Category: Georgist teaching resources

Land rent is for fighting over

One problem with private collection of land rent is that people spend their energy fighting over it rather than doing anything productive.  Today’s Tribune carries an example.  In the 1950s, some 400 Chicagoans started an agricultural community near downstate Ullin, 350 miles away.  It prospered for a while, but after the founder’s death in 1978, a schism developed.

The struggle and the lawsuits that followed, members now concede, wasn’t so much about the group’s name, but power, control and money. And there was lots of money.

Over the years, as the Israelite Bible Class had farmed less and less, the group had leased land to local, non-member farmers, a business that generated thousands of dollars of annual revenue.

Also, the farm itself, on the banks of the scenic Cache River, had considerably increased in value since the group purchased it in the mid-1950s, after forming a not-for-profit corporation in 1953.

Today the central court case over ownership, which has been appealed repeatedly, remains active, although after more than 30 years of litigation no one seems too inclined to push it any further.

The issue of rent and land value could not have arisen if the rent were not privatized.

Slashdot discussion on IP

The general issue of “Intellectual ‘Property'” was raised today on Slashdot, and the ensuing discussion makes just about all the important points. Most people accept some sort of IP, but length of protection, especially for copyrights, is too long. Some question whether IP is legitimate at all; others point out that patents do require holders to provide details of their inventions, thus preventing long-term trade secrets. And there’s a link to what seems to be a fine book Against Intellectual Property, which can be purchased in hardcopy or downloaded free.

Price of land in NY/NJ area

A new report from the New York Federal Reserve Bank looks at land price patterns around their metropolis (specifically, New York City less Richmond, plus ten New Jersey counties). Like Barker’s work noted here last year, they used sales of vacant land to indicate the value of land in general. But while Barker’s purpose was to estimate total land value and land rent, the New Yorkers’ objective is to see how land prices relate to parcel location and other characteristics, and describe trends over the 1999-2006 period.

Defining the center of New York as the Empire State Building, of course they found that the distance thereto is inversely proportional to land value. They observed a very sharp increase in average prices, from $46.65 in 1999 to $366.08 in 2006, with the increase especially pronounced in land intended for residential use.   Of course this rate of increase cannot be sustained, as a subsequent analysis might document.

The paper notes that even vacant land may be “improved,” for instance by having been graded and having utilities.  Improved lots of course are more valuable than otherwise identical lots.  So do Georgists want to tax the improved value or the “raw” value?   I think it was William Vickerey who pointed that this really isn’t a big problem. Either could be used as a base, as long as assessment practice is consistent.

Thanks to Richard Biddle and CityEconomist

Racism and land value taxation

Prosper Australia exec Gavin Putland has written an insightful analysis (“Still on the Mountaintop”) of how a policy of taxing productive activity almost guarantees, under American conditions, that blacks will suffer economic discrimination and be overrepresented among the poor and unemployed. The link is thru NAIRU, which requires a substantial level of unemployment in order to prevent ruinous inflation.

“full employment” means enough unemployment to cause enough wage restraint to give stable inflation. So we’re living in a system of enforced failure. A percentage of people have to be unemployed, and therefore, at the boundaries of unemployment, another percentage of people have to be underemployed or intermittently employed or precariously employed. In other words, the economy is being run in such a way that a certain percentage of people have to be losers.

He explains what seem logical reasons why Africian Americans, rather than other minorities or the entire labour force, bear this burden. The solution is to tax “land-like assets” instead of “house-like assets” and the work that goes to produce them, resulting in increased employment opportunities with less inflation, among other benefits. The piece includes detailed explanation of why even landowners will be better off under this reform.

Even experienced Georgists will benefit from reading Putland’s accessible explanation.

Bus Rapid Transit and Land Values

Network effects seem to be the main impact of bus rapid transit on land values, at least according to a Lincoln-supported study of Bogota, Colombia.  The analysis suggests that an extension of BRT service in 2003 may have had little impact on land prices in the area of the extension, but greatly increased land costs in an area which was already served by BRT previously.   The explanation could be a network effect– as the area served by BRT expands, the value of access to the system also expands.  A 15%- 20% increase in “property” value was found.   Obviously if one were looking only at land value, the percentage would be higher. Also, the data source was asking prices rather than actual transactions.

The study is described here (free registration required, or use bugmenot) , and a more detailed working paper is here (ditto).  The basic finding is that, yes, you can expect to fund transit from a land value tax, and it can be appropriate to use systemwide funding sources to pay for extensions.

I would have said that there is no “bus rapid transit” service in Chicago, but I can’t refute the wikipedia claim that the McCormick Place Busway is BRT.  For regular transit passengers here, however, there are no bus routes which are isolated for any distance from automobiles and other traffic.

Bundi prospers pleasantly with site value charge

All I know, of course, is what I read in the papers, in this case the excellent Aussie journal Progress (which has no on-line presence afaik).

Bundi seems to be a pleasant and well-touristed town in contrast to the general squalor of India, and yes, it has a land tax. Or more precisely, a site rent, based on the area of land and distance from town center. Progress’s Mr. Ed says that this amounts to 1000 Rs/year, 2% of the typical salary, and is sufficient to provide good local services. I for one would be very happy to earn 50 times my real estate tax, an amount which the local governments to which I am subject find entirely inadequate to meet their needs, or at least their desires.

I’d like to verify the Bundi information with some other source, but I can’t find an accessible link in English with any information about Bundi’s tax system. There seems to be some information in Hindi.

Value of land grows fast or slow…

…as illustrated by this image from the NY Public Library. It’s probably a bit over 100 years old, and shows “a wagon with signs promoting the single tax.” Among other things, the sign claims that an acre of land in downtown Chicago is worth $10 million, whereas an acre of farmland is worth $50.

If that was the relationship around 1900, it’s very different today. Good Illinois farmland today can be worth $5,000/acre, even far far beyond the reach of suburban sprawl. But downtown Chicago land has increased in value much less, perhaps to $50 million/acre.

Of course, most of the farmland in Illinois is farmed by tenants, so the impact on the farmer of the single tax would still be minimal or beneficial.

Thanks to the Georgist Journal for publishing this photo in their Spring 2007 issue (#107).