e_jo_m | Some Musin's on a Paineful Garden (Reply)

Epistemic status: quite uncertain, not really researched, corrections welcome.

When someone sells something, or rents it, or otherwise permits others to use it, the government, for the most part, allows the owner to require others to compensate the owner. Why? There are three main reasons.

First, it incentivizes people to render the thing usable to others.

Second, most politicians and civilians feel that someone is entitled to charge for the use of anything which they put effort into rendering usable.

Third, most politicians and civilians feel that someone is entitled to charge for the use of anything which they put effort into acquiring.

But aren't there things that people charge for even when:

They didn't render the thing usable to others; and

They didn't put effort into rendering it usable; and

They didn't put effort into acquiring it?

Yes! Those criteria make up: how Mr Darcy gets his ten thousand a year, ie inherited land which he rents out (using a portion of the rent to pay the land-manager(s)). This is why we have such high inheritance taxes – but inheritance taxes are still less than 100%, not least because we don't want to interfere with the property rights of the guy who gives his stuff away.

Some people, called Georgists, say that you shouldn't be allowed to make money off of merely owning something when you have neither:

Rendered it usable to others, nor

Put effort into rendering it usable; whether or not you have

Put effort into acquiring it.

The Georgists say that if you own land, then you shouldn't be allowed to make more money off of purely owning that square footage of the Earth's surface.

(This also applies to, say, mineral rights. It (depending on which Georgists you ask) doesn't apply to, say, certain numbers, because we want to incentivize the discovery of useful numbers and the creation of certain data, which we can do by allowing their temporary privatization.)

You should, they say, be able to make money off of, eg, building an apartment complex on the land, because we want to incentivize rendering the land more usable. By the same token, you should, they say, be able to make money off of, eg, digging up useful minerals on the land, because obviously we want to incentivize bringing useful minerals into the circulation of the economy; you should not, they say, be able to make money off of merely owning those minerals in the first place.

They say that when somebody does make money off of something like that, we should tax it all away from them. (In regard to real estate, this is called the Land Value Tax.) In fact, the Georgists think that we ought to tax them that amount whether or not they actually get paid it!

Some advantages to this approach, say the Georgists: we are disincentivizing people from letting land lie fallow (since we're essentially fining them for the privilege), we dislike it when people earn money for doing nothing (like Mr Darcy) and this will prevent them from doing so, and it gets us lots of lovely revenue from people who deserve to be taxed.

The main downside to this approach, is of course, the fact that there goes your retirement. The inconvenient thing about making money while doing nothing is that we all want that, hopefully starting no later than age sixty-five. The French have been rioting about it recently; professors have been on strike for the same reason. A potential solution: many Georgists propose a universal dividend, ie the money from the taxes being divided equally and given to all adults as a sort of social security program. This was first suggested by the French (specifically, the author of Common Sense). Lord knows if the electorate would be okay with that, let alone the economists. (Maybe the Georgists would allow us to invest in stocks and bonds, which is probably what your Roth is in anyway; the Marxists, of course, would still object to your making money purely from your ownership of capital.)

Also, as you have undoubtedly noticed, reason #3 for charging for usage is still not satisfied; if you spent your whole life saving up to buy a Zone 2 apartment building for your retirement, and right after you drop a million pounds on it then the Lib Dems (presumably by way of blackmail) railroad a bill through Congress saying you're not allowed to profit off your building any more than if it were in Northumberland, then you are going to be very upset with the idiots in the House of Commons.

I suppose we could give enough warning, so that land quickly becomes a depreciating-but-not-worthless asset, like in Singapore, until at last it finally becomes worthless/taxed-to-be-worthless. Get a Constitutional amendment saying "Georgism starting one hundred years from now and subsequently lasting unless and until two-thirds of Congress repeals it" and hey presto. Our descendants would thank us…the ones not expecting much of an inheritance, anyway.