Book notes for “Libertarian Party at Sea on Land” by Harold Kyriazi
Table of contents
Chapter 1 Introduction, Land is like oxygen Chapter 2 First Principles. Principle 1 is the right to life Principle 2 is equal freedom for all. Principle 3 is that of self-ownership. Principles of the Libertarian Party position on land Rights versus privileges Short primer on land economics A capsule economic history of the United States Chapter 3 Land views of classical liberals, contemporary libertarians, and other greats John Locke Thomas Paine Adam Smith John Stuart Mill Mark Twain Thomas Jefferson Henry George Ayn Rand The Bible Frederic Bastiat Albert Jay Nock Ludwig von Mises Winston Churchill Murray Rothbard Views of other famous or semi-famous libertarians Modern libertarian support for LVT Many modern economists also support LVT Chapter 4 Other arguments for and against LVT Common objections from libertarians The right to life is inconsistent with private property in land No “Libertopia” without LVT Is the right to life an absolute? Anti-Rothbard, or the fallacy of Extreme First Use Dogma Approach from chattel slavery Robinson Crusoe analogy Land ownership viewed historically Shopping malls are analogous to municipal governments The argument from pragmatism The rude guest analogy Tax cuts won’t help non-landowners if there’s no LVT How much harm comes from land monopoly vs. Big Government? LVT tracks well with the level of government service provided Chapter 5 Geo-libertarian Proposals for Change How would LVT work? How would land values be assessed? How do we guarantee security of improvements? Man’s future under LVT What Geo-Libertarians propose
Disclaimer, I have done no reading of existing thought on this subject so all notes below are my own initial reactions to the content, I am sure that the issues have been discussed at length elsewhere, and I hope to read more on the topic in future.
Loc:104 But I also think the Libertarian Party and the majority of today’s libertarians (along with almost everyone else) are wrong about a seemingly insignificant, but fundamental aspect of political philosophy — our system of ownership of land and other natural resources — and have strayed far from our classical liberal roots. I believe that a recognition of this aberration, and a return to our roots, will open up a common ground, of economic freedom and justice, on which freedom lovers of all persuasions — left, right, and libertarian — may join together in an unbeatable coalition. > These sentences could do with an edit!
Loc:132 What caused these individuals to step forward and run? I think it was the added knowledge that they actually have something to offer everyone — a full measure of liberty and justice for all, both in one’s personal life and one’s economic life. Wouldn’t you just love to be able to establish a rapport with liberals — even outright socialists — about economics? To be able to agree with them that, yes, there’s something wrong at the base of our capitalist system (though there’s nothing wrong with capitalism per se)? To agree with them that the system grinds down and oppresses the working poor? To be able to understand why socialists view capitalist centers of wealth creation as inherently despicable — as centers of injustice where “the rich guy steals from the workers and gets away with it”? They’re wrong, of course, but not as utterly wrong as I used to think. I used to view socialists, almost literally, as mentally defective: “How can anyone with a brain have such a misperception of reality?” But now I no longer have such a dim view of many of my fellow human beings. It’s quite a relief, and also explains why many others often have such a dim view of us libertarians and our mental abilities: it’s a case of misperception and ignorance all around, where all sides stand in need of enlightenment.
Loc:156 The current, mainstream libertarian view regarding land ownership is fatally flawed. The view, embodied in the writings of Murray Rothbard as well as the Libertarian Party’s National Platform, is that the first users of land, followed by their assigns or heirs, own the land completely and eternally (though I can’t say I’ve heard any of my fellow libertarians offering to return their land to the descendants of Native Americans). More to the point of this essay, most libertarians respond to the idea of a tax on land value the same way they respond to the idea of a tax on anything — by, as a friend of mine says, chanting the mantra “taxation is theft.” But what if the tax were actually a way of taking stolen money and returning it to its rightful owners? In that case, it would not be theft, but its prevention. And if that is the case, then the absence of such a tax allows a form of theft that is both ongoing and potentially enormous, occurring with the mailing of every rent check, and with every land transaction. And that is precisely the case I hope to make in this essay. > So on some level this will always be the case. If we put the line at national borders, then we are arbitrarily giving the current citizens of that country the benefits of that land – but why them? The only way to make this ‘fair’ would be to split the earth amongst all the humans. If we colonize another planet, then that gets split as well. > If we imagine the other side of the scale, a small group of 100 libertarians secede from the UK and declare a chunk of the country their own. I imagine that their neighbors might be unhappy that they don’t get the benefit of the land that has been removed. On a smaller level, if it was a single family, then we have the same situation we currently have! > Drawing the line at current national boundaries is arbitrary then, but that may not be an issue if it is better than the status quo.
Loc:166 For now, let me simply state that the overwhelming majority of libertarian philosophers throughout history have maintained that land — which no one created, and which is a sine qua non of human existence — is a unique type of property, and can be “owned” (free and clear) only when as much and as good free land is available to all — the “Lockean Proviso.” But the day has long since passed when land of any quality was free for the taking, and most libertarians today are largely unaware of this caveat historically attached to outright land ownership. > What else is like this? Natural resources of course (including air, water, fishing rights). What about positional goods?
Loc:209 The rights of self-ownership and liberty thus lead to what we can call the principle of labor-based property. One’s property is an extension of oneself, which one created by exercising one’s faculties. A geo-libertarian corollary of this principle is that one cannot monopolize that which no one created; one has no right to more than one’s equal share of the earth (though one may rent the privilege), especially those aspects of it that are scarce and/or capable of being monopolized, such as its landed surface. For that would deny others their equal rights to life and the use of the earth.
Loc:225 the Libertarian Party view amounts to little more than “First come, first served,” or “First dibs!” Its only possible moral basis is that the first claimant may have done more work than others, and since individuals must have the right of exclusive access to land if it is to be used at all, all other things being equal, it might as well belong to the first user. > Status quo seems like a good rule in the absence of a better one
Loc:245 Land, however — especially non-agricultural land — is more of a place than it is a thing. It’s not man-made, but a gift of Nature whose supply is fixed. And, unlike other of Nature’s essential gifts, such as oxygen, land is easily monopolized7 once governments exist: one can simply put up a fence, with a sign that says “Private Property! No Trespassing!” (Without government force to back you up, few would recognize your “right” to prevent them from using land that you weren’t using.) For all these reasons, when demand for land goes up, its price not only goes up but generally stays up.
Loc:250 Another key thing about land (again, speaking mostly of non-agricultural land, i.e., residential, industrial, and commercial land) is that a large part of its value comes not from what has been done with a particular parcel per se, but what has been done with surrounding land. > Interesting point. We might want government to internalize negative externalities such as pollution (Coase). Why not also do the reverse: if there is a positive externality, should we not try and internalize that too, to encourage the correct amount of it to be produced? > On the other hand, should cheese manufacturers be forced to pay digestive biscuits money for increasing the value of their product? (terrible example, think of a better one).
Loc:257 Natural utility (e.g., arable land for farming; a harbor for a seaport;
Loc:259 Community-created site utility (via taxpayer-funded, government-initiated improvements or services)
Loc:260 Individually-created utility added to the individual’s own site (e.g., by the building of a house or business)
Loc:261 Individually-created utility added to neighboring sites (e.g., the value of living across the street from a well-kept, beautiful home,
Loc:269 The market in land partly resembles that of “collectibles” such as old Barbie dolls, comic books, baseball cards, etc., in that their supply is strictly limited. Part of the sale price of any of these items consists of what is known as the “speculative premium,” the amount of money buyers and sellers expect the price of the collectible to rise.
the supply of harbor-type land is extremely limited, and its utility is high, so that type of land sells for quite a lot. But the most expensive land these days tends to derive the bulk of its value not from such natural utility, but rather from 2 and 4 above, i.e., its proximity to goods and services, such as public transportation, grocery stores, businesses, parks, etc. An acre of well-situated vacant land in downtown New York City or Chicago can easily sell for tens of millions of dollars, many orders of magnitude more than it would sell for if there were no city around it. > This sort of solves part of my point above, since the nation is responsible for (2), then it is fine for that to be returned to them alone.
Loc:286 the value of 1 properly belongs equally to all citizens, because we all have an equal right to life, and thus to access to the earth, or its equivalent, its natural value. The value of 2 properly belongs to the government entities (composed of individual citizens, i.e., taxpayers) that created it. To the extent that government is wise about its actions, it’ll be able to pay for itself out of this fund and maybe have some left over. (Such a surplus could be distributed equally to all citizens, like a “profit-sharing plan,” and/or used to provide bonuses to government officials who manage well, similar to the incentive clauses found in the contracts of corporate executives and major league ballplayers.)
Loc:292 The value derived from 3 and 4 belongs to the individual land users who created it: the value of 3 goes to its owner as either the sale or rental price of his land/building, and the value of 4 should be returned to its owners as land value rebates. > This is also fine, so only (1), which is probably not so high, is something that could be construed as belonging to all humanity.
Loc:294 To summarize, the portion of the sale or rental price of land that derives from the gifts of Nature should be distributed equally to all citizens as direct (monthly or annual) payments. That portion derived from taxpayer-funded government services should go to the level of government that created it, and would provide continued funding of those valid government functions that all libertarians can agree upon (e.g., street maintenance, police protection, a judicial system, national defense, etc.). On the other hand, the value of all individually-created land utility belongs exclusively to the owner/developer. There should be no tax levied on buildings or other improvements. That type of taxation unquestionably is theft — confiscation of the fruits of labor. And, individuals should be compensated with a “land value rebate” for value they’ve added to the community’s land. A 100% “tax” on land value, if it is distributed to its rightful owners, is not theft, as many libertarians reflexively claim, but its prevention. > That does sound rather nice assuming we can get the prices correct
Loc:309 By “LVT” I mean community collection of the market-driven, yearly rental value associated with a site by virtue of both its intrinsic qualities and its location with respect to other things. LVT is not just an arbitrary percentage of the value of land, subject to the whims of municipal officials. Neither is LVT just another way of raising revenue. Because it eliminates any incentive to monopolize natural resources, geo-libertarians view it as a necessary element of any foundation of true economic justice.
Loc:313 People often think a tax on land values will simply result in landlords charging higher rents, or land sellers holding out for higher sale prices. This cannot occur, however, because neither supply nor demand are changed by the tax, so the price would remain the same, and the entire tax would be borne by the landowners
Loc:340 Supposing the entire habitable globe to be…enclosed, it follows that if the landowners have a valid right to its surface, all who are not landowners have no right at all to its surface. Hence, such can exist on the earth by sufferance only. They are all trespassers. Save by the permission of the lords of the soil, they can have no room for the soles of their feet…men who cannot “live and move and have their being” without the leave of others cannot be equally free with those others. …
Loc:349 Neither is his second paragraph above a mere philosophical flourish, devoid of practical meaning. Part of what most of us pay for these days, as either purchasers or renters of land, is the right to exist — the ability to say, “I have a right to exist on this very spot of land.” This means that the “right” to exist has been transformed into a privilege, and is no longer a right at all. And that portion of our rent that purchases our “right” to live in our own community grows greater with each passing year, just as rent takes an increasingly greater proportion of our income.
Loc:369 But the earth in its natural state…is capable of supporting but a small number of inhabitants compared with what it is capable of doing in a cultivated state. And as it is impossible to separate the improvement made by cultivation from the earth itself, upon which that improvement is made, the idea of landed property arose from that inseparable connection; but it is nevertheless true, that it is the value of the improvement only, and not the earth itself, that is individual property. Every proprietor, therefore, of cultivated land, owes to the community a ground-rent (for I know of no better term to express the idea) for the land which he holds… > Paine
Loc:374 Paine then proposed to collect the rent nationally and distribute a small sum to everyone when they reach the age of 21, along with a yearly payment to those who’ve reached the age of 50, to cover their retirement.
Loc:389 Clearly, Adam Smith thought that community collection of ground-rents to pay for government services was both reasonable and proper.
Loc:392 The essential principle of property being to assure to all persons what they have produced by their labor and accumulated by their abstinence, this principle cannot apply to what is not the produce of labor, the raw material of the earth. … it would be the height of injustice, to let the gift of nature be engrossed by individuals. > Mill
Loc:402 To be allowed any exclusive right at all, over a portion of the common inheritance, while there are others who have no portion, is already a privilege. No quantity of moveable goods which a person can acquire by his labour, prevents others from acquiring the like by the same means; but from the very nature of the case, whoever owns land, keeps others out of the enjoyment of it. The privilege, or monopoly, is only defensible as a necessary evil… > Mill
Loc:408 The ordinary progress of a society which increases in wealth is at all times tending to augment the incomes of landlords; to give them both a greater amount and a greater proportion of the wealth of the community, independently of any trouble or outlay incurred by themselves. They grow richer, as it were in their sleep, without working, risking, or economizing. What claim have they, on the general principle of social justice, to this accession of riches?
Loc:415 ground-rents tend continually to consume a greater and greater proportion of our increasing productivity. Why? Because as we exceed the baseline amount of wealth necessary to maintain our existence, we are increasingly able to compete with one another to rent apartments or to buy or lease land. Rents rise because people can afford it (Smith, Twain and Churchill make this point as well), while items not subject to natural monopoly do not (in fact, consumables tend over time to decrease in price, as production methods continually improve). Thus, landlords tend to pocket most of any general increase in people’s wealth > And any positional/signaling goods? Medicine, education, luxury goods? Probably! These are less essential to life though.
Loc:425 It can be accessed on the Web site of the Henry George School of New York (gopher://echonyc.com/11s/Cul/HGS). > Gopher!
Loc:438 if there was only one man who wanted it, of course he would not offer me much, but if the land be really worth anything such a circumstance is not likely to happen. On the contrary, there would be a number who would want it, and they would go on bidding and bidding one against the other, in order to get it. I should accept the highest offer — what could be fairer? Every increase of population, extension of trade, every advance in the arts and sciences would, as we all know, increase the value of land, and the competition that would naturally arise would continue to force rents upward, so much so, that in many cases the tenants would have little or nothing left for themselves. > Twain
Loc:461 Therefore, please do not say that land monopoly does not exist, and that we currently have a free market in land.
Loc:479 Given the views of Jefferson and Paine, it is not surprising that the original constitution of the United States of America, The Articles of Confederation (proposed by Congress, November 15, 1777; ratified March 1, 1781), specified a tax on real estate as the only means of funding the federal government. (Unfortunately, they included buildings and other improvements in the assessment, in addition to land value.
Loc:507 (In such a payment for access to natural resources, we see the fruits of labor flowing from those who work to those who possess a state-granted monopoly.)
Loc:515 It is not necessary, in order to secure equal rights to land, to make an equal division of land. All that is necessary to do is to collect the ground-rents for the common benefit. Nor…is it necessary that the state should actually take possession of the land and rent it out from year to year…as some ignorant people suppose. It can be done in a much more simple and easy manner by means of the existing machinery of taxation. All it is necessary to do is to abolish all other forms of taxation until the weight of taxation rests upon the value of land irrespective of improvements,13 and take the ground-rent for the public benefit. In this simple way, without increasing governmental machinery, but, on the contrary, greatly simplifying it, we could make land common property. And in doing this we could abolish all other taxation…” > George
Loc:579 “Shouldn’t those large idle tracts be forcibly divided,” I asked, “so that the native Indians would have a chance to survive?” Hospers was arguing, implicitly, from our earlier-mentioned principles of equal rights to life, freedom, and the use of the earth. “No!” Ayn exclaimed so loudly that I could hear the microphone rattle. “They can sell it off piece by piece until everyone has something!” she said. She felt that the market would solve everything. “But they choose not to do that — they want to hold on to these unused lands as a matter of personal prestige. They don’t care about economic development or the condition of the Indians.” Again, much as Jefferson surmised that the landed aristocrats in France were so wealthy that they didn’t have to care about their land’s productivity, nor about the fate of the peasants who wished to work but had no jobs or access to land, so they could work for themselves. “After the war, MacArthur divided up the feudal estates in Japan in that way, and opened Japan up to democracy.” But Ayn would have none of it: “That’s land redistribution!” she said. “Coming from the Soviet Union, do I have to tell you about the evils of compulsory land distribution? You have been perverted by utilitarianism!” That stopped me. But I still wasn’t convinced. … > Perverted by utilitarianism! Very Rand.
Loc:692 instead of George’s ambiguous phraseology about “land-taxation” and charging “the expense of government upon our lands,” Paine introduced the clear and correct term “ground-rent”; and instead of incurring the confiscatory implications of George’s word “tax,” he puts it precisely that ground-rent is a debt which every landed proprietor owes to the community, thus leaving clear the distinction between taxing (which in theory may or may not bear on production,15 but in practice invariably does) and rent-collecting, which does not bear on production.
State power is in direct proportion to State income. The more money the State has to do with, the more it will do; it is incapable of inhibiting its passion for power. A tax is a compulsory transfer of property from the producer to the ruler, and with the transfer goes the privilege of disposition. Even though the disposition of tax funds is circumscribed by law, it is still the State, not the original owner, who makes decisions. The higher the tax the narrower the scope of the producer’s choices, and if all his earnings are taken from him — the Communist’s program — he becomes completely dependent on the will of the legalized spender, even in the manner of how he shall live. Thus, the freedom of the individual is commensurate with the amount of his property he is able to dispose of, as he sees fit, and the power of the State is commensurate with its confiscations. And this is so even if the confiscated property is spent in ways that, according to the State, redound to his benefit. A well-kept slave is still a slave.
The density and productivity of population is the primary cause of rent, but contributory to density and productivity are the social services provided in the locality. Hence, it seems equitable that this rent be used to defray the costs.
there is the obvious improvement in the abundance of the market place if taxes were abolished, if production were relieved of the cost of providing social services. A tax is a levy on earnings; it is a draft on the wages that would, if left with the earner, result in effective demand for goods and services. They are made poorer by the levy. On the other hand, rent is not a charge against production but is merely payment for the opportunity to produce. The merchant who says that he does not care what the rent of his location is so long as he can do the business there, is an excellent economist; he knows that he is not out of pocket for the rent he pays, that this payment is merely a yardstick of the volume of sales made possible at that location. If he sets up shop in a less traveled area, he will pay less rent, but be will also do less business. And he knows that the price he must charge for his merchandise is determined by competition, not by the rent he pays. Unlike a tax, which must be added to the price of the merchandise and absorbed by the consumer, rent is absorbed in commercial transactions; it cannot be passed on to the consumer.
It has been estimated that rent in a highly productive country, like the United States, is a larger sum than its taxes, and if this is so its diversion to the State would make that institution stronger and more arbitrary than it is now. It could use the rent fund to take over an industry, such as the steel mills, by the simple device of declaring it a “social service.” In a “democracy,” how many votes could be bought with rent? The best that can be said for the use of rent to defray the cost of social services, in lieu of taxes, is that the plan might work well in a small community. > Chodorov
But that is so not because of the inherent virtue of the plan but because in a small community political power is more immediately responsive to social power, and any attempt to make use of the rent fund for political purposes would meet with the quick disapproval of the neighbors; that, however, is also true when taxes are misused in a small political unit. Hence, for all the merits of the “single tax,” it does not meet the antisocial problems resulting from political institutions, the cure for which is the decentralization of power, the keeping of the politician within the purview of the people whose money he handles. All, of course, true. And, in The Income Tax: Root of All Evil, Chodorov has a chapter entitled “Competition in Government,” which makes the further argument that not only must governing jurisdictions be small, they must be in direct competition. Also plainly true. Fortunately, LVT and decentralized government are not mutually exclusive. In fact, their marriage is precisely what I and many other geo-libertarians propose: a hierarchical, decentralized, competing municipality form of government, with each municipality funded by the Single Tax
It’s interesting both that Hayek called it a socialist proposal (to see why he and others may mistakenly see it that way, see numbers 1 and 2 of “Common objections from libertarians”), and that at the same time he thought it at least somewhat theoretically defensible. He doesn’t say specifically that he considered it morally defensible, but that’s a reasonable supposition given that his next thought was to declare it impractical. Given his last sentence, we can assume he understood the distinction between Nature-created land value (original and permanent powers of the soil), government service-created land value, and individually-created value. Why he viewed their separate calculation as impossible, I haven’t a clue.
I know, because for years I thought monopoly was a figment of the liberal imagination; that a free market would always work against monopoly, and that only government interference could produce it. I was right, but I only considered state-granted privileges like licensing of doctors and the creation of municipal authorities, as well as the stifling of competition via governmental regulation. I didn’t see that by granting titles to land and natural resources for less than the present and future market value, government not only allows, but fosters monopoly. In this way, we’ve encouraged natural resources, hence opportunity itself, to be controlled at bargain basement prices (i.e., monopolized), in a supposedly free market system.
Undeserved increments in land are not the only form of unearned or undeserved profit, but they are the principal form of unearned increment, and they are derived from processes which are not merely not beneficial, but positively detrimental to the general public. > Churchill
Nothing is more amusing than to watch the efforts of our monopolist opponents to prove that other forms of property and increment are similar in all respects to land and the unearned increment on land. They talk to us of the increased profits of a doctor or a lawyer from the growth of population in the towns in which they live. — (Laughter.) They tell us of the profits which are derived from the rising stocks and shares and which are sometimes derived from the sale of pictures and works of art — (laughter), — and they ask us as if it were the only complaint, “Ought not all those other forms to be taxed too?” But see how misleading and false all those analogies are. The windfalls from the sale of a picture — a Vandyke or a Holbein — may here and there be very considerable. But pictures do not get in anybody’s way. —(Laughter and cheers.) They do not lay a toll on anybody’s labor; they do not touch enterprise and production at any point; they do not affect any of those creative processes upon which the material well-being of millions depends. — (Cheers.) If a rise in stocks confers profits on the fortunate holders far beyond what they expected or indeed deserved — (laughter), — nevertheless that profit was not reaped by withholding from the community the land which it needs; on the contrary, it was reaped by supplying industry with the capital without which it could not be carried on. … If a doctor or a lawyer enjoys a better practice, it is because the doctor attends more patients, and more exacting patients, and because the lawyer pleads more suits in the courts, and more important suits. At every stage the doctor or the lawyer is giving service in return for his fees, and if the service is too poor or the fees are too high other doctors and other lawyers can come freely into competition. — (Cheers.) There is constant service. There is constant competition. There is no monopoly. There is no injury to the public interest. There is no impediment to the general progress in these. > Churchill, he really did have a way with words, reminds me of Cicero.
The greater the population around the land, the greater the injury the public has sustained by its protracted denial, the more inconvenience caused to everybody, the more serious the loss in economic strength and activity, the larger will be the profit of the landlord when the sale is finally accomplished. In fact, you may say that the unearned increment on the land is reaped by the land monopolist in exact proportion, not to the service, but to the disservice done.—
A portion, in some cases the whole, of every benefit which is laboriously acquired by the community increases the land value and finds its way automatically into the landlord’s pocket. If there is a rise in wages, rents are able to move forward, because the workers can afford to pay a little more. If the opening of a new railway or a new tramway, or the institution of an improved service or a lowering of fares, or of a new invention, or any other public convenience affords a benefit to the workers in any particular district, it becomes easier for them to live, and therefore the landlord and the ground landlord, one on top of the other, are able to charge them more for the privilege of living there.— (Laughter.) > If we believe government should resolve uncaptured negative externalaties like pollution, then why not also uncaptured positive externalities, as here?
Some years ago in London there was a toll bar on a bridge across the Thames, and all the working people who lived on the south side of the river had to pay a daily toll of one penny for going and returning from their work. The spectacle of these poor people thus mulcted of so large a proportion of their earnings appealed to the public conscience, and agitation was set on foot, municipal authorities were roused, and at the cost of the rate payers the bridge was freed and the toll removed. All those people who used the bridge were saved sixpence a week. Within a very short period from that time the rents on the south side of the river were found to have advanced by about sixpence a week — (laughter and cheers), — or the amount of the toll which had been remitted. A friend of mine was telling me the other day that, in the parish of Southwark, about £350 a year was given away in doles of bread by charitable people in connection with one of the churches, and as a consequence of this the competition for small houses and single-room tenements is so great that rents are considerably higher than in the neighboring district. All goes back to the land, and the land owner, who in most cases is a worthy person, utterly unconscious of the character of the methods by which he is enriched, is enabled with resistless strength to absorb to himself a share of almost every public and every private benefit, however important or however pitiful those benefits may be.
It should be clear from Churchill’s examples that a productive community (i.e., many individuals) contributes significantly to land values while, currently, only landowners (relatively few individuals) reap the profits. As mentioned in Chapter 1, a fundamental principle of justice is that people own the fruits of their labor; we see that under a system of unencumbered land ownership, the fruits of everyone’s collective labor accrue more and more to the landowners as society progresses (see also Mill’s and George’s quotes). This is part of the reason why land has usually been treated differently than man-made property.
“LVT must be wrong because it represents a positive rather than negative right” (Although I’ve never actually heard anyone formulate their objection in this way, I think it captures much of what troubles libertarians about LVT.) Libertarians consider genuine rights to have a “negative” character, in that they all boil down to a right to be left alone.
But the right to an equal share of the Earth, especially if expressed as a right to collect a share of Nature-created land value, seems like a positive right, i.e., a right to the fruits of other people’s labor. Or, one may consider it to be an expression of a positive claim on others, that they must relinquish some space they’ve been using, to make room for newcomers. Well, at least it seems like a positive claim, now that we’ve gotten so used to the idea that individuals can own elbow room. But, giving someone else their elbow room is not really “giving” them anything they don’t have a natural right to. One’s share of natural land value represents the price someone without land would have to pay to rent, and thus regain, his rightful share of the earth.
The socialist proposals you mention would presumably involve taking the fruits of labor from those who created them. LVT would do the opposite. In the sense that the land rent would be collected and distributed to its many rightful owners, rather than to the few, privileged monopolists, yes, it’s more ‘collectivistic’ than our current system. Like John Stuart Mill, I find it almost axiomatic that we should be egalitarian with respect to the gifts of Nature, at least, those gifts that lie outside ourselves. Is it ‘egalitarian’ to believe in equal rights?”
because land is of an essentially fixed supply, and a sine qua non of human existence, the law of supply and demand doesn’t work the normal way. There isn’t the normal safety valve of others jumping into the business when prices get very high, since creating land isn’t economically feasible (though in cities people have done the next best thing, and built vertically, utilizing space better). On the demand side, people can’t say, “prices and rents are just too high these days. We can do without land this year. We’ll go live on an iceberg.” (If that were really an option, icebergs would be monopolized, too.) As a result of the fixed supply of land and its absolute necessity for man’s existence, landowners have an especially strong bargaining position with respect to the rest of mankind.
Perhaps the largest impediment to implementation of George’s prescription has been that he advocated no compensation to the current landowners, despite the fact that some may have put much of their labor into buying that land, which would lose all of its locational resale value if that value were taxed away. Many people thought that was blatantly unfair. George saw this as the right thing to do for the same reason that slave owners weren’t compensated when their slaves were freed — they didn’t have any right to ownership in the first place, and the compensation schemes being talked about amounted to further robbery of taxpayers.
We libertarians often summarize our view of human rights by saying that all rights ultimately boil down to the right to be left alone. But with a finite Earth, and with all of its surface claimed by various individuals, the right to be left alone leads us to an unusual conclusion with regard to land ownership. Libertarians are used to defending the rights of the individual against so-called “rights” of collective society, i.e., we defend the rights of individual taxpayers to not be robbed to pay for other people’s housing, food, health care, education, etc. But in this case, it is the individual landowner, pleading “just leave me and my land alone!”, who has transgressed, because he has claimed greater rights than others, and it is he who has not left his fellow man alone. For example, if a family tried to homestead a piece of unused land, the landowner would likely use the power of government to force them off. With the whole Earth privately owned, such a family could be forced off the face of the earth.23 Is that being left alone? We commonly accept the notion that “my right to swing my arm ends where your nose begins,” but fail to see that one’s right to control more than one’s equal share of the earth, without compensating the rest of humanity, ends when all of the earth’s usable surface is claimed.
Loc:1,213 Land monopoly may not seem like a problem now, but its insidious nature will become obvious to all when neural network-based robotics technology advances to the point where landowners have little need for human labor, i.e., when intelligent robots can handle all of our manufacturing and repair needs. Henry George reasoned to a similar conclusion way back in 1882 (Social Problems, p. 145): “Were labor-saving invention carried so far that the necessity of labor in the production of wealth were done away with, the result would be that the owners of land could command all the wealth that could be produced, and need not share with labor even what is necessary for its maintenance.”
Imagine that the earth has only one continent, which initially is divided into two separate countries, each populated by a separate clan. Call them Clans A and B. Let’s say Clan B multiplies, while Clan A stays the same size. Things eventually get crowded in Country B. Do Clan B individuals have any right to go over and begin living on land in Country A? If you take the Rothbardian line, you’d have to say “No, they have to respect the border.” “But,” you say, “let’s be realistic. Clan A wouldn’t be willing to sell off its own country, but would certainly be willing to rent out part of it, especially for the right price.” And of course they would. Not only would it be unpatriotic to sell one’s country, it’d be stupid besides. Why sell an eternal cash cow, one that’ll be there for your children’s children’s children, unto the thousandth generation? What a good deal they’d get! They and all their descendants could dispense with work and live lives of leisure, obtaining essentially everything they need merely by allowing Clan B individuals to occupy parts of the earth they weren’t using anyway. In effect, they’d have made those in Clan B their partial slaves, getting the fruits of Clan B’s labor without trading away any of their own, all without the onerous and burdensome aspects of old-fashioned chattel slavery. And as long as Clan B individuals continue to multiply and value land, Clan A individuals will live lives of greater and greater leisure, renting out part of their land at ever-increasing costs. They’d be reaping the unearned benefit of the expansion of “Clan B-kind.” But are the rules unfair? Clan A individuals might reasonably ask whether Clan B has a right to “overpopulate.” They might argue that parents shouldn’t bring children into the world if there’s no room for them in their own country. But do we really wish to hold as our vision of utopia a world where procreation in excess of replacement levels is not a right but a privilege?
Consider the related but somewhat more realistic first user case, where your great-great-great-great-(etc.) grandparents cleared some land, you inherited it, and now you live on part of it and collect rent from several other families that also use it. Does your ancestors’ two weeks’ worth of effort, a millennium ago, entitle you and your kin to charge others for access to God’s Green Earth, and live off their labor for all eternity? How much labor was required to justify the claim? Would two days’ worth suffice? Two hours? Minutes? Seconds? And, is it the effort at transforming the land, or its subsequent use, that confers ownership?26 Arbitrariness, thy name is Rothbard!
According to the immemorial customs of people everywhere, only ongoing land use conferred ownership. When someone stopped using land, it reverted to the Commons.
Most libertarians wholeheartedly support the concept of retail merchants making rental payments to shopping mall owners in exchange for the space and services the latter provide. One can view local municipalities as mall managers: if one likes the services they provide, one chooses to live there and pay the tax (location rent) that they specify. The ability to “vote with one’s feet” plays a large role in the success of municipalities in their competition with one another for residents. > Interesting, this way the prices evaluated are controlled by competition between districts. Would need to keep those districts small!
There are also some important differences. Municipalities are political entities, and as such the terms of their “contract” with the residents are subject to change at any moment. (Contracts are much more reliable than constitutions, it seems.) And, municipal leaders don’t have any direct, personal financial incentive for providing good service to all their residents. On the contrary, their bread is usually buttered by a few special interests. So, competition among municipal governments currently is tepid at best.
Another important point to make regarding the shopping mall analogy is the relationship between what are known as mall “anchor stores,” and the concept of a land value rebate. The success of shopping malls largely rides on the success of the large department stores that serve as their “anchors.” Such stores are usually given incentives to locate there, such as reduced rent, or even subsidies. The economics justify such compensations, since these stores are largely what bring people out to the mall, generating the foot traffic that other merchants are willing to pay for. Malls also provide other advantages that downtown locations do not or cannot: clean, well-lit “streets,” a safe, enclosed, temperature-controlled environment, and free parking. In fact, many malls are owned by the anchor company, and they recoup their investment, and make a profit, by managing the other retail space whose value they’ve created. By the same token, individuals, or individual businesses located in municipalities oftentimes generate much more land value than they receive. The most obvious case is a “company town,” where the town wouldn’t even exist without the business. In such cases, it is the company’s investment of capital and labor that created the town’s value, and it should be reimbursed for any land value it has created. > Reminded somewhat of the burbs in Snowcrash (in a positive way)
“Tax manufactures, and the effect is to check manufacturing; tax commerce, and the effect is to prevent exchange; tax capital, and the effect is to drive it away. But the whole value of land may be taken in taxation, and the only effect will be to stimulate industry, to open new opportunities to capital, and to increase the production of wealth.” (Henry George, Progress and Poverty, Book VIII, Chapter 3)
We libertarians believe that, ultimately, the moral is the practical. So if our current system is, as I’m claiming, immoral — three-fold robbery (see the end of the section, “Short primer on land economics”) — then there must be bad consequences.
why would prime city land be idled for decades? Quoting George (Social Problems, p. 126): “The invisible barrier but for which buildings would rise and the city would spread, is the high price of land, a price that increases the more certainly it is seen that a growing population needs the land. Thus the stronger the incentive to use the land, the higher the barrier that arises against its use.” Add to that our irrational taxes on all manner of productivity, not to mention bureaucratic red-tape, and the barriers to building become insurmountable. > see: Bath, many valuable buildings lay empty
If we eliminate the IRS and the income tax, only landowners will, in the end, see much in the way of extra spending cash and a higher standard of living. (For example, the income tax cuts during the Kennedy years were “mopped up by the land monopolists, through an increase in the capitalization of land values” — see p. 127 of Harrison’s book). If we eliminate all sales taxes, rents will only go higher faster, like those of the working class Londoners who had to walk to work across the Thames, as described by Churchill.
According to the calculations of Dr. Steven Cord (see Harrison’s book, p. 201), total U.S. land rent (that from use of all natural resources, including the airwaves) would, in 1982, have yielded an amount almost twice that spent by government at all levels.
Figuring in the growth of government spending since 1982, and the compliance costs regarding government regulation, etc., it seems reasonable to conclude that the total land rent approximately equals the current, high cost of government. So, the twin evils of land monopoly and Big Government may be viewed as roughly equal culprits in diminishing our standard of living, if not our freedom.
(One has to give the nod to Big Government on the diminishing freedom front; it’s a bit hard to compare sitting in jail over marijuana possession with mere economic distress. But both are destroyers of human life.)
LVT accords with Adam Smith’s four maxims of “good” taxation Smith specified four general criterion that a good and fair tax should meet (Wealth of Nations, V.ii.b). LVT meets them quite well. it is fair (since valid government expenditures attach to land, one gets what one pays for and pays for what one gets) it is equitable (since one cannot hide land, the tax is impossible to avoid, and so will be administered equally to all) it isn’t difficult to comply with (there’s no paperwork as with sales and income taxes) it isn’t costly to administer (land is easy to valuate)
As to what should be done with the ground-rent collected, the answer is clear: apportion it according to who created it, with Nature-created value going to everyone equally. To the extent that land becomes freely available, there’d be little natural value associated with it30, and any Citizen’s Dividend would tend to come from mineral extraction fees, broadcast spectrum rental fees, pollution privileges, etc. Such fees would be collected and placed in a National Citizen’s Trust Fund, for periodic (monthly or yearly) distribution to all citizens. And, as mentioned many times before, value created by various levels of government should go to them, and value created by individuals should go to them in the form of land value rebates.
Just how much land value tax or rebate attaches to each piece of property would be a matter of scientific calculation, not political pull. Such cost-benefit analyses have been performed routinely for years, for example, by shopping mall managers: they determine precisely which businesses bring in the most customers, and which mix of businesses generates the greatest site value (which they then collect as rents from the various retail merchants). > Surely there will still be politiking around this, especially if this becomes the only source of government money!
As mentioned earlier, Steven Cord’s calculations, as well as theoretical considerations, indicate that the land can support such a level of taxation. At the same time, the need for much of the government “safety net” would decline: the reduction of taxes on productivity would result in increased production, greater job opportunities, and a more fair and equitable distribution of the fruits of labor; the increase in land taxation would put an end to land speculation and its concomitant waste of human energy (with suburban sprawl, rent-seeking behavior, government boondoggles, etc.).
So, how do assessors know how much a plot of land is worth, especially when it has a building on it? (Remember, Adam Smith said that it shouldn’t be hard to separate these values, and he was right, as usual.) Assessors use several bits of information taken from the surrounding area: 1) sale prices of vacant lots, 2) land lease rates, 3) sale prices of lots whose building is subsequently torn down to make way for new construction (one simply adds the cost of demolition to the selling price), 4) sale prices of comparable buildings in different locations (the difference can be attributed entirely to the greater location value of the more expensive property) and, relatedly, 5) rental prices of comparable space (for living, office, retail, industrial, or other use) in buildings in different locations.
But what happens when we start taxing away land values, such that little or no capitalized value remains? We’d no longer have sale prices for vacant lots, and the sale prices of homes would be entirely comparable in various neighborhoods — one’s land rent would simply be much higher in a desirable neighborhood, just as retailers pay higher rent for high traffic locations than for ones off the beaten path. In that happy future, as mentioned in the previous section, the goal of municipalities will be to maximize rent, just as successful shopping malls, industrial parks, trailer parks, hotels, motels, etc. currently do. If there’s vacant land in their district, that tells them those particular rents are too high. If there’s intense bidding in certain areas, they know the rents there need to come up. Tons of data will be available for estimating such rents, and the above would serve as indicators that one’s estimate is off a bit.
with LVT (i.e., all “taxation”) administered at the municipal level, good government would be rewarded with higher revenues, and bad government punished by people voting with their feet, and moving out. But that would soon become a thing of the past, as communities would quickly learn from each other, and evolve harmoniously.
Many unconvinced libertarians ask questions of the nature, “What happens to the elderly couple who have a home in an area that is becoming more and more commercial, and their land value and rent rises to a point where they can no longer afford to live there?” No one wants to buy their house (in fact, their home will likely be demolished to make way for a commercial structure, once the couple relinquishes their land lease), and the homeowners will therefore lose its entire value. The answer is that in a geo-libertarian world, people would buy insurance to cover such cases. Those who live in high risk areas would pay high premiums. And insurance agents would be reluctant to sell insurance to people who wished to “build in the path of progress,” and would certainly charge more for such risky behavior. Building in the path of progress (unless you are part of that progress) would be viewed equally as risky as building in the path of hurricanes.
A growing trend in the real estate industry has been the development of proprietary communities under unified ownership and management (contractual governance), such as trailer parks, industrial parks, condominium associations, homeowner’s associations, shopping malls, and even planned communities (e.g., Walt Disney World; Reston, Virginia; Columbia, Maryland), where occupants lease space rather than own it. Such communities provide security, utilities, trash removal, public and private spaces, rules of conduct, etc., i.e., all those things that most people assume only (coercive) government can provide. Unified ownership makes management efficient and profit-oriented. The contractual nature of the leases and ease of exit is conducive of customer satisfaction. Such trends and their significance have been lucidly discussed by Spencer Heath MacCallum (The Art of Community) and Fred Foldvary (Public Goods and Private Communities). The continued growth of such communities, especially if they begin demanding and receiving tax rebates from municipal and county government for services they themselves provide, and also demanding the more general right of secession, means that they will come into direct competition with municipalities for residents, and that more and more of the earth’s surface will become a haven of freedom. > Yes, for example caravan parks doing NPS surveys to try and improve their service, vs. local government..not.