u/Titanium-Skull

Something similar is happening right now in the current property tax revolt. Instead of shifting to a tax on land's annual rental value by universally exempting buildings, many states would rather slash property taxes (e.g. Florida) as a whole and move to a variety of other, worse taxes that fall on work and investment; pandering to their voting base by preserving unequal landownership and in the same turn dooming their productive economy.

(Also land isn't the only finite resource governments can tax (or otherwise reform), there are plenty of finite resources which need to not be used for private wealth extraction, and which only makes not targeting them more unforgivable)

Explanation for anyone who wants it:

Patents and Copyrights occupy a weird in-between in that they act both as a reward for discovering an innovation and an exclusive, finite, monopoly privilege to control a particular innovation. Rewarding innovation is good since it means encouraging people to not just innovate, but to publicize them instead of keeping them as secret for something like a competitive advantage. But granting a monopoly at least in the way we do it tends to be bad since it helps create market domination and allows IP owners to charge way above competitive prices (EDIT: I used "above cost" before this but that's not accurate to the monopoly problem, thank you to the commenters who pointed it out) without fear of being undercut by the market, and monopolizing an idea can stifle further innovations that rely on it.

Georgists since the time of George himself have argued against the monopoly side of patents and copyrights, and while George only argued against patents those after him have extended it further to copyrights. Georgists have proposed a variety of ways to deal with this, like replacing IP with an innovation prize model, or implementing a Harberger tax on IP (with modifications like compulsory licensing to make something like a Harberger-lease system), and plenty more.

Rewarding innovation as we do it now has an interesting duality to it that needs care when dealt with. We should at least make sure those who innovate are willing to give knowledge of that innovation to the public, without giving them so much monopoly power that the public ultimately suffers from it.

Explanation for anyone who wants it:

When I say other finite resources, I'm also including non-land natural resources as well as exclusive legal monopolies like patents and copyrights over a particular innovation, or the ability to control naturally monopolistic industries like utilities (check out this list for some more good examples). It's a bit confusing, but the gist is that any asset which people can't reproduce and compete with is one that its owners can use to extract wealth from society without producing or providing anything in return. (while legal and natural monopolies are already well known as monopolies for this, for land and nature as a whole they've also been put under the term "monopoly" since the times of the classical economists)

Our current problem nowadays is that people can control these assets and privately collect that extracted wealth. This invites bad actors who, instead of investing themselves in productive business or work, will take these finite assets as a piggy bank and a way for economic power. Things like land speculation raise the cost and scarcity of finite things for the people who actually want to use them for good, which is not only bad for the economy because it squeezes out actual producers, but also raises inequality between those who control the finite bottlenecks of the economy and those who are trapped on the other side. Instead of fixing this bad behavior by compensating (or otherwise reforming) the fencing off of these finite privileges, governments will instead tax the very people who work/do business/trade and keep the economy running, hampering everything further.

The solution to this (as has been said many times before) is to simply do the opposite: don't tax the goods and services people make (whether by labor, capital, or trade), compensate (or otherwise reform) the finite resources people take; natural or artificial regardless.

Not much explanation needed here. When we treat a finite resource like an ever appreciating investment instead of actually using it, we eventually squeeze out the people who can buy it. It turns out treating the zero-sum game of land like a piggy bank hurts even the landowners who supposedly benefit from its ever rising cost. Even they could benefit from taxing land (and other finite resources) instead of taxing production and trade

There was a good conversation about this today on the subreddit and it inspired me to make this meme, mainly to explain what Georgism fully means to anyone who’s just heard about LVT (and if any fully Georgist person wants to use it):

Georgism broadly is the idea that instead of taxing the goods and services people make, we should instead be recompensing (or otherwise reforming) the finite resources and privileges people take. George and Georgists (and classical liberal economists before them) have emphasized that these assets no one can make more of have an inherent air of monopoly about them, as nobody from outside the market can enter and compete with incumbents (Georgist economist Fred Foldvary has referred to these fixed supply assets as entry monopolies though I’m not sure if mainstream econ has another word for it). Land’s the biggest which is why LVT is the most discussed, but it’s not the end-all be-all of Georgism.

This core idea that powers Georgism is that we should be minimizing the rent-seeking power of entry-monopolists by dealing with their special privileges, mainly through requiring compensation. At the same time, those who work and invest to produce and provide for others shouldn’t be burdened in doing so, as that leaves the people with less. A free market isn’t truly free while its produce and trade is hampered by harmful taxes and the private tolls levied by unchecked entry-monopolists. Reverse the current situation through Georgism and you can begin building towards a much improved market economy.

Here are some examples where economic rents can rise up, and there are certainly plenty more Georgists can target to get the revenue needed to replace taxes on what we make, and if not that then to at least enact the reforms to help free the economy from tyrannical monopolies.

Explanation as always:

Before we can go about building housing, we first have to buy and use land. Unfortunately, due to issues like land speculation and overly-restrictive zoning, as well as taxing the work and investment that goes into building housing, our ability to buy and use our land is heavily constrained and so too is the amount of housing we get. The housing constraint starts in our tax regimes prioritizing landowners over labor and capital and our laws preventing people from using their land effectively (barring health and safety conditions of course but current law has far overstepped this), and ends when the reverse is true.

For more about this, Greg Miller of the Center of Land Economics wrote a great article about how our housing crisis is actually a land crisis.

This quote was found through Cooperative Individualism, here's a good source also from the site linking more information to this quote.

It's a bit of an unfortunate term, but when Henry George argued that the value of "land" should belong to the community, he meant it in the economic sense:

>The term land does not simply mean the surface of the earth as distinguished from air and water — it includes all natural materials, forces, and opportunities. It is the whole material universe outside of humans themselves. Only by access to land, from which their very bodies are drawn, can people use or come in contact with nature.

The big benefit of recouping nature's value is that we did not produce it, and we can't produce more of it. Making people compensate for taking away finite natural resources from others helps discourage waste and encourages using them efficiently (combined with the other half of what Georgism argues, that we should fully untax the goods and services people make).

Following up on this, George also advocated mitigating other monopoly privileges like patents and copyrights, as well as owning naturally monopolistic industries.

As has been mentioned many times before, the best way to reform property taxes to make housing affordable is to universally exempt buildings and transform them into taxes on the value of land. Doing so removes the burden placed on making new buildings while keeping the onus on landowners not to hold the finite resource out of use idly, discouraging land speculation and waste while opening land to being used for building things like housing.

Still, this hasn't stopped some states like Florida from enacting property tax cuts. Instead of building more housing to keep their state affordable to the younger and poorer who don't own land, these states instead prefer protecting homeowners even if it costs their economy's future while increasing inequality through the land.

And for those wondering what monopolists have to fear from Henry George, the guy with the red eyes, here's what he wrote about them:

>Rent, in short, is the price of monopoly. It arises from individual ownership of the natural elements — which human exertion can neither produce nor increase.

• Progress and Poverty, chapter 11

And expanding on it later:

>The great class of taxes that do not interfere with production are taxes on monopolies. The profit of monopoly is in itself a tax on production. Taxing it would simply divert into public coffers what producers must pay anyway.
There are various sorts of monopolies. Some businesses are, in their nature, monopolies. These are generally the proper function of government. Delivering the mail, for example. For the same reason, railroads should belong to the public, as roads do.
Patent and copyright laws create temporary monopolies. Though the two are often confused, they are not alike.
...
Finally, there are also onerous monopolies resulting from the aggregation of capital in certain businesses. (See Chapter 20.) It would be much better to abolish such monopolies than to try to tax the returns of their monopoly.
But all these other monopolies are trivial compared with the monopoly of land. The value of land expresses a monopoly, pure and simple. The value of a railroad or a telegraph line, or the price of gas or a patent medicine may partly express the cost of monopoly. But it also expresses the effort of labor and capital. On the other hand, the value of land does not include labor or capital at all. It expresses nothing but the advantage of appropriation. It is, in every respect, tailored for taxation.

• Progress and Poverty, chapter 33

Context for those who don't know 👇:

Georgism and YIMBYism are both necessary to solve the housing crisis because of what each brings to the table. YIMBYism opens the legal channels that allow land to be used efficiently for building homes by removing a lot of the land use restrictions which make it legally impossible (like SFH zoning, parking minimums, and the like). The big wrench in YIMBYism's plans is that land speculators will hold land that is legally cleared for housing out of use in the hopes that its price will rise, this can even corrupt the rezoning process itself when landowners try to capture what is known as a rezoning windfall.

Georgism solves this by recouping land values for public use, preventing landowners from capturing it and making them either use the land efficiently, or lose it (land is the biggest example, but it's not the only finite resource Georgists can target). At the same time, Georgists also advocate getting rid of taxes on what people make, both in terms of laborers doing work and business owners investing in companies, which are both highly needed to make buildings (which would also go untaxed) to house people. Georgism effectively puts the monetary incentives in place for the land use goal to be achieved. At the same time, Georgism benefits from YIMBYism because it matches the Georgist desire to have finite resources be used efficiently without being hampered legally.

In conclusion, in terms of ending the housing crisis both Georgism and YIMBYism are at their strongest when they're paired together. For the purpose of making costs of living affordable, they're two sides of the same coin.

Those of you who are Georgists already know but for those who've never heard of Georgism before:

Land speculation is the act of buying land in the hopes that its price will rise shortly after it's been brought. The inherent problem with speculation in land is that land is finite, we can't produce more of it. So unlike other assets where speculation can be overcome or act as a benefit by encouraging more production of that thing, speculation in land raises prices for both work and living. This brings about several problems (best covered by Lars Doucet and Greg Miller over at the Center of Land Economics), but the result is the straining of the economy and increasing inequality between owners and non-owners and raising the barriers to life for the latter.

Land speculation only lives because speculators expect to get profitable returns on fencing off the finite resource, it follows that the best way to remove land speculation then is to have that land revenue go to society instead, which can then be used to further benefit workers and businesses by untaxing labor, investment, and trade while funding public services (which tend to increase land values that can then be recouped).

Land is the biggest example of it, but more broadly serves as an example of the core idea of Georgism: don't tax the goods and services people make, compensate (or otherwise reform) the finite resources people take

Source: José Martí, Henry George, and Cuban Possibilities - Bill Batt