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Culture War Roundup for the week of October 10, 2022

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The recent Georgist uprising in the rat-sphere seems to be spreading outward, and gathering steam if anything. Lars Doucet, who wrote the original ACX post that blew up, is now releasing a book called Land is a Big Deal which summarizes his writings thus far.

There was also a major takedown of Detroit land assessment practices by a major land parcel data collector, ReGrid that dropped a few days ago. Major takeaways:

  • Property tax assessment is widely variable - some houses have *double* the tax burden of identical houses literally across the street.
  • Landowners tend to have far better valuations (i.e. pay less taxes) than homeowners, probably because they have more time/incentive to protest valuations.
  • Poor taxing and tax foreclosure in Detroit are likely a large part of why the city has fallen on such hard times in recent years.

In addition, some fairly mainstream political candidates such as Chloe Brown who's running for Mayor of Toronto, seem to be gaining steam. Land value tax is a large plank in her platform.

I got interested in land reform through the original series of ACX posts, and frankly I'm surprised how interesting the problem is and how overall neglected the topic seems to be. Even extremely intelligent and well read folks I talk to about it are surprised when they learn that land value is usually just pulled out of thin air - the industry standard is to just take 25% of the purchase price and not give a shit about location or any other factors, which seems bizarre upon a critical review.

I've seen some discussion about Georgism/LVT here, but curious if anyone else has been following this?

Also, what are the arguments against LVT, besides low-effort "taxes are always bad and raising them is evil?" Genuinely curious for well thought out reasons why an LVT would be a bad idea.

Edit: For those new to this idea, a Land Value Tax in it's most basic form simply says we should tax away the value of the land, and only let people who sell land profit off of the 'improvements' they make, such as buildings, restorations, etc. For instance if you bought a piece of land and tried to sell it 1 year later off pure speculation, doing nothing to the land, you would not receive any profit.

Also, what are the arguments against LVT, besides low-effort "taxes are always bad and raising them is evil?"

Still low-effort is "it's communism, but only with land". But given how bad communism has turned out, I think it's sufficient. The Georgist LVT is equivalent to the government owning all the land and leasing it out to the highest bidder.

Socialist economic systems are bad because they don't incentivize producing what people want. But no one actually produces land (land reclamation is negligible). Hence, Georgist "land communism" can't result in the same kind of failure as everything-else communism.

But no one actually produces land

But this isn't actually true - the 'unimproved value' of land depends on its' surroundings, placement in a city, neighbors, etc - and that certainly is produced and changes. In the ACX comments someone brought up a property developer - they make massive investments in a particular neighborhood to improve the value of a group of properties, but the improvement to any individual property comes in large part from the neighbors, or infrastructure there, rather than just work 'on the land' itself. So they're increasing the 'unimproved value'!

They're also bad because they don't incentivize care about long-term consequences (note that Capitalism doesn't always do this either, but the Soviet Union had a particularly bad track record on such things, e.g. the horrifying ecological disasters the Soviets left dotted all over the Eurasian landmass).

One might equally say (and indeed Robert Nozick and others have said) that taxing income is slavery insofar as it forces people to do (fractional) unpaid labour, with the threat of force as ultimate guarantor. In both cases, I think it is a form of what Scott has called the worst argument in the world. If it did turn out that income tax was legitimately conceptually very close to slavery or LVT to Communism, it would be entirely reasonable to say, “huh, I guess at least one form of slavery/Communism is relatively unproblematic”.

Income taxes aren't slavery because they don't force you to work. A 100% land value tax really would be like confiscation of property-in-land.

Of course they force me to work. Without income taxes, I’d be already retired, instead, I have to work for couple more years.

Yeah, the income equivalent would be a... education-scaling poll tax, which would 100% be considered unacceptable by the exact same people pushing this. George Mankiw once trollishly proposed taxing height in a similar way, since it correlates so closely with earning potential.

The fact that human capital can't be easily taxed is pretty close to a grand unified theory of 21st century American politics, really.

The Georgist LVT is not fractional; it really is equivalent to the government owning all the land.

People keep bringing this up, but doesn't the government already own all the land? You have to pay property tax on it...

The distinction here is that the government is capturing the appreciation of land, or value not directly added by the landowner.

The Georgist LVT is equivalent to the government owning all the land and leasing it out to the highest bidder.

You say that like it's a bad thing, but shouldn't we want land to be controlled by the people who can create the most value on it? How is that different to landlords owning all the land and leasing it out to the highest bidder?

but shouldn't we want land to be controlled by the people who can create the most value on it

No more than we should want cars to be controlled by the people who can create the most value using them.

Well let's imagine cars were finite. There were only X many cars in the United States. But, in the places where people need them, there aren't enough to go around. In that scenario, it seems totally reasonable to place a tax on car usage, in order to ensure our limited supply of cars are being used optimally, by tradesmen, rural dwellers, and commuters with no alternative etc. rather than be people who could be taking the train, going on joyrides etc. In a world where cars are finite like land, it seems totally reasonable to encourage productive use of them.

Everything's finite. So now you've re-invented central planning.

Everything is not finite in the way land is finite. There isn't a number X of cars that can be produced, and will only ever be able to be produced.

I think the word you're looking for is "fixed".

Why not? I think it would be better for cars to be controlled by say, families, or people with long commutes, as opposed to students or people living in cities, who would get less use out of them. This isn't a hard principle - I'm sure there are plenty of individuals in either situation who might get more or less value out of owning a car, depending on their circumstances.

By definition it's best for things to go to the people that will best use them. But there are issues with the distribution process as well as vast second-order effects. A few problems off the top of my head:

  1. Who is distributing these cars and what is their criteria? What kind of overhead does the distribution process have? Surely there will be many mistakes made if we know anything about the government.

  2. What are the effects on incentives? Many people only work because they want to buy nice cars. How will economic productivity and mental health be impacted?

  3. What are the effects on existing markets? Vast markets (dozens of billions of dollars) exist just to get people from place to place--Uber, doordash, taxis, etc. Not to mention car companies who are now basically selling cars to the government rather than to people.

  4. Is there potential for corruption? Why spend a billion dollars on marketing when you can spend $100 million bribing the right official for 10x the effect?

Anyways there's a VAST difference between wanting a particular state of affairs, and wanting a government policy that you believe will lead to that state.

I didn't say anything about government policy.

Oh, come on man. The context is obvious, and earlier you were talking about the government specifically leasing land out, so it's not exactly a logical leap. Nobody's going to take the fight to your motte that "people who will use resources best will use resources best."

The opportunity costs of not selling to the highest bidder is already fully internalized by the current owner—by turning down the payout. I don’t see why the state would need to stick its nose in this very real economic calculation that is happening when people choose not to sell.

Abolishing zoning laws would be a less harmful way to accelerate the property shuffling that LVT argues for.

Zoning laws are notoriously hard to roll back - one of the reasons Georgism is becoming so popular is because it would put far more pressure on poor zoning, and make zoning more important.

shouldn't we want land to be controlled by the people who can create the most value on it?

I cannot possibly create the most value on the land I own, so, no. I want land to be controlled by bona fide purchasers for value with clean chain of title.

with clean chain of title

This is the argument at the heart of Georgism though - there is no such thing when it comes to land. It's not a product like a car that was originally created in a factory and passed through various hands such that you can trace the chain back to its production.

Land being the ultimate scarce resource, why would we not want to incentivize people to create the most value on it?

originally created in a factory

Factory recquires resources. Usually extracted from the land. Which you claim cannot have a clean chain title. Thus the same argument as Georgists deploy against land, applies to anything that needs materials found in it.

The Georgist argument is that those resources required labor to be extracted from the land, which turns them into wealth. The land itself is not wealth because nobody put in resources to make it usable, it just exists.

I haven't heard this take either, definitely interesting.

I agree that's essentially what would happen, but I don't follow how it's communist. Yes it would mean the government captured more value from land, but do you think the land market is 'fair' right now?

To use another example, the government effectively owns the internet, which lead to a golden age of tech. It's a classic example of a commons which I know some hardcore libertarians are against, but to me it makes sense that land speculation is classic rent seeking. You're essentially getting something for nothing, sucking value out of the economy without putting anything back in.

To use another example, the government effectively owns the internet, which lead to a golden age of tech.

Interesting, because I have the opposite view: The governments didn't understand the World Wide Web and left it alone, so the wild west cyberspace was left to libertarian self organization and anarcho-capitalism, which led to a golden age in tech.

Compare it to the Minitel system by the French state, which was reasonably successful but technologically stagnant:

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

Solid counter point. Didn’t the US gov build the infrastructure for the Internet though?

It built (or at least paid contractors to build) some of the early infrastructure, but mostly the infrastructure of the internet, the routers and other networking equipment, the fiber and wire connections, the wireless connections satellites, wifi devices, cell towers, microwave relays, etc., the servers, and the end user computers phones and other devices were built by private industry, and more for non-government use than by the government (and with much of even the government use being the government acting as a customer in the market).

I agree that's essentially what would happen, but I don't follow how it's communist.

Because it's government ownership of the means of production (though only the "land" part)

To use another example, the government effectively owns the internet

Not for a long time now.

So it seems like you're arguing on the basis that if the government owns something or collects value, that's inherently bad. You don't seem to be arguing against the idea of an LVT, more generally against taxation / government control. Do I follow you correctly?

I'm arguing that the government owning all the land is bad, and that the Georgist LVT is equivalent to the government owning the land.

Are you familiar with the legal distinction between "Allodial Title" and "Fee Simple" ownership?

Yes, but it's not particularly relevant. In the Georgist case, the putative landowner does not have "Fee Simple" ownership; he essentially has a leasehold interest.

Right, but without an Allodial title, the 'ownership' of the land isn't truly vested in the current holder, as the title will be traced back to some governmental entity or other bestowing it on some person if you go far enough back.

And the land will revert back to that entity should it ever be fully abandoned.

This assumption of governmental ownership still underlies the current system.

The government already owns all of the land, this is just changing the incentives for landowners. The government just gets a larger cut of the appreciation of the land.