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[-] Fried_out_Kombi@lemmy.world 2 points 1 year ago* (last edited 1 year ago)

Sure, no problem! One big area where socialist and Georgist thought diverge is on the nature of paid labor, i.e., employment. Socialists often tend to view it through a lens of it being inherently exploitative, whereas Georgists tend to view it through the lens that it often is exploitative currently, but that it doesn't have to be. Perhaps this is best explained with an example.

I'm an engineer in a niche field. I work for my employer, and in return they pay me good money, treat me well, respect me, give me a good work-life balance, etc. The reason why they pay me well is not out of the goodness of their heart; rather, it's because they have to. If they don't pay me well and treat me right, I have other options. I'm not easily replaceable, but my employer is replaceable to me.

The reasons I have this negotiating power is for several reasons:

  1. I have skills and expertise that are non-trivial to replace.
  2. My skills and expertise are in demand, so I could relatively easily find someone else who wants me.
  3. I have enough savings that I could weather unemployment for a decent while until I got a new job.
  4. My city, Montreal, is one of the most affordable major cities in North America thanks to having much less of a housing shortage than almost every other major city on this continent. Thus, I'm not sorely financially stressed and desperate for any income to pay my rent next month. This ties in with (3).

The result of all of this is I don't think my labor is being exploited by my employer. And the Georgist vision is to empower all labor to the same kind of negotiating power enjoyed by the professional class.

  1. We want to tax land, which encourages denser, more abundant housing and less speculative land hoarding (e.g., downtown parking lots and downtown vacant lots). Increasing supply is well established to be the best way to keep housing markets affordable, and affordable housing keeps people not desperate.
  2. For similar reasons as (1), we want to eliminate artificial barriers to entry for new housing, e.g., restrictive zoning, parking minimums, setback requirements, etc. There's a whole rat's nest of policies, often at the local level, that are designed to systematically restrict supply the speculative, rent-seeking investments of homeowners and speculators.
  3. We want citizen's dividend so that people have backup options in case of unemployment. If people aren't desperate for money, any money, just to not be homeless or starving, they can demand better pay and better conditions. Better yet, citizen's dividend/UBI would afford people the economic ability to go back to school or improve their human capital in other ways to pursue better jobs.
  4. For the same reason we want to tax negative externalities like carbon emissions, we want to subsidize positive externalities like rewilding. Imagine if the government, for instance, set up a climate corps to do rewilding projects across the country, and you'd be paid a living wage to do so. If you and millions of others had a credible threat of just up and leaving your jobs to go rewild for a living (or many other subsidized positive externalities), you'd see a similar effect as we had with the Great Resignation: employers forced to offer better pay and better conditions for employees.
  5. We want to tax negative externalities like carbon emissions because they are a form of rent-seeking. When a company pollutes a bunch, they are essentially privatizing the profits but socializing the costs. What Georgists want is those costs to be privatized again, i.e., force polluters to pay for the impacts of their pollution, instead of offloading those costs onto the unconsenting populace.

In general, Georgists want a system free of rent-seeking. For reference, here's a snippet from Wikipedia about rent-seeking:

Rent-seeking is the act of growing one's existing wealth by manipulating the social or political environment without creating new wealth.[1] Rent-seeking activities have negative effects on the rest of society. They result in reduced economic efficiency through misallocation of resources, reduced wealth creation, lost government revenue, heightened income inequality,[2] risk of growing political bribery, and potential national decline.

As for acquiring land, the key idea of a land value tax is to make possession of land just as much an obligation as it is an asset. How we can measure that is the rental value of land:

Imagine you have a 1-acre parcel of unimproved land. Suppose you could rent that parcel out to someone on the free market for 1k per month. Thus, the rental value of your land is 1k per month.

Now suppose someone wishes to buy your land from you. How much would you be willing to sell for? Remember, they're essentially buying an income stream. You might decide 10 or 15k is a fair price, as you could use the liquid cash to invest in something else, and they could recoup their investment in 10 or 15 years from renting out the land to someone else.

But now imagine we had a "full" LVT as imagined by Georgists. The idea is to try to tax the full rental value of land, because why should you make profit for simply possessing god-given land that nobody made? In this case, the tax would be 1k per month.

So now you can rent out your land for 1k, but you gotta pay all that to the government in tax. Even if you don't rent it out, you still gotta pay 1k in tax per month. That is, possessing that land is now just as much an obligation as it is an asset.

So if someone wants to buy it now, sure they'd be acquring an income stream, but they're also now acquiring an equal tax obligation. Thus, the fair market price of the land should approach zero as the land tax approaches the full rental value of land.

In essence, what has happened in this scenario is we went from privately owning land to simply leasing land from the government, and "selling" land becomes basically just a lease transfer. Of course, if you have improvements upon the land, those can fetch a price still, just the underlying land price should be zero (or close to it).

This effect of LVT lowering land prices has been shown in practice. For example, the Australian Capital Territory passed a pretty milquetoast LVT (nowhere near the full rental value of land), and it still improved the affordability of land, particularly by deterring land speculation.

And if you think of this from the perspective of starting a business or building a home, this is actually great. Instead of having to pay a huge upfront price for land (or taking on a massive amount of debt), you can just lease the land from society via taxes. It means the barriers to entry for starting businesses or building housing are significantly lower, because you don't have to pay upfront for the land value.

As for the city building infrastructure or services near you that improve the land value, how it plays out depends on context. Imagine two adjacent and identical parcels of land in city. On one, Bob runs a grocery store. On the other, Jane runs a paid parking lot.

One day, the city builds a new light rail station with frequent service just a block away from the two parcels of land. This, as you can imagine, significantly boosts the land values of both these parcels, increasing the tax burdens for both Bob and Jane.

Bob doesn't like that his tax burden is 3x as much, but he consoles himself with the fact that he now attracts 3x the customers. Remember, the land only gets taxed more now because the location provides more value.

Jane, on the other hand, faces the same 3x tax burden, but oer parking lot was already full, so she can't scale up her revenue 3x. After all, parking lots are a very low value-per-acre type of land use. Thus, she decides to either sell her property to a developer to make housing or shopping or offices, or maybe she considers developing it herself.

Oh, and for countries that have LVT, while it is true that a number of places have LVT, there aren't any fully Georgist countries. Taiwan has a relatively strong LVT, but even they only derive something like 8% of their tax revenues from it, and the tax rate is nowhere near the full rental value of land. Several Australian states (as well as their capital territory) have LVT, but they're even more milquetoast.

Unfortunately, while LVT is a particularly elegant tax -- I mean, economists call it the "perfect tax" -- I think the problem for implementing a Georgist system is that rent-seeking behaviors are incredibly embedded in society. For instance, in North America, homeowners expect their home to appreciate in perpetuity, even basing their retirements off of that. Likewise, negative externalities are extremely lucrative, and fighting oil companies to pass meaningful carbon taxes is an uphill battle.

Meanwhile, the harms of income taxes are very diffuse. Sure, all the working class pays the price of income taxes, but landlords and real estate speculators and homeowners are a more select group that has a very straightforward way to benefit from rent-seeking.

If you're interested in reading more, here's really good essay on how Georgism fits in within a broader libleft tradition:

https://progressandpoverty.substack.com/p/geoism-as-part-of-the-left-libertarian?utm_source=post-email-title&publication_id=672686&post_id=137855299&utm_campaign=email-post-title&isFreemail=true&r=xknmg&utm_medium=email

this post was submitted on 11 Oct 2023
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