Killer Arguments Against LVT, Not (318)

Those who pretend that only the real economy (and all its advances in technology) exists and who have a massive blind spot where the Land Monopoly Black Hole is concerned argue thusly:

We are no longer an agrarian economy. Agriculture is but a small part of our economy and with improvements in communications and transport, land/location and land/location values are no longer so important.

Exhibit A:

With growing numbers of people going online to perform tasks ranging from work to grocery shopping and streaming entertainment, good broadband has become critical. Homes without can lose 20 % of their value.

Or by implication, having good broadband (and presumably mobile phone reception) adds 25% to the 'unimproved' value of a home.

Exhibit B:

According to the real estate boffins at Knight Frank, suborbital space travel “presents the opportunity to radically shift global property markets”.

It seems an odd subject for the consultancy to tackle, but travelling outside Earth’s atmosphere will make getting around an altogether speedier affair (think London to Sydney in two hours) encouraging the world’s wealthiest to take second homes further afield.

Note that they are referring to "second homes", and by implication third and fourth homes, thus pushing up demand and hence prices/values. They are not suggesting that people will move their first home, which would free up their old home for more efficient use and/or tend to dissipate any upward pressure on prices/rents.

Georgist Economist Criticises Knight Frank's Report On The Mansion Tax

Hot on the heels of high end estate agents Knight Frank's widely publicised report denigrating the Mansion Tax, economist Nic Tideman, writing for the Journal of Economic Literature, has launched a scathing riposte.

Titled  "Knight Frank's Proposal to End Distinctions Among Factors of Production and Their Objection to the Mansion Tax" , Tideman shows how the failure to recognise the conceptual difference between rent and interest, inexorably leads to the rejection that land rents are a just source of public revenue.

The abstract is as follows:

"Knight Frank claimed that there are no economically interesting distinctions among factors of production, and they also strongly opposed Vince Cable's proposal to implement a Mansion Tax.

We locate and examine the Mansion Tax in Knight’s framework of property rights and argue that Knight ignored an inefficiency in the original appropriation of land that occurs when competition is used to assign property rights in land. This inefficiency is visible only if land and capital are conceptually separated."

The full article can be read here.