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Book Review: Progress and Poverty
- TimPC 4y agoProgress and Poverty was once the most popular economics book ever written. The Georgist Theory in it, and the land value tax proposed by it is still endorsed by economists today. This review clearly illustrates the ideas from George that land captures gains that in a more fair society we'd want to go to labour.
- nickff 4y ago>"... the land value tax proposed by it is still endorsed by economists today." Your comment is somewhat misleading, as it seems to suggest that all or most economists endorse Georgism, which is not true. Some vocal minority of economists are pro-Georgism, but I haven't seen any data suggesting it is the most popular taxation scheme.
- aesh2Xa1 4y agoI have wondered this, too. "Is/was Georgism really so popular?" Do you have any papers/writing which specifically criticise Georgism?
- TimPC 4y agoIt's hard to measure precisely how popular it was historically but he campaigned for Mayor of NYC as a Georgist and finished 2nd ahead of Teddy Roosevelt who finished 3rd. So Henry George at least was well liked. The book itself was the best selling economics book of the 19th century. It inspired art demonstrations and some governments throughout the world even adopted LVT for a while. So yes, it was pretty popular.
- SilasX 4y agoPaul Birch had a long essay criticizing it. Here’s where I mentioned it on HN to summarize the key points: https://news.ycombinator.com/item?id=17605751 https://news.ycombinator.com/item?id=17605751
- TimPC 4y agoThanks for sharing this it's interesting. The first thing I've noticed is that his estimate of the tax revenue is far lower than other far more detailed estimates I've seen by economists. But by far my biggest objection to his arguments is that he ignores the way density impacts land value over time. If we build huge skyscrapers in the countryside it's reasonable that businesses will spring up around them. Various economists have modelled this and land value increases in proportion to the income of its occupants. It's one of the reasons cities need to pay developers to get affordable housing. The allocation of people into housing that was once affordable in the market sense will naturally result in rising land values and rising rents. In no time and no place in history has density made land cheap. If we choose to dot the countryside in huge towers the land on which those huge towers are built and the land of the shops immediately beside those huge towers will have a high value that tapers off quickly as you head further into the now empty countryside. You end up with a strange peaky distribution. In practice, the increasing land rents of the building and the decreased land rents of the countryside would encourage occupants to leave for greener pastures. And the developers would know this would happen before even building a huge building in the countryside because it is economically well understood. He also makes far too big a deal out of the need for a negative land market. You can keep abandonment if you just have a 95% LVT instead of a 100% LVT and you now have a market where land values are overwhelmingly positive.
- gruez 4y agoI'm actually doubtful this would end up being cheaper. Sure, such a building would only pay taxes equivalent to a suburban house, but the construction/maintenance cost of a 2000m building (the tallest building in the world is only 828m) would be insane and would obliterate any tax savings.
- kevinpet 4y agoEconomists generally consider LVT the best theoretical tax, but with significant practical challenges. There are several links in the first section of https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax as well as further down under Modern economists.
- bee_rider 4y agoI may have to pick this up -- as someone with no economics training at all, a land value tax seems extremely appealing and intuitive to me. I'd already like to become a complete partisan in favor of this policy, but I guess it would make sense to read what the actual justification is, for it, haha.
- scythe 4y agoThe biggest problem with LVT is surprisingly simple: accurately assessing the value of land is very hard, and ensuring that the assessment process is fair is therefore extremely hard. LVT experiments in history tend to run into problems when people feel that their land has been valued incorrectly, leading to a vocal minority that despises the law. That results in something like this: https://nassimtaleb.org/2016/08/intolerant-wins-dictatorship-small-minority/ https://nassimtaleb.org/2016/08/intolerant-wins-dictatorship...
- markdown 4y agoCould you tell us where these experiments were held, and how far they went? For example, were other taxes eliminated at the same time?
- notacoward 4y agoSee my sibling comment to yours. The most notable examples are in New Zealand, Australia, and several towns in Pennsylvania. Some of those ran into problems with execution, others were abandoned for purely ideological/selfish reasons, but overall it's not a bad record.
- bee_rider 4y agoHuh. Property tax is already a thing of course, but I guess if the LVT was going to replace all taxation the stakes would be much higher. In an urban setting, it seems to me that the land value should be... reasonably uniform, unlike property, which should make assessing much easier, right? But that's just getting the number. Whether people are happy with the number is a whole 'nother problem.
- snidane 4y agoFrom Henry George wikipedia page: > Commentators disagreed on whether it was the largest funeral in New York history or the largest since the death of Abraham Lincoln. The New York Times reported, "Not even Lincoln had a more glorious death." https://en.m.wikipedia.org/wiki/Henry_George https://en.m.wikipedia.org/wiki/Henry_George
- ur-whale 4y agoFor the horse's mouth: https://cdn.mises.org/Progress%20and%20Poverty_3.pdf https://cdn.mises.org/Progress%20and%20Poverty_3.pdf https://www.gutenberg.org/ebooks/55308 https://www.gutenberg.org/ebooks/55308
- at_compile_time 4y agoFor the audio-inclined: https://librivox.org/progress-and-poverty-by-henry-george/ https://librivox.org/progress-and-poverty-by-henry-george/
- a9h74j 4y agoFWIW, John Michael Greer recently outlined[1] some alternative philosophies in political economy (including cooperatism, distributism and social credit), aiming to spur increased imagination. He cites numerous alternative resources, enough to suggest a study list or initial-study guide. [1] https://www.ecosophia.net/reimagining-political-economy/ https://www.ecosophia.net/reimagining-political-economy/
- TimPC 4y agoI think Georgism's main appeal is that if you interfere as best as possible in the mechanism by which land captures the value of labour and use that to reduce other capture of the value of labour you remove the worst excesses of capitalism. You literally don't have to change the rest of the system. Tenants pay the same rents they do now (perhaps slightly lower due to removal of speculation) but no longer have to pay any income tax. Property owners pay more in LVT but no longer pay income tax as well. No one gets to hold land value unearned and benefit from the work of others except the government who uses it to reduce other taxes and provide services we've come to depend on in modern society. This is quite different from various radical re-imaginings of the entire economic system. Those systems are looking to solve almost entirely different problems and introduce far more new ones.
- jmole 4y agoIt seems like the biggest challenge to Georgism is that municipality/county/state/federal regulations on land use would have a significant effect on land value. A landlord might lobby for restrictive land use policy while sitting on a parcel, and then lobby for opening those restrictions when it comes time to sell. Essentially avoiding the tax by using government policy to suppress the true land value. There are solutions to this of course, but they come down to zoning and land use regulation, which is sort of the core of all our other problems with real estate in America.
- zozbot234 4y ago> municipality/county/state/federal regulations on land use would have a significant effect on land value. That's not "a challenge" it's a positive side effect. Those government institutions would be enabled to internalize the value that they create, which is presently being captured by random private parties that did not create it.
- TimPC 4y agoI agree that there is a positive side effect here in that municipalities now have a strong incentive to rezone in ways that increase land value since they capture a portion of that value from their share of the LVT.
- jmole 4y agoLook at the case of Atherton, CA - multi-million dollar home values due to city ordinances around minimum lot size and land usage. The land value here is created by scarcity, and driven largely by the success of the greater metro area. But if you are trying to value this land from a Georgist perspective, and one that takes into account property zoning and use requirements, the land is worth much less than it should be due to the restrictions, and would be taxed lower than parcels of similar size in nearby cities. This seems, in theory, to reward obstinate enclaves of low-density development within larger metros. The homeowners have no reason to elect a council that would vote against their interests in this respect, and their taxes would stay low.
- MiddleEndian 4y agoOn a personal level, I like the LVT as a single tax because then I wouldn't have to do any paperwork. They give me a bill, I pay a bill, there's no exceptions, I can improve (or fuck up) my property, and overall the numbers won't change (unless a ton of people improve or fuck up their properties around me as well). Nice and easy. But it also seems effective overall. After I quit my last job and before I got my current job, I did not work for several years (some due to choice, some due to circumstance). During this time, I obviously paid no income tax. But I still paid my mortgage (some of which obviously went to property tax, but mostly to the bank). Presumably with a land value tax, my payment to my mortgage company would be notably less less and the tax would notably be more, so during that time instead of paying a bank I would be paying taxes that go to infrastructure and welfare and whatnot. I think this sort of thing is more accurate than an income-based source of taxes, because I obviously wasn't really in the same economic situation as an underemployed person who truly couldn't find a job for several years. It also allows you to assess your own level of taxation. For instance, I could have sold my place or rented it out, and moved elsewhere to a cheaper place (or I guess a more expensive place, were I so inclined to do so while not having a job). Of course, the big disadvantage, as mentioned elsewhere in this thread, is that it is difficult to assess land value sometimes. It also seems like it may force people to move a bit more often, and moving is exhausting. And also presumably you'd have to convince people to pair this form of taxation with more lax zoning laws (with some stricter exception for farmland or something to keep the value per square foot low enough for it to still make sense). Even weighing these factors, it seems like an improvement over the current system. But I guess the real issue is that in the current world of mortgages and such, even if 90% of the population decided it truly did make sense as a form of tax, the transition seems nearly impossible.
- teach 4y agoThese were previously published on AstralCodexTen and discussed here: https://news.ycombinator.com/item?id=29493005 https://news.ycombinator.com/item?id=29493005 GameOfRent is a new site by the author to collect these and similar writings by him and others.
- simonebrunozzi 4y agoI suggest to view Scott Alexander's (Astral Codex Ten) review of the same book [0]. https://astralcodexten.substack.com/p/your-book-review-progress-and-poverty?s=r https://astralcodexten.substack.com/p/your-book-review-progr...
- reducesuffering 4y agoIt's not Scott's review, it's a guest series on the blog.
- rufus_foreman 4y agoFor those who think a Georgist tax makes sense, why not apply the same type of logic to income? If someone is employed as say, a teacher making $75,000 a year, but would be most productive as a software developer making $200,000 a year, should we tax them on $200,000 a year?
- TimPC 4y agoGeorgists get around this issue by abolishing income taxes entirely. Regardless, I think there are fundamental differences between the two cases. Most notably land doesn’t have freedom of choice the way people do. We also currently tax land based on its market value which corresponds to the most productive use of the land so LVT doesn’t change this.
- rufus_foreman 4y ago>> land doesn’t have freedom of choice the way people do I mean that's your best argument, but it's not as clear cut as that to me. What I do with my property and what I do with my labor are both matters of freedom of choice. But yeah, I get you. I don't want to be told what to do with my labor. But I don't want to be told what to do with my land either. >> We also currently tax land based on its market value which corresponds to the most productive use of the land No, don't agree. If tore down the house I live in and built a 12 story apartment building on the same piece of land, it would be worth more and be taxed more. We currently tax property on its market value, not land on its market value. At least where I live.
- TimPC 4y agoThe portion of property taxes that tax the land tax it at its market price though. And we know from economics that the market price is set based on the best economic use. So the entirety of your disagreement seems to be “we also tax buildings” not that the portion of the tax on land doesn’t work the way I said. What you do with your labour is a strong right that is deeply connected to bodily autonomy. Bodily autonomy rights come from nature and shouldn’t be violated by society. What you do with your land is a weak right that is socially constructed and depends on the society that defined the rules under which land acquisition made sense. There is a stronger moral basis for taxing land than there is for taxing labour. There is also a stronger moral basis for restricting land use than for restricting labour. Despite your efforts to paint them as the same, these two things are in fact very different.
- WalterBright 4y agoConsider this: subsidize something societies want more of, tax something society wants less of. Wouldn't this be a pragmatic way to raise tax revenue? What do we want less of? Pollution. What do we want more of? Jobs, prosperity, the good things in life. So tax pollution instead of things like jobs, prosperity, etc.
- Simon_O_Rourke 4y agoSo you'd propose taxing meth, heroin and goodness knows what else too? While tax is merely an inconvenience for the wealthy, for the poor it can be a eat-or-starve decision.