that is the only point I have made.

    For my purposes, I think it quite sufficient to state that landowners are already getting the maximum rents they can. You have – as with nearly every other thread here – taken it into an unfruitful tangent.

  31. DJ, I didn’t say that I prefer briefer explanations. I said that they are available for people like yourself to read, to get up to speed, rather than having to read the whole of Capital. I said that because you said that you were intending to read “all of Marx”. My basic intention there was to suggest that this is largely a waste of time, like spending a considerable time reading and critiquing Lamarckian Evolution. It’s wrong, everyone knows it’s wrong, move along please, nothing to see here, kind of thing.

    You seem to be the one man on the planet who doesn’t believe (for whatever reason) that Marxian economics is not predicated on the labour theory of value. You are entirely free to believe that. But it is rather ludicrous that somebody with such a strange belief would accuse me of ignorance.

    It is also widely accepted that Marxist theory is developed from Ricardo.

    Still, believe what you want. It’s a free country, and all that.

    Just out of interest; you have read The Theory Of Money And Credit and Human Action, haven’t you?

  32. “is is not predicated” should be “is predicated”. Managed to edit myself into a double negative there, whoops.

  33. Any anti-LVT argument based on practicalities can be easily batted aside by pointing out that we still have something very close to LVT in this country on commercial land and buildings, it’s called “Business Rates”.

    So the argument that the government’s surveyors can’t possibly know how much the rental value of millions of different premises is falls flat on its face because a) they do and b) the owners of those buildings are happy to pay it. If they were not happy to pay it, they would sell the building.

    Residential land is even easier to value than commercial land and buildings. And if we had Domestic Rates at the same level as Business Rates it would collect enough money to reduce other taxes by half.

  34. @Stephan Kinsella I think it’s actually worse than that, from my reading of the text. It’s made clear that the state’s (whatever that mystical entity “the state” really is – it seems to be “the Crown” in England, apparently, again whatever that mystical entity is) claim to the land is that it can take it and hold it by force of arms – the subjugation of the indigenous peoples in lands overseas is specifically mentioned. The American Indians clearly had a different concept of land title, or maybe no such thing at all, but that failed to persevere in the face of superior numbers and technology.

    So we’re back to fundamentally basing a society on the say-so of the one who can wield the biggest stick. I can’t accept libertarianism on those terms… well not at least until I have some kind of Insanely Destructive Device or two that I can use to claim allodial title.

    Plus, I simply refuse to believe a government, with the ability to use force to extract money from its serfs, and some kind of legitimacy to do that implied by the LVT, would stand by while somebody rented a small flat for peanuts and made millions via transactions in the virtual world (or somesuch).

    For me, land would have no value if it attracted taxes and I could avoid paying taxes into war, death, propaganda, and slavery machine by simply renting somewhere or living on a boat or whatever.

    To paraphrase the Iron Lady: there is no such thing as government or the state; there are only individuals acting together in their own interests against the interests of other individuals who are powerless to stop them.

  35. Voting systems first.

    My comment on land tax voting was in response to DJ Webb’s idea for a land tax – if only those paying the land tax had the vote this might be a way of keeping the tax down.

    On pre 1832 voting.

    It did indeed vary greatly – not so much on the county seats (where there was the 40 shilling freeholder franchise) but in the towns.

    In some towns (Preston springs to mind) anyone who had a fireplace they could bang a pot on had the vote – in other towns hardly anyone did.

    Of course (because of population movements over the centuries) some “towns” did not have any people living in them any more (and still returned members to the House of Commons – people chosen by the local landowner) and some new places (even very big places) were unrepresented in the House of Commons.

    From a rationalist point of view the system made no sense – but in practice some of the best Members of Parliament were from “pocket boroughs” and they were often people who could not get elected in places where a lot of people had the vote (Edmund Burke is a good example).

    As all libertarians know – democracy and liberty are not the same thing.

    Women and voting.

    I think women ratepayers had the vote – both for Poor Law Guardians (under the Act of 1834) and for local councils (under thte Act of 1835).

    Parliament?

    Well by the “back door” perhaps – if a women landowner owned a “pocket borough”……. and in ancient times things were different anyway…..

    By the way in the United States – some States (at first) allowed women taxpayers to vote.

    New Jersey did – but the Democrats put a stop to it.

    You see women (like blacks) tended to vote Federalist – so Jeffersonians did their best to remove the franchise from women taxpayers (and freed black taxpayers) as part fo the Thomas Jefferson – John Adams feud.

    I am torn on that feud – in that I think that Adams was the better man, but Jefferson was the better President.

    Economics.;

    David Ricardo is a mixed figure – a mixture of the good and the bad (but when he is wrong – he is very, very, wrong).

    Karl Marx – he rejects what is good in Ricardo, and accepts what is bad.

    Karl Marx is really a terrible economist – just awful. How anyone ever took this man seriously (with his endless stupid lies – such as misquoting Gladstone to pretend that wages were falling) is beyond me. Although, of course, it is clear from the early philosophical manuscripts that all his basic (collectivist and anti private property conclusions) were made before he even started his “economic research”.

    Henry George. – as Rothbard was fond of saying, Henry George is interesting when he is talking about anything apart from land (but, sadly, he insisted on talking about land a lot).

    Indian property rights.

    Different tribes had different ideas.

    However, if people do not believe in private property how can one “rob” them? So if a tribe really did not believe in private property in land “their land” (by definition) can not have been stolen. But, of course, even if Indians (such as the real, as opposed to the school textbook, Chief Seattle) did believe in private property in land and sold it – then Kevin and co do not give private landowners a pass.

    So the “you stole the land from the Indians” stuff is just B.S. – as even if people bought the land they would go to the same places (the places that Mr and Mrs Ayers and their pal Jeff Jones used to discuss for those tens of millions of people who would need “reeducation” or “disposal”)..

    “You are being unfair Paul” – no I am not. I have given Kevin (and the rest of the “libertarian” left) plenty of chances to break with the “Occupy” movement (which is dominated by the ideologicval followers of the above – both Red Flag syndicalists, and so on, and Red Flag Marxists in open alliance). They have refused to break with the Occupy crowd – and, on the contrary, have expressed support for them.

    However, a sharp divide should be made between the Black flag supporting “libertarian” left – and people who just want a land tax as a single tax.

    If there was only one source of government revenue (the land tax) and (a very important point) only people who paid this tax had the vote, then I do not really see a huge problem.

    As Stephen K. says – it is not what type of tax there is that really matters, it is how high the tax is (and that is determined by how high government spending is).

  36. My apologists – I should have typed “Black flag syndicalists”.

    It is just that both the Black Flag people and the Red Flag people in the Occupy movement (and in the Chicago teachers union and so on) are joined at the hip.

    Whatever the differences are, in theory, between the various collectivists factions – they are all hostile to large scale private property in the means of production, distibution and exchange. And they all come out with the same “arguments”.

    Labour theory of value, down with the 1%, “social justice”, you-stole-the-land-from-the-indians-anyway (even shouted at some Polish man who only came to the United States in the 1950s and built up his manufacturing business from nothing) and on and on.

    Sure I fully accept that the collectivists are divided into various factions – but as they all march together, shout the same things, plot the same crimes (and on and on) I treat them as, for all practical purposes, the same.

    So when (for example) Roderick Long tells me that Kevin is not in X faction he is really in Y faction – I do not actually care. As what I care about is whether a person is friend or foe of large scale private ownership of the means of production, distribution and exchange.

  37. I was captivated by the brilliant opening paragraphs, summarising the poorly understood Land Law of England. I can detect a great aptitude in the writer for the Queen of all subjects – Law!

    Economics – well, we all know it is a pseudo-science at best, and at worst a form of necromancy and High Priest antics behind a thin layer of maths mis-applied though apparently “correct”.

    The comments are all very interesting, but surely Ian B is right that Value (Monetary Value that is) comes from the Purchaser – and that any theory that does not start from that point is kind of doomed? (Some might add that any theory that does not factor in ecological and social value is also doomed!)

    If we start there, we can instantly start to factor in the Elephant in The Room. There are a potential 7 billion purchasers in the world for a nice piece of urban or rural land in a lovely spot like the British Isles. Of these, at least 10 million may have enough money to purchase some land in the UK. I.e. Demand is endless, and Supply is finite.

    So before any switch to a Land Tax (which might be a better idea than it seemed before the rest of the world developed and threw up millions of wealthy people whose one desire is to own a bit of land in a nice European country), we need to clear the decks by enacting some very very non-Libertarian foundations for a Land Tax. 1) no-one domiciled abroad can buy British land at all in future. 2) those abroad who already own British land of any kind will have the fee simple exchanged for a term of years absolute, in accordance with Article 1 First Protocol ECHR which permits such confiscation provided it is A) in the public interest and B) some compensation is paid as in any CPO.

    A return to the Poll Tax would be a useful adjunct to a Land Tax. The Poll Tax would be far less onerous than Council Tax, but it would be linked to the right to vote. This would instantly clean up any fraud in the Electoral Register and would ensure the defeat of charlatan parties which buy votes by effectively bribing voters who are poor to vote for tax avoidance and benefits.

    Finally, Land Tax Relief has to be available to people who have valuable land but no income – pensioners in houses they bought decades ago, most if not all Farmers (well done the chap who wondered how they would fare!), etc. Mr Webb – well done, and when you have recovered from the shock of an injection from the Far Right, please consider whether this is not exactly what is needed to make your proposal sound both workable, and also nowt to do with Marx or Ricardo.

  38. I was captivated by the brilliant opening paragraphs, summarising the poorly understood Land Law of England. I can detect a great aptitude in the writer for the Queen of all subjects – Law!

    Economics – well, we all know it is a pseudo-science at best, and at worst a form of necromancy and High Priest antics behind a thin layer of maths mis-applied (though apparently “correct”).

    The comments are all very interesting, but surely Ian B is right that Value (Monetary Value that is) comes from the Purchaser – and that any theory that does not start from that point is kind of doomed? (Some might add that any theory that does not factor in ecological and social Value is also doomed!)

    If we start there, we can instantly start to factor in the Elephant in The Room. There are a potential 7 billion Willing Buyers in the world for a nice piece of urban or rural land in a lovely spot like the British Isles. Of these, at least 10 million may well have enough money to purchase some land in the UK. I.e. Demand is endless, and Supply is finite.

    So before any switch to a Land Tax (which might be a better idea than it seemed before the rest of the world developed and threw up millions of wealthy people whose one desire is to own a bit of land in a nice European country), we need to clear the decks by enacting some very very non-Libertarian foundations for a Land Tax. First all, no-one domiciled abroad can buy British land at all in future. Those abroad who already own British land of any kind will have the fee simple exchanged for a term of years absolute, in accordance with Article 1 First Protocol ECHR which permits such confiscation provided it is A) in the public interest and B) some compensation is paid as in any CPO.

    A return to the Poll Tax would be a useful adjunct to a Land Tax. The Poll Tax would be far less onerous than Council Tax, but it would be linked to the right to vote. This would instantly clean up any fraud in the Electoral Register and would ensure the defeat of charlatan parties which buy votes by effectively bribing voters who are poor to vote for tax avoidance and benefits.

    Finally, Land Tax Relief has to be available to people who have valuable land but no income – pensioners in houses they bought decades ago, most if not all Farmers (well done the chap who wondered how they would fare!), etc. If Tax Revenue declines more than it is already doing, too bad – the Revenue is often misspent anyway. Mr Webb – well done, and when you have recovered from the shock of an injection from the Far Right, please consider whether this is not exactly what is needed to make your proposal sound both workable, and nowt to do with Marx or Ricardo.

  39. Edith, thanks for your comment.

    You said “value (monetary value that is)” comes from the purchaser. I think, leaving aside the question of whether value and price are the same thing or not (a query on that was implied in your wording), the price achieved is determined by the purchaser in a free market. I think you will find the classical economists agreed.

    What Ian B needs to have shown is not that the price a good is sold out is as high as the seller can achieve and as low as the buyer can achieve (assuming they agree on a price), what he needs to show is that A HIGHER RENT FOR A PIECE OF LAND ENHANCES THE MARKET PRICE THAT CAN BE ACHIEVED FOR THE PRODUCTS PRODUCED BY A BUSINESS USING THAT LAND.

    If I produce hub caps in factory that I rent from a landowner for £1m a year – if the landowner doubles the rent, does that mean the hub caps I produce can be sold for more on the market? I would suggest it doesn’t mean that at all, as, as you have said, the purchaser decides whether he will buy at the price and may not agree to allow the increase in rent to be passed on to him in the price of the hub caps.

    Which either means the producer absorbs the increase in the rent, assuming market demand is such that he cannot raise his prices, or refuses the increase in rent and goes elsewhere.

    As for land tax relief for pensioners with no income: that would make the LVT pointless! Maybe you could institute a system where pensioners could defer payment until their deaths, on condition the ENTIRE INCREMENT IN THE SITE VALUATION SINCE THEY BOUGHT IT WAS TAKEN IN A LEVY upon the sale of the property during probate.

  40. Good article djwebb. I am very drawn towards Georgist policies as I too find the ownership of land to be a logical impossibility due to the fact that, traced back, all land is illegally seized and reallocated at the whim of someone ruling by force.

    However, I have a couple of criticisms of the LVT proposed:
    – As Ian B said, it is a valuation tax, not a value tax. It seems strange that libertarians who often fetishise the ability of the market should here abandon it to give state bureaucrats the final decision in what the market would decide the value of any given piece of land is.
    – It still allows the accumulation (monopolisation) of land and, given that, the added incentive to hugely limit the use of the majority of that land in order to decrease rent on it, while charging excessively on the few parcels allocated to the market. Think De Beers.
    – It allows the state to evict people(s) by arbitrarily increasing the ‘valuation’ of land, or whole communities by increasing public infrastructure near their communities to increase LVT to unaffordable levels.
    – Similar to above, someone could be living happily in Docklands, paying their £10k LVT then, without their consent, the state decides to build CrossRail, LDR etc. and their LVT increases to £20k, a level they can no longer afford. While this is unintentional by the state, how is it ‘fair’ that this person has to move through no fault of their own?

    My own modest proposal would simply be a slight modification of the above and would use the market to ensure the best economic and social outcome. Why not have a panel, made up much like a jury, possibly of local people, where parcels of land are, in effect, auctioned off for use over a given period (max. 10 years?). The auction is not simply cash, it would include land usage, infrastructure improvements etc. Thus a factory spewing pollution would not be allowed near houses because the panel would be made up of local people whereas a superstore might be allowed. This would both provide funds for local and central government (central government taxing local government!!!) and give local people a say in their own communities. Existing land usage would obviously be given priority when the lease expired, but not to the exclusion of other uses. Land could be traded as long as the use didn’t significantly change. Any significant change in usage would spark a fresh auction.

    I’m hoping this modification would cover most of the objections to the original LVT.

  41. 1. Valuations have to be according to the prices achieved in real transactions – not the state’s view of the market price.

    2. It doesn’t add to an incentive to limit the use of the majority of land – quite the opposite. The LVT penalises the non-productive use of land. The LVT is levied on land that is not being used!

    3. The LVT doesn’t evict anyone – but the current obsession with property has to stop. The idea that we should all put every penny into property and all be sitting in expensive homes with little or no income is absurd. In the end financing vehicles can be arranged for people who are asset rich but income poor to pay the LVT for them and take it out of the sale of the property in probate.

    4. If you’re living in the Docklands and have your LVT doubled by infrastructure provision, you are “blocking” very valuable land. The LVT promotes the most productive use of land, making it difficult to sit on expensive land for which there is very high demand and use it for non-productive purposes. As stated this could be resolved where people genuinely had no income by financing vehicles that would capture the increase in the site valuation in a windfall levy after their deaths.

    5. Land is a social resource, and there is nothing ‘fair’ about blocking the use of a social resource.

  42. @Paul Marks I’m sure we agree this isn’t the place to argue the toss about the American Indians, though you’re at the very least omitting facts for instance that the many tribes held no unitary idea about property rights in common. In any case, my point is a general one: right now indigenous peoples are being exterminated to permit exploitation of the land they occupy. And what about Diego Garcia?

    From my POV the responses to my post (i.e. where I’m specifically mentioned, not the general arguments) are pretty much non sequiteur so far as I can tell and my points are presumably deemed irrelevant to the discussion, which is fine, you’re comfortable with the ethics of initiation of force for reasons other than self defence, I’m not. I guess that means I’m not a libertarian.

  43. Economics is not a natural science (like physics) but it is a “body of knowledge” (the old defintion of a “science”) – just as solid (if followed correctly) as logic.

    People who are interested in real economics (as opposed to the stuff taught in the schools and universities and presented by the media) should start with something like “Economics In One Lesson” by Henry Hazlitt and then go on to works like “Human Action” by Ludwig Von Mises, and “Man, Economy and State” by Murray Rothbard.

    As for land law.

    Disputing the right of free hold because of the Reformation or the Norman Conquest is not sensible.

    Nor is it really sincere – as the attackers do not hesitate to attack private landowners (or de facto private landowners – which is what free hold actually is) even in places that neither had a Norman Conquest or a Reformation.

    On a land tax in place of all other taxes……..

    There is no special reason why “unused” land (say land that has been left for a nature reserve) should be taxes more highly.

    However, I have no fundemetnal objection to a land tax as a substitute for all other taxes – as long as only people who paid the land tax had the vote.

    It is obviously unjust (and just plain silly) to have the majority set taxes (by voting) when they are not even going to pay the tax whose level they set.

    If people want a land tax, instead of all other taxes, then (logically) they should support restricting the franchise to those people who would actually pay this land tax.

    These people would have an obvious interest in supporting the reduction of government spending – so that the single tax (the land tax) did not cripple them.

  44. David,

    1. I thought you might bring this up, however, no two pieces of land are identical, it will still be the subjective opinion of bureaucrats as to how Piece A in 2014 compares in value with Piece B sold in 2012 and Piece C sold in 2009.

    2. LVT is based on the value of land achieved in the market, there is massive incentive for you and I to duopolise a portion of the market and sell land to each other for buttons. The use of the land, and economic benefit from that, at that point becomes the only potential stick for the state to beat us with since we’ve gamed the price of the land.

    3. LVT definitely evicts people, or financing takes ownership of their property away from them. I don’t disagree with your point on the property obsession, but that doesn’t detract from the problems I highlighted.

    4. This is completely untrue. Housing has a high cost and high social value. It may be more productive to turn it into offices, but it’s generally more expensive to do that, what this does is make housing more attractive in this area, and all you are ‘blocking’ is someone able to pay the higher LVT and use it for exactly the same purpose you are.

    5. Compulsory purchase is OK in this view then? My proposal gives a term for people to use land as agreed by the community. This allows people and firms to prepare. LVT doesn’t.

    “[T]here is nothing ‘fair’ about blocking the use of a social resource.”
    From a libertarian??? What if it causes harm?

  45. On housing (and other endless developments) I wonder how much of this would be done if developers had to (and knew in advance they would have to) provide all the costs (roads, drainage and so on) – and maintain them in the long term.

    There is an unspoken assumption that government (central or local governments) will “adopt” developments (in such things as roads) after a certain period of time – there did not use to be this assumption, but there is now.

    I think that is why so many green fields and woods have got boring housing estates slapped on them.

    “You are going off topic Paul”.

    Sorry.

  46. Johnny – I actually said that different tribes had different ideas about land ownership.

    As for ommitting facts – both sides do that.

    For example, those people who claim to care so much about the Dakota people and the “sacred Black Hills” do not seem to give a toss about the Dakota driving the Crow tribe from those very same hills only a few years before. Which is why the Crow allied with the U.S. military to get back at the Dakota.

    But then the real story of the American West is rather more complicated than Hollywood movies. For example, one of the leaders of the Indians that Andrew Jackson faught was just about as “white” as he was – put the two men in the same style of clothing and you could not tell them apart. That is not defend Jackson and his (later) “trail of trears” (vile – utterly vile) but folk are complex.

    As Senator Benton said of Jackson – “President Jackson, I remember him – I shot him once, a fine man”.

    Even “savage Indian fighters” like Kit Carson (a much more interesting man than our Kevin) were, at least in part, Indian in culture – and faught with Indians on their side (as well as against them) all their lives.

    Sometimes the hardest Indian fighters were also defenders (defenders) of Indian land rights – Sam Houston and David Crockett are two examples.

    And sometimes the “facts” are just flat wrong – for example Thomas Woods started to suspect that something was wrong with the way American history was taught when he found, in a school textbook, a list of “exterminated” tribes – including a tribe he passed every day on the way to school.

    When people were allowed to do scientific investigation of “sacred Indian land” is was obvious that the history was one of endless attacks and slaughter among the tribes. The “sacred graves of our forefathers” are often not the forefathers of the people talking about them at all.

    “What about ………”

    What about it?

    I am not going to defend the Spanish in Latin America any more than I am going to defend the Angles, Saxons and Jutes in Britain.

    That does not mean that people in England should have their land stolen now – because it “really belongs” to the folk of King Arthur.

    Or that people in England are really “pure” Germanic anyway.

    By the way – the people in Latin America are often not “pure” Spanish (or “pure” Euopean) either.

    Not even in Chile.

    There is no sincerity in the attacks.

    If the attackers were sincere they would seek after the “true owner” of a particular piece of land.

    They hardly ever do that.

    What they do is the following…..

    They say “so and so does not really own this land – because of such and such”.

    “Therefore we can distribute it” or tax it to bits, or whatever.

  47. You start from where you are.

    “This land was stolen a century ago” (even if true – and it often is not true) gives people no right (no right at all) to steal it now.

  48. To reiterate Stephan Kinsella-

    But the fee is not just “charged”. It’s charged by someone. Charging this fee is acting as an owner of the land–as a landlord. But the state doesn’t own the land. You say the nominal owner doesn’t own it–but the state doesn’t own it, so has no right to impose a fee on someone to use it.

    Indeed. This is why I was trying my best to point out that Georgism isn’t, and never was, a libertarian policy. It’s a (Ricardian) socialist policy. It holds that the land is a “common weal” and thus “the people” as a collective own it and thus this collective people should be its landlords. The result is that although Georgists make much play of ground rents being unjust, their proposed policy is entirely predicated not on ending rental, but in making the State the rentier, which follows that general socialist principle that oppression by individuals becomes worthy when the State does it.

    If ground rents are really unjust, then one would seek to abolish them, by some policy such as making ground rental illegal, or confiscating all the rented land and awarding it to its tenants as their property in perpetuity. I am not advocating those policies, but they are consistent with the idea that ground rents are exploitation by a landowner cartel. But the Georgists don’t advocate either of those things. They want the rents, and indeed want to extend the rents such that even a man who owns his own land outright, and who currently pays no rent, must now pay rent, to the State.

    So it seems to me that it is hard to see the LVT, at least as advocated by Georgist argumentation, as anything other than an assault on private property rights. Which does not seem very libertarian to me.

  49. Yes Ian B.

    It is like (for example) someone talking about the indian peoples in Brazil – whose land has been threatened in recent years by government road building projects (partly funded by aid from the British and American taxpayer). In the old days people who were near the major rivers were under threat from settlers – but not people far away from the rivers (the road projects have changed all that).

    Now this is not centuries ago – it is right now.

    If someone was campaigning for the indian tribes in Brazil to be left alone (an end to the government road buidling and so on) it would make sense.

    But what does not make sense is “let us impose a land tax on them”.

    The only way that such people could get the money to pay the tax is to sell the land.

  50. So presumably we shouldn’t tax any oil producers over and above normal Corp tax, or sell off the Bandwidths, or charge train operating companies for the use of the tracks? Water companies unregulated? Energy industry unregulated?

    That’s a licence to print money. And Libertarians are ok with that?

    Monopolies damage free-market Capitalism. Land ownership is a natural monopoly.
    If youre ok with that then fine, just say so and we’ll put you in the mad draw and move on to something else.

  51. It’s a shame that a nonsense is made, deliberately of all these discussion threads. I would recommend readers to read the blogposts and not bother with the how’s-your-father below.

    No one is talking about imposing a land value tax on primitive Brazilian Indians – they don’t claim to own the land and they are not benefiting from any capital appreciation. What a stupid comment! Brazilian Indians trying to corner the capital appreciation of these lands? Where did you get that idea from?

    But if the developers move in and start logging – then THEY should pay a land/resource tax.

  52. benj-

    For the benefit of those less knowledgeable, could you, in concrete terms answer MW’s several points. Less the personal stuff.

    I’ve argued this out with Mark Wadsworth a number of times on his blog already. To be honest about it, I always feel a little bad arguing with him as he’s clearly a nice bloke and he has a lot of good points to make about how “Home-ownerism” is ruining the economy. That’s why his barb about (me) being a “Daily Mail reader” is beneath him, really. He knows full well that I’m on his side regarding breaking the house price spiral, and homeownerist NIMBYism and so on.

    The problem is he just really hasn’t got much of a grasp of economics; as I said earlier, he’s one of those people arguing the detail without understanding the basics.The difference between values, valuations and prices, for instance. To fully explain all this would need more than a comment, more than a blogpost. More like a monograph or a book. The thing is, it’s already available from writers other than myself, all over the internet. But to understand it, one needs to immerse oneself in it, as with learning any other subject.

    The major problem is one very common in economic thought. It’s the desire to boil everything down to a single cause. So here for instance Mark offers the following justification-

    Then there is the basic point that without a stable nation-state, there can be no land rents (try buying, renting or selling land in Haiti, Somalia or Afghanistan!) therefore as a quid pro quo, it seems perfectly reasonable for the nation-state (i.e. the government on behalf of every citizen) to collect those rents and spend them on the core functions (law and order, defence, immigration control, refuse collection, flood defences, whatever) and dish out the rest as a Citizen’s Dividend or Personal Allowance.

    This is the classical Ricardian view that land rents are the cause of everything in the economy; everything else is an effect. But one could equally say that “without a stable nation state there can be no law and order” or “without a stable nation state there can be no rights for women) or “without a stable nation state there can be no food”; stability, safety and production of anything is dependent on a stable society (whether or not a nation state) which is why economies collapsed as Hunnish hordes swept out of the Steppes in the past. Land rents are not special in that regard.

    It is often difficult to explain to somebody who holds a particular belief why they are wrong, other than to say “you are wrong”. The basic problem here, which is why I have talked about it, is Value Theory. Smith and Ricardo, and Marx and George believed in the Labour Theory of Value. We now know that value is subjective in the minds of consumers (called by the somewhat opaque terminology of Marginal Utility). This may not seem important. Indeed I remember making this point to Mark in one debate, and his next comment said he’d gone away and looked it up on Wikipedia or somewhere and, basically, he couldn’t see the big deal. But it is really important, because the difference between the two theories boils down to the question of “in which direction prices propagate”. The LTV posits that prices propagate from producer to consumer; the producer sets the prices. This allows for a Ricardian interpretation in which the Rentier controls the market by setting the cost of land, and all prices propagate from that.

    But it doesn’t work that way. It works in the opposite direction. “Costs” are ultimately set by consumer prices, and the land rent is merely one of many prices thus set. Take this from DJ-

    What Ian B needs to have shown [...] is that A HIGHER RENT FOR A PIECE OF LAND ENHANCES THE MARKET PRICE THAT CAN BE ACHIEVED FOR THE PRODUCTS PRODUCED BY A BUSINESS USING THAT LAND.

    If DJ understood Marginal Utility he wouldn’t be asking me that. I suspect he doesn’t; with all due respect I think he’s concentrated on reading stuff like Smith and Mill and Marx from a kind of historical criticism perspective rather than studying economics as a science. I don’t need to answer that question at all. Two ways to address it: firstly, the landlord can try riasing his rent. If the tenant won’t pay it, he has to drop it again. Whether he can is dependent on numerous market conditions, as with any other price, including teh availabiltity of cheaper rents from competitors. As with any other good or service.

    The second way to address it is to consider the question of what is special about rents; the answer is “nothing”. A Georgist at this point will say, “there is a limited supply of land”; but there is a limited supply of everything. That after all is why there is a price system at all. Ricardo’s “Iron Law” claims that because the tenant has to buy from a land “monopoly”, the Rentiers can arbitrarily increase their rents en bloc and absorb all the tenants’ incomes above an arbitrary subsistence. But think; if that is correct, so can any other primary supplier; of raw materials, of electricity, of transport. Or indeed the factory labourers.

    So what actually happens is that all these costs to the (hub cap) producer are competing with one another for portions of his income (and another cost doing that is his own desire for a profit). They can each only increase their prices to the degree the market will allow. There is nothing special about rents. Ricardo was writing at a particular historical juncture when agricultural peasantry was widespread, shifting out of post-feudalism, and as such his observations had some merit as a picture of the world of his time- but it was a world already passing away and is long gone now. The mistake was to try to generalise a pre-modern observation into a general theory, in the absence of a thorough understanding of economics that we now have. There is no “Iron Law”; and as such, any assumptions based upon it fail. Landlords don’t set the price of hub caps.

  53. Ian, one thing you missed there was that although everything is limited in supply, a few things have a rather hard minimum demand, water, food and beer, sorry, land, being some of them.

  54. Ian, you absolutely insist on taking the debate off-topic in what seems to be a deliberately destructive way. This is my last comment on the labour theory of value, which really has nothing to do with the land tax. I approach the land tax from the point of view of English common law, as outlined above, and I don’t regard the land tax as depending on any version of a labour theory of value or none.

    I haven’t read Smith and Ricardo – and I understand that each writer has his own particular take on the labour theory of value and that maybe Smith and Ricardo had a less thought-out version of it than Marx? I am only familiar with Marx’s version, so I can’t comment on the others. I believe Smith commented briefly somewhere – or was it Ricardo – that he couldn’t get his labour theory of value to work properly as a theory describing the real world – which seemed to have prices diverging wildly from that, but he had no solution. But I do know – from reading primary sources – that Marx did not believe his labour theory of value could be empirically observed in the actual economy, and even said that if goods exchanged at values that corresponded to their share of labour expended in the economy, it would be only accidental. It was no part of his theory that prices reflected labour values (this is called “the transformation of value into price” in his works). Whether some element of his theories was right or not, I am not yet sure, and I cannot defend one writer by another’s views or vice versa, but I am merely stating (as explained well by Paul Mattick at http://www.marxists.org/archive/mattick-paul/1969/marx-keynes/ch04.htm – a link you obviously did not read) that the labour theory of value is not disprovable by empirically observed prices or any other empirically observed phenomenon.

    I have read enough of Marx to know he was no simpleton – Paul Marks’ comments on Marx indicated to me he knows even less on the subject than Ian B – and that he wrote a very dense and closely argued work that it would require very careful reading and analysis to unpick. Sure, he drew an entirely incorrect conclusion about the immiseration of the workers – which we know today has not happened – and may have used quotes from government Blue Books erroneously (Capital is full of huge quotes, pages long, from the Blue Books and inspectorate reports – trying to prove empirical points). But to read his theory carefully, unpick the flaws in it and then show why and how he drew the wrong conclusions would be a large undertaking that to my knowledge no libertarian has done. Nearly everything I read on the subject, including Ian’s comments, reveals instantly a basic misunderstanding.

    In the actual economy – whatever the abstract theories some classical and Marxist economists have tried to impose on it – businesses deal not with labour values or anything like it – but with cost and price. Input costs, prices, profits and that sort of thing. The price of something is determined by demand for it – as Marx himself wrote (duh? Ian B has not read the works he claims to know in depth) – but by the same token, not everything can be produced for a profit for the price that it could command. This is because there are inputs and outputs to consider. This is just the ledger accounting of a business – which does not need an abstract theory of how value or price are arrived at – they just operate in the real world.

    I believe Marx is drawing a distinction between essence and appearance, and he believed that his labour theory of value influenced the way the whole economy (at the level of total social capital) worked, but on the level of individual businesses, which are free to try to get as much for their goods as they can, they experience not value, but prices, costs and profits. This led him to the view that free market competition helped or tended to equalise profit rates, making the really observed prices quite different from any abstractly posited labour values. This is why what Marxists view as vulgar economic theories, including marginal utility and everything else mentioned by Ian, is merely a discussion of how the system empirically works following what they see as the transformation of value into prices. Nothing Ian said even begins to be an adequate critique of Marxism, although I can’t say that for sure about Smith and Ricardo without committing Ian’s error of rushing into critiquing something I don’t know about.

    My view is that a more viable critique of Marxism would concentrate on his view that there was a long-term tendency of the rate of profit to fall, but supplemented by a long discussion of countervailing factors, which left it unclear in volume 3 of Capital why he was so sure none of the countervailing factors did not cancel out what he viewed as the problem with the capitalist system. He also abstracted from things like the world market, leaving his final analysis far from being a description of the real capitalist system. However, unlike Ian, I do not wish to have a hazy understanding and rush into a critique without reading the sources properly and being sure I understand the theory properly before critiquing it. So everything I have said on this subject has a provisional nature to it: provisional, dependent on rigorous analysis.

    Marx did not deny that economics in the real economy are as vulgar economists describe them. From the point of view of a businessman, if he can only buy inputs and labour for a product for £1,000 and can only sell it for £500, then he cannot produce it for a profit. He can look for cheaper inputs, and those inputs and labour have varying prices too – but in the end he is just preoccupied with prices and costs, not theories. It doesn’t really make any difference how market prices are arrived, whether psychological or otherwise – the fact remains you cannot profitably produce things at a loss. A landowner is not preoccupied with classical economic theory of whether rent is a cost that influenced the final market price of articles produced on the land or whether it is a residual (that amount of the profits of a business that leases the land that the landowner can corner): he simply works in the real world. He is already trying to command the highest rent he can – and if the rents go above a certain level then the businesses will no longer be able to afford to lease that land and produce hub caps or whatever on that land. The tenant can go elsewhere, and to the extent that the LVT would exist elsewhere, albeit on cheaper land, all businesses would benefit from any corresponding reduction in other taxes, eg. on income, profits, capital gains, etc.

    In the real economy, rent increases ARE an increase in production costs, but rent is also a price determined by market demand (including, among other things, whether the tenant believes he could pay the rent and still produce at a profit things that can sell at a price the market will buy them for), and so rent increases cannot always be passed on to tenants, as beyond a certain point the tenants will not be able to allow the rentier to commandeer a greater and greater proportion of his industrial profits. As Ian B said, rent does not determine the market price of hub caps and so eventually the land value tax reaches a point where it has to be borne by the landowner.

  55. Ian B: “The result is that although Georgists make much play of ground rents being unjust, their proposed policy is entirely predicated not on ending rental, but in making the State the rentier,”

    Exactly. Not only that: “rent” cannot be unjust. Putting it this way makes equivocation and evasion possible. Rent is not some free floating thing that could be unjust. Rather, there is the action of renting by a person: so the question is: is this action unjust? Clarifying how to word the question virtually answers it: no action is unjust so long as it does not commit aggression against others. By permitting someone to use your property in exchange for some consideration, you are not thereby committing aggression agianst anyone else–that is, you are not thereby invading the borders and/or changing the physical integrity of their body or justly acquired scarce resources without their consent.

    Georgists are thoroughly confused–and statist. They are not the solution to statism–they are part of the problem.

  56. Keddaw:

    “Good article djwebb. I am very drawn towards Georgist policies as I too find the ownership of land to be a logical impossibility due to the fact that, traced back, all land is illegally seized and reallocated at the whim of someone ruling by force.”

    There are at least two problems with this reasoning. First, some land titles can be traced back to an immaculate act of Lockean homesteading. Second, even if it’s correct that the nominal landowner has no good title because he cannot trace property back to some immaculate act of Lockean homesteading, this does not mean the state or the community has title in the land either. But the state has to have ownership of the land in order to assess a fee or tax–for doing this is acting as the overlord or landlord (see, for more on this latter issue, my post Peculium, and the State as Overlord (in which I discuss the fact that in several US states the state stepped into the shoes of the British Crown as overlord (instead of going to an “allodial” system), and that as a matter of de facto reality, even in the “allodial” states, the state is still acting as landlord or overlord due to its claim to extract property taxes from the land).

    Third: legitimate title does not require tracing your claim back to an immaculate homesteading act. The libertarian-Lockean view is very simply: it says that the first user of previously unowned property has a better claim than latecomers: and this is because of the significance of the prior-later distinction. In cases where title is not traceable back to the dawn of time, you can still use the prior-later distinction to determine who, among two or more potential competing claimants, has a better claim.

    See, e.g. my article What Libertarianism Is, text at footnotes 25-28, and footnotes 25-26. As the Louisiana Code of Civil Procedure article quoted there provides (and it is quoted because this procedure perfectly follows a Lockean-libertarian view of the workings of title verification): “When the titles of the parties are traced to a common author, he is presumed to be the previous owner.” The reason for this is the dispute is always a dispute between two real claimants: if the both ultimately claim title traced back several generations ago to a common person, then the law asusmes that person was the owner, and then looks at the conveyances starting from that moment to see which of the two claimants has the better claim. For example if A owned land 150 years ago and conveyed an interest to B 140 years ago, and then a conflicting interest to C 130 years ago, then (ceteris paribus) B would have a better claim than C, and would prevail in the property dispute. As for the rest of the world, unless someone with better title than A could be identified (the chance of which grows more and remote over time), then no one in the world could ever show better title than B, so in effect this gives B a “real” right–a right good against the whole world. And notice that this is done without tracing title back to an immaculate owner. It could even be that A was a thief–it would not matter.

    As Rothbard notes (I quote him here: Justice and Property Rights: Rothbard on Scarcity, Property, Contracts…):

    “It might be charged that our theory of justice in property titles is deficient because in the real world most landed (and even other) property has a past history so tangled that it becomes impossible to identify who or what has committed coercion and therefore who the current just owner may be. But the point of the “homestead principle” is that if we don’t know what crimes have been committed in acquiring the property in the past, or if we don’t know the victims or their heirs, then the current owner becomes the legitimate and just owner on homestead grounds. In short, if Jones owns a piece of land at the present time, and we don’t know what crimes were committed to arrive at the current title, then Jones, as the current owner, becomes as fully legitimate a property owner of this land as he does over his own person. Overthrow of existing property title only becomes legitimate if the victims or their heirs can present an authenticated, demonstrable, and specific claim to the property. Failing such conditions, existing landowners possess a fully moral right to their property.”

    Re Native Americans: yes, if a particular person living today can trace a claim back to an ancestor who was dispossessed of it, he should get it back. For people who would lose the stolen property their ancestors had stolen, well, that’s what property title insurance is for — as I explained in Property Title Records and Insurance in a Free Society, linked previously.

  57. Ian B loves to play this game, of trying to pretend that theories of value are somehow relevant to LVT. The only question is whether the price is discoverable, to which the obvious answer is yes, otherwise there would be no land market (buying or renting). Indeed, the process by which a government could discover the correct LVT for a given plot is exactly the same as the process by private landlords do: trial and error. But then, I’ve told Ian this before.

    Incidentally, you can construct exactly the same theoretical valuation argument against income tax and yet no-one opposes income tax on the basis that the value of people’s labour can’t be determined…

  58. Stephan,

    All land was once someone else’s and at some point taken without recompense. Not that it matters, I have a more fundamental problem which is that as a fundamentally limited and non-renewable resource it cannot be allowed to be monopolised.

    Yes, even by the state. My idea was for the community/state to act as steward of the land, putting it to communally agreed best use for the best fee (not dissimilar to the ‘beauty pageant’ some countries held for 3G EM spectrum) but only for a limited time so as not to disenfranchise future generations, or better uses in this generation.

    In any situation where land can be owned, even land “in use”, there exists a potential for accumulation of land into fewer and fewer owners. Someone with a properly long term view would try to own as much land as possible and rent it out to keep ownership valid, until they were in a position to charge super-normal rents. Unspoken collusion with other large landowners would lead to increasingly high rents, transferring wealth from capital and labour to land.

    At least, that’s what I would do in a situation with a necessary and limited resource given enough time and money.

  59. Pingback: Stephan Kinsella on lower taxes | Libertarian Home

  60. @ Ian B: “The result is that although Georgists make much play of ground rents being unjust, their proposed policy is entirely predicated not on ending rental, but in making the State the rentier,”

    I don’t have a problem with that. Better the state has access to those revenues, so I don’t have to pay any other taxes, than the double whamming of paying taxes and rents.

    However you want to cut and dice it, that’s the choice. Or go and live on a island in the middle of nowhere and don’t pay anything, but no longer enjoy the protection that a governed society, big or small, affords.

  61. benj-

    Like I said above, this isn’t a Libertarian policy and your above comment really confirms that. Since this is a Libertarian blog, I’m not really inclined to justify a libertarian view as opposed to your “governed society”, since the whole definition of Libertarianism is a desire to be as un-governed as possible.

  62. @djwebb

    What does English common law have to do with libertarianism?

  63. @Ian

    I agree. But, not paying any taxation is a good step in that direction

    wouldn’t you agree? Because our current system is so skewed against producers, the Government has to offer all sorts of subsidies in order balance out the affects. That’s why our welfare bill is so large.

    This state of affairs imbues a something for nothing culture, lets all get what we can, particularly if someone else is picking up the tab.

    Look, I’m nowhere near as educated as you or Mark but for me the message that you keep 100% of what you produce and only pay for the benefits you receive seems a simple and compelling idea, that fits right in with my libertarian slant.

    More disposable income allows people more choice. I know what I’d do with the money. Private health care and private education for my children. That equals a smaller state.

    It’s not like Mark is some kind of raving socialist is it? On his calculations, Government expenditure would fall to less that 15% GDP if a 100% lvt where to be implemented.

    Surely that is something you can agree on. As a start at least. Then we can go from there any talk about all the other things government can stop doing for us.

  64. @dj webb and everyone else.

    I came across this some months ago.

    http://dailyanarchist.com/2012/06/21/the-single-tax-a-refutation/

    some of the contributions are superb. If your going to go esoteric this is how to do it.

    I highly recommend everyone takes a look and works through the comments

  65. Thank you D.J. Webb. Delighted to read your insightful article. It shows great deal of clarity concerning land ethics and economics. The paradox is that a true libertarian needs to recognize the gifts of nature as a commons – bravo! Now let’s find something similar leading us from the left to the land value taxation as a key policy for a fair society. The new economic paradigm synthesizes the values of both freedom and fairness, efficiency and equity.

  66. benj

    So land is a “natural monopoly” and anyone who believes in private ownership of land (or de facto private ownership of land) should be put in the “mad draw”.

    Did I say that I believed that one person (or organisation) should own every inch of land in the world?

    Surely the would-be monopolist is the state (the government).

    And the people who should be put in the “mad draw” are those who think that such things as the declaration of 877 (declaring that even a King of France could not justly take land from one person and give it to another – one of the key points of difference between Western and Islamic civilisations, indeed the West and “asiatic despotism” generally) are mistakes.

    I would also like the point out that Alanna Hartzog is not (repeat not) a Paul Marks sock puppet.

    It is, of course, useful to me to have someone come on and say stuff like “the gifts of nature are a commons” and “fair society” (and on and on) in order to discredit the “libertarian” left.

    But I did not invent Alanna Hartzog – as far as I know this lady is a real person.

  67. In reply to DJ Webs original post:

    First of all thanks for writing this article and showing that you are taking an interest in improving society.

    Note most importantly that the focus should be on cutting Government spending, not raising new revenue streams, or nothing will improve.

    Here are some quick comments on the original post at the top.

    Quote 1
    “This does not change the fact that land ownership can only ultimately be vested in society as a whole, as represented by the Crown, and that that land has to be the source of revenue for the upkeep of society.”

    So an individual cannot own land, because land is common, but a group of individuals can own land if they call themselves Government?
    What if this government were then to sell land to pay debts incurred by the government, would an individual be able to own land then?

    Quote 2
    “A land tax base cannot flee abroad”

    But investment can, investors will invest in other jurisdictions where they will not be taxed on land.
    We can see from China what investment can do for a country and why it is so important.

    Quote 3
    “it allows for a reduction in taxes on production and consumption”

    No it does not, it just creates a new revenue stream to spend by government. Assuming other taxes will disappear is political niavity.

    Quote 4
    “it allows for the recapturing of the public outlay on infrastructure and services”

    This assumes land value increase comes only from public services, and not from people like Dyson or Branson (or Disney) creating jobs in an area.
    How are they to be compensated for increasing land value? Or is government the only creator of value?

    Quote 5
    “In fact, site valuations are often directly the result of public investment.”

    Say what!!! Public investment, isn’t public investment just tax from the private sector? So a form of compulsed/directed private investment with no direct return?
    Doesn’t public investment, employ private firms and workers. How much of public investment is public, and if the government didn’t hold the monopoly wouldn’t that investment come wholly from the private sector?

    Quote 6
    ” a valuation database should be easy to build”

    As a developer, that shows ignorance that you think all such factors that go into a buildings worth can be captured easily.

    More general points from our website here:

    http://www.own-yourself.com/governance/fiscal-policy/tax/capital-taxes/lvt

  68. I’ve been pondering this topic for a little while. It seems to me that one of the major sticking points is the valuation of the land, from which the tax charge payable is deduced.

    In an ideal world, this tax charge would be determined by the paying individual, but how do we stop fraud? I propose:

    i) At the start of each year, each person is sent a valuation as determined by the council/government/whoever, along with the details of how much tax this would mean that they have to pay.

    ii) Each individual can then either accept this valuation and pay the tax, or submit their own alternate valuation, and pay the relevant tax.

    iii) All valuations are published on the web, and those where the taxpayer did not accept the default are flagged as such. In these cases, anyone can tender an offer to buy at the amount listed+50% and the owner cannot refuse.

    Still working on the finer detail…

  69. @ Paul Marks

    I think you’ll find a monopoly is not defined as there only being one player, but a resource being finite. So, all land owners are monopolists.

  70. benj,

    I think you’ll find a monopoly these days is defined in whatever way best suits a person’s argument.

    The word originally meant a state-granted exclusive licence to trade in some particular industry or with some particular country- e.g. the East India Company or the Brewers’ Guild. It then came to mean a market sector with only one supplier in it. Socialists have since extended this to mean anyone with a large- not even dominant- fraction of a particular market sector. And Georgists define it by this quirky “resource being finite” thing. The problem with that being, all resources are finite. Because the planet Earth is finite.

    Land owners are not in any meaningful sense monopolists. Certainly not by the Georgist definition. It is a deliberate misuse of the word.

  71. Own Yourself – generally agreed,

    benj – if something being “finite” means it is a “monopoly” then everything is a monopoly.

    Gold, silver, tin, – whatever, all “monopolies”. Because nothing (not wheat, not cattle, not timber….) is “infinite”.

    What you are, in fact, doing is not just falsely claiming that there is a “land monopoly” but actually pushing a land monopoly (the very thing you claim to be against).

    As always the problem is not “the rich” – it is the state. And the idea that the rich control the state is just Marxist sillyness (any deal tends to break down over time). Giving “the people”control over the land – is giving the state (the government) control over the land. And this is not a good thing.

    The central feature (the central difference) between Western civilisation and “asiatic despotism” (at least since 877 AD) is de facto private ownership of land.

    Call it “free hold” (or whatever) but the fact remains that the state could not just casually come in and give the land of one party to another party – sure some tyranical Kings did that, but it was unusual (it was remarked upon – it was considered against the way things should be, it led to the revolt of landed barons and Great Chartas – even even David Cameron does not understand such things).

    Nor could the state just tax landowners (or de facto land owners) to destruction – “the power to tax is the power to destroy” unless limited (again some tyrants did that – but it was unusual, it was not considered the way things normally were).

    There was a difference between the West and the lands of Islam (and so on).

    What you (and others) seem to be saying is that that the West was in the wrong – and that asiatic despotism is correct.

    Ever considered getting a job at a mainstream university? After all that is what the university crowd seem to think.

    I remember listening to a bunch of them on a BBC discussion show – they were all saying how unfortunate it was the Ottomans did not take Vienna (indeed the whole of Europe) as the Ottomans were a much more “tolerant” civilisation – with far more “progressive” ideas…..

    No selfish landed families (and greedy merchant companies) preventing the Sultan doing what is good for the people?

    After all even the modern Islamists say they are in favour of “social justice” and a “fair society”.

    And they are sincere – and that is exactly the reason they should be opposed.

  72. @ ownoneself

    1.Land cannot be owned by anyone, any more than the air we breathe. It’s the same principal. The wealth derived from it doesn’t have to go to government. It could just be equally distributed among all of us. So, even anarchists should be happy with an LVT.

    2. Land “investment” is speculation. The difference between the two is that the former adds to productive capacity, the latter syphons it off. So, if the Chinese want to take their “investments” elsewhere, that’s a good thing.

    3. It is a more efficient “tax”. Taxes on production incur dead weight costs, over 15% GDP in the UK. Because land ownership produces nothing, taxing it has no dead weight costs. As such, by expanding the economy by getting rid of these costs, an LVT would produce a lower government spending %gdp ratio. Basic stuff, you should know this.

    4. By not paying business taxes, which an LVT would also eliminate the need for.

    5. Semantic quibble. We are all aware that the public sector is overwhelmingly financed by taxation. The point being, it is not the landowner that is responsible for the maintenance or increases in their site’s value.

    6. They seem to manage elsewhere in the World. Business rates here?

  73. .Land cannot be owned by anyone, any more than the air we breathe.

    Yes it can be, and it is, and indeed that is what you’re complaining about, isn’t it? What you mean is a moral point, as in “should not be owned by anyone”. But that’s simply a preference. Different people have all kinds of different ideas about what should or should not be owned. For instance, as a Libertarian, I think I own myself. The government, with its power to conscript me into the military, or civil work, doesn’t agree, and is backed by many citizens using much the same argument (that a claim to my own self-ownership is a selfish monopolistic withdrawl from the common weal, which I have no right to declare, since my refusal to participate in some common good would be denying the benefits of it to others).

    On the matter of air, the lack of ownership is a matter of both practicality and its superabundance. If air were in short supply, and required some sort of supply/demand management, you would find some sort of ownership applying (that is, you may get charged for it in some way); such as on a space station, or an undersea habitat, or something like that. You could try, “water should not be owned”. But it is, either by the State or private companies. Even though it is as much a natural resource of finite quantity as land- and indeed precisely because it is a natural resource of finite quantity.

    Just as an aside, if Stephan is still reading this thread, it occurs to me that he may see this as me using a utilitarian argument for markets. I think this is valid; there are two approaches, the deontological (derived from natural rights) but also a utilitarian, or at least utilitarianesque, argument that markets work better than central planning and/or commons approaches.

    Also, while idly pondering this over coffee this morning, I did wonder something else; suppose the government sets a 100% LVT. Suppose then that, since they are denied all income anyway, the “rentier cartel” all set their ground rents to zero. What happens next?

  74. benj – “land can not be owned by anyone”;

    The cry of the classic barbarian – someone who has never evolved past the hunter-gathering pack (Hayek rightly pointed out that evolving out of this communalism was the precondition for the development of human civilisation).

    I think we now know who should be in the “mad draw” – yourself.

    As for air.

    It was Judge Wensleydale’s claim that “public benefit” trumped private property rights in air supply that led to him supporting pollution. of air and water supplies. A judgement that Oakeshott so denounced.

    It is private rights (property rights) over air and water supplies (and light also) that are the main safeguard against folly – unless these property rights are allowed to be trumped by talk of “the public beneift” or the “gereral welfare”.

  75. Yes you own yourself and you should own 100% of what you produce.

    No matter what the scarcity or supply/demand would an owner of air produce it? Er, no.

    Say if I owned all the air. How much could I charge you for it’s use? Everything you own I dare say.

  76. No matter what the scarcity or supply/demand would an owner of air produce it? Er, no.

    You think air gets on a space station by itself? You think it stays breathable by itself? The only thing I can think here is that you’re painting yourself into a corner arguing that anything that occurs in the natural world is unownable. Right?

  77. If you have expended capital to enhance the value of a natural resource, then of course you are entitled to the full return to that investment. The suppliers of air to your space station or BOC Ltd of example. What you are not entitled to are monopoly rent derived from it’s scarcity, as per my example of me owning the air you breathe.
    Not charging for the air you breathe does not make me a barbarian does it?

  78. @ Ian @Mark

    Look you can be flip flop around this subject, but I’m going to try and make the choices you face as clear as possible. That way and with out evocation we all know where we stand.

    We all agree that if you add value to something you are entitled to keep 100% of that value. Have I got this bit right?

    But, should you be entitled to the value of something you didn’t produce? Because that sounds like robbery to me?

  79. @ Ian

    Btw, I think you’ll find the definition of monopoly quite clear. Where any new entrance into a market does not produce any more of that thing/item/commodity.

    Common sense tells us exactly in which way it is meant. All the economic writing I’ve ever come across concur. Left, Right in the middle whatever.

  80. @benj “But, should you be entitled to the value of something you didn’t produce?”
    Yes. That’s kind of what a positive externality is. If (and let’s just grant land ownership for now) you prettify your house it makes mine, and everyone in the neighbourhood’s, more valuable. Should I give that increase in value to you? To the government? Or should I not do anything because sometimes positive shit just happens? Hence LVT is fundamentally wrong.

    “We all agree that if you add value to something you are entitled to keep 100% of that value.”
    Only if it’s yours. If I pay for your skills to add value to something on my behalf then I get to keep all the added value and you get the agreed wage.

    As to the main point, there is no justification for the ownership of land that doesn’t take the viewpoint of either “finders keepers” or “might is right”. Frankly I’m not happy with either approach.

  81. benj who protects us from this “governed society” you talk about?

    After all it is already clear that the demands of the collective – the governmnt (both for money and for power) are infinate. So the Thomas Hobbes approach, go on our hands and knees and kiss their boots, is not going to save us.

    Your support for despotism – for the denial of even de facto private landownwership is obvious. I doubt you would be a fan of such things as the Constitution of Texas – or any real effort at limiting government (if even private landownership is not protected it is vain to talk about other limitations).

    So this makes you an enemy of liberty – fair enough I like enemies being out in the open, rather than hiding in the ranks (waiting to stab me in the back) and I praise you for your plain speaking.

    A monopoly is something where an new entry does not increase the supply on the market?

    So land is not a monopoly.

    As a new entry into the market (say someone selling some land, that had been kept in their family as a nature reserve for some generations) increasesd the supply of land upon the market.

    “But they did not create the land”.

    And people do not create trees or animals either – or stone.

    If (as the Cong say) “the products of nature belong to the commons” then that applies to a lot more than land.

    Estates are managed – otherwise they fall into wilderness quite quickly.

    But they are not “created”.

    By this (false) definition of property – only God could own anything.

    The old dispute between the German Pufendorf (with his world given to mankind in general – private property having to be “justified” by greater economic output) and the Dutchman Grontius (the world starting unowned – but the lands open tpo be unowned).

    Hopefully we will not be following the Samual Pufendorf too far – not off into “compulsory charity” (dry water) with its justification (at least according to some German thinkers) of the later “Welfare State”.

  82. @ KEDDAW

    Positive shit in this case didn’t just happen though did it. I had to fork out to prettify my house. Under an LVT I get to claw some of that value added to your property back via lower taxes/ citizens income, whatever.

    No free lunches. I’d have thought that would have chimed well with libertarians.

    Point 2, agree

    “As to the main point, there is no justification for the ownership of land that doesn’t take the viewpoint of either “finders keepers” or “might is right”. Frankly I’m not happy with either approach.”

    That’s right, it definitely doesn’t wash when someone tries to burgle your home.

    @ Paul

    I’ve already stated above, LVT is compatible even if there is no government. It is still just compensation for excluding another from a common resource.

    Forget supply, that was an understandable mistake on my part. Substitute amount instead.

  83. “I had to fork out to prettify my house. Under an LVT I get to claw some of that value added to your property back via lower taxes/ citizens income, whatever.”

    So you get something you want (a nice house) and I have to pay you a subsidy when I didn’t agree to it? What if you want to build a private school? My lack of children means that I gain no benefit (until I sell) but I do have to pay additional taxes to subsidise your school as property prices rise.

    I have no problem with LVT as a voluntary agreement, but that’s not how you want, or need, it to be implemented.

  84. The argument is, indeed, all over the place now. I think that’s because it was incoherent in the first place.

    The land valuation is completely arbitrary: to an Amish farmer building a superhighway and strip mall nearby is not improving his land value, whereas to someone who lives the commuter life that superhighway might give him more housing options. True value is only discovered in free exchange.

    Since some people are arguing by consequences then it seems to me that the underlying premise of LVT presented here leads us to UN Agenda 21, given that I can’t see how the arbitrary lines drawn on the map suddenly make a common resource for humanity particular to a certain arbitrary lines drawn on a map. The premise in and of itself is pernicious, IMHO. We may argue nobody can own land – and after all, nothing is forever anyway – but that doesn’t then jump me to some kind of collective holding it in trust for “our children” or WHY.

    I don’t see any logic here, even given what appear to be the initial premises.

    I don’t see how you collect a tax (and saying it’s not really a tax but we’ll call it that anyway – how does that help the argument?) without somebody being allowed to initiate violence, as opposed to free exchange or barter. I previously supposed the libertarian way to be public subscription and privatisation with a heavy dose of insurance but anyway not to allow the monopoly on violence that the state currently claims.

    I suppose I am an anarchist, for want of a better term, and I can’t accept an LVT, philosphically and for fear of the consequences.

  85. By this (false) definition of property – only God could own anything.

    Even that’s debatable, since God clearly transferred His property rights in the Earth’s resources to mankind in Genesis. Of course he was expecting to only have to battle with Satan, not contend with Georgists as well.

  86. @ keddaw

    Any laws or agreements that take place in society produces costs and benefits. No one thinks we can live in a perfect World do they? So everything comes down to a cost/benefit analysis.

    1. Under 100% LVT you wouldn’t even get the benefit when you sell, so that’s an extra minus as far as you’re concerned!! i.e your the site value may have increased(absorbed by LVT) but the bricks and mortar element would have stayed the same. Best to be honest about these things, I’m sure you’ll appreciate it :)

    2. It is a known fact of life there is always a risk that schools get built. That’s a simple cost of living if you don’t have any children. But, just like now, you are free to move and enjoy the benefits to you of someone else paying the higher LVT bill instead. More Citizens Income/ lower taxes for you. Compensation.

    It’s a bummer but it’s not all bad. A consequence of living on a finite plant and being a social animal. But, seeing as most people do have children the benefits of a new school far outweigh the costs.

  87. benj,

    It gets worse, if I live near a utility that I don’t use (highway, school, large business) that I get no personal utility from which subsequently closes before I sell, I have been forced to pay for the temporary increase in my property while receiving no benefit and have the value of my house back to its normal level when I do sell. Do I get a refund? Or do you suggest that splitting up communities and financially forcing people to leave their homes (itself a cost!) and live somewhere else is the most libertarian view?

    I’m happy to pay for schools, if we’re to have a democracy we need an educated electorate. But the point I was making, rather obviously, was that it was a PRIVATE school. Thus no societal benefits, only increased housing costs around it, no benefits to me at all. Why should what some private company does without my permission or consent, on their own land (and hence my opinion is irrelevant) make me liable to pay the state, or other taxpayers, more money and subsidise this private, profit making entity?

    Positive externalities are free, negative externalities should be met by whoever is creating them and those suffering them compensated either to a level they prior agree to, or somewhat higher if imposed against their will. Anything else is social engineering using the force of the state in opposition to voluntary agreements.

  88. @johnnypate | 27 September, 2012 at 3:59 pm |
    “The argument is, indeed, all over the place now. I think that’s because it was incoherent in the first place.

    The land valuation is completely arbitrary: to an Amish farmer building a superhighway and strip mall nearby is not improving his land value, whereas to someone who lives the commuter life that superhighway might give him more housing options. True value is only discovered in free exchange.”

    In an infinite World this makes sense. Why should anyone impinge on his plot, his life? It would be unjust.

    Mr Amish’s forebears knew exactly what the were getting into when they left Europe and the legacy they would leave their descendants. All the risks and certainties, all the costs and benefits. They could have chosen Antarctica to migrate to.You roll the dice.

    Now for most people, improvements do benefit them directly and indirectly. On this occasion Mr Amish didn’t have all his Christmases come true. And a higher LVT bill to boot! Unjust!!

    But he is still free to move. He still gets all the benefits of living in a great Country like the USA, how wise his ancestors were!. I’d hope he’d be philosophical about it, knowing what he was doing was for the greater good. God would surely approve? And by way of compensation he gets to pay less taxes/or a higher Citizens Income because someone else is footing the higher LTV bill.

    More likely he’d stay put and put his prices up on all the extra organic food he’d flog to middle class yuppies shopping at the new mall. Or put a sign up at the side of the new freeway offering “the real Amish experience” only $20 per person. Children and well behaved dogs free,

    There’s nothing like a little profit to help take your mind of your worries is there?

  89. @keddaw

    “Or do you suggest that splitting up communities and financially forcing people to leave their homes (itself a cost!) and live somewhere else is the most libertarian view?”

    That’s never going to happen. You know that, so we’ll pretend you didn’t type it :)

    Will individuals want to move, need to move. In a very limited set of circumstances yes. This cost to them can be mitigated. Poor widows in mansions could be exempt for a time limited period until the affect of a tax change embed themselves. But even then there are benefits that have to be taken into account. Like the huge economically and socially damaging misallocation of property resources we have at the moment.

    It’s no good talking about costs without referring to the benefits. Balance is required.

    I was very careful to point out that we don’t live in a perfect World and as such no system can be perfect i.e 100% happiness 100% of the people 100% of the time.

    Now if on balance you get no benefit from improvement or utilities, you are a very unusual person. And you are never going to be happy.

    Now I admit, this school has no direct benefit to you. But, does it benefit society? Clearly yes, or it would have been given planing consent and DoE consent either. You get to live in a more productive better educated society. If you don’t like it move. Someone else, that your title excludes, will! Good for them. Or sue the builders of the School. The Judiciary is being paid by your LVT so use it.

  90. Ah, the Greater Good. How many suffered and died in the last century in the pursuit of the Greater Good? How many selfish Kulaks who were denying their land to The People had to die for the Greater Good?

    Aren’t we tired of the Greater Good yet? I am. That’s why I’m a Libertarian.

    Oh, I know. Who said anything about killing farmers that won’t vacate their land? Y’see, that’s the problem. You deliver your tax bill, the farmers can’t pay it, they have to leave land they had believed belonged to them, and not the State. They say they won’t leave. What happens next? Well, the State turns up. With guns.

    For the Greater Good.

    That’s why I’m a Libertarian.

    I know, I know. It’s only a tax bill. Everyone has to pay taxes. But, at least, taxes in general are levied on what you have earned. That is coercive and exploitative, but at least the taxes are payable. But once you start levying taxes on imputed values, rather than incomes… you’re demanding real payments for hypothetical incomes. Curiously, Statists who talk about imputed incomes never offer to accept payment in hypothetical money. They want the real folding green stuff.

    The Georgists keep more quiet about this forcing people off their land bit, but in earlier times they were much more up-front about it. They saw it as a benefit of the tax, and quietly still do, as Benj does above. Because in their minds, they can increase, and even maximise, the National production by forcing the less productive off the land they’re “hogging”. Sorry Mr Amish Kulak, you have to leave! For the Greater Good.

    In a free society, there are no social goals. One does not try to maximise any statistic. Libertarians generally argue that market economies are the most productive, but there is no obligation to be productive, other than the need to sustain oneself. The individual is free to choose what they produce; they may want to maximise their production (and thus income). They may do something less productive in return for more leisure time. They may use their previously saved production-as-wealth to buy some land, and turn it into a nature reserve, or a rose garden. For their own good, or for the good of their neighbours, or just for the birds and the roses.

    And then Mr Georgist Tax Assessor comes along, slaps a massive tax bill on the nature reserve or the rose garden, and it has to close. For the Greater Good, you see.

    That is why I’m a Libertarian. And more than that, a Propertarian Lbertarian. In so many crucial respects, liberty stems from property. Without property, liberty tends to be in rather short supply. For the Greater Good, of course.

  91. “Now I admit, this school has no direct benefit to you. But, does it benefit society? Clearly yes, or it would have been given planing consent and DoE consent either.”

    Ahh, so not only do we have a LBT authority but you’re also suggesting we have a state education authority who decide who is fit and proper to educate children in spite of parents’ wishes? And a planning body who have the authority to tell you what you can and can’t build on your land and what use it can be put to.

    This single tax is working out more and more authoritarian every step…

  92. ” If you don’t like it move.”

    Jesus! I get that all the time from people telling me to go live in Somalia if I want a “libertarian paradise”, I sure as shit wasn’t expecting it on the Libertarian Alliance site!

  93. @Ian

    We are talking policy here. Policy gets decided, one way or another, with or with our your input(preferably with) by argument, a healthy debate and an honest appraisal of the merits.

    I doubt if there was much of that in Russia. Moral relativism? I’d didn’t think you’d use that lefty debating trick. Deduct 2 marks for that.

    Now the scenario Ian refers to is only applicable now. Once an LVT embeds itself this won’t be a problem, because we all would have had time to adjust our affairs. So, until this time, say twenty years into the future should will do our best to mitigate any costs. Yes, I’m amenable to that.

    “But once you start levying taxes on imputed values, rather than incomes… you’re demanding real payments for hypothetical incomes. Curiously, Statists who talk about imputed incomes never offer to accept payment in hypothetical money. They want the real folding green stuff.”

    See above. Charges could be put against the title, redeemable upon it’s change. There. Poor Old Widow get to stay in her mansion. Up front reddies not required.

    As for the rest, society or anything else for that matter cannot be “free” when the World is a finite place. We can do our best to make it as “free” as possible, but that involves weighing up the cost and benefits aka “the greater good”. Not a simplistic absolutist solution, I am afraid, I wish there were one. But there is not.

  94. See above. Charges could be put against the title, redeemable upon it’s change. There. Poor Old Widow get to stay in her mansion. Up front reddies not required.

    So we eventually end up in a state (or State) where a farmer trying to sell a two hundred year old farm has to pay two hundred years back taxes. Or, are you going to prevent inheritance and insist on tax settlement on death of the owner? Can he give it to his son while still alive? Whatever epicycle you bolt onto the idea, you’re still stuck with the fact of trying tax imputed income with real money. It’s about the same as forcing men with girlfriends to pay a tax proportionate to the number of shags per month they have, because the imputed cost (i.e. if they had to rent a prostitute) would be some collossal sum (at least £100 an hour for the “Girlfriend Experience) according to the internets). By your philosophy, those men are getting an unearned imputed income too! Let’s see, ten shags a month, at least £1000 you’re missing out on taxes there. Get taxing! Oh, and then come to that you can tax women too for being monopolists of a finite natural resource.

    This is what I love about the Single Tax. It’s one of those ideas that starts off sounding plausible, then the more you look into it, the stupider it gets.

    I’ll just repeat my above point. It’s not a Libertarian policy. It’s a socialist policy. Socialists are entitled to believe in it, but it is ludicrous to suggest that a libertarian should, if the word “libertarian” has any meaning at all.

    It’s probably also worth bearing in mind that the arch-Fabian George Bernard Shaw was converted to socialism by a talk by… Henry George.

    Libertarians don’t do this “greater good” thing, Benj. It’s just not part of our philosophy. I hope one day you’ll come and join us. Until then, there’s always the Liberal Democrats.

  95. Come to think of it, you could call that the “Not Single Tax”.

  96. @ Ian
    “In a free society, there are no social goals. One does not try to maximise any statistic. Libertarians generally argue that market economies are the most productive, but there is no obligation to be productive, other than the need to sustain oneself. The individual is free to choose what they produce; they may want to maximise their production (and thus income). They may do something less productive in return for more leisure time. They may use their previously saved production-as-wealth to buy some land, and turn it into a nature reserve, or a rose garden. For their own good, or for the good of their neighbours, or just for the birds and the roses.

    And then Mr Georgist Tax Assessor comes along, slaps a massive tax bill on the nature reserve or the rose garden, and it has to close. For the Greater Good, you see.”

    I totally agree with the sentiments expressed in the first paragraph. But if you don’t want to be productive, why do you need a productive location. They are in short supply!!

    You know that in time, once a LVT has embedded all these misallocations resolve themselves.

    The second scenario would not happen. An LTV on a rose garden or nature reserve would amount to practically nothing. Not worth collecting.

  97. @Ian, that farmer would not have to pay an LVT. Your better off sticking to poor old widows.

  98. But if you don’t want to be productive, why do you need a productive location. They are in short supply!!

    It’s not a question of “need”. A free society doesn’t ask you to justify your property. You bought it, you can do what you like with it. That’s the start and end of the matter.

    Ian, that farmer would not have to pay an LVT.

    Why? Are you going to exempt farmers? Anyone else?

  99. An LTV on a rose garden or nature reserve would amount to practically nothing. Not worth collecting.

    Really? Urban parkland has no value? Crikey.

  100. @ian

    I would hope the GF was getting the same benefit, so it cancels out. I think :)

  101. I would hope the GF was getting the same benefit, so it cancels out. I think

    Now you’re getting there Benj. Keep along that line of reasoning and you’ll realise that the same reciprocity is true of land, and everything else in the economy.

  102. @Ian
    You know from your dealings with Mr Wadsworth why parkland, forests, farmland, would pay no LVT, so don’t come it with me ;)

    Look how about a rule where if you don’t want to pay LVT you seal yourself off from society? Physically and in law? You become an autonomous entity. Would that be ok?

    Btw, you still haven’t answered if it would be ok with you if I owned all the air and all the land while we are at it. Please say yes.

  103. @Ian

    “Ian B | 27 September, 2012 at 6:52 pm |
    I would hope the GF was getting the same benefit, so it cancels out. I think

    Now you’re getting there Benj. Keep along that line of reasoning and you’ll realise that the same reciprocity is true of land, and everything else in the economy.”

    What kind of reciprocation do non landowners get from landowners?

  104. I honestly can’t remember what Wadsworth has said about parkland, farmland and forests. If he’s said they’re exempt, I’m mystified, firstly as to the justification, and secondly because basic Georgist theory works from calculating the productive capacity of land in terms of Ricardo’s units of “corn”. So is this thing actually just a “tax on owners of urban property” then? I can own half of Scotland if it’s rural? What?

    Many libertarians would like to contract out of the State. We’re not allowed to. If the State were voluntary, those choosing to join it would be free to voluntarily agree to whatever subscription fees and taxes they like. What we’re worrying about here is coercive taxes.

    Would you be happy if I owned all the women? I could charge a fuck of a rent. Literally.

  105. What kind of reciprocation do non landowners get from landowners?

    None, the same as men without girlfriends don’t get any reciprocal erotic value.

  106. @ian
    Nobody pays voluntary taxes do they. I’m sure your going to tell me I’m wrong though.

    As far as you owning all the women in the World were concerned, we have some very strict laws about that for obvious reasons. Even so you would be charging monopoly rents. They would taken from you, only leaving you with the profits you make from your capital expenses.

    Just like renting out a house.

  107. “Ian B | 27 September, 2012 at 7:06 pm |
    What kind of reciprocation do non landowners get from landowners?

    None, the same as men without girlfriends don’t get any reciprocal erotic value.”

    That would be their fault, there’s enough to go around. No compensation.

  108. “Ian B | 27 September, 2012 at 7:05 pm |
    I honestly can’t remember what Wadsworth has said about parkland, farmland and forests. If he’s said they’re exempt, I’m mystified, firstly as to the justification, and secondly because basic Georgist theory works from calculating the productive capacity of land in terms of Ricardo’s units of “corn”. So is this thing actually just a “tax on owners of urban property” then? I can own half of Scotland if it’s rural? What?”

    I said practically nothing. On that scale, a lot of practicallies add up to a something

  109. @Keddaw, thanks for your clear and logical comments.
    (Am going slightly off topic now.)

    I think you are getting to the crux of the matter. The whole justification and reason that LVT appeals to some libertarians is that it is claimed that land value increases can be unearned.
    Libertarians believe libertarianism is just, so it sounds like you can kill two birds with one stone, pay for the nightwatchman state and make society more just.
    Despite all its failings LVT would seem to be a fairer tax for those reasons than other taxes.
    However you raise the idea that unearned is not necessarily unjust as you would have to tax/rebate all externalities if it was.

    So I have one question to you, if you are effected negatively by an externality, is that not unjust? Should you not be compensated for that?
    The flip side of this is that if you get a positive externality, should you be required to compensate people for that.
    Libertarians beleive in personal responsibility, so should we not be rewarded by positive externalitys or compensate for negative ones?

    Do you have any thoughts on this?
    Exclude arguments about the workability of it for now.

  110. I advised David some time back that to engage the Libertarian swine in an intelligent discussion about land value would be mucky. Congratulations on a fine article. Not one of the grunters has refuted Count Leo Tolstoy’s judgement in his last book “Resurrection” where the landowner Nekhludov lays out the Georgist argument. Tolstoy the landowner better than any economist or theorist ever, grasped the difference between his serfs reaping what they sowed and his unearned rent. He recycled this back into schooling and healthcare on his estate.

  111. He recycled this back into schooling and healthcare on his estate.

    He didn’t consider just not charging them the rent, then?

  112. Thank you , Don, for your kind comments. Your praise is high praise indeed!

  113. IanB

    This is interesting. George was fiercely opposed to “the labour theory of value”. He makes this very clear, by saying that “value was determined at the point of sale by the ‘higgling’ of the market”. Completely the opposite to your bold claim. Yet you say you have studied him and understand him. This demands an explanation. Have you really read him… and the others for that matter… or not?

    On your point about there being no such thing as root cause, is also a straw man. Neither George nor I, not sure about Mr Wadsworth, say this is a silver bullet, though those claiming to have read George, often set up this scarecrow and shoot it down in the hope no one will look into it further, praying on the general ignorance of people. You ‘missed the mark yet again’, but make bold claims about understanding? Your credibility is now under serious scrutiny.

    What anyone who proposes an LVT is saying is that this is an extremely difficult thing to do ironically. And not technically nor politically. The social mechanics of it were ‘completed work’ 4000 years ago. But individually… we are all in denial. You see, we are all ‘Rent Seekers’. Rich and poor, left and right, socialists and libertarians. All trying to get the work of others without giving our own in fair exchange. Parasites in a grand pyramid scam made legal. Hypocrites hiding under a veil of freedom or equality. This *IS* the root cause George talks about in the final chapter ‘The Individual Life’. Have you read it yet and understood it I wonder?

    “MY TASK IS DONE. Yet behind the problems of social life lies the problem of individual life. This thought brought me cheer while writing this book, and it may be of cheer to those who, in their heart of hearts, take up the struggle.”

    http://gco2e.blogspot.co.uk/2012/09/george-georgists-and-root-cause.html

    Given that the fundamental social organisation of the world today is ‘privatisation of these economic rents’, there is nothing else economically that goes deeper than this. And this is why we are all complicit. To admit we are all part of the problem, not just bankers, homeowners, landlords, politicians etc, is the only commitment ‘no one’ is willing to make. All of us are in denial at this point. Rents account for 5/7th’s of all asset value cash flows. There will be other problems, but none as big or economically devastating.

    What George made abundantly clear, was that there will still be other problems and with his proposal they will merely be that much easier to deal with. But without it, nothing will improve. He never said it would solve all problems, particularly the Individual one. Did you read this by the way? What he did say was something no other economist has said and followed through with after gaining fame (such as Smith, Mill, Spencer, Keynes, Marx etc etc all of whom saw it but sold out and were silenced with material wealth if you have read the history? Even Churchill did when he saw the ‘problem of the Individual’):

    “If our investigation runs counter to our prejudices, let us not flinch”

    Instead, he died young still trying to find a way to help the world see it in themselves.

    The problem for all rent seekers is that they do not really disagree with George. They simply do not know what he said. Almost every investigation I’ve made shows the pundits ‘presumed’ what was being said, led by individual prejudice and denial, but never actually read the book and understood it as George asked everyone to do. Yours appears to be a classic case history to be noted for others to use.

    Both Marxists and Libertarians constantly make the exact same error, fighting a futile social battle while the real enemy inside each individual laughs selfishly.

    I have met one or two who do not flinch though. Mr Wadsworth is one of these honourable men. There will be others.

  114. Progress And Poverty, Book I, Chapter 3; “Wages Not Drawn from Capital, but Produced by the Labor”.

  115. Also, and I admit to being rusty since it’s a long time since I ploughed (haha!) through George, but skimming rapidly through it, Book 3, Chapter 6 expounds the Ricardian corny theory about rents being the marginal productivity of land parcels.

  116. @Robin Smith, I’m with you that rent-seeking is a problem and that the ownership of land is a particularly pernicious part of this. The problem I have is with using taxation to attempt to fix this.

    Let’s get back to homesteading, I think a homestead should be a allodial title. However, absentee landlords shouldn’t have land ownership rights, i.e. the terms of land ownership shouldn’t allow absentee landlordism. So, yes, land is special and the monopoly of land is special. I don’t agree that taxation is a libertarian way to approach this because it’s incompatible with non-aggression, the entity that collects the tax is some kind of arbitrary and mystical collective against which an individual has only arbitrary mechanisms decided by that collective, or some controlling interest group, to counter.

    Ownership should be defined by possession and use as well as cultural customs – one of the problems is that, for real reasons of history and human psychology, ownership can’t be an absolute concept. In contrast, it seems to me that the libertarian principle espoused by at least some libertarians that the initiation of violence is only acceptable in terms of strict self defence can be an absolute value across cultures and psychologies – from an ethical standpoint even if any given individual, or culture, has different ideas. It seems to me to be obvious that taxation can only work if you have men with guns to back up the demand – I know that’s why I pay taxes.

    I think LVT supporters need to check their premises, arguing the toss about how LVT is better than some other taxation scheme is a straw man, it seems to me. Pretty much anything new can be imagined to be made easier and less complicated than the taxation systems we have now but so what, the current system is simply what politicians have managed to get away with over time… and they would manage to parlay an LVT into a much more encompassing and expensive scheme given time. It seems obvious to me that history demonstrates you have to strike the root and declare taxation unacceptable and immoral on whatever terms or with whatever excuse.

  117. Well I hope we are, at least, all agreed that if the land tax is the only tax (no other taxes) then only people who pay this tax should have the vote.

    After all this was the position in such States as New Jersey at the Founding of the United States – only land tax payers had the vote, but all of them did (“even” freed blacks and women – although the Jeffersonians managed to get the vote taken from them because they voted the “wrong” way).

    If there is only tax and most people who vote do not (not) pay it – then the tax will be increased and increased. Leading to economic bankruptcy – and the fall of the West.

    I remind people that the defining feature of the West for most of our history was not freedom fo speech of freedom of religion (we often had neither of these good things) – the defining feature of the West (what made it different from asiatic despotism) was greater security of private property in land (free hold – or whatever you want to call it).

    It is very strage that Westerners should want to throw away the defining feature of our civilisation – the foundation of all practical limits on state power.

    After all history shows that if property rights in land are insecure you can forget about any hope of other forms of civil – and there will be no class of people with a foundation to support the limitation of government power.

  118. @Paul Marks – I’m a fan of “Starship Troopers” but I think this is going to be a hard sell in this day and age.

  119. @Own Yourself, and anyone else interested,

    All non-state positive externalities are incidental outcomes of someone voluntarily engaging in some activity that is positive enough for them to do regardless of those positive externalities. Since you were not a party to them doing whatever they are doing the externalities are, effectively, free gifts.

    Negative externalities are harms enforced on you by someone engaging in activities that are beneficial in some way for the perpetrator. Harms must be compensated for, either prior to them being imposed (and hence voluntary) or punitively after the fact (because they are not voluntary).

    If someone comes round and says they are thinking of doing X and it will enhance my life in some way (positive externality) then I may be willing to encourage that person to do X financially, as it is a benefit to me, but I cannot be forced to do so after the fact and non-consensually.

    Surely the whole point of libertarianism is that it is about not being coerced to do things you don’t want to, not being harmed by others and not being forced to enter into agreements against your will, and certainly not retrospectively?

  120. Pingback: Why Libertarians Should Support a Land Value Tax « Attack the System

  121. Johnny – I do not demand a single tax, in place of all other taxes.

    If others demand such a tax then they must accept that only those who pay this tax should have the vote.

    Otherwise give up the demand for a single tax.

  122. Don Riley – I am proud to be “Libertarian swine”.

    However, I would not insult Henry George like you just did.

    I do not agree with Henry George For example he thought the increase of land prices as the number of people increased in California (so that poor immigrants could no longer buy land as they could when there were fewer people and land prices were lower) as something terrible – to me it is just life.

    However, I would never compare Henry George to the Tolstoy – Tolstoy mayh have been a fine fiction writer but he was utterly useless when it came to both politics and economics.

    I would not insult Henry George by comparing him to the Tolstoy (see Paul Johnson “Intellectuals” on “God’s elder brother) and you just have.

    As for the serfs.

    The transfer of land to them on a Mir basis (the Mir system was orignially only on Royal estates – but the Imperial government spread it to formally private estates) after 1861 was a failure – there were repeated fammies in Russia.

    It was only after Stolypin allowed peasants to withdraw land for the Mir sytem and operate is as private property, that farming turned the corner (sadly then came the war and the Reds – and they messed everything up).

    Privarte landownership (or de facto land ownership – which is what Free Hold is) is the cornerstone of Western civilisation, it is also the foundation on which everything else (limiting government, civil liberties….) was built over time – by vast effort.

    Even after all this time it is astonished me that the West has so many enemies – especially people brought up in the West.

    It reminds of the Marxists who went over to California after World War II – the Golden State in its Golden years.

    And all these son-of-bitches could think of doing is trying to destroy it all – with their Frankfurt School crap.

    The late Andrew Breitbart could never understand “why” and neither can I – but I do understand that their are evil people about and they have to be faught (to save what is left of civilisation – and so that future generations can try and rebuild).

    That is enough.

    Ho

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  124. Meanwhile, in Russia…
    “According to The Bovine, Russia’s Private Garden Plot Act, which was signed into law back in 2003, entitles every Russian citizen to a private plot of land, free of charge, ranging in size from 2.2 acres to 6.8 acres. Each plot can be used for growing food, or for simply vacationing or relaxing, and the government has agreed not to tax this land. And the result of this effort has been phenomenal, as Russian families collectively grow practically all the food they need.”

    http://www.naturalnews.com/037366_Russia_home_gardens_food_production.html

  125. Ian B’s objections to LVT can be summarised as

    1.So we eventually end up in a state (or State) where a farmer trying to sell a two hundred year old farm has to pay two hundred years back taxes. Or, are you going to prevent inheritance and insist on tax settlement on death of the owner? Can he give it to his son while still alive? Whatever epicycle you bolt onto the idea, you’re still stuck with the fact of trying tax imputed income with real money.

    2.It’s about the same as forcing men with girlfriends to pay a tax proportionate to the number of shags per month they have, because the imputed cost (i.e. if they had to rent a prostitute) would be some collossal sum (at least £100 an hour for the “Girlfriend Experience) according to the internets). By your philosophy, those men are getting an unearned imputed income too! Let’s see, ten shags a month, at least £1000 you’re missing out on taxes there. Get taxing!

    3.Oh, and then come to that you can tax women too for being monopolists of a finite natural resource.

    This is what I love about the Single Tax. It’s one of those ideas that starts off sounding plausible, then the more you look into it, the stupider it gets.
    I’ll just repeat my above point. It’s not a Libertarian policy. It’s a socialist policy. Socialists are entitled to believe in it, but it is ludicrous to suggest that a libertarian should, if the word “libertarian” has any meaning at all. It’s probably also worth bearing in mind that the arch-Fabian George Bernard Shaw was converted to socialism by a talk by… Henry George.
    Libertarians don’t do this “greater good” thing, Benj. It’s just not part of our philosophy. I hope one day you’ll come and join us. Until then, there’s always the Liberal Democrats.
    Ian B | 27 September, 2012 at 6:28 pm |
    Come to think of it, you could call that the “Not Single Tax”.

    Ian B | 27 September, 2012 at 7:05 pm |
    4.I honestly can’t remember what Wadsworth has said about parkland, farmland and forests. If he’s said they’re exempt, I’m mystified, firstly as to the justification, and secondly because basic Georgist theory works from calculating the productive capacity of land in terms of Ricardo’s units of “corn”. So is this thing actually just a “tax on owners of urban property” then? I can own half of Scotland if it’s rural? What?

    5. Many libertarians would like to contract out of the State. We’re not allowed to. If the State were voluntary, those choosing to join it would be free to voluntarily agree to whatever subscription fees and taxes they like. What we’re worrying about here is coercive taxes.

    6.Would you be happy if I owned all the women? I could charge a fuck of a rent. Literally.
    Ian B | 27 September, 2012 at 7:06 pm |

    7.What kind of reciprocation do non landowners get from landowners?
    None, the same as men without girlfriends don’t get any reciprocal erotic value.

    1. None of this applies, must have been typing faster than thinking, but we’ll concede that yes LVT does tax imputed incomes from real incomes. All be it those imputed incomes are unearned.

    2. Illustrates the difference between earned and unearned incomes. Yes, you could say the boyfriend receives an imputed income (we need to assume his girlfriend only had sex with him for payment in kind), but seeing as the prostitute and girlfriend were charging for their own labour, this was earned income. Aside from the morals about paying for sex, taxes on earned incomes are a bad thing. Agreed? Well perhaps not.

    3. Are women monopolists? In the real World no. But in order to try and get to the point, we’ll grant a few parameters. Firstly all women are prostitutes. They only ever have sex for money. Not for enjoyment, not for procreation. Men have no other alternatives. Men care about the survival of the human race, women don’t.

    Yes, I think in the above scenario, Women could be said to be making money from having a monopoly. Sex wouldn’t have the same earning power as Land monopoly or an Air monopoly because they are immediate essentials. Sex would still be a necessity, all be it a very expensive, damaging and divisive one.

    It could be suggested that the state creates an environment in which monopoly profits can be earned in the sex industry by making it illegal and putting up barriers to entry (if there wasn’t there’d be no barriers, women could make the normal choices as when choosing a career). In which case is point 1 still valid? I’d say no. The boyfriend is indeed receiving an imputed unearned income, but only if his girlfriend was only (this is important ONLY) having sex with him for payment in kind. I.e a prostitute, someone who would not have sex freely because it had no monetary value. Love, true affection and caring cannot be bought and as such has no monetary value.

    So, in the scenario where a boyfriend has a girlfriend that has sex with him because of an emotional attachment, he has no unearned imputed income.

    Perhaps Ian does see all women as prostitutes? I think we should know.

    4. LVT on a normal size farm(not including buildings) is so small it so not worth counting. Half of Scotland is a different matter. A lot of smalls add up to a very big.

    5. Voluntary taxes and you still get all the infrastructure benefits, defence, freedom of movement, protection of the law etc, etc, etc? Yes, that’s right, I can really see how that would work. FFS.

    6. This was Ian’s response to my question, If I owned all the air in the World, what would he pay me to breathe?

    Yes he could charge a fuck load of rent. I think I could charge more, but what is his point here? He seems to be unwittingly perhaps agreeing that it is a bad thing? Odd, very odd.

    7. If men could own and hoard women, Ian’s analogy to Land ownership would indeed be true.

    Again, does Ian have an agenda. Master of all he surveys and a huge Harem to boot?

  126. The idea that farms can be limited to two acres (or even 7 acres) is absurd. Although, yes, I fully support the rights of small holders (and small holders do a lot of good).

    The “little homestead” mentality helped to dust bowls – sometimes ranching is a better use of the land than farming (it depends on soil, climate and so on) and a farm must be big enough to set aside land for tree cover and so on.

    If “land reform” means the right to withdraw land from communal farming (even if only to create a private farm 7 acres) then it is a good thing.

    But if “land reform” means breaking up large private farms and ranches then it is a bad thing – as many examples from Latin American (and elsewhere – such a Egypt) show. It leads to a collapse in economic efficiency – till when (and if) large farms and ranches return.

    The denial of economies of scale is one of the basic economic errors of the “Green”.

    Turning to other things…..

    Claiming that if a person believes in private landownership they believe in slavery is a lie.

    Wilberforce (and the other anti slavery campaigners) were actually very conservative people – who were actually more hostile to state intervention (and communalism) than was normal in their day.

    The idea that a reasoning mind can own unreasoning matter does not mean that a reasoning mind can own another “I” (another free will being). And someone who opposes the private ownership of land should also (if logical) oppose the private ownership of all other nonreasoning matter – and thus just admit that they are Cong (just waving a Black Flag – rather than a Red Flag).

    As for “a harem and lord of all he sees”.

    That was actually the doctrine of those opposed to private ownership of land (and de facto private ownership – which is what a “free hold” is). It is the doctrine of Ottoman Sultans and other examples of asiatic despotism.

    So it is not only a lie – it is the exact opposite of the truth.

    As for a single tax – a land tax replacing all other taxes…..

    That might actually work – as long as only those who paid the tax had the vote.

    For the majority of people who have the vote to not pay the only tax that exists (i.e. the “single” tax) obviously makes no sense.

  127. Benj, you haven’t understood my point about imputed incomes. It was to demonstrate that they don’t exist.

    The fact that a certain thing you have access to (land, a girlfriend) creates subjective value in the mind of its receiver cannot be used in economic calculations. It is thus a fundamental error to “impute” an income that does not exist in the actual economy. Ergo, you cannot tax and imputed income. You can say that a parcel of land *would* have a certain rent *if* you were renting it, but if you own it outright, it does not follow that you are gaining an “imputed” income which can be taxed, any more than one can “impute” an income by comparing one’s sexual activity to what it would cost if you had to rent a prostitute. That was the point.

    It’s the difference between justifying a rental tax, and justifying a land “value” tax. The first tax taxes real incomes. The second is taxing (for an owner occupier) an “imputed” income that he does not actually have.

  128. @Ian

    Just say your employer doesn’t pay cash, but benefits. Not just a company car or healthcare, but everything you need to sustain your lifestyle. All these things you would own outright.

    It is my understanding that these benefits are indeed taxed as imputed incomes.

    Owning and occupying land to the exclusion of others is a benefit is it not? A benefit not granted to you an employer, (although they could pay for your rented accommodation(which is a taxable benefit I think) or your mortgage), but by the Crown, who intern protects your property rights.

    Btw, your point about imputed income from a prostitute only works if your girlfriend is also a prostituting herself to her boyfriend. Youre not comparing like with like. If you were you might well have a point. Please refer to my answer above.

    Instead of using women and prostitutes as an example, please provide me with another example, as it seems a little extreme and fundamentally flawed.

  129. Benj, you’re not getting the point.

    A payment from an employer to an employee is “in kind”; something has changed hands as part of a trade. Do you understand this point?

    An owner occupier has not traded. They simply own the land. There is no rental; ergo you cannot “impute” an income as you could with the company car, which is part of a trade. The “imputed income” justification for Land Taxing owner occupiers argues (and Wadsworth has done this at length) that the psychological value an owner gains can be taxed on this basis.

    But you have yourself shown the difference; the company car can only be taxed because it was part of a trade. A man who owns his own car is not getting that imputed income; it is not part of a trade. He simply owns it.

    If you use the Georgist idea of imputed income, you would assign such values to everything we have for free- whether it is land we own, or girls who we shag- by declaring the imputed income is what you wuld have paid if you had to rent it.

    The reason for using an “extreme” idea is to demonstrate where this silly justification ends up. Anyhing with a potential value can, by this justification, be taxed- and it would lead us to a mammoth over-estimation of taxable income. Try this one.

    I own my cat. If I had to rent a cat, I probably wouldn’t spend the money (of which I have little) on such rental. You cannot “impute” an income to myself based on the potential rental costs of my cat. I simply don’t have that income; likewise neither does an owner occupier. You’re taxing a hypothetical.

    Do you get what I’m saying now?

  130. @DJ Webb very interesting article. You give an example of annual levy of 1% of land value = £1000 in North and £18,500 in Docklands. ALTER (libdemsalter.org.uk) believes we should use the land rental value, rather than the land value. Land values in Central London are currently probably exaggerated in relation to the rental value. Because of speculation, land values are volatile compared to rental values that rise and fall more slowly. So the Tax difference between land in North and land in Docklands could well be reduced if you base the tax on Land Rental Values and would be a more stable. Once we know the split between property value and land value, you can work out the proportion of the rental value that comes from the land. To avoid economic shocks and political problems we may need to introduce local transition rates, which allow a lower rate in London to the North and gradually bring them together. Initially we could only hope to replace Council Tax, Business rates and Stamp duty land tax, but even just replacing these taxes will produce a building boom. Gradually we could reduce income tax and national insurance rates, making it possible to replace IT and NI with a single flat income tax, as LVT is effectively a very progressive tax and there would be no justification for higher rate tax bands even for left libertarians (although convincing them could be another matter). Single tax? well I don’t see it happening in my lifetime, assuming it’s even possible.

  131. @Ian

    “I own my cat. If I had to rent a cat, I probably wouldn’t spend the money (of which I have little) on such rental. You cannot “impute” an income to myself based on the potential rental costs of my cat. I simply don’t have that income; likewise neither does an owner occupier. You’re taxing a hypothetical.”

    I would define buying something as trading. The previous owner gets cash, you get property.

    Let not call it income. That confuses matters. Let’s call it a non cash benefit. If you own a cat, that non cash benefit does not come at anyone else’s expense. You are not depriving them. They can always go and buy or rent a cat themselves. The market supplies one extra cat.

    But owning and occupying a piece of land isn’t like that is it? The market cannot supply one extra plot. It is this exclusion that creates and sustains value, not the property owner. This is a non cash benefit. Agreed, this is not income. But it is sustained by someone else’s income though isn’t it. Is it morally right to help your self to something you did not earn?

    Anyway, I fear we are going to go round in circles on this.

    But, before I leave it, will you please explicitly answer the question I put to you earlier. If I owned all the Air and charged you every cent you own to breathe, is this ok?

    Air, land, mineral, all the same thing. They can all be subject, in theory, to property ownership. In theory one person could own all of them.

  132. Pingback: LA Director’s Bulletin, 2nd October 2012 | The Libertarian Alliance: BLOG

  133. And you want one person to own everything benj – and a fictional person at that. “The People”.

    Whatever you may think, in practice “The People” means the state.

    As Max Eastman recorded Trotsky saying “where the state is the sole employer, dissent is death by slow starvation”. What Trosky did not understand, but Eastman did, was that is still true if Trotsky (or even a majority of persons) are leader – not just if Stalin is leader.

    The tyranny of the 51% is still tyranny – so democracy (on its own) solves nothing.

    I notice that my points do not tend to get real replies. For example, if there is going to be a “single” tax (replacing all other taxes) then clearly only people who pay this tax should have the vote – otherwise they will be taxed to destruction (Chief Justice Marshall was correct – an unlimited power to tax is indeed a “power to destroy”).

  134. @ Paul

    You could make the very same argument about income taxes. Which would be fair enough. But I don’t see it(lvt) as a tax anyway. It’s a fee. Very different imo.

    As far as the pressure for a restraint on Government spending is concerned, I believe it would still be there. How the Government decides to divvy the proceeds would result in fewer taxes, no taxes or a surplus handed out in a Citizens Income, You cast your vote, you take your choice.

    I don’t have a problem with the Crown being the Freeholder. That’s what they are anyway. It’s not as though just because you have been granted a title you become a self autonomous state is it? All I’m saying is the proceeds from a site value should go to them to be used as public revenue instead of staying in private hands. A far as the operational day to day lives of property owners are concerned nothing changes. Except of course, if you used to pay income taxes you will be much better off.

    Only landlords and banks have anything to fear. Everyone else will be better off.

    Now if you don’t want to be better off, because you have a point of principal about what is means to be free, and what property rights are to you, that’s fine. Most of us want to deal with real life situations.

    However, as I pointed out earlier. LVT is not incompatible with having no government. A group of Anarchists could still collect and redistribute site values among themselves.

    Landlord Anarchists and Banker Anarchists would still shit a brick though.

  135. @ Mark

    “And you want one person to own everything benj – and a fictional person at that. “The People”.”

    The market still sets the price though. If I owned everything you can imagine what the price would be?

    Just because we’d have an LVT the only change to the market would be a greater efficiency in property use and allocation. Although I perfectly understand that you would say we should be free to see productive areas under utilised and homes left to rack and ruin. That is a price worth paying for “freedom”.

  136. Most voters (in Britain – only about half in the United States, with the absurd structure of the Federal income tax) do pay income tax.

    Would that be true of your land tax? Would most voters pay it?

    And do not pretend that a tax is a “fee”.

    Nor is there any real market if the state owns everything – either officially, or de facto (as with German “War Socialism” where the “owner” is really transformed into a shop manager under government direction). That was the central insight of Ludwig Von Mises against the “market socialists” in the 1920s.

    “Productive areas under utilised”.

    Do you mean left as park land?

    How is it any of your business if private owners do not choose to build stuff on their land.

    You may think it is your affair – but it is not.

    “homes left to rack and ruin”.

    That does not sound like a free market to me – that sounds like modern Britain where the tax on home repairs is 20% and rent control (and other regulations) have been undermining the private rent market since the First World War.

    I doubt you would see many homes left to rack and ruin on Guernsey (which has a smaller government – in proportion to its economy) – and, I remind you, that Guernsey was poorer than Britain in 1914 and was reduced to the point of starvation by the Germans during the occupation of 1940-1945.

    Lastly freedom (and Britain is certainly not a free country) is freedom – there are no scare quotes.

    Just as “vulgar libertarianism” is just libertarianism (period). The “higher form” of libertarianism (or “higher freedom”) is not libertarianism (is not freedom) at all.

  137. I cannot follow this whole thread, in part because one gets tired of continually replying to the same economically illiterate arguments. But one theme that underlies lots of the leftoids here is the explicit or implicit view that there is a right to the product of labor, and, also, to value of things. There is no right to the value of property Hoppe on Property Rights in Physical Integrity vs Value, nor do you own your labor–or things that you “create” with your labor: see Locke on IP; Mises, Rothbard, and Rand on Creation, Production, and “Rearranging”; and Locke, Smith, Marx and the Labor Theory of Value.

  138. Stephan – I am supposed to be the one who gets irritated (and more than irritated) with the uses of “economically illiterate arguments”, the “leftoids” who believe in some version of the Labour Theory of Value and so on.

    Do not usurp my position as the angry bald man. You have more self control than I do.

  139. By the way Stephan, if you ever decide to visit Britain again then visit Guernsey and Sark. I am told they are far more like Britain than Britain is these days.

  140. @ Stephan

    I agree. You have the right to 100% of the product of your own labour

    You have the right to 100% to your property. That being what you own as a product of your labour.

    I’m sure we all agree with this.

    What I don’t agree with is that by being granted to a title to a natural resource you are gaining the product from someone else’s labour. Without paying for it. aka theft or robbery.

  141. @ Mark

    For me a tax is a levy or charge on something you own ie income tax

    A fee is a charge for the use of something you don’t own ie green fee’s in golf

    Therefore, I believe my use of fee to be more accurate than tax.

    If you position is that only those who pay tax should vote, that is a logical position. But, if you think that just because you don’t pay LVT you wouldn’t have an equally interested stake in efficient government or low/no taxes or Citizens Income, then you are clearly wrong. Everyone wants more disposable income do they not? Not Just LTV payers.

    As far a the state owning everything, in terms of land, it does now. So what? We still have a market. We would still have exactly the same market if the Government collected all the rents. Site values to be clear.

    Park land doesn’t have planning permission. As such, I sure it is being utilised to it’s up most potential, granted by the local authority on behalf of it’s community.

    I don’t want to tell anyone what they should or shouldn’t build on the land their property occupies. But, if they had to pay the full market price for the benefits they receive by occupying a location, you can be sure they will very much want make best use of it. I think that’s pretty straight forward.

  142. @benj Your premise is on the face of it false. Nothing has any value until humans utilise it. Nobody makes anything from scratch, matter is neither created nor destroyed except in an atomic reactor or explosion.

    The government can’t own anything because “the government” is a fiction, likewise “the community” or WHY. That’s true for all collectives you might dream up, they’re not real things they’re legal fictions. Only individual people can own things – and individual people aren’t forever.

    I’m bewildered that people who purport to be libertarians are ready to embrace collectivism and all that entails.

  143. Johnny, it’s pretty simple really. Most people think the best tax is the tax that other people pay. LTVers thus like the idea of people who own land, i.e. other people, paying lots of lovely tax to spend on “the public good”. They come up with lots of arbitrary justifications, e.g. the “unearned” thing, but the bottom line is they just want a high tax economy, in which other people pay the high taxes and they don’t pay any. As such, it’s just another form of, literally(!) rent-seeking.

  144. Edith Crowther

    The fact that this interesting debate is still going on proves what we already know – that Henry George was onto something. He has got shelved like Malthus, because stratagems have been found to stave off the effects of exponential population growth. 150 years later his ideas are a lot more difficult to put into practice than they would have been at the time. But what else have we? No-one else that I know of has tackled the bull by the horns, as it were. And the strategems were not solutions – they merely enabled us to dodge the hard work of finding solutions.

    I am suprised that no-one has picked up my point about the Elephant In The Room (unlimited Demand due to population explosion) – because that is the very thing that set George off back in 1871, as he records:

    “I asked a passing teamster, for want of something better to say, what land was worth there. He pointed to some cows grazing so far off that they looked like mice, and said, ‘I don’t know exactly, but there is a man over there who will sell some land for a thousand dollars an acre.’ Like a flash it came over me that there was the reason of advancing poverty with advancing wealth. With the growth of population, land grows in value, and the men who work it must pay more for the privilege.”

    The great thing about George is that he wasted no time on any notion of parcelling out land amongst greater numbers of people, other than the mild increase in individual private ownership that a land tax might indirectly foster – i.e. he predated Garrett Hardin’s “Tragedy of the Commons”. He was not the only American pioneer to go a bit postal witnessing the sheer speed of landgrab in a once pristine America, once the Industrial Revolution had provided the powers tools. Now that this landgrab has gone global, George is a rock to cling to if nothing else. The rock might not be able to stop the towering waves, but a rock is rock and you never know how much you need it till you fall overboard into a stormy sea.

    In short, I do hope Mr Webb and others will push the debate out into wider circles. Not that I see any problem with the “Libertarian” umbrella – a lot of Libertarians need to adjust their ideas about Liberty and they know it, so it would not be a dialogue of the deaf.

    I also hope Mr Webb will continue to base stuff on English land law. A recent documentary on France’s TV5 shows how Napoleonic and Islamic law have utterly failed to prevent the whole Med (sea and coastal land) from being ruined by overbuilding and attendant pollution. Without the framework of English law, bodies like the National Trust and local conservation groups cannot get a look-in, so do not even try.

  145. @Jonny.

    ” Your premise is on the face of it false. Nothing has any value until humans utilise it.”

    Like a seam of gold under your feet? Unused, unmodified. But if I own it, I could sell it for a lot of money couldn’t I? It would have value as seen in my bank account and had anyone utilised it? No.

    I guess you can say you own things until you’re blue in the face. But we can guess what would happen if the collective wasn’t there to enforce your property rights though? Yes you’d be straight on the phone to the police or solicitor. Or maybe you dream about self-defence?

    As I’ll point out, yet again, LVT is not incompatible if you are an Anarchist. In fact I’d say it helps stabilise property rights without a government. Why? Because without it there’d be accusations of theft and robbery. Not nice when you have to live together.

  146. nb: due to using different computers I seem to be appearing as “johnny” and “johnnypate” sorry for the confusion.

    @benj, I already acknowledged that ownership is somewhat of a variable quantity. OTOH, try and take my stuff without a gang to back you up – you’ll find out what I mean by “circumstances of strict self defence” for use of violence.

    I’m saying a collective has no claim to anything, the future, or posterity, has no claim to anything, only an individual living person can lay claim to own anything. Some actual, living, person has got to own something before you can argue about value. This is both from a philosophical and practical viewpoint IMHO.

    For sure, gold is a classic case of something only having value because individuals believe it so.

    @Edith Crowther, this is a classic collectivist argument that is fundamentally BS – I say this as someone with a Biology degree who has held Malthus’ own copy of “Essay on the Principles…” (Jesus College Cambridge Library has it). This is a phantom argument and various LA publications have addressed its fallacies (without going into utopian stuff about colonising the solar system but which ought to be an option, IMHO).

  147. @Ian
    “Johnny, it’s pretty simple really. Most people think the best tax is the tax that other people pay. LTVers thus like the idea of people who own land, i.e. other people, paying lots of lovely tax to spend on “the public good”. They come up with lots of arbitrary justifications, e.g. the “unearned” thing, but the bottom line is they just want a high tax economy, in which other people pay the high taxes and they don’t pay any. As such, it’s just another form of, literally(!) rent-seeking.”

    But, that’s the good thing about LVT though isn’t it Ian. You can go out to work and not pay one penny in tax. You are free to choose your liabilities. Something that I’d have thought appealed to Libertarians. Free to choose.

    You could rent. Or you could buy a field and camp in it. Or if you commute in from your home, in Neath, your LVT bill will still be virtually nothing. So, if you are right, and everyone thought the best tax was the one some else pays, isn’t this what everyone would do? No, clearly not.

    How is unearned income an arbitrary justification? You know it’s not. It couldn’t be clearer. You must be rattled to have written that.

    What evidence do you have that advocates of LVT want a higher tax government? Wadsworth reckons around 10% GDP. I’d go along with that. Is this clear enough for you?

  148. I have no idea why you think I live in Neath.

  149. benj – why do you assume that park land is granted by the “local authority”?

  150. Edith Crowther

    @johnny pate – I don’t understand, who is the collectivist? If collectivists have hijacked George and Hardin, that is their problem. George tried to halt Chinese immigration, and if you ask me he went wrong when he joined the Labour movement. Don’t know about Hardin’s politics, but he was saying that when too many people or animals use the land, disaster ensues. Obviously, but it needed spelling out.

    It is important to use land tax to offset the killing effect of human overpopulation, this was George’s aim but I suppose he felt obliged to sugarcoat his ideas in egalitarian nonsense as he did not want to sound nasty and “fascist”. Although Mother Nature is the utmost “Fascist” – but humans try to be kinder, rightly so.

    It is good that in England most of the land is in the hands of a few large landowners, including the Church and the Army – this preserves it from becoming a wasteland like the Horn of Africa, which once had many trees, believe it or not – they were all chopped down for firewood for cooking, over the decades.

    I am beginning to realise that George has been hijacked by the “left”, partly because he himself made the mistake of seeing the Labour movement in the States as an antidote to corporate landgrabs. If you ask me, those Labour thugs killed him indirectly, through stress as he began to realise how awful they really were. Now he is probably turning in his grave to see all sorts of “socialist” opportunists use his ideas to bleat about justice and equality for all.

    A tax on anything reduces access to that thing – and that is the primary aim of George, whatever he dressed it up in. If we do not reduce access to land by humans, our species is doomed – and if a Land Tax helps with this aim, then its time has come at last.

    Imagine what the roads would be like if there was no tax on petrol! This is the purpose – or at any rate the effect – of any tax, death and taxes are bracketed together with good reason, and death is a crucial part of life – without death, there would be no room!

  151. @Edith Crowther now I don’t understand where you’re coming from… first I assume you’re talking about Malthus and you’re a fan of the one child policy, then it seems you’re worried about a billion Chinese coming to Britain and not realising that makes them worse off than they were in China.

    Things in the real world of phenomenal objects don’t work in the mathematical fashion the Malthusians and trend forecasters pretend. Instead of imaginary future problems we should focus on the known ones… at the moment there seems to be an issue with crazy people pretending an LVT has some relationship to libertarianism.

  152. Edith Crowther

    @johnny pate – ha ha, quite funny, you are either Theatre of the Absurd or a former member of PInk Floyd come back to life. Or Irish.

    Obviously George meant Chinese immigrants to The Wild West in the late 19th century, and he was not motivated by an imaginary problem but a very real one. But I think you are more interested in your ideas than his! Or mine.

    I agree it is astonishing to see Libertarians debating an LVT, but I have Irish blood too (a great grandmother who married out) – and I believe in miracles.

  153. @Edith Crowther. It is rather ridiculous to observe a bunch of people who style themselves as libertarians yet have so little faith in the free market and free exchange.

  154. All the evidence that I have seen is that Chinese immigrants to the United States in the 19th century were more of a benefit than a cost. Certainly there were some bad people amongst them – but most were good people.

    Even that one eyed building boss of the Central Pacific (name? I can not remember his name….), who started out a hard core racist against the Chinese, was won over by working with them – indeed he threatened to resign if nitro continued to be used in the work of building the railroad. Because nitro was just too dangerious for the workers (although they were brave men – and quite willing to use it, inspite of deadly accidents) – the very Chinese workers he has once despised, but had come to respect.

    By the way – two different Indian policies between the Central Pacific and the Union Pacific. The Union Pacific got the army in against the Indians. The Central Pacific tried a policy of offering free transport for the Indians – sounds absurd, but it tended to work (some Indians were still getting free rides years later).

    By the way – I know both companies were corrupt that (unlike the Great Northern) both the Union Pacific and the Central Pacific had their hands out for subsidies. But there are levels of corruption – and the Union Pacific was worse (a lot worse).

    Unions – if they are offering Fraternal (Friendly Society functions – medical cover, old age cover, legal services…..) then they are good. If they are trapped into the “collective bargaining” delusion (the delusion that wages can be increased for everyone without rising productivity) then they are bad – leading to higher unemployment and (eventurally – as industry decays) actually lower wages and working conditions than would otherwise have evolved, Places like Gary Indiania and Detroit Michigan show that what W.H. Hutt called the “Strike Threat System” does not just hit nonunion members (by making them unemployed) – it, eventually, hits even union members themselves.

    American unions got into this collective bargaining stuff – and the “Yellow Peril” stuff. Really vile stuff – although the media, and academia, have tried to cover up for the unions for many years (“mainstream” American history books are basically Progressive spin – and have been since Woodrow Wilson’s time).

    As for China itself……

    The keystone of the 1978 move away from Maoism was allowing the peasants de facto private ownership of land (in theory land remains collectivily owned – but the peasants were promised that, in practice, they would be allowed to build up family farms).

    But how real is that de facto private ownership? There are a lot of stories of people in China (who have strong connections to the Chinese Communist Party) just walking in and strealing farmer owned land – to build factories on whatever. And when farmers complain they get the answer – “it is not your land, there is no private land here”.

    By the way – before Americans feel self satisfied about that, check the “eminant domain” status of your State. Remember the “Kelso” (Supreme Court) case showed their is no Federal protection for private land – so if your individual State does not have specific legal protection…..

    Well then any privarte person or company (that has bribed the correct politicians or administrators – not old style bribes of course, modern “development gain” bribes) can just walk in and steal your land – with the full backing of the police and so on. I repeat check the specific legal situation in you own State.

    The old days (when even John D. R. could not make people sell if they did not want to sell – so there is a little old building in the middle of the big 1930s development in New York City) are long gone.

    Britain? Compulsory-sales-R-us.

  155. Edith Crowther

    @johnny. It is not ridiculous at all. It’s called Growing Up, shedding some youthful idealism which is sad, but getting something much weightier in return. Like the three caskets for Portia’s suitors in the Merchant of Venice, it was the dull heavy lead one you had to pick.

    But I came to this site to tell you and anyone still reading this article, that either Justin Webb of the Today programme on Radio 4 is related to D.J. Webb or he has been reading the Libertarian Blog regularly – because he is in Niger examining Land Grabs by foreign companies!

    All the issues George saw unfolding in the Wild West are present but in mega proportions because Niger is already hugely overpopulated with the highest fertility rate in the whole World. You can listen again for up to a week – the item came just after the news headlines at 8.35.

    And, just as in 19th century America, some of the villains of the piece are clothed in thick “humanitarian” garb. As indeed they were when they went to the Congo for copper etc. over 100 years ago. Plus ca change ………

  156. Edith seems to be the front-runner for this thread’s Fruitcake Award.

  157. Edith Crowther

    @Paul Marks – thank you so much for raising the topic of land grabs in China – this is perhaps the most instructive area of all because in other parts of the world today land grabs have the distracting element of being done by “foreigners”. (Of course China is a major land-grabber outside its own borders as well.)

    The objection to Chinese immigration in the States was because of numbers, not race – and since America today is dependent on using 25 per cent of the entire World’s resources, we can see that George (and others) were right that maximum sustainable population had been reached in the US of A by 1900. Given that the rest of the world was filling up fast (due to Industrial Development altering life expectancy), and that Americans were already an overflow from Europe, so the pressure could not be relieved by emigration.

    The problem with land grabs by Developers for construction or agribusiness is that while they preserve the land from the ruin of over-use by exploding human populations and their livestock, they fuel overdevelopment by providing mass housing and mass crops which decimate the natural world in a different way and less obviously.

    We do not know if an LVT could prevent both kinds of overuse, all we know is that George had the right aim – and really, one nation needs to try out LVT to see if it works at all, if it just needs some adjustments, etc., just like any Inventor of a a machine or weapon. Trial and error. I would suggest the UN picks two countries from round the Med, one Developed like France or Italy and one still Developing like Tunisia, if it is done under UN auspices a nation is more likely to volunteer. A Developed nation is more likely to volunteer than you might think, if it is going under financially. Same goes for a Developing nation, come to that. So, plenty of willing candidates!

  158. The economy is not a division of resources. This is a common economic fallacy, particularly popular with Malthusians, Socialists, etc. The economy is production, not resource division.

    It follows quite obviously that a more productive economy will transform more inputs into outputs than a less productive economy. If you thus sum up every national economy’s input purchases as a global figure, then compare each economy’s fraction, you will therefore observe a larger fraction going to the more productive economies. If you are prey to the “division of resources” fallacy, you will therefore conclude that the more productive economy is using more than its “fair share”. And think that this proves that there aren’t enough “resources” i.e. economic inputs to go around for everyone.

    But what you have actually observed is simply the low productivity of some economies. The problem is not “over-use” by productive economies such as the USA. It is the inefficiency of the less productive economies, making them unnecessarily poor in consumer goods and services, which they could remedy by improving their productivity.

    This is, needless to say, a very common fallacy.

  159. I see no evidence that allowing more Chinese into the United States in the early 20th century would have led to Chinese people (not the modern Chinese government – the ordinary people) stealing land.

  160. Edith Crowther

    George was not “racist” in that way – he simply saw that any increase in population meant the value of land would keep going higher and higher. Because in a way, everyone “steals” land – not in the Marxist “property is theft” sense, just that anyone using the land in a way that does not keep it in good heart and productive is stealing it from future generations. This is why the first time I came across George was in the company of quite famous “Ecofascists” as they are now called.

    Of course the label “Fascist” is applied to anyone or anything that denies humans their right to do exactly as they please all of the time. Nature is Fascist, so is God, so is Death – the biggest Fascist of all.

    A Land Tax, properly applied, would be “Fascist”. But less Fascist than desertification, I can assure you. However, we no longer have any choice in the matter I think. A wrong road was taken before 1900, and that is that. Now 1 in 5 people in the UK think parsnips grow on trees – all connection with the web of life has been lost, it is Harvest Festival but the tractors bringing in the sheaves are just a nuisance slowing down the traffic on the main roads, etc.

  161. Here’s something I find interesting – people who say that someone who owns land should completely own it and no-one, not even the broader community around them, should be able to tell them what to do with it. Yet should someone take some of that land then they want to reclaim that land by appealing to … the broader community to validate their prior claim to it.

    Not that I think land should be communally owned, I simply think land ownership is itself untenable. You disadvantage immigrants and future generations by tying up all land in private hands, potentially leading to effective slavery if there is no public land for people to use to travel or live on.

  162. First of all land ownership does not mean that false imprisonment is allowed (by buying land in a circle round another person) or that one can cut off light and air – again property ownership is bundle of things (which are well understood by traditional law). When Plato thought he had refuted the traditional idea of justice by saying “would you give a back an axe to someone you had borrowed it from – if they had gone mad and were going to use the axe to murder people” (or words to that effect) he thought he was being wise – but actually he was just being clever (a very different thing indeed).

    In reality legal traditions fully understand why it is wrong to give someone back a axe if they are going to use it to murder people (they will violate the bodies and goods of others), just as legal traditions understand the complexities of land ownership a lot better than clever people do.

    Systems of goverment “planning” (what the Americans call “zoning”) are not needed – ownership rights (such as covenants) evolve and do the job.

    Brtiain got on O.K. without “planning laws” for most our history )they only came in in the post World War II period) and even the vast American city of Houston has no such system of government planning (zoneing) even now. Yes Houston is ugly – but no more ugly than LA (which has incredibly complicated and extensive regulations), it is just less expensive to live there (partly because business enterprises and so on do not have to pay endless bribes to politicians and planning officials – because such folk have much less power in Houston).

    If land ownership is not “tenable” than neither is the ownership of an axe, or the shirt on your back.

    “But if someone has their land taken they appeal to the wider community…”

    Such a reply is not even clever (let alone wise) – as people also “appeal to the wider community” (the police) if their wallet is stolen, or if the shirt off their back is stolen.

    Would you prefer it if land owners did not “appeal to the wider community” (the police and the law courts) and just shot or hanged “occupy” types and so on?

    No – I thought you would not like the idea of a rope being placed round your neck and having the drop. Better to have the policeman saying “move along there lad – this land does not belong to you”. I have the same opinion on this matter – I would much rather be told to “move along there” than have a landowner take the law into his own hands – and hang me.

    Civilisation can not exist (in the long term) without property rights – and property rights in land (official or de facto – such as “Free Hold”) are the foundation for all other property rights (and for civil liberites and so on), but land owners must be limited in the punishments they can dish out – limited by a system of law (even if there are no government police). That is also true of non landed property – for example I should not be allowed to burn you alive for stealing a loaf of bread from me.

    By the way…..

    If property rights in land are “untenable” then there can be no such thing as “stealing” or “grabbing” land either.

    So if people come along (in Niger or anyone else) and use the land for some new purpose (and kill the locals if they get in the way) they are not violating land ownership – if there is no such thing as land ownership.

    “Among my people there is no concept of land ownership”.

    “Oh good – that means I am not stealing the land from you when I use it for……” (strip mining or whatever).

    Denying the concept of land ownership is not a good thing for “primitive” people – indeed it is about the worst thing one can do.

  163. Honduras is going to give a corporation permission to build and found a city, have its own laws and the only taxes payable will be property taxes…

    http://www.foxnews.com/world/2012/09/11/private-city-in-honduras-will-have-minimal-taxes-government/

  164. keddaw – I have heard this (it has got a lot of publicity in recent times) and I wish the project every success.

    Of course as the city will be privately owned, my objection “but the property tax payers will be outvoted” does not apply.

    However, I would warn about Honduras – it is very unstable.

    The endless labour market regulations have forced a lot of people into the black market (the normal “law of unintended consequences” regulations intended to “help workers” end up hurting them) and the drug prohibition policy has turned the cities into war-zones.

    Still, I repeat – I wish the project every success,

    It is better to try and fail, than not to try at all.

    For the chances of failure, if one does not try at all, are 100%.