Autolykos writes that the meaning of “supply” as the existing amount still results in supply being variable. How is the existing amount of a particular issue of a19th century genuine gold coin inherently variable, if no more can be produced, assuming that none are being melted or destroyed?
EmperorNero says there is no such species as “the community.” What are residential associations, condominiums, and cooperatives? Are they not communities, or are they illusions which do not exist? Define “community” so that I can know what does not exist. Are clubs in general a socialist illusion that cannot exist? I belong to the American Economic Association. Shall I tell the members that the AEA is not a community of economists?
Under the first meaning, “the supply of land is fixed” is equivalent to “the universe is not expanding” or “space doesn’t change size” or perhaps “no two objects can occupy the same physical space at the same time”. It is not a useful observation for our purposes, since doesn’t have anything to do with supply in the economic sense, where we use the concept to explain price formation.
The second meaning is closer, if a little imprecise. Supply can be more than just the units of a good that are “offered for sale” at any time. It also includes units of that good that are available to buyers which are not currently owned by anyone. Consider a store selling TV’s across the street from a big pile of abandoned TV’s of identical quality. The existence of that pile of TV’s will definitely play a role in what the store can charge for TV’s. The TV’s in that pile must be considered in some sense part of the supply, because they are having an impact on prices, even though no one is supplying them.
The supply of any good/service is a set of objects (units) that are considered homogenous (equally serviceable) by a given actor or actors. No two objects can occupy the same physical space at the same time, so no two objects are ever “identical” to each other. What matters is whether the relevant actors consider them equally serviceable. We give names to classes of objects that tend to be viewed as equally serviceable from the point of view of the actor.
So we can talk about the “supply of TV’s” contributing to the price of TV’s, but we can never be precise about what is and is not part of this supply, outside isolated economic models. It depends on what people consider “a TV” to be. We can be a more or less general about what supply we’re referring to. For example, we could look at the prices of “Sony TV’s in England”, “Sony TV’s”, or “Audio-visual equipment”, or “entertainment goods” and explain each of them by talking about supply and demand. Likewise we can talk about “the supply of labor” as contributing to “the prices of labor (wages)”, or we can be more specific and talk about “the supply of plumbers” or “the supply of plumbers in England” as contributing to the “the wages of plumbers”. As we get more and more specific, the good being discussed becomes more homogenous, more substitutes become relevant, and we can be more precise about what constitutes supply and demand.
The phrase “supply of land”, then, depends on what level of homogeneity you’re talking about. Your definition of land (your first meaning) is the broadest definition of land you can get. It apparently just means “three-dimensional space”. But this is not a useful level to be looking at, since three-dimensional space is highly heterogenous. People don’t consider each unit of space to be equally serviceable. A unit of space on the Earth is not the same as a unit of space off the Earth, and this is why the size of the universe has no impact on the price of plots of land in London. It doesn’t make any sense to include the moon as being part “the supply of land” when we’re talking about how the price of plots of land in London are formed. But the availability of unowned plots of land just outside London will have an impact on prices of plots inside London. Those unowned plots can reasonably be considered part of the supply even though there is no supplier.
In summary, in economics, “supply” is a formal term that we use, along with “demand”, to explain the formation of prices. What gets included in “the supply of land” (and hence what we can say about the elasticity of it) depends on what level of homogeneity you are looking, and this depends on what prices you are actually trying to explain.
It might all be claimed (in fact Autolykos just claimed it all) but would it all be homesteaded?
@Fred, dsyddall,
do you agree with this?
There are speculators in every industry. Your explanation here is not limited to goods in fixed supply. Tell us… when do speculators improve allocation, and when do they worsen it?
This is a monstrous red herring. But what’s more ridiculous is the implication that you don’t also believe in homesteading. These questions can be turned back on you, because you have to explain how a person acquires original ownership of the rights to possess/use land.
It’s not homesteading vs not-homesteading being discussed here. It’s homesteading-with-no-proviso vs homesteading-with-the-proviso, specifically the modern geoist interpretation of the proviso.
You guys claim to be the “true heirs” of Locke because you retain his proviso, so it’s grossly misleading of you to imply that questions like these are somehow an attack on libertarianism from which geolibertarianism is immune.
Thanks for the links, that second one is a really interesting paper, and supports my own assessment of George… that he was a profound and original thinker, and a vivid writer. He reached many of the same conclusions as Austrians, but from a pre-marginalist starting point.
You’re arguing from a false dilemma, Fred. If something isn’t inherently valuable, that doesn’t necessarily mean it’s inherently worthless. Indeed, the notion of subjective value means that nothing is inherently valuable or valueless. Value exists entirely within the mind. There’s nothing inherent about it.
Estimation of “market value” means estimation of what others are likely to pay for the good or service in question. The use of generally agreed-upon heuristics in such estimation in no way obviates its necessary and inherent subjectivity.
I will take that as you conceding that you made a non sequitur.
Even if the Georgist position on LVT is internally consistent, that in no way means that its premises must be agreed to by anyone, let alone everyone.
False dilemma and strawman, all in one. Try again.
Wrong. Using my definition, all land is capital.
I already understand that my definition is different from the Georgist definition. That’s what I was pointing out. The issue that’s actually more important, as I see it, is whether production and only production determines original property. So far, I don’t see how you’ve demonstrated how that must be the case.
That highest bid only exists ex post facto. There is no way to calculate it or otherwise determine it in advance or even during the bidding process.
Perhaps you’d like to elaborate here.
That does not constitute you providing a proof. Try again, or I will conclude that you’re unable to and will then accept your implicit concession.
I fail to see how land is necessarily not encouraged to be allocated to the highest bidder in the absence of LVT.
You misunderstand my argument. What I argued was that, even if both senses of “supply” are taken into account, supply overall is variable, because one part of it is variable. But I maintain that “supply” in the economic sense concerns goods and services that people are currently able and willing to sell.
It was never meant to be a logical deduction in the first place. Just because something is inevitable in practice doesn’t mean that that fact is necessitated by logic. The practical truth is, there are no states that have no taxes. Good luck changing that. I’m not saying that you should compromise on your principles, just that if you actually want to have any effect in the real world then you’ll have to pick your battles wisely.
True. But what premises are Georgists asking you to accept? Only that what is produced by nature can be meaningfully distinguished from what is produced by human activity. Quite reasonable if you ask me, and, at the risk of being accused of appealing to authority, the vast majority of people will see this premise as self-evident and obvious, and its denial as a perverted contortion of logic.
Words, not an argument.
You are of course free to use whatever definition of land you like. It may or may not be useful, but if the logic is sound then it will not affect the outcome of the argument.
Accepting for a moment that all land is capital,
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A standard economic definition of capital would be something like “man-made wealth that is used to produce more wealth”. This implies that all land is man-made, or else, how do you define capital?
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How would you classify the electromagnetic spectrum in economic terms?
You’re committing the fallacy of misplaced burden. Since you believe that property can be determined by something other than production, the burden is on you to justify your belief.
There is no way to determine a highest bid during a bidding process? Then what is the point of the bidding process?
OK. What you’re doing is making the fallacy of composition. You’re asserting that the total cost of a system of taxation is equal to the sum of the costs of the individual taxes. Then you’re saying that if there are no taxes, then there are no costs of any taxes, therefore the system of taxation as a whole has no cost. (And therefore the least costly system of taxation is the one with no taxes.) But this doesn’t follow because you have not proved that the cost of a system of taxation is equal to the sum of the costs of the individual taxes.
Since you refuse to face the fact that land is qualitatively different from capital, and I don’t have infinite time to invest in reproducing material that is available elsewhere, I will not be assenting to your challenge today. Perhaps when we can agree that land is different from capital then we can talk about this more.
One reason is that, especially during “boom” years, the return from rising asset prices can be over an order of magnitude greater than the return from lease. Under such circumstances, it is not difficult to see why landlords would be more interested in investing their efforts in acquiring more land than ensuring that the land they already own is leased to the highest bidder.
I believe the following is the case:
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The production of Rembrandts would not be affected (since production is already zero and cannot be lowered from there).
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EA’s stated effect would occur, i.e. Rembrandts would be held less by speculators and more by art appreciators.
Does this mean that the allocation is improved? Perhaps, but that’s a normative statement.
Supposing there was a positive basis for saying that allocation was improved, does this mean that I would support taxation of Rembrandts? No, because I believe that there is a moral distinction between taxing land and taxing a human work. You have a right to keep what you have produced, and taxing Rembrandts would violate this right.
Nothing is inevitable only in practice. Nothing. If it’s inevitable in practice, then it’s necessitated by logic.
Earlier you wrote:
It does not follow logically that absence of LVT necessarily means presence of “something far worse”. That’s the non sequitur. If you weren’t making a logical argument there, then I suggest using different wording.
It’s not an appeal to authority, unless you see the vast majority of people as being inherently authoritative. Regardless, it is an appeal to the majority, which is itself a logical fallacy.
What is produced by nature can indeed be distinguished from what is produced by human activity. That’s not the point. The point is about what constitutes property. Your position is apparently that only what is produced by human activity can be owned (i.e. considered property). My position is that what is produced by nature can also be owned.
Wrong. Your question “Why do you think that I don’t own what I produce?” contains the claim that I think that you don’t own what you produce. That’s actually not my position, so there’s the strawman. But the fact that you attribute this claim to me means you’re implicitly arguing that, if production alone does not determine property, then production does not determine property at all. That argument embodies a false dilemma.
Wrong. You were the one who put forth the claim that production (and presumably only production) determines property. If you’re concluding that from one or more other propositions, then the burden is on you to provide those. Otherwise, if you’re simply stating it as a founding assumption for your position (i.e. a premise), then I suggest you be explicit about it, at which point I’ll simply reject it as such.
As long as the bidding is still going on (which means that people are offering ever-higher amounts of money), how can the highest amount be determined?
If there are no taxes, then there’s no system of taxation, and if there’s no system of taxation, then obviously there are no costs of it. The whole notion of talking about the cost of a system of taxation when there is no system of taxation is meaningless. Whether the cost of a system of taxation (i.e. one that actually exists) is equal to the sum of the costs of the individual taxes or not is irrelevant. Any system of taxation will necessarily be more costly than no system of taxation. So where again am I making the fallacy of composition?
I hereby conclude that you are unable to provide a proof that 1) a subsidy to land values in the form of economic rent necessarily exists in the absence of the LVT, and 2) this subsidy is necessarily more costly than the costs of implementing the LVT. Thus I accept your implicit concession. Any attempt by you to bring this up in future discourse will be met by me with a reminder of this.
Providing one example does not constitute a sufficient explanation for how land is necessarily not encouraged to be allocated to the highest bidder in the absence of LVT. But to address your example directly anyway, you’re equivocating over the term “highest bidder”. Whoever a landlord leases the land to is, by definition, the highest bidder ex post facto. How much time and effort landlords devote to acquiring more land over other things is entirely irrelevant here.
“Your position is apparently that only what is produced by human activity can be owned (i.e. considered property). My position is that what is produced by nature can also be owned.”
Humans do NOT produce anything, they are just re-arranging the matter of the nature. That’s all the magic there is. If dsyddall is right, then no on can own anything except themselves maybe. All other things are nature given, doesn’t matter you re-arrange it into a shovel or a car.
I agree with the OP, poor people should be executed for the crime of poverty.
And I completely agree with Dsyddall. Ultimately a rental tax on Rembrandts is going to trace back as a production tax, and thus hamper production. Though many artists don’t receive this speculative bonus, because they have to die first, much of that rental is still due to their efforts and genuine appreciation. And much of that will still accrue to them while living.
The second part of the summary “…pay for what you take.” also applies as well. If some class of people create and trade in Rembrandts nothing is being taken from the general store of freedom. So no compensation is due.
The very narrowly worded question was answered. And I suspect a rhetorical trick, whereby the services of trade and exposition will be conflated with that of pure speculation. This is because Graham has not yet bothered to understand Georgism, for being too busy attacking it.
Folding in the other thread here about “the red hearing”, the specific question of property is still paramount. Graham wants to pretend that Georgists are also homesteaders but with the proviso. Not so at all. Because the notion of homestead is useless bunk. There is no principle that can take an event in the past between different people and then apply to people today. Freedom is a present tense condition. A key to any argument protecting privilege as somehow “fair” is to introduce an irrelevancy. And homestead is by that legerdemain a perfect example. Freedom and property are social concepts they exist solely in the social dimension, events like pulling swords from stones, planting flags, and ancient tilings are outside and irrelevant of that dimension.
Homestead conflates permanent property with that of natural annuity property. And since the critical Georgist insight concerns these and their difference I’ll explain.
All of life is the taking of nature’s substance and changing the form. Freedom is doing that unhampered by the other moral agents. To be unhampered implies both ones forms are left alone, but also means access to nature is also unhampered. And so respected property in created forms is a direct corollary to respecting freedom. This specific claim as property (exclusion) does not impair freedom because it is essentially part of the maker. And if the maker is utterly removed, those wanting access would still have no access. Nor have they lost anything that they had before the claim to form. And for most things the substance is of trivial scarcity, so the denial to substance is trivial. For example the carbon, oxygen, hydrogen of a hamburger are freely available in the air. (Which is the source and final disposition of hamburgers.) But as long as that hamburger exists, its form is the permanent property of its creator.
But how did that hamburger get formed? This included access “annuity” property, that of the fields needed to grow the grains, and range the cattle. These annuity properties have the ability to crank out a limited number of hamburger forms every year. Their value is delivered continuously, and is often marketed with time delineations, such as a lease. And in the case of these fields the annuity is a natural resource. It comes from nature, and is made scarce by exclusion. The exclusion does not protect its creation, it gets created any way. All the exclusion does is segregate freedom of access. On one side the state, and on the other victims of the state. There is no state that does not perpetrate natural exclusion. Those cultures where the state could not exclude such as the American Indians, lived essentially stateless. And only by the varying degrees of natural exclusion does the state exist within them.
At this point, any one following will see, exclusion from form good, exclusion from substance bad. But since there is no form without substance how do we separate the good of respecting property in form from the bad of the violence in natural exclusion? Which is a damn good question, that I hope we can get too, without being dragged down by an army of endless straw-men. I will refer to that question as “the split”.
But to continue the exposure of homestead as a fraudulent conflation. The idea of permanent property applies to all created forms, and the bulk of the property we want respected is of that type, there is an unseen assumption that all property should be permanent. The question of why property, how does it derive from freedom is not asked, it just shortened to, once owned always owned. And the issue of origin gets ignored. So with land, the predominate annuity property, the annuity as resource disappears from awareness, and instead ownership of these natural annuity installments, is thought of as a permanent ownership of a fiction that controls all of them. This conflation is critical to hiding the crime of homestead, because the proviso is met at the original moment. Someone can get to a piece of land before any other, and thus no conflicting claim. And they can gather that annuity without perpetrating any exclusion. All possible Georgist answers to “the split” would call for no rent on that period of the annuity. Precisely because Georgism is only about correcting the wrong of the state. And during that period there is no state. The conflation of Homestead is to pretend the stateless period continues as does thepermanence of created property. And it succeeds because the unconditional nature of created property is not seen as a specific condition.
“Homestead” like “rights” is a useless concept. A bogyman to confuse and conceal privilege. Georgists are not deploying a version, some modification, because there is nothing there. Its a fetish to an event that only has momentary relevence. Minus any principle not already independently derivable, its all rubbish. There is only that which is consistent with respect for freedom and that which is not. And since Austrian economics focuses on freedom the bulk is going to be perfectly applicable. What Austrians say about the state, and privilege, and subsidy, central planning, political (force based) distribution, is all true. Fine work! All that needs correcting is the notion of what constitutes violence and thus the state. Split that away and the promise of freedom is revealed.
I have been accused of coming here to convince you guys that I am right, and that perhaps I think you all wrong. While I do think the split is an important question, what I see here is that we are all anti-statists. I am not here on a mission of conquest, but one of finding allies. And I will listen patiently to all that is offered, with the exception of being fatigued by intellectual dishonesty. I was not always a georgist, my parents didn’t baptize me into it, before I was capable of defending my contemplative equilibrium. It was the disequilibrium of the prevailing socialist and Rothbardian lies that had me seek out these answers. And when I grasped the Georgist Idea for the first time, I only held it as a possibility. There where practical concerns that needed evidence. So I held in my head three possible conflicting ideas and without deciding proceeded in investigation. Maybe what made it easy was that I was not married, by income, identity, or prestige to any of them. I had nothing to lose how ever it came out. How disappointing that symmetric absolute freedom is not possible. But how wonderful, absent statist privilege, the equal freedom remaining still is.
The statists succeed by how they circumvent thought on their tricks. And high emotion is a wonderful block. I am sure the word “georgists” evokes a lot of emotion here. Well I am an emotional guy too, very well practiced at the snipe and snark. And honestly I fail to control that indulgence depending on crazy factors, like how traffic was that morning. I am hoping this confession in a strong time will bolster me in the weak times, but I also hope it will explain weak time failures. I have even already taken some needless shots, at least they where mild. I will try and keep this investigation as high minded as I can.
There are many examples of things that are inevitable in practice but are not necessitated by logic. The existence of the universe, the existence of consciousness, the fundamental laws and constants of physics, the actions of a stubborn person, etc.
An appeal to the majority is a type of appeal to authority. My statement is neither. An appeal to authority (or majority) only occurs when the claim is made that the conclusion follows necessarily from the premise, not when the claim is that the conclusion follows defeasibly from the premise. And, even if it was a logical fallacy, it does not follow from the fact that an argument is unsound, that the conclusion is untrue.
Here we must be careful to define ownership. I accept that nature can be exclusively posessed but I do not accept that its ownership by humans can be unconditional (as per the Lockean proviso).
That’s not a strawman, just a misunderstanding. From the way I read your original comment it genuinely seemed as though this was your position. But since you don’t hold this position, do we agree that everything we produce, we own?
That was certainly not my intention, and I think this is a misreading of what I wrote. I believe that production determines property whether or not production alone determines property, so the dilemma you suggest would not have been helpful to my argument.
I am not claiming that production alone determines property. I am claiming that production determines property. Yes, I am using this as a premise. Now, I am not sure whether you will accept this premise since here you claim that you reject it, yet above you already claimed that you do not reject it. I’m hoping that in your reply to this post your actual position will be made clear.
I accept that the highest bid is usually calculated at the end of the bidding process. I do not see where this argument is leading.
What you consider to be a system free from taxation (no taxes), Georgists consider to be a system where the producers of economic surplus are effectively taxed in order to subsidise owners of land.
You are making the fallacy of composition because you have assumed that a system with no taxes is identical to no system of taxes. It may sound contradictory, yet it is purely an artifact of language, that to geoists, the most free system (a system free from taxation) means a system with a land value tax, because this is what most respects the right of producers to keep what they have produced.
Yes, that’s exactly it. I can’t be everywhere at once therefore your logic is superior to mine. I lost, you won. Congratulations! Victory is yours! How will you celebrate?
(There’s an extra bonus if you can detect the logical fallacy in the above paragraph.)
I have not provided an example, I have given the reason why, in any particular example a landlord may choose a particular action over another action.
Not necessarily. Consider the case where a landowner is not leasing his/her land at all. Is the highest bid zero because there are no bids and the landowner receives no income from its lease? Clearly not.
dsyddall wrote that inevitable in practice but not necessitated by logic are the fundamental laws and constants of physics. But where would the law of gravitation (that two particles attract each other with forces directly proportional to the product of their masses divided by the square of the distance between them) come from it not from logic? This physical law could not operate in any other way, hence there is a logical necessity for this relationship betrween mass and distance. If mass is attracted to mass, there must be some inherent reason. Ultimately the universe is ruled by logic: eternal, deterministic, invisible yet real, never changing, present everywhere - the perfect god.
None of those are inevitable.
Also, I forgot to add that my definition of “wisely” in no way has to match yours.
You were arguing that I should accept the premise because the vast majority of people (presumably) accept it. That’s an appeal to the majority. Defeasible argumentation is certainly not logical argumentation, if one considers it to be a form of argumentation at all. And finally, I’m attacking your (logical) arguments, not the conclusions per se.
I define “ownership” as “legitimate control”. How is exclusive possession a form of conditional possession?
I’m willing to give you the benefit of the doubt here that you didn’t intentionally set up a strawman to knock down on my behalf. I’m not sure how you so greatly misunderstood my position though.
Anyway, I actually don’t think that we own everything that we produce. For example, A may hire B to produce things for A that A then sells. I’d say that B never owns what he produces while working for A.
I don’t think it’s a misreading of what you wrote, but I’ll accept that you don’t see a dilemma there (i.e. either production alone determines property, or it doesn’t determine property at all).
Simply saying “production determines property” is vague IMO, and I assumed it meant “production and only production determines property”, since you didn’t say something else like “production helps determine property” or “production is one of the things that determines property”. Anyway, it’s fine if you use that as a premise in your argumentation, and I appreciate you clarifying that for me. But I still think it’s vague. If you don’t think production alone determines property, then what else do you think determines property?
The point is to show that “highest bidder” is context-dependent and thus cannot be determined in advance (e.g. mathematically).
How exactly can there be taxation in the absence of taxation? Are you now claiming that it’s impossible for there to be no taxation whatsoever?
Ironically, you seem to be doing the very thing you’re accusing me of doing, although it’s not making the fallacy of composition. Rather, it’s making the continuum fallacy. Furthermore, it’s an obvious contradiction to equate a system that is not free from taxation, which a system with an LVT surely is, with a system that is free from taxation. Here I appeal to the law of excluded middle.
I challenged you on a claim you made, and you refused to defend it. What else should this be called but an implicit concession. It doesn’t necessarily mean that you’re wrong - it simply means that, for the purpose of the debate, your claim does not stand.
You started off with “One reason is…” which implies that there’s more than one reason. So the one reason you provided is an example among the set of multiple reasons. Otherwise you would’ve started off with something like “The reason is…”
Yes, in that case, the highest bid is zero. To claim otherwise is to claim that the notion of “highest bid” is not context-dependent.
Let me continue the Georgist pile on and try and steer the conversation in what will hopefully be a more useful direction… which is the one I think Graham had in mind when he invited us here.
- Ground rent in Manhattan is around 1 million per acre per anum. That’s a pretty hefty salary for landowners that aren’t actually doing any allocating, and are in fact just lounging in the Hamptons or in Palm Beach, collecting rent. 2) I would consider this economic rent in the sense that if I were to hire someone to allocate my property for me, I would offer them more like 60 thousand a year – and only If I owned enough property to keep them busy full time!
So you can think of it as grossly overpaying for the service of allocation. Instead of paying millions in subsidies to many landowners, we could be paying a very modest salary to a single employee, and the difference would be distributed as a dividend to “some relevant community,” thereby greatly lowering the overall price structure of the economy.
As Dan Syddall mentioned earlier, LVT is a kind of misnomer as it’s not a tax so much as an avoidance of subsidy. It can also be expressed as an embargo, a tariff, a boycott or a strike.
I don’t argue for the state LVT (many of goergists don’t) because the subsidies are now so large and the interests so vested that it just isn’t a realistic possibilty anymore.
I prefer to think of it as a financial matter where you have two very distinct assett classes: one that tends to appreciate with no cost of production, and another that tends to depreciate, require maintenance and DOES have a cost of production. That’s why they’re assessed and appraised separately. You will have a very hard time getting a job and being successful in real estate or finance without understanding this. To me it is simply a task to communities to direct their own investments and gain more equity in the land values they themselves are creating.
Can anyone show that this would NOT be a cost savings to the broader economy?
And just to echo what EconAm just pointed out, homesteading is really not the issue here and trying to find an objective definition of property rights is a waste of effort. Nevermind that most homesteads were not actually homesteaded (at least here in America). Land values only exist in a social dimension where economic development has already taken place, and property rights have already been established. And these days all the land with any utility is already owned. It’s now a question of “free market dynamics.”