tag:blogger.com,1999:blog-1141932539860553199.post3758268773340524766..comments2024-03-05T10:52:24.691+00:00Comments on Mark Wadsworth: Killer Arguments Against LVT, Not (363)Mark Wadsworthhttp://www.blogger.com/profile/07733511175178098449noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-1141932539860553199.post-57307739574291465202015-06-15T08:46:48.148+01:002015-06-15T08:46:48.148+01:00"In other words, manufacturer B would actuall..."In other words, manufacturer B would actually be indifferent about paying $1 million a year (rent or LVT) to occupy Site A because it would save him $1 million transport and travel costs."<br /><br />Which is why building fast roads to isolated places doesn't help business in those places, as it is purported to do. All that happens is B ends up paying more rent and A can now compete more effectively with B on B's home turf. However , it does benefit landowners, which, I suppose is the real reason for doing it. See also HS2.Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-39883402791877246972015-06-14T14:39:05.059+01:002015-06-14T14:39:05.059+01:00R, "Couldn't this argument be made about ...R, <i>"Couldn't this argument be made about anything though? Essentially what you are saying is "we rely on public goods."</i><br /><br />Well it could be made, but it's not a very good argument. You could take the argument to the extreme and say "Without oxygen all human life on earth would cease within a few minutes. Therefore the entire value of everything is derived from oxygen". This is a philosophical point not an economic one.<br /><br />What we are trying to identify is the <i>location</i> value. <br /><br />So manufacturer A has his factory near a population centre, with plenty of potential workers and good transport links to bring stuff in and out, his product sells for $10.<br /><br />Manufacturer B has his factory miles from anywhere, so has to offer higher wages to compensate people for the commute time, the only access is winding country lanes so there are often delays in getting stuff in an out and it costs more money, his product is identical and also sells for $10. his extra travel and transport costs are $1 million per year.<br /><br />Clearly, in either case, the bulk of that $10 for the finished product is wages and return on capital, it is earned income and net wealth created. Society (or nature) just provides the general framework (like oxygen), not the $10. <br /><br />Site A clearly has a higher value, which we can arrive at using Von Thünen's law of rent. Iit is the inverse of transport/travel costs. <br /><br />In other words, manufacturer B would actually be indifferent about paying $1 million a year (rent or LVT) to occupy Site A because it would save him $1 million transport and travel costs. Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-49692681254134894782015-06-14T13:44:30.159+01:002015-06-14T13:44:30.159+01:00If the owners of the building argue that all the v... If the owners of the building argue that all the value is internally generated and refuse to pay the appropriate LVT, then "what happens if the government goes beyond a simple trade embargo and withdraws the police and fire brigade, builds a brick wall round it and cuts off water and electricity? What is the location value then? Nothing. <br /><br />Therefore, any value in excess of 'nothing' is not generated internally, but by the benefits people on that site can access from the rest of society."<br />Couldn't this argument be made about anything though? Essentially what you are saying is "we rely on public goods."Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-50608469430893836132015-06-14T13:40:27.062+01:002015-06-14T13:40:27.062+01:00http://mobile.news.com.au/finance/economy/tony-abb...http://mobile.news.com.au/finance/economy/tony-abbott-says-his-daughter-proves-it-is-possible-for-young-people-to-get-on-the-property-ladder/story-fnu2pwk8-1227392710384<br />More Abbott brilliance.Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-23178553013669054072015-06-14T13:19:24.675+01:002015-06-14T13:19:24.675+01:00B… " if the building declared UDI and provide...B… <i>" if the building declared UDI and provided its own electricty, police force etc. then it could continue to thrive, but there would have to be a system of internal taxation to pay for this and we would be back to square one."</i><br /><br />Exactly. (only, being cut off from the outside world, it would not thrive at all). Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-8389913322145723512015-06-14T12:26:32.839+01:002015-06-14T12:26:32.839+01:00"then what happens if the government goes bey..."then what happens if the government goes beyond a simple trade embargo and withdraws the police and fire brigade, builds a brick wall round it and cuts off water and electricity? What is the location value then? Nothing."<br /><br />An example of this at the extreme is the island of St Kilda. For centuries it "belonged" to a landowner on the mainland and was part of the UK, but the inhabitants paid no rent and they received nothing in return. The island was almost totally self-sufficient.<br /><br />However, if the building declared UDI and provided its own electricty, police force etc. then it could continue to thrive, but there would have to be a system of internal taxation to pay for this and we would be back to square one.Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.com