Trooper Thompson in the comments to KLN #98
Secure property rights are necessary for progress in all manner of ways. (1) Land ownership is not a protected state monopoly. (2) The state justifies its existence by (amongst other things) claiming to protect our property rights. (3) In fact it can play the part of aggressive invader (one example: Diego Garcia). (4)
Land is not a creation of man, but land bears the same relationship to man as the fruit he gathers. He mixes his labour with the land, and thereby gains a property in it. (5) This property he can sell. I do not grasp the Georgist distinction between land and all other things. No doubt you can refer me to an earlier chapter.(6)
1) Agreed. Motherhood and apple pie.
2) Yes it is. Without a state there can be no land ownership and without land ownership there can be no state. Otherwise, why would there ever be such a thing as 'border disputes' where two armies battle for the right to decide who 'owns' a certain strip of land?
3) Agreed. And states do very much protect property rights; which includes state-protected monopoly rights. For sure, there are 'compulsory purchase orders' from time to time, but the government doesn't do this for fun.
4) Doesn't that contradict his statement at (2)?
5) Well yes of course. If our hero buys an empty plot suitable for a house, and he builds a suitable house at a cost of £100,000, then under a Georgist view point, he has 'property in' i.e. owns the first £100,000 of the total value of the land and buildings. The rest is location value and was generated by 'society in general'.
It's the same as if you buy a car for £10,000 and park it on your drive. The car belongs to whoever paid for it (or built it), and if you were to sell the house inclusive of the car, £10,000 of the selling price relates to the car and not the land/location. The car, like the building, is a separate concept to the pure land/location.
6) This is the nub of TT's argument aka 'punching a tree', I'm sure I have done a chapter on it, but let me advance another example to illustrate my point:
a) A farmer owns all the land from the outskirts of a nearby town all the way up to the edge of a cliff along a nice bit of coastline, which is assumed to be a solid cliff not liable to erosion. He sells off a fifty yard wide strip along the cliff edge which is parcelled up and holiday homes, chalets, beach huts etc are built along it.
b) This involves a fair bit of expenditure, but however humble these huts or chalets may be, they command a vast premium over the actual build cost because they have the nicest views. The farmer will collect the bulk of that location value as a windfall profit, let's call it a million quid for sake of argument.
c) Unfortunately, the engineers and geologists were wrong, and a few decades later, a whole chunk of cliff, fifty yards wide collapses and falls onto the beach. The location value of the strip of land which the farmer originally sold off is now £nil, as it's just a strip of boulder-strewn beach which is flooded at high tide (and thus belongs to Crown Estates anyway)
d) Following further inspections, the engineers and geologists conclude that there was a particular fault line, that the newly exposed cliff face is much more solid rock and unlikely to be eroded (and insurance companies are happy to take on the risk). What happens to the location value of the land that has effectively moved fifty yards closer to the beach and from which you can now enjoy the views?
e) The location value of that strip must now be a million quid, so the chalet owners' loss is the farmer's gain; he can sell off another strip for a million quid and the whole cycle starts again. He has in no way 'mixed his labour with the land' to generate a million quid profit, it is pure windfall arising from the destruction of land and buildings 'owned' by others.
f) Thus location values depend on people and views and so on, as long as the views are there and there are people prepared to pay for it, the location value cannot be destroyed and is to some extent independent of the physical land.
Bond
29 minutes ago
5 comments:
"Without a state there can be no land ownership[1] and without land ownership there can be no state[2]. Otherwise, why would there ever be such a thing as 'border disputes' where two armies battle for the right to decide who 'owns' a certain strip of land?[3]"
I agree with you about the merits of LVT but these assertions seem dubious and inessential for the case.
1. There was no land ownership before the emergence of the State? It would be more accurate to say there was no state to enforce land ownership, not that people didn't consider their farms and villages to be their property. But to argue the point clearly we'd need to agree what constitutes a state and when such things came into being.
2. For example, was feudal society a 'state'? Were Henry II's judicial circuits aimed at restoring land holding to a pre-Stephen pattern part of a state apparatus? If so, how did this state exist when there was no land ownership in the modern sense, rather everybody was a tenant with the top nobles tenants of the King.
3. Private land holdings can cross international boundaries. The two things, land ownership and the boundaries of a state, are different. The Soviet Union had a border, but did it have land ownership?
I think this idea that land ownership comes from the state alone is misguided. It's truer to say that where states exist and they don't ban private ownership of land, then the protection of private property is one of the legitimate functions of those states.
PR:
"how did this state exist when there was no land ownership in the modern sense, rather everybody was a tenant with the top nobles tenants of the King?"
How is this radically different to today?
About half of us are either tenants, or mortgagees (i.e. tenants of the bank). The rest can be considered very minor nobility ('free holders') in terms of land 'ownership', but they of course are still either serfs of the UK government (income tax) or dependent on largesse of UK government/income tax payers (old age pensions).
What the Georgist model does is turn back the clock to the old version where the King was on top, only instead of him collecting all the rents, the rents are divvied up and paid out as a Citizen's Dividend.
"Private land holdings can cross international boundaries."
For sure. Let's imagine I 'own' an olive grove on the Israeli side of the border and another one on the Jordanian side, and the Israelis then occupy that bit of Jordan. They are free to tear up the land registry and give or sell 'my' Jordanian olive grove to whomever they please. For sure, I can buy it back again, but it is now the Israeli army and not the Jordanian army who 'guarantee' my exclusive possession.
"The Soviet Union had a border, but did it have land ownership?"
Yes of course. By and large, the Russian government claimed ownership of all the land (and granted exclusive possession to its businesses, government departments and households), and then sold off (or gave away) lots of it in the Yeltsin era.
Mark, I don't see how your reply overcomes my objection. States might guarantee land ownership or they might usurp it, but neither means that ownership per se derives exclusively and only from the state.
Minor quibble: Yeltsin was post-Soviet
PR, to take a simple example, you, me and some mercenaries buy up a shed load of weapons and take over some distant uninhabited island and declare ourselves rulers and split the land between us. We agree to organise & pay for a mutual defence force against potential invaders (or against whichever existing state has dibs on it).
If somebody else wants to live on 'our' island, we can charge him rent. Are we 'land owners' or 'the state' or both, and if so, under whose say-so?
Yes of course Y was post-Soviet, but he could only sell off stuff which his government had previously claimed as its own. The titles he sold derived from Soviet-era collectivisation/nationalisation, and not from the Tsarist era (those titles being de facto null and void, as the Soviet state replaced the Tsarist state and started with a clean sheet).
Dont forget, if someone has a vested interest in not believing observed facts, you will spend your entire life providing infinite evidence of them. No pay off.
A noble cause.
But would it not be better to just try to get them to believe? Forget the facts. Forget the science. Forget the maths.
Its a matter of faith for them.
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