Administrator – Page 32 – The Menace of Privilege

Walkability pays

Lots of folks like to live at relatively high densities. Though a big house and yard are nice, they prefer easy access to facilities and services. That’s why land prices are usually high in densely-developed areas (One might say that high price is the market’s way of maintaining density).

None of this is news to Georgists or observant urbanites, but it’s nice to note that it’s been documented that “walkability raises home values in U. S. cities.” How much? Well, computing a “walkability score” based strictly on proximity to 13 different services (apparently with no consideration of whether there are maintained sidewalks or paths), in Chicago each one point increase (equivalent to one percent of the total range) increases residential land value by $5260. This incidentally is the highest amount for any of the 15 cities studied

Public transportation is not directly recognized in this study, altho it is acknowledged that walkability is somewhat correlated with transit service. Therefore part of this value may be due to transit.

The walkability study is among many interesting resources identified in VTPI‘s new compilation and analysis “Where We Want to Be: Home Location Preferences and their Implications for Smart Growth (pdf). “

Mongolia plans Citizens’ Dividend

Mongolia Fund to Manage $30 Billion Mining Jackpot

Sept. 11 (Bloomberg) — The Mongolian government will set up a sovereign wealth fund using mining royalties and tax revenue, and distribute part of the income to citizens to alleviate poverty, said Finance Minister Sangajav Bayartsogt.

The fund, to be run by professional managers from 2013, will disburse part of its annual income to every Mongolian…

Currently, per capita income is estimated at $1680/year for the 2.7 million Mongolians. A single large mining project is expected to generate $30 billion in tax revenue over 50 years. Apparently this estimate includes royalties. Distribution of “mining wealth” to the people had been an issue in May’s elections.

Less encouraging:

Mongolia’s government on Aug. 25 passed laws allowing companies to carry forward their losses for eight years, build private roads and let Oyu Tolgoi developers use water they find on their land. The parliament will also repeal from Jan. 1, 2011, a 68 percent windfall profit tax on copper and gold.

Land speculation in Khartoum

Georgists will not be surprised that the Sudanese capital of Khartoum suffers from land speculation. A perceptive article in the Sudan Tribune notes that downtown building lots go for $500,000 to $2 million USD. “The rents in Khartoum have also increased due to huge demand from the oil companies and UN agencies…” Another source of speculative increase:

The Bank of Khartoum recently initiated the first mortgage policy in the history of Sudan and they announced that their customers could buy, through the bank’s policy, a house or an apartment and pay in installments over a period of 15 years.

Although he doesn’t draw the direct link between speculation and finance, Ahmed Elzobier’s article notes that “land speculation is, at best, a high-risk, high-return investment. At its worst, it is the playground of scam artists and rife with high-level corruption.”

Henry George’s analysis is brought in thru a Progress Report of Fred Foldvary. However, Elzobier does not mention George’s remedy, the taxation of land value. Instead, he suggests that Mozambique “has the best land policy in Africa. According to the country’s 1997 Land Law, land in Mozambique is still owned by the state and cannot be bought or sold, but the rights of people or communities to use the land, and sell assets on it, are recognized.” Being truly ignorant about Mozambique, I wonder how well this works.

Although the Sudan Tribune site claims to allow comments, I could not figure out how to make this function work, so I cannot comment on the story.

Medallion Prices– upward trend continues

Month Price Source

July ’09            $175,000         Chicago Dispatcher
May ‘09             $170,000       Chicago Dispatcher
April ‘09            $164,500        Chicago Dispatcher
March ‘09           $165,000        Chicago Dispatcher
February ‘09      $158,000        Chicago Dispatcher
Feb ‘07               $ 77,000        Chicago Tribune
2004                   >$40,000       Chicago Tribune
1991                     $28,000         Chicago Sun Times

August 25th is the most recent date for which sales are reported on the Chicago City web site. Three of four sales that day were at $184,000.

Maybe Georgists need more pretense

From Felix Salmon:

it wasn’t an excess of greed and speculation which led to the financial crisis, but rather an excess of overcaution, with an attendant surge in demand for triple-A-rated bonds. Investors didn’t want risk, and investment banks made billions of dollars, during the boom, by waving their magic securitization wands and seemingly making that risk disappear.

And that might be the biggest obstacle to effective reform. Folks want to pretend that there is a system of public finance under which no one (except a few disliked rich or profligate people) will ever risk losing anything. Everyone’s savings will always be protected. No one will ever be unable to afford to stay in her home. All needed medical care will always be provided at a reasonable (or no) charge. Successful politicians pretend that this can be achieved, with just a few new laws and/or taxes.

Then here come the Georgists, or other rational reformers, saying “we have a system that will work really well, people will be rewarded for doing productive work and won’t be able to live off others.” What? I won’t be able to count on using equity in my land to fund my retirement? Of course, I never could count on it anyway, but everybody pretended that I could. Successful politicians pretend that something pretty close to absolute security can be achieved, if only we elect them and they pass a few laws. Georgists aren’t so good at pretending.

Review of Lincoln’s new “LVT” book

LAND VALUE TAXATION: THEORY, EVIDENCE, AND PRACTICE
edited by Richard F. Dye and Richard W. England
Lincoln Institute of Land Policy, 2009

“[E]conomists agree on a great many things, but tend only to discuss the things about which they disagree,” writes Lincoln Institute (of Land Policy) chief Gregory K. Ingram in the Foreword to this new book. And if one is disinclined to conspiracy theory, that might be the reason that the Single Tax and its various derivations don’t get much attention in the academic world.

A book about experience with the Single Tax would, of course, be a short one, since we don’t have any experience of a modern economy in which the only tax is one that collects virtually all the land rent. Rather, this work examines some cases in which land has been taxed at a higher percentage of value than buildings and other improvements.

Continue reading Review of Lincoln’s new “LVT” book

Fisheries, too

I’ve mentioned previously that poor countries are selling or long-term-leasing arable land to more prosperous and densely-populated ones, a phenomenon monitored here. No surprise, it’s not just solid-earth-type land that’s being sold:

“Most counties in Africa are selling fishing rights to industrialised nations which catch large amounts of seafood, effectively out-competing local fisherman,”

according to New Scientist. It’s not stated, but presumably the revenue received for the rights goes to elites, not to the working fishermen displaced. Well, they can become pirates.

Another endorsement for the Single Tax

From Reihan Salam in The Atlantic.

There’s a certain compelling logic to the Single Tax that stands the test of time. When you tax income, aren’t you punishing people for working hard? But when you tax an asset like land, you’re simply encouraging the most valuable use of that land. In the years since George faded from the scene, a number of economists, from Milton Friedman to Paul Romer, have found virtue in the Single Tax, not least because it creates the right incentives for government.

Thanks to Vince Tolve for the tip.

Why are Danes happy?

Danish Georgist Ole Lefmann recently circulated a paper looking at this question from, of course, a Georgist viewpoint. There’s a lot about Georgist theory (I guess Georgists can skip that part) and a lot about Danish history (likewise for Danes, I suppose). Lefmann notes the Danish traditions of political and legal equality, absence of an empire and no “resource curse.” Historically Denmark had a considerable land tax, but in more recent times this has declined to, he says, less than 2% of value. (Not trivial, I say, even 1% is a significant cost to the speculator.)

But Danes pay high taxes, and these are largely taxes on labor, so how can the Danes be happy? The answer, he says, is all taxes reduce rent, so part of any tax on labor is really a tax on rent. And the proceeds are used to provide social services, so Danes are happy.

It would of course be less complicated and much cheaper for the Government and the taxpayers to collect the rent of land directly from the landowners than by collecting the same amount indirectly via many other sources. The major problem in that matter is that so many of the Danish voters have got the idea that they don’t like land-value taxation and prefer many other taxes

I claim no knowledge of the Danish tax system, but I would guess that higher-income folks do pay a somewhat greater percentage of their incomes than lower-income ones, and the former are more likely collecting rent than the latter. If so, then on that basis I would conclude that Denmark is collecting some of the rent. Then we might also assume that, in Denmark, public expenditures are primarily for the benefit of the public. Under those circumstances, I could see high taxes primarily on labor income as an awkward but not entirely ineffective way to aid happiness. It would only look stupid if compared to a more intelligent tax regime elsewhere. Where might that be?

Writing notes on pdf’s

Now I can do it. I can read a pdf document on the screen, highlight or underline parts of it, write notes in the margins, and save it. I can change or erase my marks without changing the document. I’ve been looking for a way to do this for a while, and I can do it with Xournal. (It is said that some other programs can also provide this capability, but I haven’t tried them.)