Re: Spot the land taxer /find a rack renter
- --- In LandCafe@yahoogroups.com, "Harry Pollard" <henrygeorgeschool@...> wrote:
> If locations acted in the normal supply/demandFalse. While the presence and access of the
> market place like other goods, their rents would
> reflect the value given to these locations by the
> presence and access of the surrounding community.
surrounding community is no doubt almost always the
major factor in determining urban land rents, it is
not the only factor, and obviously becomes a less
important factor the farther one gets from that
presence and access.
> If this was $100 a week, the payment to theThis is true as far as it goes, but it must be
> community would be $100 a week. This is a zero
> sum situation and the user of the location pays
> nothing from his wages in his contribution to
> the community.
borne in mind that wages are determined in the
first place by labor's productivity on marginal
land. As Henry George demonstrated in "Progress
and Poverty," when population pressure and the
accumulation of capital and technology push the
margin outward, wages are pushed downward. So
while the $100/week in rent does not "come from
wages," wages are lower in the first place
because the worker is deprived of his liberty to
use good land without paying rent for it.
> So, if price mechanism rent is taken by privateFalse. Wages are determined by labor's
> landholders, we would lose some revenue, but
> labor would not be forced down to subsistence.
productivity on marginal land. Whether they are
above, at, or below subsistence depends on how
good the marginal land is.
> Rent payments would be controlled by the "priceExcept in the case of goods that are fixed in
> mechanism" the reaction in a free market to
> changes of price, supply, and demand. If demand
> increases, the price rises. This stimulates
> production and movement of goods to market.
supply, such as land. In such cases, increased
demand simply increases price to the market
clearing or equilibrium level.
> Their arrival supplies the demand and priceExcept in the case of goods in fixed supply,
> returns to an economic equilibrium.
such as land, whose price simply rises enough to
reach a new equilibrium.
> What fixes the economic equilibrium? In the caseMore accurately, Ricardian rent theory implies this,
> of wages, Georgist theory suggests it depends on
> the best available rent-free land - the margin of
and George explored and described the implications
of that relationship.
> However, the scenario described doesn't happenThey certainly are. The price mechanism just
> because location costs (land costs) are not
> controlled by the price mechanism.
doesn't provide for any increase or decrease in
supply, because supply is fixed.
> Necessary to optimum price mechanism control isFalse. Fixed improvements can't be moved, yet
> that there will no restriction on free movement
> of goods in response to price changes.
they are under price mechanism control, as is land.
> Unfortunately, locations can neither be produced,Correct. When supply is fixed, price can only be
> nor can they be moved to take advantage of rising
> prices. So, when demand warms or heats and prices
> rise, there is no way to bring them down.
reduced by reducing demand.
> So, given a demand that is constant and intensive,No, it simply rises until the demand curve
> the cost of getting a location rises higher and
> higher, breaking loose from its price mechanism
intersects the vertical line of supply, then stops.
> As community created rent doesn't rise,That is most certainly and obviously false. What
else could cause demand to rise but increased rent?
> where does this extra payment come from? There isFalse. Wages are determined at the margin, not by
> only one place - from wages. As 'rent' rises, so
> do wages fall.
whether rent is rising or falling.
> How high does this 'rent' rise? Simply, as highNo. It can rise no farther when it is equal to
> as it can. The rent demand can go no further,
> when any further raise would stop production.
the economic advantage obtainable by the user.
Any attempt by the landowner to exact more than
that amount, and the tenant will simply leave and
deal with a less greedy landowner.
> This is when no enough would be left after rentNo, when there is a better opportunity elsewhere.
> collection to provide a subsistence wage.
> This would lead to a "cessation of life" asWould that Harry paid more attention to George's
> George put it.
central thesis in "Progress and Poverty," and
less to an uninformative bit of rhetoric.
> I call this highest amount that can be collected"Rack-rent" already has a perfectly good meaning.
> "rack-rent", I think an appropriate term.
In fact, two.
> The 100% of rent I want to collect is 100% ofBut how can this amount be measured other than by
> the community created value that attaches to a
> location - not 100% of rack-rent.
competing bids in the market?
> Roy wants to collect 100% of rack-rent, or theI want to collect the full rent of land, less a
> amount now collected by landholders.
flat, universal individual exemption. This
amount might, coincidentally, be the same as what
the current landholder collects for a given site.
It might be more, it might be less, depending on
how land use patterns change under rent recovery,
how land users react to the lifting of taxes that
burden production, etc. Almost certainly it will
rise rapidly as economic growth takes off with
> He apparently believes that the 100% collectionI believe the full collection of RENT would not
> of rack-rent would keep the poorest at
> subsistence level,
significantly increase market wages, and the
least productive would consequently remain BELOW
> whereupon he would help them out with hisThe exemption is equal for all. The poorest
> exemption notion.
obviously need it more, as they would otherwise
be unable to afford to use enough good land to
sustain themselves on. That does not mean it is
provided primarily as a means to relieve poverty.
That is a fabrication on Harry's part, and simply
assumes a motive on my part that I have neither
stated nor implied. The exemption would be
morally just as necessary if no one was poor.
> There are massive amounts of land unused andWhat "normal increase in land values"? According
> underused in cities and elsewhere. They exist
> because the normal increase in land-values
> compensates for any small taxes and other
> charges that burden the locations.
to Harry, land values have all already risen to
the point where the user is left with nothing but
> It should be noted that 100% collection is notIt will occur no later than the point where rent
> necessary to turn under improved land on to the
> market. This will occur at some tipping point
> less than 100%.
owed exceeds expected value increase.
> Far more good land will hit the market than canHarry seems to be very sure he knows how much
> be used.
land people can use. I suspect they could, and
would want to, use a great deal of it if their
production and consumption were not taxed.
> The effect of the deluge will be to raise theHas this happened ANYWHERE rent collection has
> margin of production (the alternative that
> decides wages). The highest available rent free
> land (the margin of production) would come
> galloping in, bringing with it higher wages. It
> should be noted that this would reduce rents,
> even as fully built central cities would raise
> rent collection.
been high enough to eliminate the speculative
holding of land out of production? Kiaochow?
Meiji Japan? Altoona? Anywhere? Harry's
assumption has no basis in either historical
fact or economic theory.
> An important point is that we cannot know howWhat Harry calls, "rack-rent" is in fact rent.
> much rent there is until we collect it. The
> calculations that Georgists and others make of
> total rent is of course total rack-rent.
> Further, capital calculations of land pricesI agree current exchange values of land are not
> include collectible values. These are the
> anticipated future value of land.
proportional to rent, as tax rate, growth rate
and speculative momentum are also key factors
in determining market prices.
-- Roy Langston
- --- In LandCafe@yahoogroups.com, "roy_langston1" <roy_langston1@...> wrote:
> > If prices drop, so does rack-rent increase,I take it that Harry is considering a place with a limited number of parcels where landowners can basically take all that isn't needed to keep their tenants alive. Imagine, e.g., an island with one landlord. The residents need to live someplace, so they'd be at this owner's mercy. In such a place, if the prices of tenant-consumed goods dropped, nothing would prevent the owner from raising rents to take the difference, would it?
> > maintaining wages at subsistence.
> There is no rack-rent involved, as land users
> are perfectly at liberty to just deal with less
> greedy landowners. What would stop them? The
> position of the margin is unaffected, so Harry
> has to invoke some sort of mystical landowner
> rack-renting power to keep wages at subsistence.
> -- Roy Langston