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Perhaps this is your point, but what exactly is the difference? Whether you're building a factory or building a house, you're you're getting a regular income as

Perhaps this is your point, but what exactly is the difference? Whether you're building a factory or building a house, you're you're getting a regular income as a reward for creating utility generating capacity. What makes one honourable, and the other "rent-seeking"?

ArkyBeagle 10y ago
"Honorable" means "creates consumer surplus". Rents are complicated to talk about, but the canonical example from Ricardo is land that is worth more because of where it is causing it to be more productive. Take a parking lot in Manhattan - it'll be worth more and derive more income than the same area in Kansas farmland. The owner does nothing to add this value - the value is created by the other people and buildings surrounding this parking lot. Since this value is socially created, it's more justifiable to tax it on behalf of that society. Since our alternative is to tax labor, it seems more equitable to tax rents. This might be a problem with say, Micheal Jordan, who trades on his name for income that's pretty clearly his but it's still income from rents - the desire of others to use his fame creates the value, not anything he does in particular. Nobody said this has to be easy.
- aninhumer 10y ago
  And a factory which produces cars becomes more valuable than one that produces buggies without the owner doing anything either. Why is realising that people are going to want cars in future more valuable than realising people are going to want parking in Manhattan in future? EDIT: IMO the problem is that the rewards for creating capital are indefinite, and that this just becomes more noticeable when you're talking about housing.
  - ArkyBeagle 10y ago
    No, the choice to produce cars is not nothing. It's an act; owning land ( as opposed to buying it ) is not an act. Yes, there's a certain uncomfortable similarity to physiocracy. Like I say, it's not a really easy thing to reason about. I can't really do it either past a rudimentary level. Your example "parking in Manhattan" is pretty good, but the car itself provides its own utility. The utility for the parking lot is proved from others owning cars. Likewise, gasoline provides its own utility. But oil underground? Probably rents. Rents-thinking comes from Ricardo, but it's strongly associated with Henry George. Fascinating guy; "Poverty and Progress" is a worthy read.
    - aninhumer 10y ago
      Yes, the labour involved in organising the factory to produce cars is an act, and worth rewarding, but then so is managing a rental property. What I'm talking about simply owning the factory (or perhaps a better example is owning a car company, without managing it yourself). I'm familiar with Georgism, but I had a similar confusion about land value tax. I just don't see what's so special about land compared to capital goods. I'd rather have a general wealth tax.
      - ArkyBeagle 10y ago
        Maybe it's just me? Georgism is inherently about the proposition that taxing labor rather than rents is inherently immoral. That's rather the point of it. I'd just like to see rents in general taxed rather than labor taxed. The theory of rents provides a means to distinguish between ... "socially useful" wealth and "sort of parasitic" wealth." As you note, there's nothing original about this.
        aninhumer 10y ago
        Well I'm highly suspicious of arguments that anything in economics is "inherently immoral". I prefer to talk about outcomes. But in any case, I'm not suggesting a labour tax, I'm suggesting a wealth tax. I think my argument is similar to George's: just as LVT encourages efficient use of land, a wealth tax encourages efficient use of wealth in general.
    - sokoloff 10y ago
      > No, the choice to produce cars is not nothing. It's an act; owning land ( as opposed to buying it ) is not an act. The choice to produce cars seems analogous to the choice to buy land. Once that choice is implemented, owning a factory (or share of a factory) seems no more and no less active nor noble than owning a piece of land.
      - ArkyBeagle 10y ago
        Yes - those acts in themselves are indeed acts. But! One can then own land without actually doing anything with it - you can let it out at rates for others to use. You can't just let a car factory sit. And if you just own the building and land, and do nothing else, then yes- you're just charging rents. But generally owners have to work to own a factory, if at nothing else than making operation policy decisions. Perhaps a trip thru "Poverty and Progress" is in order? George is better at this than I am.

ArkyBeagle 10y ago

"Honorable" means "creates consumer surplus". Rents are complicated to talk about, but the canonical example from Ricardo is land that is worth more because of where it is causing it to be more productive. Take a parking lot in Manhattan - it'll be worth more and derive more income than the same area in Kansas farmland. The owner does nothing to add this value - the value is created by the other people and buildings surrounding this parking lot. Since this value is socially created, it's more justifiable to tax it on behalf of that society. Since our alternative is to tax labor, it seems more equitable to tax rents. This might be a problem with say, Micheal Jordan, who trades on his name for income that's pretty clearly his but it's still income from rents - the desire of others to use his fame creates the value, not anything he does in particular. Nobody said this has to be easy.

aninhumer 10y ago
And a factory which produces cars becomes more valuable than one that produces buggies without the owner doing anything either. Why is realising that people are going to want cars in future more valuable than realising people are going to want parking in Manhattan in future? EDIT: IMO the problem is that the rewards for creating capital are indefinite, and that this just becomes more noticeable when you're talking about housing.
- ArkyBeagle 10y ago
  No, the choice to produce cars is not nothing. It's an act; owning land ( as opposed to buying it ) is not an act. Yes, there's a certain uncomfortable similarity to physiocracy. Like I say, it's not a really easy thing to reason about. I can't really do it either past a rudimentary level. Your example "parking in Manhattan" is pretty good, but the car itself provides its own utility. The utility for the parking lot is proved from others owning cars. Likewise, gasoline provides its own utility. But oil underground? Probably rents. Rents-thinking comes from Ricardo, but it's strongly associated with Henry George. Fascinating guy; "Poverty and Progress" is a worthy read.
  - aninhumer 10y ago
    Yes, the labour involved in organising the factory to produce cars is an act, and worth rewarding, but then so is managing a rental property. What I'm talking about simply owning the factory (or perhaps a better example is owning a car company, without managing it yourself). I'm familiar with Georgism, but I had a similar confusion about land value tax. I just don't see what's so special about land compared to capital goods. I'd rather have a general wealth tax.
    - ArkyBeagle 10y ago
      Maybe it's just me? Georgism is inherently about the proposition that taxing labor rather than rents is inherently immoral. That's rather the point of it. I'd just like to see rents in general taxed rather than labor taxed. The theory of rents provides a means to distinguish between ... "socially useful" wealth and "sort of parasitic" wealth." As you note, there's nothing original about this.
      - aninhumer 10y ago
        Well I'm highly suspicious of arguments that anything in economics is "inherently immoral". I prefer to talk about outcomes. But in any case, I'm not suggesting a labour tax, I'm suggesting a wealth tax. I think my argument is similar to George's: just as LVT encourages efficient use of land, a wealth tax encourages efficient use of wealth in general.
  - sokoloff 10y ago
    > No, the choice to produce cars is not nothing. It's an act; owning land ( as opposed to buying it ) is not an act. The choice to produce cars seems analogous to the choice to buy land. Once that choice is implemented, owning a factory (or share of a factory) seems no more and no less active nor noble than owning a piece of land.
    - ArkyBeagle 10y ago
      Yes - those acts in themselves are indeed acts. But! One can then own land without actually doing anything with it - you can let it out at rates for others to use. You can't just let a car factory sit. And if you just own the building and land, and do nothing else, then yes- you're just charging rents. But generally owners have to work to own a factory, if at nothing else than making operation policy decisions. Perhaps a trip thru "Poverty and Progress" is in order? George is better at this than I am.