Harry,
You and I have been writing and arguing with each other ever since the
beginning of Futurework. Try as I might, I have never been able to
understand quite why land has to be so overwhelmingly important. Yes, it's
important -- even very important -- and I think the taxing of (visible)
land value rather than (the declared, but sometimes invisible) income would
be a great step forward.
At 20:02 06/09/2010 -0700, you wrote:
Chris,
We cannot survive without access to land -- one of the three Factors of
Production.
Land, Labour and Capital. Granted, but this still ignores a fourth factor
of production -- innovation -- which you and I have argued about before. In
Henry George's time innovation was going on at such a cracking pace that it
was hardly noticed as particularly important phenomenon. It was "natural",
just like the air we breath. If there'd been economists writing in the
Medieval period they wouldn't have considered land to be "a factor of
production" because it was too obvious. It had no monetary value, it was
not bought or sold, the idea of "renting" land was totally unknown to them.
Labour, too, wouldn't have been considered either because there were no
wages in those days. The Domesday Book of 1086 didn't compute the wealth of
England in terms of money but only acreages, numbers of beasts and numbers
of serfs (slaves) that had been granted to various favourites of William
the Conqueror. Gold, silver and copper were, it's true, losing their
status-only value and becoming currency as a handy form of exchanging small
items (as they were previously in Roman times). But economists in those
days would only have considered Capital -- Wealth and Power -- as the only
factor worth talking about when considering the "economic system". Land and
labour, improtant thought they were, were merely only ancillaries.
I think the reason why Land loomed so large in Henry George's thinking is
that he as living in a huge continent that was filling up so rapidly with
massive immigration that the struggle between Land and Labour was very
obvious.
The principal characteristic of all land is location. Locations are by their
nature monopolies.
And in Henry George's time, location was important because railways were
being built. But two more characteristics of land turn out to be even more
important than location per se -- though Henry George didn't realize it.
One is the fertility of the top-soil and the other is the resources
underneath the soil. These can't necessarily be assessed for many years and
their original location is not important -- the roads and railways can be
built to them later.
Necessary to the efficient operation of the market price mechanism is no
restriction on the production of goods, and no restriction on movement of
goods. Yet, no more land can be produced -- as said Will Rogers "They ain't
making no more dirt." Also land cannot be moved. We cannot move some Mojave
desert land into downtown Los Angeles to compete with high priced sites.
So the market cannot control land prices as it does with eggs and bacon and
other goods.
But there surely is a market in land just as there is with eggs and bacon.
It is very high in cities because that's where work is to be found, where
young people go in order to find partners, where specialists and innovators
can meet together.
Further land is all taken up. If you found a little bit of
apparently useless land and decided to put up the cabin it is likely that
before long someone would come running up waving a piece of paper.
Behind my previous house in Bath there was a patch of ground -- about 10
acres of forest on a steep hillside -- that no-one owned and no-one wanted
to own because of high costs of maintaining the trees (which could, and
did, sometimes fall on houses below). One chap lived there under a
tarpaulin sheet for a number of years. Few people ever saw him and, if he
was spoken to, he wouldn't reply. He repaired and maintained footpaths that
led through the woods. However, I've just mentioned that just for interest.
It doesn't refute your point.
When land rents and prices rise, the market price mechanism cannot bring
them down by drawing land to the market so the prices keep rising. They
continue to rise until they can go no further. This occurs when any further
increase would leave a wage too small for Labor's survival. At that point,
according to classical theory, the wages of those at the bottom of the wage
pyramid have descended to subsistence level.
Further, as a society progresses and the economy advances, rents and prices
rise to absorb the advance. This is why the poor are always with us.
As land prices move upward year by year, landowners frequently do not bother
to sell or rent out their land. The increase in land value receives better
tax treatment then income and if capital gains taxes can be ended, the
income is not taxed to all.
(The capital gains tax does not really tax capital, it taxes land value but
that is a further discussion.)
This leads to a situation where land cost makes production difficult. It
also leads to empty areas in cities that cause sprawl into the boondocks. It
also deters slum clearance. Landholders with blighted buildings on valuable
land spend as little as possible on them because it would be wasted if they
can make a land sale killing.
The economy moves merrily along, but in fact it is in a continual state of
tension, waiting for a trigger to send it over the brink. Anything might be
a trigger which is why there are so many "causes" of depression.
There is an argument that the land crash occurs every 18 years or so. I do
not altogether agree with it.
The particular problems with the banks are all based on land values. If you
are interested, I will be happy to say a little more about it. Also, how the
fatcats (or your Predators) cash in on it.
I would agree with most of what you have written above. But apart from
implying "greed" (which, I suggest, everyone suffers from, each in his own
way) you haven't really put your finger on it. The real reason is that
because governments got away with printing money so readily in times of
borrowing for warfare then the banks followed suit by departing from
traditional limits of fractional reserves when lending (100% in Renaissance
times and in the earliest "country banks" of early industrial times) to
lesser and lesser reserves -- down to about 2% at the time of the beginning
of the credit-crunch. At any one time a considerable part of the 98% of the
credit money was swimming around as banknotes and digital currency and very
much at the mercy of those who specialized in finance rather than those
engaged in value-adding occupations.
Keith
Harry
********************************
Henry George School of Los Angeles
Box 655
Tujunga CA 9104
818 352-4141
********************************
-----Original Message-----
From: [email protected]
[mailto:[email protected]] On Behalf Of Christoph Reuss
Sent: Monday, August 16, 2010 2:05 PM
To: [email protected]
Subject: Re: [Futurework] FW: paper on technology manias and gullibility
Harry Pollard wrote:
> The crash wasn't a contrivance of your Predators - whomsoever they may be.
> It was an inevitability, apparently happening every 18 years or so.
Within a boom-bust cycle system, the crash may be "an inevitability" (and
even a cyclic one). But the boom-bust cycle system is not inevitable at all
-- it is made and perpetuated by those who gain from it in every cycle.
Key components of that system are growth bubbles, fiat money and compound
interest.
> About the only policy that would help is to allow land prices to crash.
No. The boom-bust cycle system must be abolished, with its key components.
> There are so many government policies ranging from the potty to the
> disastrous that one cannot easily grasp their damaging consequences.
Depends on one's intelligence...
Chris
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SpamWall: Mail to this addy is deleted unread unless it contains the keyword
"igve".
_______________________________________________
Futurework mailing list
[email protected]
https://lists.uwaterloo.ca/mailman/listinfo/futurework
_______________________________________________
Futurework mailing list
[email protected]
https://lists.uwaterloo.ca/mailman/listinfo/futurework
Keith Hudson, Saltford, England
_______________________________________________
Futurework mailing list
[email protected]
https://lists.uwaterloo.ca/mailman/listinfo/futurework
