In ye very olden dayes,
* A landowner rarely made windfalls on land created by the
infrastructure paid for by the community.
* The windfalls were mainly because of the communities activities,
not the landowners.
It could be said raised land values in selling off land were not the
prime form of income from land, just the charging of rent on the land.
Few owned property in Ye Olden Dayes.
Since the industrial revolution:
* Taxpayers have increased the infrastructure of communities
* Taxpayers money in infrastructure does make a highly significant
impact on land values.
* The community needs to reclaim its money to pay for the
infrastructure it provided.
The real big licks in land came once the Industrial Revolution took off
with the buildings of canals which ran only through aristocrat's lands.
They were clever enough to realize the increased land values the canals
created. The accounting system at the time hide the real profits which
was from the values that soaked into the land.
Later came railways. These went over many people's land. The large
landowners would get loans, build the railways, and sell off the
railways leaving them in debt because of the high capital cost - the
railways made operating profits but not enough to pay for the initial
capital to construct. They promoted them as cash cows to small
investors, hiding some accounts, who lost their shirts. Who then
wondered why this highly popular technological marvel, the train, could
not make money.
The landowners walked off with no debt, but the real prize was the
windfall profits on the increased values of the land the steel track ran
through. They increased rents as the economy rose - market forces they
said it was. The more money people made the more they put up rents. The
railways brought massive economic growth which they milked via the
values that soaked into the land.
A railway in Shropshire, the Bishops Castle Railway, ran for 70 years
under the administrators - it created economic growth along its length,
yet only drew even in running costs, so was kept running. Land values
increased along its length with the landowner creaming off land value
windfalls. The administrators were called in as the initial capital
debts to construct could not be paid.
The railways were bound to collapse and fall into public hands. Private
profit and socialized debts. In the USA the railways mainly just
collapsed and private road vehicles took over as small diesel engines
were now feasible for road vehicles. In the UK the railways were vital
to the country and had to be run by the government. Like with the
Credit Crunch, governments had to step in to save the banks because they
were vital to the countries.
Thatcher came along and said the railways and coal mines (most output
went to power stations) were not making a profit. She did not have the
intelligence to see that they were creating economic growth. The massive
gap in the governments 18th century accounting system did not detect the
money leaking away via a massive sluice, the land market, as landowners
creamed it off.
Thatcher decided to privatize the railways and close down the coal mines
exhausting the North Sea gas supplies to create electricity, which is
why energy prices are now through the roof. In her simple brain they
were not making money. Railtrack was created to run the tracks with
other companies running train services on top of them. Naturally it
collapsed and 250,000 small investors, encouraged by Thatcher with high
publicity to buy shares, lost all. A repeat of the 19th century rail
financial fiascoes. Tony Blair replaced it with Network Rail a
non-profit making company.
The government still provides the money to upgrade the rail
infrastructure. The New electrification projects and the new High Speed
Rail which will have a brand new track.
The London Underground does not make money in ticket sale revenues. No
underground rapid-transit rail system in the world does. Imagine what
would happen if it was all closed down tomorrow. Land and house values
would plummet, travelling around would be a nightmare, people would
leave London, the city would die quickly and reach the size of
Birmingham - the biggest you could get a city without a rapid-transit
Rail should stay in public hands to keep them away from private sharks,
using LVT to fund it.