Killer Arguments Against LVT, Not (176)

Another favourite trotted out by the Home-Owner-Ists goes along the lines of this:

"I bought my home under a private contract, I've paid for it and it's in my name. It's my 'property' and nothing to do with you or anybody else."

1. Even if that were factually correct, it is irrelevant. Employment contracts are private, but we still have PAYE; buying stuff in the shops is private contracts and you still have to hand over 20p in VAT for every £1's worth of goods or services you buy etc. So that argument, if based on actual facts, is in fact an argument against income tax, VAT and so on (and these are very bad taxes indeed for this and a hundred other reasons). And your skills and labour, or the goods and services provided in the shops are private property as well. At no stage does 'everybody else' have a hand in creating any of this value and neither are they burdened by such exchanges.

2. The whole argument is based on a crass misrepresentation of the nature of land ownership anyway:

a. Land ownership is always an ongoing contract between the land owner on one hand and 'everybody else' on the other (with 'the state' as referee), and that 'everybody else' includes the government, the local council and all those people who contribute to the rental value of your land, whether that's by providing local amenities (jobs, shopping and leisure opportunities) or merely by respecting the land owner's right to exclusive occupation.

b. Land ownership in the modern sense can only originate by some sort of agreement between 'the state' and the land owner. That agreement may have been reached by simple force, i.e. when the Normans invaded and simply declared themselves owners of most of England ('the state' and land owners were more or less synonymous) or when colonialists conquered foreign countries and claimed the land for their respective empires and then sold or gave bits of it to themselves.

c. In a modern context, land itself is worth little, the real value is dictated by the location and the generosity of planning permission, so if a farmer has an acre of farm land worth £10,000 and the council gives him planning permission, the land is now worth £1 million, so he has effectively been given £990,000 (he has to up to half of that back in taxes and fees and bribes, of course). But in economic terms, giving a farmer planning permission for one acre is much the same as giving him another ninety-nine acres for half price, or giving him forty-nine acres for free. And 'the state' can't give somebody land without first taking it away from anybody else. Of course, the council also preserves the value of land which already has planning permission by being very restrictive about handing out any more planning permission, so this underpins the scarcity value of any existing plot with planning permission or a building already on it.

d. So we have to distinguish between the parties to the contract for the sale of land (Mr A sells to Mr B) and the actual subject matter of the contract (the rights of the land owner as against 'everybody else'). Land ownership is NOT and never has been created by private contract. Mr A does not 'sell his land' to Mr B, what actually happens is that Mr B replaces Mr A as a party to the agreement with 'everybody else', so up until the date of sale, the agreement is between Mr A and 'everybody else' and after the date of sale, the agreement is between Mr B and 'everybody else'. Some of the land seized by the Normans (or the Colonialists) has never been sold, it was passed down to their current living descendants, who have much the same rights as any land owner who paid for his rights since. The subject matter is exactly the same.

e. With the benefit of hindsight, we establish that whichever branch of 'the state' was entering into such agreements (i.e. creating private land ownership rights in the first place) struck an incredibly bad bargain on behalf of the people whom they are supposed to represent and who were being burdened in perpetuity (i.e. 'everybody else') which is why land owners can sell the bundle of their very favourable rights (less modest obligations) under the agreement with 'the state' to others.

3. To use a simple analogy...

a) If Mr C accepts an offer of employment from Mr D, then the parties to the contract are also providing the actual subject matter of the contract. Mr D provides the work place, the customers, the training and Mr C provides his own skills, labour, time. Mr D hopes that this will increase his total income, and he pays part of this to Mr C as wages and keeps the rest as his own profit. Subject to certain employment laws, either party is free to terminate the contract at any time, and no burden is placed on 'everybody else' or on future generations (or Mr D or Mr C's children). And I see no good reason why 'the state' should collect half of the income which Mr C and Mr D generate in tax, or why they should collect any at all (except maybe an 0.005% deduction to cover the cost of running Industrial Tribunals if the parties opt in to this rather than any other form of arbitration).

b) Conversely, perhaps the King of African country E sold some of his subjects into slavery to slave trader Mr F for their market value, and Mr F transports them across the Atlantic and sells them to slave owner Mr G in the New World for their market value. The parties to these contracts are the King, Mr F and Mr G, but the subject matter of the contract is the slaves and their children. These slaves and their children in perpetuity did not negotiate the contract, enter into it voluntarily or receive market value for their labour, and they are - morally at least - entitled at any time in the future to rescind it and declare themselves free men, i.e. demand market wages for their labour (or seek work elsewhere, like Mr C).

c) When land ownership rights were granted by 'the state' in the past, these were granted by somebody purporting to act on behalf of 'everybody else' within their jurisdiction (i.e. whatever part of the world's surface area they can control by force) in perpetuity. And from the point of view of 'everybody else' (i.e. the slaves and their children) they struck a bad bargain, ergo, 'everybody else' is - morally at least - entitled to vary the terms of that agreement and demand something approaching full payment for the value of the benefits (minus modest obligations) which 'everybody else' is generating and which land owners are currently receiving for free (which is mathematically broadly equal to the burden which land owners are placing on 'everybody else').