May 3, 2018

Becoming the Trashcan of Ideology

I have an ideology to sell you. It’s likely one you haven’t heard of before, which is usually a bad sign—the calling card of reactionaries, apologists for authoritarian regimes, vendors of strangely detached and incoherent portraits of social relations, and every manner of person who has wedded themselves to a grab-bag of orthodoxies in order to produce a personal exceptionalism narrative. I don’t have a rosy view of ideologies, but I believe in the 21st century, we’ve come upon a shortage of ones that can be more-or-less mechanistically followed by useful idiots to produce a better world. Therefore, I have selflessly become the trash can of ideology; I have allowed it to ferment inside me. It is now time for the feast.

This ideology is a descendent of that of Henry George—a Philadelphian, educated in Quaker institutions, and a some-time typesetter, who, upon moving to San Francisco in his early 20s, found himself morally appalled by the land-use policy, and saw fit to write about it. In all respects, this description fits me as well, and it feels, in some sense, a sort of destiny that I share these ideas—as he did 140 years ago in “Progress and Poverty,” the best-selling book in the US in the 1880s after the Bible.

Basically speaking, the central appeal of Georgism (at least in it’s 1880s form) is that it reconciles the understandings that socialists put together about industrialization and poverty with the beliefs of what we would now call libertarians on how the markets develop, without advocating anarchy, primitivism or authoritarianism. The tool of choice in doing this is the Land Value Tax (LVT); a tax on the value of land, excepting the value of improvements, which in orthodox Georgism is to become the only tax assessed by the government, and to capture the vast majority of the value of the land. I am not a single taxer, and I will admit that this sounds like a bit of a non-sequitur at first. However, I believe it makes far more sense than it has any right to, for such a simple program, and upon reflection, there is a nugget which contains a way forward that is usually ignored.

Instead of a sweeping exposition that tries to encapsulate every Georgist dogma in one go, I’d like to provide something akin to a set of koans, or perhaps an expanding brain meme, with a few of the most important takeaways.

  1. Because land can’t be created, an LVT is the only tax that’s non-distortionary and doesn’t create deadweight loss.

  2. I hear you saying ‘what about artificial islands’—unfortunately, the sea is also land. Those are the rules of Georgism. So are mineral and oil deposits, and so forth—as no human created them, and they are in fixed supply, they’re land. (Whether Bitcoin is land has been hotly debated; the answer remains unclear.)

  3. Space Georgism. Space is also land. It may seem that the land value tax no longer applies when we’re in the infinity of outer space, but it’s not so—let’s say our first space station can locate itself wherever it wants to; all locations are more or less equivalent. It stops somewhere. For the second space traveller, the incentive is different. The best place to locate by far is near the first spaceship, which affords opportunities to trade, socialization, the ability to for the inhabits to gain through specializing, and so forth. Over time, we may find ourselves with a large fleet of spaceships, all thriving in the economies of proximity. It’s likely that the center will have those specializations which need coordination most intensely, and the edges those which can be done relatively flexibly. If we were to export the earthly notion of ownership to our space colony, we would reproduce the incentive for squatting—an early arrival could stake claim to a big piece of the sky, and wait there as others arrived, contributing nothing, costing others as they found themselves forced to traverse this span in order to engage in communication or trade, profiting massively from speculation while producing nothing in turn.

  4. Land is not capital. Where you can think of capital as stored up human labor, land is not that. Buildings are capital, as is tooling, but land deserves to be thought of as a separate input to production, on equal footing with labor and capital.

  5. All taxation is theft, except for taxes on land, where to not tax away the value of private ownership and redistribute the proceeds, is to facilitate the theft of the birthright of all mankind.

  6. There is an orthodoxy in common economic thought that says that wages drop to the level of subsistence. However, this doesn’t explain the indefatigability of deep poverty, and why it doesn’t waver in the face of say, wage stickiness, minimum wage increases, social programs, and so forth. While wages likely do drop to subsistence under an employment monopsony in a rural area, in a modern city it’s much more coherent to think about the level of subsistence rising to the level of wages, and the greatest portion of that by far is going to be increasing land rent.

  7. Land is not as hard to appraise the fair market value of as one might think, as the value of a plot is typically very similar to that of those around it. The plot under a house can be worth little more than the sale value of the property minus the cost of construction, and no less than the sale value plus the cost of demolition, which leaves a reasonably tight band. Land appraisal for taxation is done regularly and with little controversy in much of Asia, Australia, and even Pennsylvania, where many municipalities use split-rate taxation, charging property taxes on land at rates as high as 28 times that on structures.

  8. Even in the densest cities, land is generally worth more than the buildings on it.

  9. If you’ve been paying extremely close attention, you may notice that taxing away all land value would make property prices fall towards zero, as the rent summed to the full value of the property, leaving the market unable to act as a pricing function. This is easily solved; leaving a portion of that rent to land owners allows the market to continue to provide accurate pricing information.

  10. Rent-seeking on the essentials of human existence knows no bounds except the sum of all the profits of human exertion.

  11. Contrary to rumors spread by neoliberal thinktanks, the exceptional rise and growth of the Asian Tigers (Singapore, Hong Kong, Taiwan and South Korea) in the 20th Century shouldn’t be laid solely at the feet of market-oriented reforms (which have been seen around the world, to mostly unremarkable effect) but to their unique embrace of land value capture.

  12. You may remember the learning in school about the requirements to voting in the early American states: one had to be White, Male, and a landowner. The first two were surely emphasized, but the third is in many ways as important; the monopolization of land has been, for centuries, America’s Other Original Sin; where slavery translated into Jim Crow and then the carceral state, centuries of theft of native land were followed by the broken promise of 40 Acres and a Mule, mortgage discrimination and redlining. We may not be able to right the historic wrongs, but the least that we could do would be to end the ongoing theft of land value.

  13. A popular platform these days among those who would actually like to end poverty is that of the Universal Basic Income. But a UBI, placed into today’s society, would disappear in a poof of rising rent. This is a fundamental flaw of the ‘UBI pilots’ that claim to test its effectiveness through a basic income for a small fraction of the population; they find individual-sized successes, and assume they scale—but if $1000 a month were given to every San Franciscan, contingent in their remaining in the city, we would see landowners continuing to block increases in density, and as many would find themselves on the streets as before.

  14. A land value tax transforms underutilized lands in urban areas from objects to speculate on with little overhead, into hot potatoes which must be utilized to their utmost limit in order to pay the ground rent; this would lead to high quality, dense, infill development, discourage sprawl and blight, and make speculative ownership unprofitable. This also has massive ecological benefits.

  15. An axiom of American thought on real estate is that housing is a good investment; that its price must go up. The reality is that while the value of the housing stock has increased massively over the last 70 years, the land hasn’t changed at all, and the change in the buildings has been underwhelming in comparison. The real value has come in the monopolization of other economic activity—at its base, the growth must come out of the pockets of those who do not own land. Every person is born with an implicit short position on a stream of food and shelter for the length of their life; the gains in housing are net-zero for the country at best, but they show up as profit because the deepening short position of non-landowners is left off the national balance sheet.

  16. From another angle—an axiom of American local politics is that one should strive to ‘increase home values.’ It is often missed that this is more or less identical to the proposition of ‘make housing less affordable.’ Contrary to popular belief, housing is like other commodities in that it is better for the economy for it to be cheap than expensive.

  17. The squeezing of the middle and lower classes at every moment for the ability to make land rent constantly pushes them to false economies. Were this pressure relieved, and those classes able to invest their efforts in the same ways that upper classes do, would the growth produced not pay for the loss of land rent many times over in social benefit?

  18. George wrote this one best, so I quote him: “Where the conditions to which material progress everywhere tends are most fully realized—that is to say, where population is densest, wealth greatest, and the machinery of production and exchange most highly developed—we find the deepest poverty, the sharpest struggle for existence, and the most of enforced idleness… If there is less deep poverty in San Francisco than in New York, is it not because San Francisco is yet behind New York in all that both cities are striving for? When San Francisco reaches the point where New York now is, who can doubt that there will also be ragged and barefooted children on her streets?”

    Was he wrong?
  19. A developed society is not one where everyone makes $15 an hour, but one where anyone can live a life without fear or want, on $15 a day.

  20. Capitalism cannot survive with private ownership of land value, for it becomes ouroboros.

  21. Marx, in conflating land with capital, and then arguing against capital accumulation, was acting as a stooge for the landlords.

  22. It is rare to find those who treat wage slavery as as great an issue as the more literal kind. Those who do too often fail to solve its great locked room mystery—how can the employer be the killer, if they offer the workers the best opportunity they can find? But the landlord is also in the room.

  23. People have a tendency to appraise the degree to which a policy is “radical” by how poorly thought out it is. Physically redistributing land would be agreed by all to be an incredibly radical move. Redistributing the value, by taxing the great majority of it away, would be more effective at reaching the same ends; why not grant it the designation of radicality?

  24. When you think about it, didn’t the “The Rent is Too Damn High” guy have a point?

  25. It should be clear to anyone why taxing income at too high a rate is harmful, although people will of course disagree what that rate is. It's probably clear to most people that taxing construction at too high a rate is also harmful, and may leave people without safe homes. Careful analysis will show that taxing those things at lower levels, though not terrible, is still on margin harmful, although the returns from collective reinvestment of tax revenue can make up for it. Taxing land is unique, in that the sole effect is to reduce the price the land can be sold for. Instead of discouraging a productive activity, taxing land discourages holding land for speculation—an activity that not only produces no value, but actually prevents productive uses of land.


  27. To properly tax land value, remove restrictive zoning, and transfer some of the burden of governance from labor and capital to land wouldn’t solve everything I’ve described here—but can it be denied that it would help a lot?

  28. It is often assumed that an increase in wealth must mean an increase in the cost of living. The mechanisms of this effect are rarely specified with any level of detail; on close inspection, most of them are about increases in the price of highly desirable land.

  29. Technological unemployment isn’t real. Unemployment caused by the increases in housing costs that make it unaffordable to mobilize labor certainly is.

  30. Following a century of housing discrimination, and residential segregation that has increased even in the 50 years since the Fair Housing Act, with white housing assets at a high—perhaps a Land Value Tax, which could transfer that value back to the people evenly, is the closest we might come to reparations.

  31. Subsistence farming was, through the mid 1800s, a workable approach to life all around the world. Were land equally divided, it would remain so, although most would choose better options. Were people equal shareholders in every piece of land in their country, they should do as well still, with the proceeds of industrialization added to the bounty they could already draw from the land. That they are not is the origin of poverty.

  32. “The Earth is the equal birthright of all mankind” is not a controversial idea—until you try to bring it into practice.

  33. Georgism is an accelerationism, as it attempts to unchain capital—not from the restraints of humanity, but those of land, which eats cake in the stands as it watches capital and labor fight over crumbs.

  34. This moment—San Francisco, 2018—is the perfect soil in which a new Georgism can grow, as unlike every other culture in the last century, there is a society that possesses capital, and sells labor, but for which land is only ever a cost.