| Subject: | [socialcredit] RE: OWNERSHIP: the "single tax" | | Date: | Thursday, December 9, 2004 14:02:25 (-0500) | | From: | Ed Dodson <ejdodson @.......net>
|
Ed Dodson responding...
Bill Ryan wrote (12/9/04):
Ed Dodson (previously): Nature has a zero cost of production in terms of
labor expended and/or capital goods utilized. "Rent"
is the measure of the difference between locations
and between natural resource-laden lands. There are
just not enough "best locations" and "best natural
resource-laden lands" to go around. So, some come to
have more exchange value than others, the difference
having nothing to do with what the individual deed
holders do or do not do.
---------------------------------
-------------------------------
Bill Ryan: This train of logic contains several suppositions
that are open to challenge. I'll touch on only some
of them.
You equate "rent" to differences in exchange values
and conclude that those differences have nothing to
do with what individual deed holders do or do not do.
This seems to arbitrarily exclude private development
from the equation and ignores the benefit to the
entire community when development occurs. To the
extent the private developer personally benefits from
the development, which is not cost free to the
private developer in any real sense, those benefits
are earned by the developer, are they not? To the
extent the entire community benefits from the
development, which would not have occurred without
the development, the benefits the community receives
are unearned by the community, are they not?
Ed Dodson here:
The constant refrain from those involved in the real estate trade is:
"location, location, location," meaning that the highest potential returns
to the investor are to be found where there is the highest competition to
locate in an area. These highest value locations exist where population is
large and (generally) possesses strong purchasing power, where the community
has committed huge amounts of resources to infrastructure (e.g., clean
water, modern sewage treatment, police and fire protection, quality
educational opportunities, efficient public transit, etc. etc.). This level
of investment occurs over time -- decades or centuries. The desirability of
the community is based on aggregate public and private investment. An
extreme example of how a public policy decision turned almost worthless
locations into increasingly valuable ones is Las Vegas, Nevada. What created
the value there, what attracted individual investors? The state created a
special privilege for owners of land by approving casino gambling. Public
funds were used to construct roadways, an airport, to bring water from the
Colorado River, and so on.
Even when a developer creates a new community out of farmland (e.g., Reston,
Virginia or Columbia, Maryland), these communities attract investment and
population only because of external public investments. Either there is a
nearby interstate highway or government announces plans to extend the
highway system to the area. Either there is a nearby airport capable of
handling jetliners or government announces plans to construct one. These
"new towns" are, in effect, edge cities, creating a competing employnment
center to attract workers who are living in the suburban fringes of an
existing metropolitan area, such as Baltimore, Md. or Washington, DC.
Bill, you do ask an important question which is at the heart of the moral
issue of what constitutes societal versus individual property. I subscribe
to Henry George's ethics, to the labor and capital goods basis for
individual property. Thus, taxation of the wealth created by labor and
investment of capital goods is unjust. Charging private individuals and
entities the full location rent in return for access and the right to
develop parcels of land is, on the other hand, entirely consistent with
justice.
****
Ed Dodson (previously): This exchange value has to do with the fact that
supply is finite, population keeps increasing and the
demand for locations is infinite.
Bill Ryan: Supply is definitely not "finite," because of
discovery, innovation and development. And demand in
the economic sense is definitely not "infinite"
because it is satiable. Even the manic glutton let
loose in the five star restaurant with an open tab
will reach the point where he will not eat another
bite.
Ed here:
We have yet to develop the technology for any large-scale establishment of
communities floating on the ocean surfaces or attached to the seabeds. And,
as the apparent effects of global warming seem to be escalating, our ability
to continue to live in low-lying coastal areas is at risk. Entire cities
(e.g., New Orleans) could potentially be destroyed by flooding and storm
surges in the foreseeable future. So, as the earth itself is a finite
sphere, the portion of the earth that is habitable is more or less finite.
Some portions of the earth become over time more habitable and some less.
Deserts expand here, contract there. Some ocean communities lose their
beaches, barrier islands disappear, while elsewhere the beaches get wider
and wider every year. As Will Rogers once said, "Friend, buy land, they
ain't making any more of it."
As for the demand side of the equation, we can see around the globe that
wherever purchasing power of workers increases, there is an unlimited
aggregate demand being created for the "goods of a decent human existence"
that many of us (a minority of the world's population) take for granted. We
are a very very long way from even reasonable desires of people being met as
we also struggle with the introduction of sustainability as a fundamental
developmental value.
****
Ed Dodson (previously): My perspective, then, is that the failure of society
to collect this fund for use by all of society (even
for partial distribution to each citizen as a
dividend) "is more akin to theft."
Bill Ryan: But you're talking about land. "Fund" refers to
money, something quite different, right? Where does
the fund exist that can be taxed? Is not the "single
tax" tantamount to abolition of private ownership in
land?
Ed here:
There was a time in history when the lord of the manor took a share of the
peasant's crop as rent. Then, the development of coinage enabled people to
move into the cash economy and the widespread establishment of markets. We
pay for goods and services today with currency (or, its electronic, bank
balance, equivalent). The competitive bidding process determines the rental
value of land (subject to whatever restrictions on use are imposed by
government). Potential users of land will tend to bid more when restrictions
are few or nonexistent, less when there are more restrictions. The fund
exists as the surplus of wealth (i.e., of goods) produced above what
legitimately belongs to people as a market-derived return to their labor and
as a market-derived return for the investment of capital goods. Our system
of currency and credit monetizes the exchange value of this wealth.
As to whether the "single tax" is "tantamount to abolition of private
ownership in land," the amount of location rent the community will receive
is as I suggest above dependent upon what restrictions the community imposes
on use of land. The rental value is also a factor of how well the community
protects the individual's rights to enjoy access without undue interference
and the protection of whatever improvements are made on the land. I can be
just as secure in my tenure under a leasehold situation as when I hold the
deed. In either cirucumstance, what is most important is the enforceability
of the terms of the contract entered into -- the honestly of government
agents when it comes to enforcing the law.
****
Bill Ryan: If so, it is incumbent on you to demonstrate with a
preponderance of evidence that centralized "non-
profit" land management by some politburo is
inherently superior to decentralized management for
profit, in terms of the public welfare.
Ed here:
Government is often a terrible steward of the public domain. Agreed. I don't
know how you made the leap from what I have suggested to the idea I would
support "land management by some politburo." That said, there is the need
for regional, national and international cooperation regarding land use.
Pollution respects no borders. Communities sharing rivers and lakes need to
work together. I am reminded of Carl Sagan's comments about viewing the
earth from space. No borders can be seen from space. The nation-state is a
purely artificial and contrived entity conceived to enfore geo-political
control over some portion of the earth to the exclusion of all others.
****
Bill Ryan: Moreover, it is a fact that private ownership in land
is what we now have. You will have to further
demonstrate that confiscation will not do more harm
than good in the disruption that would inevitably
result. That is the practical reality you do not
address, is it not?
Ed here:
Henry George undestood that the insecurity people experienced throughout
history was intimately related to being landless. Owning a piece of land and
your own house means that every year one does not have to face an increased
payment to the landlord (notice that we still use the term "landlord" to
describe the person or entity to whom payment is made to live in an
apartment). There is enough very sound and mainstream economic literature
making Henry George's case. See Paul Samuelson's basic economics text, as an
example). As for demonstrations of the real world impact, these are slowly
beginning to emerge. The proposals put forward by the Controller for the
City of Philadelphia, if adopted, would put the theory to a good test. As of
now, all we can point to are the communities that have restructured their
property tax system to impose a higher rate of taxation on the assessed
value of land parcels, while simultaneously beginning to reduce the tax rate
on buildings. These communities all experience increased investment in new
construction and renovation, even though the financial effect on property
owners is rather modest (given that the school districts collect most of the
property tax revenue and have not adopted the same tax rates as the city
governments involved).
****
Bill Ryan: It is the reality that every utopian schemer avoids.
But hell, on to the Winter Palace!
Ed here:
Bill, I have spent over thirty years in the trenches working to revitalize
communities where housing is falling apart, where there is concentrated
poverty and where the private sector has made almost no investment. No until
I came to understand the impact of taxation policies on communities did I
find the tools to potentially turn this situation around for good. Changing
the tax system is not the only thing in need of drastic improvement. But,
without it, the liberty you seem to cherish will be continuously diminished
in the face of class divisions and an ever-increasing concentration of
wealth and political power.
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