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I'm surprised it didn't mention an obvious difference from modern conceptions of the free market: he thought landownership was a monopoly privilege that could b
by nwah1 9y ago
I'm surprised it didn't mention an obvious difference from modern conceptions of the free market: he thought landownership was a monopoly privilege that could be taxed without harm, so long as you are taxing only the land rent itself, not the improvements.
"Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground." - Wealth of Nations, Book V, Chapter II
- primroot 9y agoSmith does not seem to be a private-propery-idealist as almost anyone in the mainstream today. Take this passage for example, also from book V. "Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many. The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions. It is only under the shelter of the civil magistrate that the owner of that valuable property, which is acquired by the labour of many years, or perhaps of many successive generations, can sleep a single night in security. He is at all times surrounded by unknown enemies, whom, though he never provoked, he can never appease, and from whose injustice he can be protected only by the powerful arm of the civil magistrate continually held up to chastise it. The acquisition of valuable and*23 extensive property, therefore, necessarily requires the establishment of civil government. Where there is no property, or at least none that exceeds the value of two or three days labour, civil government is not so necessary. Civil government supposes a certain subordination. But as the necessity of civil government gradually grows up with the acquisition of valuable property, so the principal causes which naturally introduce subordination gradually grow up with the growth of that valuable property. " http://www.econlib.org/library/Smith/smWN20.html http://www.econlib.org/library/Smith/smWN20.html
- CryptoPunk 9y agoAlso note this passage, as a counter-point: >>[The rich] consume little more than the poor, and in spite of their natural selfishness and rapacity…they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.
- primroot 9y agoThanks. As the article states, Smith was clearly not some sort of proto-left-wing intellectual. Here is the source of your quote http://www.econlib.org/library/Smith/smMS4.html#IV.I.10 http://www.econlib.org/library/Smith/smMS4.html#IV.I.10 Evidently, Smith was unfamiliar with golf courses. I see the whole paragraph (of your quote) as being even more detached from today's reality than his oft-cited quote regarding famine and government.
- antisthenes 9y agoAdam Smith was the Piketty of his time. I'm guessing this is generally not obvious to the people who frequently cite him or portray him as some sort of free market champion. It's interesting how the issues addressed by him are just as relevant 240 years later, the main ones being insufficient taxation of wealthy landowners and eventual consolidation of capital.
- ScottBurson 9y agoInteresting, then, that the growth of inequality in the US in recent decades has occurred alongside a marked and ongoing fall in crime. Is it just that the rich can now afford electronic locks and security cameras?
- conanbatt 9y agoTaxes on land have been popular forever. Adam smith talked about it, then Ricardo formalized why rent is what it is, to which Marx barely made an addition and Henry George made an economic and moral argument for Land Value Tax in California. That was over 100 years ago. Today, Krugman, Stiglitz and Milton Friedman agree on land value taxes. The economic consensus on this topic was achieved long ago. Its a political issue , not an economic one.
- saosebastiao 9y ago> The economic consensus on this topic was achieved long ago. Its a political issue , not an economic one. Shamefully true, and now it has been exacerbated several fold by subsidizing single family homeownership for several decades.
- tim333 9y agoPopular with economists maybe. What has worked well in practice is the government owning much of the land and raising money by renting or selling it which is how Monaco gets by with zero tax and how HK raised quite a lot of money while keeping tax <17% on income, zero on gains.
- conanbatt 9y agoI cant speak for the details of your examples, but taxing land or owning it and renting it out are economically identical. High Land value taxes really does mean that the land is not owned by a private individual. But Im perfectly fine with that, definitely better than taxing work or consumption.
- hjiiuhv677 9y agoAll hail the word of unaccountable economists! I’m sure they’re pure of motivation when approving of a system they know how to game inside and out!