I think it is pretty clear who is standing in the way of Georgism: Landowners. They stand to lose the most, and those with a lot of property typically have a larger influence on economic property. The problem is that there is not a single organized landowner you could paint as the bad guy. It is a distributed mass that is hard to counter.
I think you’re right, Georgism doesn’t get passed because it goes against the interests of landowners who have overwhelming political influence. But if the actual problem we’re trying to solve is high rents, maybe that doesn’t require full Georgism? Maybe we just need to make construction legally easier. There’s strong opposition to that too, but not as strong as literally all landowners.
Wait! Is the actual problem we’re trying to solve “high rents”? From everything I’ve read, it’s “inefficient use of land”, in other words, failure to maximize land-rents collected, which are now taxed at a high percentage of theoretical value.
In some sense, bulldozing 10 single-family houses to build a 30-unit apartment does “reduce rent” on a per-unit basis, but it increases it on the land. As designed, as far as I can tell. It’s unclear what bulldozing them to build a datacenter does to rents, but that may be necessary if the powers-that-be decide that’s the income level needed to pay the taxes.
I feel like suburban homeowners are the key group here. They have the most votes among landowning groups, and the strongest motivation to oppose anything that reduces property values because their home represents all of their wealth. There is also the way-of-life question, because the economics of the suburbs seem really difficult under Georgism.
Something like an exemption for the first sale after the tax is passed would be a simple solution to taking some of the sting out, and makes sure no one has to unilaterally lose their investment to a tax.
Actually, in my father’s day, there was this one infamous landlord who people used to point at. Who was it, Claude? “Peter Rachman” yes that was it. People used to talk about “Rachmanism” which apparently just meant “being a cruel and unscrupulous landlord”, but which could probably be expanded to encompass home owner associations organizing to lobby against zoning reform if efforts were made, because when people hear ism they expect to see a civic ideology.
Unfortunately one of his most prominent sins was excessive subdivision, so he wasn’t exactly a nimby.
And also, yeah, in reality — for instance in New Zealand which has it especially bad, where substantially more than half of the families in the country own land — land investment is just a popular way of keeping savings. The last Labour government felt a need to promise, despite confessing the will, not to touch it.
I mean, yes. Real Estate is about the only perpetual bond still available to buy. Current owners stand to lose their entire investment (in the land portion, at least, but also in the improvements because they can’t be separated and bankrupt is bankrupt). Those who hope to invest in real-estate lose their dream, which is a surprisingly powerful factor in public sentiment.
The key seems to be (like other communist nationalizations) painting ALL landowners as the bad guys. Or trying to convince people that “only the big guys” will be impacted, but that’s so transparently a lie that it probably doesn’t fly anymore.
I feel like it’s still Moloch to blame, if a sufficient bribe to landowners would cost less than indefinitely continued rent-seeking.
I don’t have any calculations to offer in support; but I would generally expect an individual landowner’s time preference to be lower than society’s as a whole, so I suspect this is indeed the case.
So the actual reason is that landowners don’t want to be seen taking a bribe, because that would involve acknowledging they have been knowingly rent-seeking since 1879; and the government doesn’t want to openly bribe them for moral hazard whatever; so even though everyone would be better off by their own lights it can’t happen. And that’s fairly moloch-flavored.
if a sufficient bribe to landowners would cost less than indefinitely continued rent-seeking.
Note that if made in public, for legitimately-owned assets, and voluntarily accepted, the term is no longer “bribe” but “purchase”. A whole ton of my objections go away if the government (or even a private entity) is buying land and then figuring out the best use for it, charging optimal rent to the people who own the improvements separately.
How many older people who own land do you know, who’re happy with CURRENT inheritance taxes? Saying “land value is no longer inheritable, it goes only to the state” seems about as likely as any other implementation of massive tax increases.
I know! I own property myself. Obviously, people don’t like big sudden changes that cost them a lot of money. That’s why I asked for more incremental approaches. Though, I guess the problem is that small changes will not get a lot of support from non-property owners—because the effect is small—but will get opposition from large owners because they see the effect.
people don’t like big sudden changes that cost them a lot of money.
People don’t like ANY changes that cost them a lot of money. The only saving grace of gradual rollout is that it’s easy to continuously delay the next step until it gets fully killed before going too far.
Any proposal that amounts to “nationalize Trillions of dollars worth of land value (or of net present value of future rent streams, same thing), without compensation” is going to face backlash from a lot of people, including me. REGARDLESS of timeframe or gradualness.
Well, there will be compensation, that’s the whole idea of LVT—it’s a more efficient tax, so you can reduce inefficient taxes. But I guess you mean for the same person. And that is the hard to prove point.
I guess the only time to introduce such a tax is after a war.
The only saving grace of gradual rollout is that it’s easy to continuously delay the next step until it gets fully killed before going too far.
This is a bit hyperbolic. As a general matter, gradual rollouts have other important benefits, such as the fact that they allow people to be free to optimize: by maintaining a more transparent, slow-moving pace of change in the background legal system, citizens (and companies etc.) are able to more easily deal with the modifications by “smoothing” their adaptations over time instead of being hit with something they were not prepared for and are unable to deal with in a very short time-frame.
Very rapid rollouts generate more uncertainty and unpredictability, which can sometimes result in a situation that’s even worse than if a bad, but more certain option was chosen (partly because individuals who react rationally to uncertainty generally do so by hedging their bets and wasting resources on preparing for future world-states that seemed possible at the time but were not actually reached, in hindsight).
I think it is pretty clear who is standing in the way of Georgism: Landowners. They stand to lose the most, and those with a lot of property typically have a larger influence on economic property. The problem is that there is not a single organized landowner you could paint as the bad guy. It is a distributed mass that is hard to counter.
I think you’re right, Georgism doesn’t get passed because it goes against the interests of landowners who have overwhelming political influence. But if the actual problem we’re trying to solve is high rents, maybe that doesn’t require full Georgism? Maybe we just need to make construction legally easier. There’s strong opposition to that too, but not as strong as literally all landowners.
Wait! Is the actual problem we’re trying to solve “high rents”? From everything I’ve read, it’s “inefficient use of land”, in other words, failure to maximize land-rents collected, which are now taxed at a high percentage of theoretical value.
In some sense, bulldozing 10 single-family houses to build a 30-unit apartment does “reduce rent” on a per-unit basis, but it increases it on the land. As designed, as far as I can tell. It’s unclear what bulldozing them to build a datacenter does to rents, but that may be necessary if the powers-that-be decide that’s the income level needed to pay the taxes.
I feel like suburban homeowners are the key group here. They have the most votes among landowning groups, and the strongest motivation to oppose anything that reduces property values because their home represents all of their wealth. There is also the way-of-life question, because the economics of the suburbs seem really difficult under Georgism.
Something like an exemption for the first sale after the tax is passed would be a simple solution to taking some of the sting out, and makes sure no one has to unilaterally lose their investment to a tax.
Actually, in my father’s day, there was this one infamous landlord who people used to point at. Who was it, Claude? “Peter Rachman” yes that was it. People used to talk about “Rachmanism” which apparently just meant “being a cruel and unscrupulous landlord”, but which could probably be expanded to encompass home owner associations organizing to lobby against zoning reform if efforts were made, because when people hear ism they expect to see a civic ideology.
Unfortunately one of his most prominent sins was excessive subdivision, so he wasn’t exactly a nimby.
And also, yeah, in reality — for instance in New Zealand which has it especially bad, where substantially more than half of the families in the country own land — land investment is just a popular way of keeping savings. The last Labour government felt a need to promise, despite confessing the will, not to touch it.
I mean, yes. Real Estate is about the only perpetual bond still available to buy. Current owners stand to lose their entire investment (in the land portion, at least, but also in the improvements because they can’t be separated and bankrupt is bankrupt). Those who hope to invest in real-estate lose their dream, which is a surprisingly powerful factor in public sentiment.
The key seems to be (like other communist nationalizations) painting ALL landowners as the bad guys. Or trying to convince people that “only the big guys” will be impacted, but that’s so transparently a lie that it probably doesn’t fly anymore.
I feel like it’s still Moloch to blame, if a sufficient bribe to landowners would cost less than indefinitely continued rent-seeking.
I don’t have any calculations to offer in support; but I would generally expect an individual landowner’s time preference to be lower than society’s as a whole, so I suspect this is indeed the case.
So the actual reason is that landowners don’t want to be seen taking a bribe, because that would involve acknowledging they have been knowingly rent-seeking since 1879; and the government doesn’t want to openly bribe them for moral hazard whatever; so even though everyone would be better off by their own lights it can’t happen. And that’s fairly moloch-flavored.
Note that if made in public, for legitimately-owned assets, and voluntarily accepted, the term is no longer “bribe” but “purchase”. A whole ton of my objections go away if the government (or even a private entity) is buying land and then figuring out the best use for it, charging optimal rent to the people who own the improvements separately.
Would it work if the tax was raised very slowly? Like 10% points per generation.
Would it work if the tax sets in only after death for privately owned property? That might significantly reduce resistance by individual land owners.
How many older people who own land do you know, who’re happy with CURRENT inheritance taxes? Saying “land value is no longer inheritable, it goes only to the state” seems about as likely as any other implementation of massive tax increases.
I know! I own property myself. Obviously, people don’t like big sudden changes that cost them a lot of money. That’s why I asked for more incremental approaches. Though, I guess the problem is that small changes will not get a lot of support from non-property owners—because the effect is small—but will get opposition from large owners because they see the effect.
People don’t like ANY changes that cost them a lot of money. The only saving grace of gradual rollout is that it’s easy to continuously delay the next step until it gets fully killed before going too far.
Any proposal that amounts to “nationalize Trillions of dollars worth of land value (or of net present value of future rent streams, same thing), without compensation” is going to face backlash from a lot of people, including me. REGARDLESS of timeframe or gradualness.
Well, there will be compensation, that’s the whole idea of LVT—it’s a more efficient tax, so you can reduce inefficient taxes. But I guess you mean for the same person. And that is the hard to prove point.
I guess the only time to introduce such a tax is after a war.
This is a bit hyperbolic. As a general matter, gradual rollouts have other important benefits, such as the fact that they allow people to be free to optimize: by maintaining a more transparent, slow-moving pace of change in the background legal system, citizens (and companies etc.) are able to more easily deal with the modifications by “smoothing” their adaptations over time instead of being hit with something they were not prepared for and are unable to deal with in a very short time-frame.
Very rapid rollouts generate more uncertainty and unpredictability, which can sometimes result in a situation that’s even worse than if a bad, but more certain option was chosen (partly because individuals who react rationally to uncertainty generally do so by hedging their bets and wasting resources on preparing for future world-states that seemed possible at the time but were not actually reached, in hindsight).