A Critique of Murray Rothbard's Critique of the Georgist Argument.
The land question has been with us since day one. A look at Murray's take on the observations of Henry George. by Gene DeNardo
(libertarian)
Wednesday, September 30, 2009
Murray Rothbard’s article, "The Single Tax, Economic and Moral Considerations and a Reply to Georgist Criticisms" [link edited for length] was an attempt to submit an "Austrian" school answer to the perennial land questions that originated with the theories of Henry George. [link edited for length] The following is an attempt to critique the criticism.
To start, although Murray falls just short of including land as the third fundamental of the economy, he submits that there is indeed a land question.
"Most present-day economists ignore the land question and Henry George altogether. Land is treated as simply capital, with no special features or problems. Yet there is a land question, and ignoring it does not lay the matter to rest. The Georgists have raised, and continue to raise, questions that need answering."
His first misstatement involves the outcome of a land fee. The land fee is simply the payment of land rent to the community, rather than a landlord. Henry George was as adamant about free market capitalism as it is possible to be and anyone who has read his writings can come to no other conclusion.
"Rather than nationalize land outright, the single taxers would levy a 100 percent tax on the annual land rent—the annual income from the site—which amounts to the same thing as outright nationalization."
The idea that the "single tax" would spur production rather than diminish it as all other forms of taxation do, is agreed upon by most. Murray however, takes aim at this claim.
"The deficiency in that argument is the neglect of the time factor in production. Capital is the product of human energy and land . . . and time. The time-block is the reason that people must abstain from consumption, and save. Laboriously, these savings are invested in capital goods. We are further along the road to a high standard of living than India or China because we and our ancestors have saved and invested in capital goods, building up a great structure of capital."
He is, of course, correct in his assessment that time is a factor. But, no amount of time will be sufficient if the land mass is locked up. Any society must have access to its land to prosper. It was England that prospered off the land of India and the restrictions of Mao that tied the land of China up until recently.
The next argument he presents is that somehow the assessment of "bare" land would not be possible and therefore the tax cannot be determined. It is somewhat confounding that someone so intelligent could come up with a statement like that! Bare land is sold every day at an agreed upon value despite Murray’s objections. Land value [rent] equals the total property value minus {the value of the improvements minus the depreciation of improvements}. Simple as that! His next statement is even more confounding.
"Well, what about idle land? Should the sight of it alarm us? On the contrary, we should thank our stars for one of the great economic facts of nature: that labor is scarce relative to land. It is a fact that there is more land available in the world, even quite useful land, than there is labor to keep it employed. This is a cause for rejoicing, not lament."
Murray has informed us that land is not scarce after all! There is plenty to be had. Why then does its have a cost? Should it not be free for the taking? And what of unemployment? Shouldn’t these idle masses be tending to the readily available fields or building sites? Is it true then that the "poor" unemployed are just lazy and slothful, since land is available? And what of starvation and malnutrition? Surely these two problems have something to do with the land question?
What Murray fails to realize is that his above statement is in complete concurrence with the reasoning of the Georgists. There IS land, but it IS NOT available for use.
Murray then attempts to dispute the claim that the site owner performs no productive purpose and prove the landlord’s worth to society.
"The site owner brings sites into use and allocates them to the most productive user. He can only earn the highest ground rents from his land by allocating the site to those users and uses that will satisfy the consumers in the best possible way. We have seen already that the site owner must decide whether or not to work a plot of land or keep it idle. He must also decide which use the land will best satisfy. In doing so, he also insures that each use is situated on its most productive location."
He really misses the boat on this one! The site owner does none of these things. The market itself decides the use. If the site owner decides to "work" the plot, he then also becomes a laborer. Any work or improvement done to the site no longer has any connection to the single tax, since Georgists and Geo-libertarians are unanimously opposed to any taxes on products or labor. Murray has made the common mistake of confusing land with land improvements. Hang on though, the biggest false assumption is soon to follow.
"A 100 percent tax on rent would cause the capital value of all land to fall promptly to zero. Since owners could not obtain any net rent, the sites would become valueless on the market. From that point on, sites, in short, would be free. Further, since all rent would be siphoned off to the government, there would be no incentive for owners to charge any rent at all. Rent would be zero as well, and rentals would thus be free."
It is hard to believe that Murray would think that the only value to land is the "rent" value! The primary value to land is utility and the collection of site rent by someone other than the landlord has no effect on this use value, other than discouraging hoarding. It is the speculative value, that future value that is monopolized and capitalized into the present value, that redirection of rent would diminish.
Let’s take a simple example. Any builder knows that he can build the same house on different site locations for similar cost. Would that builder pick the site that would bring him half the selling price of a better site? Would he not value the better site more and be willing to give more in exchange for the right to utilize the better and more valuable site? Would not that site have a higher rent, regardless of where the rent ended up? Perhaps the value of some sites would fall to zero and this would be beneficial in encouraging development of distressed areas, but valuable sites would remain valuable and maintain their relative values, although not their current inflated values.
It is important to point out that most all "single taxers" believe that it is superior to collect 80=90% of the rent value. In this way, the landlord is compensated for managing his property and collecting rent. The combination of this and the value appreciation that will occur to land as communities grow and develop would be enough to ensure private ownership of land and prevent the nationalization that Rothbard worried about and Socialists [link edited for length] support.
Murray extrapolates on this false assumption of zero value and rent for quite a few paragraphs and it is pointless to try to critique postulations built on a false premise. Zero rent and value for land sites can only be attained when the availability of the most productive sites exceeds the demand. Who receives the rent can certainly affect the supply and that is one of the beneficial side effects. But the day of land abundance is long past. At six billion plus, we are way past the appearance of land scarcity. Murray then returns to the "worth" of the speculative site owner.
"What about the maligned speculator, the holder of idle land? He, too, performs an important service—a subdivision of the general site owner function. The speculator allocates sites over time. Even if a speculator reaps an "unearned increment" of capital value by holding land as its price rises, he can gain no such increment by keeping land idle. Why shouldn’t he use the land and earn rents in addition to his capital gain? Idle land by itself cannot benefit him. The reason he keeps the land apparently idle, therefore, is either that the land is still too poor to be used by current labor and capital goods, or that it is not yet clear which use for the site is best. The "speculative" landowner has the difficult job of deciding when to commit the site to a specific use. A wrong decision would waste the land. By waiting and judging, the speculative landowner picks the right moment for bringing his land into use, and the right employment for the land. Land speculators, therefore, perform as vital a market function as their fellow site owners whose land is already in use."
Here, Murray admits to the land monopoly that site owners hold. They "allocate" sites as they wish, over time. Rather than at the "mercy" of the market, they control the market. They are beyond the "need" to be productive. By waiting and reaping what he honestly refers to as "unearned increment of capital value", they can enrichen themselves off the production of others.
Idle land does benefit the site owner. The more idle land held off the market, the faster capital will accumulate in land values and rents as demand for productive land grows. The hoarded land is not "too poor"; it is not of any quality other than speculative. The job of the speculative landowner is not difficult at all. He need only watch the rest of the population work and when the economy has instilled enough value in his land to his liking, he can post the "for sale" sign and collect his bounty.
What is the product of this vital function that land speculators perform? The transfer of value from the productive sector to inflated or paper land values and rents. It should be noted that this capitalization of productive value into land value is further exaggerated by the "money creation" of the Federal Reserve. New monopoly money most often finds its home in either land or stock values and intensifies the problem noted by Henry George before the advent of the Federal Reserve.
Murray goes on to announce that the landlord should not be penalized because he gains from the value others produce. After all, we all gain from each other. And we do, but none of us, excluding "free riders" and site owners [perhaps this is redundant], gain without being productive ourselves. And none of us gain so directly and so massively from the value the rest of us produce like the non-productive site owner.
"We have still to deal with the critical core of single tax moral theory—that no individual has the right to own value in land."
This is simply untrue and reverts back to his erroneous earlier belief that the single tax would bring the value of land to zero. Single taxers simply believe that the "rent’ from the land should be directed to all of us, not to the landlord. As long as there is a sufficient human population to ensure land scarcity, there will always be value in land and the single tax is simply a user fee protecting this value and the right to own property.
Do we forget that the current situation of the landlord retaining rent is enforced by the same government Murray so loathes? In an anarchic situation not unlike what Murray favors, the landlord who compensated those who were "excluded" from his property would need much less "private" force and have a much easier time getting those around him to respect his property rights. Not to mention, how much "private agency" force he would need to actually "collect" rent from those excluded. In reality, which system is the most natural arrangement, that of government enforced rent payments or compensation due to exclusion?
"The single taxer might still claim that individual ownership is immoral, even if he can find no plausible remedy. But he would be wrong. For his claim is self-contradictory. A man cannot produce anything without the cooperation of original land, if only as standing room. A man cannot produce anything by his labor alone."
Again, a single taxer would claim no such thing. And, if "a man cannot produce anything without the cooperation of original land", does that not mean that all "sustaining" men have "mixed their labor with the land" and have a common right to land? Would not the recognition of this right be compensation directed towards all rather than the State enforced rent compensation to the landlord?
Murray continues to go on and confuse "nationalization" of land with the Georgist concepts. It is interesting to note that many Geo-Libertarians are anarchists. In their ideal world, there is no State and the "rent" is directed to the community. Usually, they allow for "opting out" of services and non payment. In that case, you are on your own. Murray’s system of anarchy seems to necessitate a very powerful force to continue the coercive direction of rent to the landlord. The likeness of a system of this type to the feudal system is striking.
I was bewildered when I first read Murray’s critique. His straightforward clarity and precise statements that are a mainstay of the bulk of his work were replaced by orations based on false assumptions and half truths. It seemed he was more interested in servicing an agenda than exposing the core ideas and truths. As he is a favorite author of mine, he is really the last person I would except to defend the "status quo".
The Georgist "single tax" idea is a system of free market capitalism in which the land rent is directed to all. The present system is one passed down to us from the Kings and their kingdoms: the "divine right" of the King to channel the wealth of the land to himself and his noble associates.
Despite all the discussion and debate, the question remains a simple one: who should receive the rent from that which none of us produced, the land? Does the presence of capital in enough quantity to outbid all others for land title include the enforced right to extract rent from the same property or does the right to exclusive use and ownership of land include the requirement that those who were excluded be compensated?
It ia definitely a question worth a lot of thought.
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Indeed, it is a sin that so many libertarians these days either have never heard of Henry George or ridicule his claims. Sure, this childish discreditation is mostly due to a lack of understanding, but I often wonder how so when the concept is so outright simple for practicioners of the free market to understand?
It is merely a recalibration- a correction of false externalities that the current system, aka the status quo, has imposed. That Rothbard tried to tackle the issue with a straight face here, is admirable, if it weren't for how he traced his argument to an equation of time and capital.
The overarching flaw here, and one you dissected thoroughly, is his assumption that immediate acrruement of value over speculation is possible. This is one of Rothbard's common assumptions; he operates completely in theoretical destinations rather than the truth of the matter.
For this I give you another thumb, hoping more people are brave enough to read your articles.
The problem Libertarians have with the redirection of rent is simply that they tie the current rent payment to landlord as somehow eternally connected to private property when it is in truth connected to the force of the State.
Posted By: Jahfre Fire Eater
Date: 2009-10-01 17:56:31
Hi Gene,
Nicely written. You keep trying but I'm still not buying it. Both Murray and Henry were missing the point because they were starting from a fallacious position which they were apparently just as incapable of recognizing as you are. At least you're in good company. I decided to submit an article about this rather than post my position here. Here's a thumb for writing something worth opposing. :-)
"I was bewildered when I first read Murray’s critique. His straightforward clarity and precise statements that are a mainstay of the bulk of his work were replaced by orations based on false assumptions and half truths."
Murray Rothbard's case for a priori anarchy is also based on orations based on false assumptions and half truths. Rothbard wrote brilliantly, but he could be very wrong very often. It took me many years to realize this. His rants attacking what he had created late in life provided a good clue.
But Rothbard had a point about collecting 100% of ground rents rendering land values unmeasurable. Personally, I think collection of a smaller fraction is a good idea, especially in rural areas. Keeping some "unimproved" land aside for future generations is a rather good idea. Aristocrats do serve some useful purposes. King John was preserving Sherwood Forest from overhunting.
Anyway, to Murray's credit, he did realize the importance of the land question. He called for quite radical one-time land reform in places like Latin America. But he rationalized away the single-tax argument because it requires a collection authority representing the community (i.e., government), and Murray would do anything -- bend history, attack friends, sabotage the Libertarian Party, ignore geopolitical reality, villify Adam Smith, destroy nature, coddle racists -- in order to cling to his beloved anarchy. Picture Murray Rothbard as a Jedi gone to the dark side via his hatred of the State, and you'll go far.
Hi Carl, I think all "free market" single taxers push for some rent to be retained by the landlord to maintain "private" ownership of land.
It is commendable that Murray addressed the land question, as few Austrians did, but you are right that he could argue any point, regardless of a lack of logic!
That's correct. Even now with "property taxes", we have a forty to fifty percent "land tax" [the remainer of the tax is on produced property like houses]. If this tax were applied across the board to all property, not just residential and commercial but farm, forest and resource, and a corresponding decrease in the income tax occurred, we would see big time benefits.
of course, it is special interests that prevent this. the resource lobbyists have convinced congress to "give" the resources away with virtually no land rent, even though they a non-renewable, while the farm and forest industries have got their way and all farm and forest goes virtually untaxed and even much commercial property has exemptions or subsidies.
The result is astronomic income tax and extreme taxation of the "product" [especially houses] of land, rather than the land itself.
If you are interested, Gene, maybe you would like to examine the current situation in California, under prop 13, which has led to unstable spikes in tax revenues for the state government, and how it would benefit from a Georgist revision. I think the time is nearing when geolibertarian ideas may be put in to practice without mainstream resentment.
that is an interesting idea. prop 13 is fairly goofy. we have a citizen's initiative altered property tax here in oregon also.
i don't think the average citizen would have any problem with the land fee, especially with a related income tax deduction, but the entrenched interests would certainly fight it.
resource corporations would immediately object as would agribusiness. you can hide income, you can't hide land. when you have received something for free for a long time, paying even a discounted price feels like robbery!
I appreciate your article. I found Rothbard's attack on geoism to be so off-base that one must conclude he was not trying to understand, nor to be fair. The geoist or geolibertarian viewpoint makes much more practical sense and is more consistent logically, as well as more compatible with libertarian goals.
Posted By: Edward J. Dodson
Date: 2009-10-04 07:15:10
The key to understanding Henry George's moral principles is that he argued for a labor and capital goods theory of property. Only that which we actually produce falls within a just definition of private property. Nature is the source of goods we produce but is the commons from which what we produce must come. Thus, the issuance by the state of deeds (or leases) allocating exclusive or near-exclusive control over locations in our cities or towns, over natural resource-laden lands, over the broadcast spectrum, over landing slots at airports, and any other "natural monopoly" (to use Henry George's term) is the granting of privilege. The public collection of rent compensates, as best as is practicable, those in a society who are not direct beneficiaries of what Locke would have called economic licenses.
I agree, he was out to lunch on that one. Rent to all is the method of "least force" and that is a Libertarian goal, as you mention.
Hi Edward,
well put, it is simply payment for privilege. what is funny is that the Austrians rightfully bark forever about Socialism failing due to the lack of a "pricing mechanism" when the State owns the means of production, yet they support a land condition that does just that, eliminates the "cost" of land ownership.
Yes, corporations and unions would be strange bedfellows here, but I think California would benefit greatly from the Alaskan model, especially if it removed its ban on new oil drilling such as suggested by fellow columnist Paul Benedict.
I'm also curious as to if it could help neutralize the difference in revenue that California has stolen from it by the federal government year after year. As you may have heard, another reason recovery is slow here is due to the fact that California only gets 70% of its tax revenue back.
Thanks for this timely article Gene. I am preparing myself to go to the UK's Liberarian Alliance Conference in a few weeks time and I know there will be some people there who will screw up their face at my admitting to be a Georgist!
The fact is that it was Georgism that brought me into Libertarianism in the first place. I think it is quite difficult to believe George's solution without becoming a small government advocate (despite what some of my UK Liberal Democrat fellow LVTers say!).
And in fact, I have really drifted, apart from this one area of the land question, towards being an Austrian style anarchist. For example, I wholeheartedly agree with Hoppe's explanation of why a "limited government" is the impossible utopia, and would prefer a "private law society".
I also agree that in an Austrian world without state produced fiat money, there would be less inflationary speculative pressure on land.
And that without any zoning or planning restrictions at all there would also be less pressure on land.
And that without any state protected privileged title to land, one would effectively be restricted to what one could defend, or afford to pay others to defend, and that potentially much land would be freed up through abandonment in such an environment.
And I tend to accept the arguments about original appropriation being necessary for anyone to bother in the first place.
But...my main continuing interest in the Georgist way of dealing with the land question is that any land, whether it is fully utilized or not, seems to me to be effectively charging a tax on those who cannot use it because someone else got there first, no matter how much better the non-owner may be able to put a particular location to productive use. In this way it is wholly different from the Rembrant or the pastor Pentecost arguments of Rothbard (dealt with fully satisfactorily in the rhetoric of Winston Churchill for example).
He says that everyone benefits from agglomeration - but neglects of course those who contribute to those benefits for others, but who cannot afford themselves to do any more than eke out an existence because someone else owns all the locations within the margin of that agglomeration to which they are contributing. The central landowner gains the benefits of agglomeration as well as the increment of the land values caused by that agglomeration from which he already benefits.
Rothbard also does not understand the idea of "common" rather than simply "equal" (collective) rights. One should turn his question about how someone born in Timbuktu can have a right to land in Manhattan on its head - where dopes someone born on Manhattan have a right to some space from which to be economically productive.
My over-riding concern though, as a budding anarchist, is that I too do not want a coercive government authority to collect land tax, because I do not believe (as with Hoppe and others) that it will remain so limited. So what I want to see developed more are things like Dan Sullivan's ideas of using some kind of corporate community management body to collect and redistribute rents.
I feel that this could be tied in with Hoppe and others' ideas of insurance and protection agencies defending claims to real property - and that premiums would likely rise with the value of the location being insured and if it were done as a mutual insurance company the distribution of the land rents could be the "with profits" part of the policy.
However I also worry here that there could be no scope for competition - that in order for it to be collected equitably and distributed equitably everyone may have to be in the same insurance/protection company and thus you have Nozick's inevitable limited state. I often also hear Austrians say that one is not entitled to the "value of one's property" only the property itself.
Finally, really, I've never heard of this assumption that we would only want to collect a percentage of the rent. I see no reason why it should not be 100%. If a location is growing speculatively, this will involve a premium to the current owner, if it is not worth the current assessed rent to anyone, it will result in an abandonment and subsequent bidding round amongst people who would buy it for less rent chargeable.
Lots to think about - but thanks again for raising it all.
It is entirely absurd to collect money from the local level, siphon it directly to the federal level and then have the feds deal it out in whatever manner benefits them and their buddies the best. totally upside down. Cal and all states should collect the money at the county and city level, submit a portion to the state for services and then a portion from the state to the fed for services.
Jock,
good points, especially the "common" vs collective fundamental. the austrians completely miss out on that one. the austrians also claim property was originally "unowned", which is interesting since mankind has been "mixing his labor with the land" since he got kicked out of the Garden of Eden. apparently there must be a specific "austrian" time period in which the mixing actually counts as ownership, like a game clock or something!
100 percent fee might tend towards tenancy rather than ownership, but i also see your point.
i don't think you need the government to collect the rent, but you would need a "judiciary" arm to settle disputes. and you would need someone to represent the receivers of rent [everyone]. in disputes.
the rent can also be voluntary and services can be withdrawn. there is a group of geo=libertarian anarchists and they have some ideas and you can link them from Dan's webpage.
Here's another thought about Rothbard's defense of the hoarder of idle land - if it is delapidated land it could be directly harming the value of surrounding sites. Of course here the Austrians would say that those surrounding neighbours have no right to the value of their property, just their use and enjoyment of it. But they can't have it both ways!
By the way, I have put together some of my thoughts on this here.
I have a rather Georgist/geolibertarian outlook on taxes (with a bit of Pigou thrown in), and the main difficulty I have with the land value tax question is the possibility of the state setting the rate high enough to discourage use, or to grab a portion of the value of improvements through too-high assessments -- if I have a $1 million home on a $100K plot, the state might charge the rent appropriate for a $200K plot without fear of abandonment. And yet, you don't want assessments set too low, because it encourages inefficiency in land use.
The only solution I've been able to come up with is to allow the owner of fixed improvements to sell them to the state at fair market value any time they believe the land value assessment is too high -- in the case above, I could ask the state to lower the assessment to a value I believe was fair, or for a $1 million check to purchase my house. For assessments that were too low, other parties would be allowed to bid up the assessment -- agreeing to pay a high land value tax -- in addition to paying the fair market value for fixed improvements. Of course, the current occupant would be granted the right to match the higher assessment and pay the higher tax.
Unfortunately, I don't know if this is the best way to handle the problem. Does anyone have an idea on the best way to handle assessments that are too high or too low?
I think another point that could be made here is that if we only had a land value tax, then we'd have the sort of limited, responsible government that libertarians advocate.
Take a municipality, for example. Under the current tax system, a local government first comes up with a budget, THEN gets the revenue from those within its jurisdiction. I wish I could do that...determine my budget first, then just somehow get the revenue. But alas, I get my revenue first, then I have to budget what I have...just like everybody else, except for the government.
But under a land value tax system, the government's revenue is determined by (and constrained by) the local land market. In other words, revenue first THEN the budget...just like it is for everyone else.
How would the government increase its future revenues? By allocating the revenue in such a way as to maximally increase future location values...things like roads, bridges, utilities, schools, etc....those things that everyone in the community wants and expects from their government. Revenues derived solely from land values would provide that incentive for government.
land assessments are a known factor. what you mention could possibly come into play in an area where all land is built on and the value under buildings is somewhat in question, but the government would have to assess all your neighbors land equally high.
there is a "correct" value for the land and it can be determined from the equation....total value minus [improvement value minus depreciation of improvements]. total value [comparable sold property] would be known and depreciation would be known. the same land value would need to apply per square foot throughout the area, so the number could be easily attained. in other words, an owner[s] could easily appeal and gain true value if the gov was off. and they would have to be consistently off, which means you could go class action with it.
Thank-you for your (enthusiastic) response to my post!!!!
I think if there was a synthesis between Georgism and Austrian economics, (i.e., Geo-Austrian economics), we would have ourselves quite a powerful economic paradigm.
First, I think that Ludwig von Mises' "praxeology" was, quite frankly, a stroke of genius. For those who are unaware, "praxeology" is the conceptual analysis of "human action"; that is to say, "purposeful behavior", or "humans have ends and employ means to achieve those ends". What makes this concept axiomatic, (and not just merely postulational), is that if one were to attempt to make an argument against the statement, "humans act", then such an argument would itself be an action; that is, the "end" would be to refute the statement, "humans act", and the "means" would be the argument itself, and thus such an argument would be self-contradictory.
It is therefore somewhat stunning, (at least from a Georgist perspective), that Austrians, (including Mises), argue against making a distinction between land and capital since this seems to contradict the very praxeological method that Austrian economics rests upon!
From a Georgist perspective, "labor" is that factor of production involing human exertion. The distinction between "capital" and "land" is that capital is that material factor of production that is a product of labor, and land is that material factor of production that is not a product of labor.
Or from a (consistent) praxeological perspective, (and by extension, a consistent Austrian perspective), labor is a type of human action, capital is that material factor of production that is a product of human action, and land is that material factor of production that is not a product of human action.
This, to me, seems like the appropriate starting point for the Austrian analysis of land and capital.
Posted By: Edward J. Dodson
Date: 2009-11-04 13:16:07
What Rothbard (and most other libertarians) do not embrace is the labor and capital goods basis for private property that comes out of Henry George's analysis. George asks us to concur with him that the annual rental value of locations in our cities and towns (and all other natural resource-laden lands that have a rental value) is societal property. When we do, we also recognize that the collection of this societal property is not taxation. In fact, failure to collect this societal value extends a form of economic license to those who are left to enjoy imputed or actual rental values as an income stream. Taxation of our legitimate private property (i.e., the goods we produce or acquire by exchange for our labor) is, on the other hand, a form of wealth confiscation.
right edward, george saw the value in landed property as a "return" to everybody. he also saw it as a "remedy" for any prior force and fraud that led to land ownership.
what strikes me as odd, is the Libertarian view that the cost of property ownership should be socialized. the logic is, I have a "right" to exclusive ownership of any property i have the capital to purchase therefore society owes me the favor of establishing, protecting and upholding my right free of cost to me [spread over the aggregate population whether they own or not]. user fees don't make sense to libs [at least right libs] when it comes to landed property.
the ludwig von mises institute is the establishment's accepted debunking of karl marx. henry george is not accepted because it reconciles the differences, resulting in something, which isn't keynes.
vested interests can't rob people of half their income through taxation and the other half of their income of the other taxation called mortgage interest and rent if henry george is allowed to exist.
Posted By: Gilbert De Bruycker
Date: 2011-03-19 03:21:22
Rent cannot justly be privately appropriated because land is a good the value of which is produced by the community.
However, George did not address the case of interest earned by capital which had its origin in invested wealth derived from rent.
On the one hand, wealth with a clear moral title is exchanged for something to which, according to George, there can be no moral title; and the return to that something, namely, rent, cannot be legitimately appropriated privately, inasmuch as it arises from the effect of public activity and demand upon a passive source that was never legitimately owned privately.
On the other hand, the return from something to which there is no clear moral title is exchanged for wealth with a clear moral title, and this wealth is used to produce more wealth.
Interest originating from invested rent is analogous to laundered drug money and, the state should confiscate such interest - on the same grounds that it confiscates the assets of convicted drug dealers.
Granting Georges premise that the private appropriation of rent is unjust, what would be his verdict as to the private appropriation of that interest earned by capital which had its origin in invested wealth derived from rent?
Even as rent as a social product should be returned to the community, so justice demands that interest from such capital as may stem from rent should also be returned to the community.
However, capital usually undergoes so many combinations and permutations that it is impossible to trace all its titles to their origins. This implies that there is no feasible way by which to separate interest, derived indirectly from private rent, from interest which is justified according Georgist principles.
my own view would be that the more competitive and free a system becomes, the less "rent" that is collected, whether it originates from land or otherwise.
True enough, but as you say, working out which is legit and which is not would be far more effort than it's worth.
Once the source (ie the rent) is cut though that problem will resolve itself over time. I don't think it's an issue worth worrying over once the root cause is dealt with.
If land ownership were illegitimate, then how can any mineral extraction from the land be legitimate? By removing mineral from the land, be it iron, copper, most certainly naturally occuring mineral such as gold and quartz, you are certainly excluding others from taking the same thing from the very same piece of land. From there, how can any product that is ever made of anything then ever be legitimately considered "private" (as in everyone else being excluded from owning it)?
Rothbardian never asserted that the rest of the society is responsible for providing the defense of the property rights of any individual. It is that individual's own responsibility to provide adequate defence, including hiring specialists. Collection of rent is not a state responsiblity either in the Rothbardian view, but that of tprivate contracts, settled through private courts.
