Re: what's wrong with eastern germans?

royls_at_telus.net
Date: 08/12/04 

Date: Thu, 12 Aug 2004 21:39:05 GMT

On Thu, 12 Aug 2004 20:04:34 +0200, "Volker Hetzer"
<volker.hetzer@ieee.org> wrote:

><royls@telus.net> schrieb im Newsbeitrag news:411ac2f7.2591389@news.telus.net...
>> On Wed, 11 Aug 2004 16:03:42 +0200, "Volker Hetzer"
>> <volker.hetzer@ieee.org> wrote:
>>
>> ><royls@telus.net> schrieb im Newsbeitrag news:4113c2bb.3210837@news.telus.net...
>> >> Of course. When it decided to give away all the additional land value
>> >> it was going to create with that spending to idle private landowners
>> >> for doing nothing, it guaranteed the failure of all its efforts. It's
>> >> like trying to fill a leaky tank: first you have to patch the hole.
>> >Can you run that by me again?
>> The spending of a competent government almost all ends up as increased
>> land rent. When the land is privately owned, and the land rent is
>> captured and retained by private landowners, it is effectively a
>> massive welfare subsidy giveaway, but to the rich instead of the poor.
>Ok, so I presume you mean new access roads and buried glass fiber cables
>and such?

When a competent government spends money on pretty much anything, the
effect is almost always to make the land within its borders more
desirable. That means increased land rents. How much more desirable
do you think the land in Germany's eastern states has become since
reunification? I would estimate that the total land value increase is
probably on the order of $1T. Most of that immense value was simply
given away to private landowners for doing nothing. What would it
have bought for the East German economy and people had it not been
given away to the rich?

>The government puts up infrastructure and hopes that companies start there,
>or private citizens use the facilities (like use the internet), right?
>What would you suggest?

I would suggest that the government pay for the services and
infrastructure the community wants by recovering the value the
community creates, rather than by stealing the value private
individuals and firms create.
 
>> Land rent amounts to about 20% of GDP in a modern industrial economy.
>> That is a very large amount of money to be giving away to the rich for
>> doing nothing. Germany cannot really afford to do that, and hope to
>> foster a healthy economy in its eastern states: most of the government
>> spending there just leaks out into the hands of private landowners,
>> guaranteeing economic failure.
>Typically cities sell off their land because they need short term cash
>or because they lack the cash to develop an area.

No. They sell it off because they do the bidding of wealthy private
interests who demand ever larger flows of unearned wealth into their
pockets.

>Also, if I understand you correctly, taxation of companies would also
>count as "land rent"?

No, although most taxes do flow through to land in at least some
degree.

>Yet everybody complains that germanys taxes
>are too high.

All Germany's taxes are too high except the tax on land rent, which is
far too low.

>> All the land which was formerly public in East Germany
>> and is now private represents value that is being created by
>> government and the community, and given away to private (mainly West
>> German and foreign) landowners.
>Well, that was in the unification contract.

Yes, I know. As in the XSSR, the requirement that the increased land
value resulting from desocialization be given away to wealthy private
interests for doing nothing had absolute and unconditional priority
over all other considerations. Everything was negotiable except that.

>Property was to be handed back
>instead of compensated. (Don't ask me to comment on this.)

I am commenting on it. The former landowners demanded, and got,
immense quantities of unearned wealth, most of it in effect stolen
from West German taxpayers, with the predictable result of prolonged
economic depression and unemployment in the former East Germany and a
crushing tax burden in the former West Germany. German landowners did
the same sort of thing in the 1920s and 1930s, with results that we
all know all too well.

"The only thing we learn from history is that we learn nothing from
history." -- Friedrich Hegel

>Tax breaks
>(if you agree that they count)

Depends what taxes get broken.

>are used to attract business.

Right. To counteract the economic damage caused by giving away too
much money to the rich, the government gives away more money to the
rich...

>> Land rent is the value one can
>> get for use of land or other natural resources.
>You lost me here again. The government should own land and administer it
>in a profitable way?

Government administers possession and use of land in any case. All
governments do this, because that's what government _is_. And it
makes perfect sense, because the rent of land is publicly, not
privately created.

So the main question is, will the government administer the land in
such a way as to give the rent away to privileged private landowners
who do not create it, or will it administer the land in such a way
that the rent is recovered and used for the purposes of the community
that does create it?

>> It is created by
>> government and the community, not by the owner who gets to pocket it.
>
>Please have patience with my density but I don't think I have understood what
>you mean,

Right. You are an intelligent and reasonably well informed
individual, and yet you are completely ignorant of the facts of
economics regarding land. Who do you think has kept you ignorant of
those facts, and why?

>so here's what I *think* you mean:
>There are publicly owned ressources like forests, estate in cities and so on.

The rent of land is publicly created whether it is privately or
publicly owned.

>Now, the government can try to derive some income from it (which you
>call rent) or it can sell it off.

The rent exists whether it is recovered to pay for the public services
and infrastructure that create it, or given away to private landowners
for doing nothing. Selling off public land just means that the buyer
is buying the land from the community rather than a private owner.
But for reasons I have explained in previous threads, selling public
land cannot recover the full value of the future rents, especially
when a large amount is sold in a short period of time.

>For some reason you think that government owned (or administered) property
>is better for the society than privately owned (or administered) property.

No, for some reason I think that private ownership of privately
created value and public ownership of publicly created value is better
for society than either public appropriation of privately created
value or private appropriation of publicly created value.

>If that's your point then I have to say I'd love to see a sensible and accountable
>government do well with the ressources entrusted to them.

Singapore and Hong Kong have done very well by leasing out publicly
owned land. So did ancient Rome. The fraction of publicly created
land rent that is recovered for public purposes is one of the best
predictors of economic growth and prosperity (the only better one
being the fraction of privately created value that is retained by its
private creators and devoted to their purposes).

>However, all the
>governments I have known were neither sensible nor accountable (old and
>new governments) and generally botched the job.

Meiji Japan achieved the highest economic growth and the most rapid
modernization of industry ever seen in the history of the world up to
that time. It did so while financing its government almost
exclusively by a 2.5% annual tax on land value. East Germany could
achieve similar results by adopting a similar policy. In fact, almost
any underdeveloped country could.

-- Roy L

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