The Crime of Poverty

[dsyddall]

@Autolykos

@dsyddall

B is selling the service of rearrangement, produced by his labor, to A. What right does he have to do this if he does not own the products of his labor?

I still don’t understand the question. B is providing a service to A, which A pays him for. How does B not have the right to sell a service to A?

Because in order to sell the service B must own the service B is selling. If A already owns B’s service (since you already claimed that at no point does B own the service in this case - to quote: “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.”), then it’s fraudulent for B to sell something to A that already belongs to A.

@Autolykos

As I said before, I define “ownership” as “legitimate control”. I presume that a person’s control of his body is legitimate - that is, I presume that he owns himself.

I would prefix that with the word exclusive, since “legitimate control” alone suggests the possibility that others might also have legitimate control. Would you agree that a person has exclusive legitimate control over his body?

@Autolykos

Irrelevant. Do you agree that humans are naturally produced? Yes or no?

Yes. I did not create myself. And I believe it’s equivocation over the word “create” to say that my parents “created” me. Does that mean I’m owned by nature? No, nature is not something that can own anything. Nor does nature own land.
Why must I have exclusive legitimate control over myself? It follows from a simple reductio ad absurdum. To deny exclusive legitimate control over one’s body is to deny the right of life, since if another person can legitimately control you, they can legitimately direct you to commit suicide. It is also true that exclusive legitimate control of land follows from a reductio ad absurdum. If I cannot have exclusive legitimate control of land, then no work that I produce can be secure and I lose the right to sustain myself and my right to life. However, my right of exclusive legitimate control of land must be balanced against other people’s equal rights to exclusive legitimate control of land, which follows from their equal right to life. This is the difference between land and my body - no-one else has an equal right to my body, they only have a right to their own body.

@Autolykos

@dsyddall

Because one can “homestead” land at the margin for free, forget about it for 50 years until a town has grown up around it, then return (evicting any squatters who may have settled in the meantime) to what is almost certainly a substantially more valuable plot (in that it will sell for a higher price). Here the only costs are the initial act of homesteading and the final act of enforcing any eviction, and these aren’t dependent on the holding duration, while the corresponding rewards are proportional to the holding duration.

Presenting an extreme hypothetical example doesn’t answer my questions, sorry. Try again.

This is a plain refusal to face the issue. Moreover it is common, not extreme.

@Autolykos

@dsyddall

In common parlance yes, but not in the sense of “privilege” and “coercion” used by libertarians/anarchists. Property in this case refers to rightful property, not a privilege, and coercion is suggestive of the initiation of force rather than force per se.

How do you think libertarians/anarchists use “privilege” and “coercion”? I personally define “privilege” as “non-universal right” and “coercion” as “the use or threat of physical force”.

I prefer to reserve “privilege” to mean things such as state-granted privileges, and “coercion” to mean aggressive force (i.e., I would not call responding to aggressive force in self-defence coercion).

@Autolykos

Does the phrase “one reason is…” imply to you that more than one reason exists? Yes or no? If yes, then if only one reason is provided, that doesn’t cover all the reasons, does it? So it’s an insufficient explanation, isn’t it?

It’s insufficient, perhaps, if you were creating an encyclopedia. But it’s not logically insufficient to provide only one of several logically sufficient reasons.

@Autolykos

I’m saying that you haven’t given your argument. It may look like an argument to you, but it doesn’t to me. So I’m still waiting on an actual argument from you.

We appear to be at an impasse, since that doesn’t look much like an argument to me, either.

@Autolykos

@dsyddall

The highest bidder does win. But the highest bidder pays the second highest price. This is how a standard open auction works.

Not according to Wikipedia:

@Wikipedia

English auction, also known as an open ascending price auction. This type of auction is arguably the most common form of auction in use today.^[4] Participants bid openly against one another, with each subsequent bid higher than the previous bid.^[14] An auctioneer may announce prices, bidders may call out their bids themselves (or have a proxy call out a bid on their behalf), or bids may be submitted electronically with the highest current bid publicly displayed.^[14] In some cases a maximum bid might be left with the auctioneer, who may bid on behalf of the bidder according to the bidder’s instructions.^[14] The auction ends when no participant is willing to bid further, at which point the highest bidder pays their bid.^[14]

What you’re talking about is known as the Vickrey auction, and it’s rarely used in real life (eBay is a notable example of where it is used).

My apologies, you are correct, I referred you to the wrong type of auction. In my defense I had the same conversation with Graham about a month ago and pointed him to the right type of auction then, so I was not being intentionally misleading.

@Autolykos

@dsyddall

Because it is not necessarily the case that the landowner will allocate to the highest bidder.

Then again, that’s up to the landowner, isn’t it?

Yes, it is. He has the right to allocate land to whoever he likes. But he does not have the right to push the costs of doing so onto others.

@Autolykos

I’d like to attack your notion that not allocating land to the highest bidder will represent a loss of production to the economy as a whole. This seems to be based on a notion of “optimality” that can be objectively determined. This notion, in turn, depends upon an objective theory of value. But value is subjective, hence “optimality” can’t be objectively determined.

We can talk about the numerical quantity of goods produced without referring to value at all. In any case, I think you’re overstating the case to say that there’s no way to talk about objective value.

@Autolykos

@dsyddall

If you know the highest bid (which will be roughly equivalent to a valuation performed by a real-estate appraiser) and you know the current return, then calculating the difference is a trivial mathematical operation.

Wait a minute. You’re not saying that the highest bid will necessarily be roughly equivalent to a valuation performed by a real-estate appraiser? Really?

In practice, real-estate valuations are usually quite accurate.

@Autolykos

@dsyddall

No I’m not. It is standard and reasonable to charge the highest bidder the second highest bid, because that is the price that represents the degree to which others have been excluded.

It’s certainly not standard, as I’ve noted above. Why shouldn’t the highest bidder be charged the price that he said he’s willing to pay (i.e. his bid, not the second-highest bid)?

Because others have not been excluded by that amount. The maximum by which others have been excluded is the second-highest bid.

@Autolykos

@dsyddall

You have it precisely backwards. Georgists consider people who produce things not to owe a subsidy to people who own land.

… They don’t. Goods that aren’t produced can’t be paid by people as a subsidy.

What goods are you claiming are not produced? Economic rent has to be produced by somebody. Since it is not produced by the landowner, who is it produced by?

@Autolykos

Oh, nice attempt at a guilt-trip. Sorry it didn’t work though. Let’s stick to argumentation, shall we?

I’m not asking you to feel guilty. I’m asking you to consider the logical consequences of your position.

[Autolykos]

@dsyddall

Because in order to sell the service B must own the service B is selling. If A already owns B’s service (since you already claimed that at no point does B own the service in this case - to quote: “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.”), then it’s fraudulent for B to sell something to A that already belongs to A.

B does own the service that he’s selling. I said that B never owns what he produces, because what he produces is simply a rearrangement of things already owned by A.

@dsyddall

I would prefix that with the word exclusive, since “legitimate control” alone suggests the possibility that others might also have legitimate control. Would you agree that a person has exclusive legitimate control over his body?

I wouldn’t, because I don’t consider all ownership to be exclusive to single individuals. Some things can be jointly owned. But I agree that a person has exclusive ownership over his body.

@dsyddall

Yes. I did not create myself. And I believe it’s equivocation over the word “create” to say that my parents “created” me. Does that mean I’m owned by nature? No, nature is not something that can own anything. Nor does nature own land.

Another false dichotomy and strawman, all in one. My counter-argument was that, since people are produced by nature, then people count as “(economic) land”, and therefore LVT should also apply to people.

@dsyddall

Why must I have exclusive legitimate control over myself? It follows from a simple reductio ad absurdum. To deny exclusive legitimate control over one’s body is to deny the right of life, since if another person can legitimately control you, they can legitimately direct you to commit suicide. It is also true that exclusive legitimate control of land follows from a reductio ad absurdum. If I cannot have exclusive legitimate control of land, then no work that I produce can be secure and I lose the right to sustain myself and my right to life. However, my right of exclusive legitimate control of land must be balanced against other people’s equal rights to exclusive legitimate control of land, which follows from their equal right to life. This is the difference between land and my body - no-one else has an equal right to my body, they only have a right to their own body.

What do you think is the basis for the right to life? Otherwise, you’re using it as a premise. If so, then no one is obligated to accept it as such.

@dsyddall

This is a plain refusal to face the issue. Moreover it is common, not extreme.

No it isn’t. I asked you a question which you did not answer to my satisfaction. That is, I still don’t know how you (allegedly) know that the costs of holding “land” are always and necessarily “so low”, and that that the rewards of holding “land” are always and necessarily “so high”. The words “always and necessarily” are very important there. So either you’ll ultimately answer it to my satisfaction or I’ll conclude that you cannot, and therefore that your claims here are baseless.

@dsyddall

I prefer to reserve “privilege” to mean things such as state-granted privileges, and “coercion” to mean aggressive force (i.e., I would not call responding to aggressive force in self-defence coercion).

I have no problem accepting arguendo your definition of “coercion” as “aggressive force”, but I don’t think your definition of “privilege” is sufficiently clear.

@dsyddall

It’s insufficient, perhaps, if you were creating an encyclopedia. But it’s not logically insufficient to provide only one of several logically sufficient reasons.

… Do I need to repeat myself? Answer my questions directly, or I’ll conclude that you’re evading the issue and that therefore your claim that “land” is necessarily not encouraged to be allocated to the highest bidder in the absence of LVT is baseless.

@dsyddall

We appear to be at an impasse, since that doesn’t look much like an argument to me, either.

Whether we’re at an impasse is entirely up to you, because the burden of proof rests with you. What I wrote isn’t an argument and isn’t supposed to be - it’s just supposed to point out that I’m still waiting on your argument. Do you understand?

@dsyddall

My apologies, you are correct, I referred you to the wrong type of auction. In my defense I had the same conversation with Graham about a month ago and pointed him to the right type of auction then, so I was not being intentionally misleading.

So where do you think that leaves us on the issue of " the highest bidder"?

@dsyddall

Yes, it is. He has the right to allocate land to whoever he likes. But he does not have the right to push the costs of doing so onto others.

Those “costs” are imaginary. How can one pay for something with things he doesn’t have and don’t exist?

@dsyddall

We can talk about the numerical quantity of goods produced without referring to value at all. In any case, I think you’re overstating the case to say that there’s no way to talk about objective value.

… Perhaps you’d like to clarify how exactly I’m “overstating the case”. But it sounds to me like here you’re implicitly admitting to believing in some sort of objective theory of value.

@dsyddall

In practice, real-estate valuations are usually quite accurate.

Accurate to what, exactly? And I didn’t ask about “in practice”, did I? No. I asked about necessity. Did you overlook the word “necessarily” in my question? If so, was it intentional?

@dsyddall

Because others have not been excluded by that amount. The maximum by which others have been excluded is the second-highest bid.

… Perhaps you’d like to clarify yourself here too, because I’m at a loss to understand your point. I fail to see why the amount at which others have allegedly been excluded should factor at all into the price that the highest bidder pays for an item at auction.

@dsyddall

What goods are you claiming are not produced? Economic rent has to be produced by somebody. Since it is not produced by the landowner, who is it produced by?

Weren’t you the one who said that the “cost” borne by those who don’t own “land” is that of goods that aren’t produced? I don’t think I’m misunderstanding anything here.

@dsyddall

I’m not asking you to feel guilty. I’m asking you to consider the logical consequences of your position.

You have in no way convinced me that such a crazy hypothetical situation is a logical consequence of my position. Understand? That doesn’t mean you never will - it just means you’ll have to try harder.

[dsyddall]

@Autolykos

@dsyddall

Because in order to sell the service B must own the service B is selling. If A already owns B’s service (since you already claimed that at no point does B own the service in this case - to quote: “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.”), then it’s fraudulent for B to sell something to A that already belongs to A.

B does own the service that he’s selling. I said that B never owns what he produces, because what he produces is simply a rearrangement of things already owned by A.

B’s rearrangement is the service he is selling. He has produced this and owns it.

@Autolykos

@dsyddall

I would prefix that with the word exclusive, since “legitimate control” alone suggests the possibility that others might also have legitimate control. Would you agree that a person has exclusive legitimate control over his body?

I wouldn’t, because I don’t consider all ownership to be exclusive to single individuals. Some things can be jointly owned. But I agree that a person has exclusive ownership over his body.

Good. Then we are in complete agreement on this.

@Autolykos

@dsyddall

Yes. I did not create myself. And I believe it’s equivocation over the word “create” to say that my parents “created” me. Does that mean I’m owned by nature? No, nature is not something that can own anything. Nor does nature own land.

Another false dichotomy and strawman, all in one. My counter-argument was that, since people are produced by nature, then people count as “(economic) land”, and therefore LVT should also apply to people.

I was not attributing this line of argument to you, only exploring possible consequences.

@Autolykos

What do you think is the basis for the right to life? Otherwise, you’re using it as a premise. If so, then no one is obligated to accept it as such.

If your logic has caused you to dismiss the right to life, perhaps it is time to re-examine your position.

@Autolykos

@dsyddall

This is a plain refusal to face the issue. Moreover it is common, not extreme.

No it isn’t. I asked you a question which you did not answer to my satisfaction. That is, I still don’t know how you (allegedly) know that the costs of holding “land” are always and necessarily “so low”, and that that the rewards of holding “land” are always and necessarily “so high”. The words “always and necessarily” are very important there. So either you’ll ultimately answer it to my satisfaction or I’ll conclude that you cannot, and therefore that your claims here are baseless.

Those words are important to you because you want to dismiss a straw man. It is not necessary for my argument that land is always and necessarily low-cost and rewarding, only that at least some times it is.

@Autolykos

I have no problem accepting arguendo your definition of “coercion” as “aggressive force”, but I don’t think your definition of “privilege” is sufficiently clear.

Agreed that the above was not a clear definition. To clarify, a privilege would be a benefit gained through coercive (aggressive) force rather than through economic exchange.

@Autolykos

@dsyddall

It’s insufficient, perhaps, if you were creating an encyclopedia. But it’s not logically insufficient to provide only one of several logically sufficient reasons.

… Do I need to repeat myself? Answer my questions directly, or I’ll conclude that you’re evading the issue and that therefore your claim that “land” is necessarily not encouraged to be allocated to the highest bidder in the absence of LVT is baseless.

I don’t see why you’re having trouble understanding this. I have already provided a sufficient reason that land is not encouraged to be allocated to the highest bidder - because the land owner does not bear the full economic cost of his decisions. You have yet to rebut this reason. Until you rebut this reason, my argument stands.

@Autolykos

@dsyddall

We appear to be at an impasse, since that doesn’t look much like an argument to me, either.

Whether we’re at an impasse is entirely up to you, because the burden of proof rests with you. What I wrote isn’t an argument and isn’t supposed to be - it’s just supposed to point out that I’m still waiting on your argument. Do you understand?

Frankly, I’m so lost in the argument about the argument that I don’t even remember what this argument was even about.

@Autolykos

@dsyddall

Yes, it is. He has the right to allocate land to whoever he likes. But he does not have the right to push the costs of doing so onto others.

Those “costs” are imaginary. How can one pay for something with things he doesn’t have and don’t exist?

If the land is not sub-marginal, yet is left unproductive, then there is an economic cost because the same production that would have occurred on productive land will have to occur on less productive land.

@Autolykos

… Perhaps you’d like to clarify how exactly I’m “overstating the case”. But it sounds to me like here you’re implicitly admitting to believing in some sort of objective theory of value.

I think an objective theory of value can be descriptively helpful, even if we recognise it is ultimately a result of subjective values. Much like atoms are descriptively helpful to physics and chemistry, but in reality atoms are a reification.

@Autolykos

@dsyddall

Because others have not been excluded by that amount. The maximum by which others have been excluded is the second-highest bid.

… Perhaps you’d like to clarify yourself here too, because I’m at a loss to understand your point. I fail to see why the amount at which others have allegedly been excluded should factor at all into the price that the highest bidder pays for an item at auction.

Anything that the highest bidder pays below the second highest bid is economic rent (according to the law of rent). Anything above is either wages or interest.

@Autolykos

@dsyddall

What goods are you claiming are not produced? Economic rent has to be produced by somebody. Since it is not produced by the landowner, who is it produced by?

Weren’t you the one who said that the “cost” borne by those who don’t own “land” is that of goods that aren’t produced? I don’t think I’m misunderstanding anything here.

Yes, but that is only part of the subsidy received by the landowner, since economic rent is not produced by landowners qua landowners, yet is taken by landowners.

[Truth_and_Liberty]

@dsyddall

@Graham Wright

If I were to convince you that a RVT would be economically destructive, would you then concede that LVT would be economically destructive? (You may still support it for ethical reasons, of course, regardless of this concession).

Only if you were to also explain why it would be inconsistent to accept the former but not the latter.

I thought I already explained this, so let me be clearer. As I understand it, this is your argument:

P1: A tax on a thing is not economically destructive (and is actually beneficial), if that thing is completely inelastic, or “in fixed supply”, or “unable to be (further) produced”.

P2: Land is a thing which is in fixed supply.

C: A tax on land is not economically destructive (and is actually beneficial).

Your logic is sound. But I have problems with both premises. I believe P1 is simply false. To test that, I substituted P2_r for P2, resulting in conclusion C_r.

P2_r: Rembrandts are in fixed supply.

C_r: A tax on Rembrandts is not economically destructive (and is actually beneficial).

You accepted this new minor premise, P2_r. So if the major premise P1 is true, it follows that C_r is true. This is why I asked you if you thought C_r is true, since it follows logically from your belief that P1 is true.

If, however, I was to convince you that C_r is false, then either P1 is false or P2_r is false. And since you accept P2_r already, you must conclude that the problem lies with P1, i.e. P1 must be false.

So that’s the argument. This why it’s worth exploring whether C_r is really true or not.

@dsyddall

@Graham Wright

The response I was expecting from you was that, in fact, a Rembrandt Value Tax WOULD NOT encourage Rembrandt owners to put them to best possible use, and that it would actually worsen allocation. I thought as a free marketer you would understand why a Rembrandt Value Tax would be economically destructive.

A tax on Rembrandts would only be economically destructive if it affected economic production (by definition).

No, that’s not true. The tax might worsen how the good is allocated/used and that would be economically destructive by itself.

@dsyddall

Since Rembrandts aren’t being produced any more, there will be no effect on the production of Rembrandts.

Agreed.

@dsyddall

Since also a tax on Rembrandts will not raise prices (by the law of supply of demand) it will not reduce their use.

I accept that it will not raise prices, as per Friedman. But I don’t accept that the tax will have no consequences on usage. Consider a museum that right now faces the choice of owning/displaying a Rembrandt, or a Monet. Without the Rembrandt Value Tax, let’s suppose they estimate that the Rembrandt will bring in slightly more revenue for them than the Monet. But with the tax, they may estimate the other way, since it will cost them nothing to hold the Monet and they keep all the income they get from it, whereas this isn’t the case with the Rembrandt. This may tip the balance in favor of them getting a Monet. And there’s (part of) the economic destruction caused by the RVT! Consumers would have prefered to see a Rembrandt, but because of the RVT, they now have to put up with a Monet, something they consider less valuable.

There will be further distortions and negative consequences as well, but what these might be would depend on how the amount owed collected is to be worked out. This is why I asked you to explain the bidding process a bit more, since it seems quite different to the mechanism laid out by Fred in that paper you linked, and some of my (our) criticisms of Fred’s mechanism may not apply to yours. I also think doing that will help your conversation with Autolykos.

[Fred_Foldvary]

By Graham Wright in General

The obvious question is what’s so special about land…

Morally, that land is not a human being, and was not produced by human action. Therefore self-ownership does not apply to land.
Economically, that there is a fixed supply of land, that land is necessary for human action, and that much of the gains from economic expansion gets captured by land rent.

why wouldn’t a “Labor Value Tax” or a “Tractor Value Tax” have the same beneficial effects?

Labor has an opportunity cost in leisure. Not so with land.
Tractors have a cost of production. Not so with land.
Taxes on labor and capital goods have a deadweight loss, taxes on land have no DWL.

I brought up another example of something for which that is true: Rembrandts. To be consistent, then, you would have to say that recapturing 80% of the Rembrandt-rent “doesn’t distort prices” and “encourages Rembrandt owner to put the paintings to best possible use”, because the economic argument is the same as that for LVT.

Correct. Collecting that Rembrandt rent would reduce the purchase price of Rembrandts by 80 percent. More Rembrandts would be exhibited and fewer stored out of sight. Those who are not making productive use would sell to those who do.

The response I was expecting from you was that, in fact, a Rembrandt Value Tax WOULD NOT encourage Rembrandt owners to put them to best possible use

What is the logic?

I thought as a free marketer you would understand why a Rembrandt Value Tax would be economically destructive.

It is a matter of positive economics, not ideology.

it suggests there is a significant disconnect between the system implied by your ethical values and the system you expect to have the best economic consequences.

My Georgist ethical values are based on natural rights, not utilitarianism. It is possible that making one person a slave would increase the utility of all the others by a large amount, but I reject such as violating the slave’s natural rights.

Fred Foldvary

[Johnny_Doe]

Did/do the landowners in question, actually mix their labor with the land/homestead, or was the land acquired via government intervention/redistribution(government doesn`t redistribute; top to bottom, in a regulated society the rich get richer, and the poor get poorer)?

[Fred_Foldvary]

The tax on Rembrandts will not reduce the revenue to the museum, as the visitors will pay a fee based on their desire to see the art, not on who receives the revenue. The tax would reduce the price of Rembrandts to the amount for which the profit from them is the same as before. The reduction in the purchase price, and thus also of the expllicit or implicit interest on the loan or equity offsets the tax payment.

[Fred_Foldvary]

“The supply of land can expand. It can also contract.” autolikos.

I live in the County of Alamada, California. It has a jurisdictional boundary. Please explain how the acres of land in the country can expand or contract.

[Fred_Foldvary]

“I’ll answer you after you answer my own questions.” autolykos. I think I did. If not, please state your unanswered questions. I’m not going to slog thru the entries to look for them.

[Econ_Amateur]

dsyddall, the Rembrandt tax has the problem of initial implementation. The users who have already paid the expected rent, are asked to pay yet again. Their second million dollars will likely come to them more dear then the first. So increasingly the discussion problem here is one of the change in ownership that happens. Owning the rent is not neccesary to appreciate the painting, but its duplicated cost can interfer.

Suppose the Rembrandt paintings where of a magical quality that they would appear on the wall for whom the highest current rent is offered. Its important that the money be paid, so the bids are ‘real’ bu its not important that any being be able to spend that money as it incentivises nothing in this example. Now introduce the speculator, his means is to buy low and sell high. His operation is to have the paintings on a wall where no one enjoys them. Since viewing and ownership are now seperate, there is no subsidy to ‘control’ that he can exploit. The paintings will never be on the null wall. Now assuming that the highest bid at any moment is the best use, how is it that without even an owner, this painting is still finding its way to the best use, solely on the descretion of the users?

If the rental ‘tax’ where structured consistant with that, then it does maximise best use. Even one second hanging on a speculators wall would be a second of use that can not be made up.

[Econ_Amateur]

Johnny please explain the qualifiers of “actually mix their labor”. How can one know how much labor is needed, and how far it mixes?

I agree that in a regulated society the rich get richer. Espicially so when the rich have an open market in theft insturements that are supported by state action. “Theft” would depend on what “property” means and “property” would be best based on what the non aggression principle dictates. Would you agree that those three all follow?

[Truth_and_Liberty]

@Fred Foldvary

By Graham Wright in General

The obvious question is what’s so special about land…

Morally, that land is not a human being, and was not produced by human action. Therefore self-ownership does not apply to land.
Economically, that there is a fixed supply of land, that land is necessary for human action, and that much of the gains from economic expansion gets captured by land rent.

Thanks. Let’s put the moral question to one side for now and focus on the economic side.

You give three reasons land is special. The first - land being in fixed supply - is certainly is true of Rembrandts, but I can see you think a Rembrandt Value Tax would have (qualititatively) similar economic consequences to a Land Value Tax, in that “more Rembrandts would be exhibited and fewer stored out of sight.” So it seems like the first special thing about land - that it is in fixed supply - is alone a sufficient condition for your conclusion that taxing it would be beneficial. Is that right?

If that is right, I’ll put your two other special things about land aside for now, because it’s this conclusion that I think is incorrect. In particular, I think the major premise - that a thing being in fixed supply can be taxed without negative consequences - is incorrect.

@Fred Foldvary

why wouldn’t a “Labor Value Tax” or a “Tractor Value Tax” have the same beneficial effects?

Labor has an opportunity cost in leisure. Not so with land.
Tractors have a cost of production. Not so with land.
Taxes on labor and capital goods have a deadweight loss, taxes on land have no DWL.

Those questions were rhetorical. I was trying to pin down exactly what is special about land that means taxing it has net-positive effects.

@Fred Foldvary

I brought up another example of something for which that is true: Rembrandts. To be consistent, then, you would have to say that recapturing 80% of the Rembrandt-rent “doesn’t distort prices” and “encourages Rembrandt owner to put the paintings to best possible use”, because the economic argument is the same as that for LVT.

Correct. Collecting that Rembrandt rent would reduce the purchase price of Rembrandts by 80 percent. More Rembrandts would be exhibited and fewer stored out of sight. Those who are not making productive use would sell to those who do.

I don’t think we can say for sure that more Rembrandts would be exhibited. The higher costs of holding them might mean museums are less likely to want them, relative to other goods which are not subject to the tax. Like Monets, for example.

And even if this does turn out to be the case, I don’t think we can say for sure that that would be a good consequence economically-speaking. Who’s to say that we’re not better off with some of the Rembrandts kept out of sight? If for some reason there is a series of fires in museums and the ones on display get destroyed, future generations will be extremely grateful to the speculators - who profited handsomely - keeping some of the paintings under wraps.

Now you might say that land cannot be destroyed, so the analogy fails, but that’s not the point. The point is that speculators play a useful role in the economy. Do you accept this? For example, take a wheat speculator. He buys at harvest time in the expectation that the price will be higher next spring when supplies are low. The wheat speculator makes a profit, and benefits the rest of us by making wheat available all year round, and making the price of it remarkably stable given the seasonal nature of the good. You could look at the situation in November and say ‘Look at all this wheat that is being held out of use! If we distort economic incentives so that these wheat speculators release their wheat onto the market, prices will plummet! Everyone can have more wheat!’. Of course, depending on how successfully you achieved your goal, prices would plummet but then they would skyrocket in the spring, and the wheat may even completely run out.

So if you accept that it would be economically destructive to ‘induce’ speculators of wheat to flood the wheat market, rather than hold out of use until a time it might be more demanded, I do not see how you can accept precisely the opposite conclusion when it comes to land: that it would be economically beneficial if land being speculated upon were ‘induced’ into being put to use now rather than being held out of use until a time it might be more demanded. Are there no conceivable circumstances under which the ‘best possible use’ of land is to ‘hold it out of use’ (or ‘not make productive use of it’ in your words), waiting for it’s price to rise?

@Fred Foldvary

The response I was expecting from you was that, in fact, a Rembrandt Value Tax WOULD NOT encourage Rembrandt owners to put them to best possible use

What is the logic?

See my post to Daniel that explains the logic carefully.

@Fred Foldvary

I thought as a free marketer you would understand why a Rembrandt Value Tax would be economically destructive.

It is a matter of positive economics, not ideology.

I agree. All I meant by ‘free marketer’ was that Dan has a good understanding of how markets work and why taxes are generally bad.

[Truth_and_Liberty]

@Econ Amateur

Johnny please explain the qualifiers of “actually mix their labor”. How can one know how much labor is needed, and how far it mixes?

The same way one knows how much labor is needed to acquire possession rights over land in your own philosophy. Got a problem with Locke? Take a look in the mirror.

[dsyddall]

@Graham Wright

I don’t think we can say for sure that more Rembrandts would be exhibited. The higher costs of holding them might mean museums are less likely to want them, relative to other goods which are not subject to the tax. Like Monets, for example.

For the museum, the cost of holding the Rembrandt is not higher. The inelasticity of supply means that the entire burden of the tax is borne by the supplier (and the museum is not supplying the Rembrandt, it is renting it from its owner). In fact, the cost to the museum will most likely be lower, since more Rembrandts that were held speculatively will be made available to the market.

@Graham Wright

And even if this does turn out to be the case, I don’t think we can say for sure that that would be a good consequence economically-speaking. Who’s to say that we’re not better off with some of the Rembrandts kept out of sight? If for some reason there is a series of fires in museums and the ones on display get destroyed, future generations will be extremely grateful to the speculators - who profited handsomely - keeping some of the paintings under wraps.

The risk of loss is compensated for in the price paid by the museum to the owner.

@Graham Wright

Now you might say that land cannot be destroyed, so the analogy fails, but that’s not the point. The point is that speculators play a useful role in the economy. Do you accept this? For example, take a wheat speculator. He buys at harvest time in the expectation that the price will be higher next spring when supplies are low. The wheat speculator makes a profit, and benefits the rest of us by making wheat available all year round, and making the price of it remarkably stable given the seasonal nature of the good. You could look at the situation in November and say ‘Look at all this wheat that is being held out of use! If we distort economic incentives so that these wheat speculators release their wheat onto the market, prices will plummet! Everyone can have more wheat!’. Of course, depending on how successfully you achieved your goal, prices would plummet but then they would skyrocket in the spring, and the wheat may even completely run out.

Yes, speculation in this case is useful, because it can help to stabilise production over time. But speculation can’t have this effect in a good that is no longer being produced.

@Graham Wright

So if you accept that it would be economically destructive to ‘induce’ speculators of wheat to flood the wheat market, rather than hold out of use until a time it might be more demanded, I do not see how you can accept precisely the opposite conclusion when it comes to land: that it would be economically beneficial if land being speculated upon were ‘induced’ into being put to use now rather than being held out of use until a time it might be more demanded.

1. Wheat is a consumable good and is used up. Land is not.
2. Wheat can be withdrawn from the economy now and stored for later. Land cannot.

@Graham Wright

Are there no conceivable circumstances under which the ‘best possible use’ of land is to ‘hold it out of use’ (or ‘not make productive use of it’ in your words), waiting for it’s price to rise?

If a speculator is convinced that the most productive use of land is to hold it out of use, the LVT does not prevent him from doing so. What it does is ensure that he bears the economic cost (or, if his assessment is correct, keeps the gains) of him doing so.

← By the way, any idea why my posts seem to keep breaking out to the side like this?

[dsyddall]

@Graham Wright

@Econ Amateur

Johnny please explain the qualifiers of “actually mix their labor”. How can one know how much labor is needed, and how far it mixes?

The same way one knows how much labor is needed to acquire possession rights over land in your own philosophy. Got a problem with Locke? Take a look in the mirror.

No labour-mixing at all is needed in order to claim exclusive possession of land under Georgism.

[Autolykos]

@dsyddall

B’s rearrangement is the service he is selling. He has produced this and owns it.

This is one place where we fundamentally disagree. If A owns certain raw materials, hiring B to rearrange them into something else does not (IMHO) constitute selling or even giving away those raw materials to B. A retains ownership of the raw materials through to their rearranged form. Hence I don’t consider B to ever acquire any ownership rights over them, either before or after their rearrangement.

@dsyddall

Good. Then we are in complete agreement on this.

I don’t see how. You want to include “exclusive” as part of the definition of “ownership”; I don’t.

@dsyddall

I was not attributing this line of argument to you, only exploring possible consequences.

That certainly wasn’t clear to me. I was under the impression that you were paraphrasing what you thought my position was.

So what do you see as the flaw in my counter-argument about Georgists having to logically conclude that people are a form of “land”, since they aren’t produced by human labor?

@dsyddall

If your logic has caused you to dismiss the right to life, perhaps it is time to re-examine your position.

Is this another example of you exploring possible consequences? Either way, I’d like you to answer my question - what do you think is the basis for the right to life, if any?

@dsyddall

Those words are important to you because you want to dismiss a straw man. It is not necessary for my argument that land is always and necessarily low-cost and rewarding, only that at least some times it is.

In this post, you wrote the following: “the holding costs of land are so low, and the rewards so high”. The syntax you used there is that of the gnomic aspect, which is used to assert universal truths. I added the words “always and necessarily” in paraphrasing your claim to make explicit that it’s a claim of universal truth. If you meant to claim something other than a universal truth, then why didn’t you say something like “the holding costs of land can be so low, and the rewards can be so high”?

@dsyddall

Agreed that the above was not a clear definition. To clarify, a privilege would be a benefit gained through coercive (aggressive) force rather than through economic exchange.

Okay, I can accept that definition arguendo as well. So per your definitions of “coercion” and “privilege”, I’d say that property involves neither.

@dsyddall

I don’t see why you’re having trouble understanding this. I have already provided a sufficient reason that land is not encouraged to be allocated to the highest bidder - because the land owner does not bear the full economic cost of his decisions. You have yet to rebut this reason. Until you rebut this reason, my argument stands.

Simply telling me that you’ve already provided a sufficient reason is in no way going to make agree that you have done so.

Your original claim - that LVT encourages “land” to be allocated to the highest bidder - seemed to strongly imply an obverse, namely that LVT necessarily does not encourage “land” to be allocated to the highest bidder. If that is indeed the case, then proving one is the same as proving the other. I asked you to prove the obverse, but so far you’ve only provided a partial proof (at best). You haven’t shown that it’s impossible for “land” to be allocated to the highest bidder in the absence of LVT. If that’s not your claim, then I suggest you clarify.

@dsyddall

Frankly, I’m so lost in the argument about the argument that I don’t even remember what this argument was even about.

The argument is about you showing how - that is, proving - LVT necessarily encourages “land” to go to the highest bidder. A logical proof is required here.

@dsyddall

If the land is not sub-marginal, yet is left unproductive, then there is an economic cost because the same production that would have occurred on productive land will have to occur on less productive land.

That begs the question as to whether “the same production” necessarily would have occurred using the more productive “land”.

@dsyddall

I think an objective theory of value can be descriptively helpful, even if we recognise it is ultimately a result of subjective values. Much like atoms are descriptively helpful to physics and chemistry, but in reality atoms are a reification.

Either value is objective or it’s subjective. It can’t be both. So which do you think it is?

@dsyddall

Anything that the highest bidder pays below the second highest bid is economic rent (according to the law of rent). Anything above is either wages or interest.

How can the highest bid be below the second-highest bid? I still don’t see why the amount at which others have allegedly been excluded should factor at all into the price that the highest bidder pays for an item at auction.

@dsyddall

Yes, but that is only part of the subsidy received by the landowner, since economic rent is not produced by landowners qua landowners, yet is taken by landowners.

How can a landowner receive goods that don’t exist? What exactly do you think is taken by landowners?

[Autolykos]

@Fred Foldvary

“The supply of land can expand. It can also contract.” autolikos.

I live in the County of Alamada, California. It has a jurisdictional boundary. Please explain how the acres of land in the country can expand or contract.

You’re changing the context, Fred. You know as well as I do that, when I said “the supply of land”, I meant the total supply.

[Autolykos]

@Fred Foldvary

“I’ll answer you after you answer my own questions.” autolykos. I think I did. If not, please state your unanswered questions. I’m not going to slog thru the entries to look for them.

I refer you to this post.

[Econ_Amateur]

My philosephy seperates form from substence, labor from force, freedom from privilge. Unilateral property only exists for created form. I find it dishonest to be misquoted and mischaracterized. There is no “mixing”. ALL the form comes from labor.

Is there any one who can produce a quote of mine that shows how I allocate land via labor? Because I do not.

Or better yet, discard the personal attacks and return to the logic.

Lets review. Jonny Doe asked a question:
“Did/do the landowners in question, actually mix their labor with the land/homestead,…”

This implies to me that the question can be answered via following some principle. And for all my efforts to find out what “mixing” is it still seems mystical. Suppose there are two similar lands. In one a tree is blown over by the wind, and on another the tree is pushed over by a man with his wind machine. This quality called “mixed labor” would be in the one cleared land but not the other. What test might one perform on the cleared land to find this “mixed labor”? If ownership is to be determined on the cleared land, then it seems reasonable that any deciding quality be one that can be demonstrated. This would be espicially helpful in determining the radius of the claimed land. For one could just test various samples of land, until the region of mixed labor is plotted, and the extent of claimable land so known.

Since Jonny implies the question can be answered because he asks it. And it is vital to knowing what control should be awarded, I wanted to know how the question gets answered. Because it seems to me that “control”/ “ownership” is not actually an economic action at all. Its only dimension is that of forceful exclusion, which may be consistant with freedom, inconsistant, or conditionally consistant with freedom. So my problem with Locke is that he is mixing the economic concept “labor” with a force based concept “control”. Normally when dimensions mix there is a conversion constant. The constant here would have the dimension Lands/labors. And I just wanted to know how to measure the units of each.

When I look in the mirror I see a guy who wants better then mystical reasons to start excluding people from freedom.

[dsyddall]

@Autolykos

@dsyddall

B’s rearrangement is the service he is selling. He has produced this and owns it.

This is one place where we fundamentally disagree. If A owns certain raw materials, hiring B to rearrange them into something else does not (IMHO) constitute selling or even giving away those raw materials to B. A retains ownership of the raw materials through to their rearranged form. Hence I don’t consider B to ever acquire any ownership rights over them, either before or after their rearrangement.

I agree that B doesn’t own the physical item he has performed his rearrangement on. What I’m saying is he owns the service of rearrangement, which is why he is entitled to sell it.

@Autolykos

@dsyddall

Good. Then we are in complete agreement on this.

I don’t see how. You want to include “exclusive” as part of the definition of “ownership”; I don’t.

I’m not saying that “exclusive” should be inserted into the definition of ownership generally. Only in the case of ownership of one’s body.

@Autolykos

So what do you see as the flaw in my counter-argument about Georgists having to logically conclude that people are a form of “land”, since they aren’t produced by human labor?

The exclusion of humans from land is implicit in its definition. Land refers to naturally occurring resources, and humans aren’t a resource.

Since I presume what you’re really interested in is not the definition, but why Georgists don’t consider humans to be owned in the same sense that land is owned, I believe I answered that when I said:

@dsyddall

Why must I have exclusive legitimate control over myself? It follows from a simple reductio ad absurdum. To deny exclusive legitimate control over one’s body is to deny the right of life, since if another person can legitimately control you, they can legitimately direct you to commit suicide. It is also true that exclusive legitimate control of land follows from a reductio ad absurdum. If I cannot have exclusive legitimate control of land, then no work that I produce can be secure and I lose the right to sustain myself and my right to life. However, my right of exclusive legitimate control of land must be balanced against other people’s equal rights to exclusive legitimate control of land, which follows from their equal right to life. This is the difference between land and my body - no-one else has an equal right to my body, they only have a right to their own body.

@Autolykos

I’d like you to answer my question - what do you think is the basis for the right to life, if any?

As far as this discussion is concerned I’m content to assert it as a brute fact.

To answer your question more directly, I’m aware of various materialistic attempts to define “personhood”, which supposedly grants the right to life, but so far I haven’t heard an account that I consider satisfactory. But I don’t think the failure to successfully account for the right to life warrants the conclusion that such a right doesn’t exist.

@Autolykos

You haven’t shown that it’s impossible for “land” to be allocated to the highest bidder in the absence of LVT. If that’s not your claim, then I suggest you clarify.

That’s not my claim. My claim is that since even poorly allocated or unallocated land is already profitable, the marginal incentive to allocate land to the highest bidder is reduced in the absence of LVT. Therefore, in any given instance, the likelihood of it being allocated to the highest bidder is reduced. This does not entail the impossibility of land being allocated to the highest bidder.

@Autolykos

The argument is about you showing how - that is, proving - LVT necessarily encourages “land” to go to the highest bidder. A logical proof is required here.

LVT encourages land to be allocated to the highest bidder by increasing the marginal incentive of doing so.

@Autolykos

That begs the question as to whether “the same production” necessarily would have occurred using the more productive “land”.

Quite possibly not, but it remains the case that production is driven onto less productive land.

@Autolykos

Either value is objective or it’s subjective. It can’t be both. So which do you think it is?

I think that economic values are subjective, but that talk of “objective values”, such as “the market price” (which doesn’t refer to any particular individual’s subjective value) can nevertheless be meaningful and useful so should not be ruled out merely because it is a reification. (Similarly, all scientific theories are reifications, but that doesn’t make science meaningless or useless.)

@Autolykos

@dsyddall

Anything that the highest bidder pays below the second highest bid is economic rent (according to the law of rent). Anything above is either wages or interest.

How can the highest bid be below the second-highest bid? I still don’t see why the amount at which others have allegedly been excluded should factor at all into the price that the highest bidder pays for an item at auction.

The highest bid can’t be below the second-highest bid (clearly). What I meant was the highest bid can be divided into two parts. The first part has a value of the second highest bid and is economic rent, while the second part is the remainder and is wages or capital yield. The highest bidder is entitled to his wages and capital yield, but not the economic rent, since he produced the wages and capital yield but not the economic rent, which exists whether he produces anything or nothing.

@Autolykos

@dsyddall

Yes, but that is only part of the subsidy received by the landowner, since economic rent is not produced by landowners qua landowners, yet is taken by landowners.

How can a landowner receive goods that don’t exist?

Economic rent does exist. Things like a good location and access to services provide value that people are willing to pay for, but a landowner receives them at no cost.

@Autolykos

What exactly do you think is taken by landowners?

Economic rent.