Re: von Mises Institute on Henry George

From: sinister (sinister_at_nospam.invalid)
Date: 08/21/04 

Date: Sat, 21 Aug 2004 11:14:32 GMT

"Grinch" <oldnasty@mindspring.com> wrote in message
news:b3fci0llo4svtaskfjse5gq0don0pp1oap@4ax.com...
> On 20 Aug 2004 06:27:13 -0700, ruetheday@outgun.com (Rue The Day)
> wrote:
>
> >http://www.mises.org/fullstory.aspx?control=1592&id=71
> >
> >They praise him endlessly for his writings on free trade and
> >protectionism, but then end the paper with a couple of sentences about
> >how he was wrong on the land issue "because Rothbard said so".
> >Classic.
>
> Well, George was right about free trade. As to the rest, I dunno ...
>
>
> "Ricardo's concept of land, 'the original and indestructible powers
> of the soil', is no longer adequate, if ever it was.
> "The share of national income that accrues as land rent and the
> associated social and political importance of landlords have declined
> markedly over time in high income countries and they are also
> declining in low income countries...."
>
> -- Theodore W. Schultz, Nobel Prize Lecture.
>
> Oh, Ricardian rent, where is thy sting??? ;-)

But you left out the context: regardless of whether he's right or wrong,
Schultz was speaking about agriculture, not rent accruing in e.g. urban
areas.

>From http://www.nobel.se/economics/laureates/1979/schultz-lecture.html

"Despite economic history, scratch an economist and you will find that his
ideas about land are still, as a rule, those of Ricardo. But Ricardo's
concept of land, 'the original and indestructible powers of the soil', is no
longer adequate, if ever it was. The share of national income that accrues
as land rent and the associated social and political importance of landlords
have declined markedly over time in high income countries and they are also
declining in low income countries. Why is Ricardian Rent losing its economic
sting? There are two primary reasons: first, the modernization of
agriculture has over time transformed raw land into a vastly more productive
resource than it was in its natural state, and second, agricultural research
has provided substitutes for cropland. With some local exceptions, the
original soils of Europe were poor in quality. They are today highly
productive. The original soils of Finland were less productive that the
nearby western parts of the Soviet Union, yet today the croplands of Finland
are superior. Japanese croplands were originally much inferior to those in
Northern India; they are greatly superior today. Some part of these changes,
both in high and in low income countries, is the consequence of agricultural
research including the research embodied in purchased agricultural inputs.
There are new substitutes for cropland (call it land augmentation if you so
prefer). The substitution process is well illustrated by corn. The corn
acreage harvested in the United States in 1970 was 33 million acres less
than in 1932. Yet the 7.59 billion bushels produced in 1979 was three times
the amount produced in 1932."

> ~~~~~~~~
>
> "Be it as it may, Progress and Poverty, a wonderful example
> of old-style classical economics, was thirty years out of date the day
> it was published"
>
> -- Marc Blaug, _Economic Theory in Retrospect_ (all five editions).

You didn't provide any context. The most obvious interpretation is that the
analytical method in _Progress and Poverty_ was not mathematically "modern."

However, you can say the same thing about Ricardo's analysis of rent. That
doesn't mean it's wrong. Indeed:
>From http://www.econlib.org/library/Enc/bios/Ricardo.html
"Writing a century before Paul Samuelson and other modern economists
popularized the use of equations, Ricardo is still esteemed for his uncanny
ability to arrive at complex conclusions without any of the mathematical
tools now deemed essential. As economist David Friedman put it in his 1990
textbook, Price Theory, 'The modern economist reading Ricardo's Principles
feels rather as a member of one of the Mount Everest expeditions would feel
if, arriving at the top of the mountain, he encountered a hiker clad in
T-shirt and tennis shoes.'
"One of Ricardo's chief contributions, arrived at without mathematical
tools, is his theory of rents. Borrowing from Malthus, with whom Ricardo was
closely, but often diametrically, associated, Ricardo explained that as more
land was cultivated, farmers would have to start using less productive land.
But because a bushel of corn from less productive land sells for the same
price as a bushel from highly productive land, tenant farmers would be
willing to pay more to rent the highly productive land. Result: the
landowners, not the tenant farmers, are the ones who gain from productive
land. This finding has withstood the test of time. Economists use Ricardian
reasoning today to explain why agricultural price supports do not help
farmers per se but do make owners of farmland wealthier. Economists use
similar reasoning to explain why the beneficiaries of laws that restrict the
number of taxicabs are not cab drivers per se but rather those who owned the
limited number of taxi medallions (licenses) when the restriction was first
imposed."

>
> ~~~~~~~
>
> "The claim that any price system in which land earns rents and
> capital earns quasi-rents is ipso facto exploitative and unfair is
> simply completely wrong. "
>
> -- J. Bradford DeLong, PhD, economist, Berkeley, NBER, "& proud
> member of 2ndC-COPESTOG* " says his vitae (? Huh?)

Again, you provide no context, link, etc.

> ~~~~~~~~
>
> Imagine... Nobel winners who specialize in the field, authors of top
> textbooks on economic history, and even 21st-Century econo-blogging
> professors all agree with that dummy Rothbard as far as "George and
> the land issue" is concerned!

You provided no evidence that they agreed with Rothbard's particular
arguments.

> How's that happen?
>
> Quite seriously, just how's that happen?

It didn't happen...

> I mean, one can't consider oneself really informed on an issue unless
> one understands *both* sides of it -- and that means one must be
> capable of fairly, accurately and with understanding presenting the
> *other* side's arguments -- and only then will presenting one's own to
> answer them specifically be convincing.
>
> After all, simply proclaimingoneself to be right right and the other
> guys wrong without knowing or understanding what the other guys are
> saying, is not reason -- it is ideology, religion, posturing,
> whatever.
>
> So, can you explain to us, just *what* is the argument that Nobelists,
> and leading economic historians, and 21st-century tenured
> econo-blogging professors use when they say the Ricardian/Georgist
> take on the land issue is "no longer adequate, if ever it was" ...
> "thirty years out of date [in 1880]" ... "simply completely wrong."

So why did Nobelist Milton Friedman endorse LVT?

And, again, Blaug didn't say _Progress and Poverty_ was *wrong*; he said it
was "out of date." One can argue that the analysis in Newton's _Principia_
is also out of date. Does that make it wrong? Nope.

> It must be *plausible* reasoning or they wouldn't embarrass themselves
> in public by using it over and over, eh?

A ringing endorsement for argument by appeal to authority!!

> Can you explain to us, fairly, this plausible reasoning they use?
>
> Before answering it? (Much less ridiculing it!)
>
> Have you bothered to learn what it is?

Pretty hard to do that when you don't provide context, links, etc.

> And can you show how they relate their reasoning to the *fact* that:
>
> "The share of national income that accrues as land rent and the
> associated social and political importance of landlords have declined
> markedly over time..." ?
>
> *After* you do that, *then* you might be convincing in answering them
> and giving us the analysis that trumps them, and that also squares
> Georgism with the fact of the share of national income going to land
> rent declining markedly over time everywhere.
>
> (As long as you don't follow Roy's course of "it's a conspiracy of the
> national record keepers to fake the official data, Schultz was lying
> his ass off to the King of Sweden and the Conspiracy keeps everyone in
> the whole world from calling him on it!" That's not convincing *at
> all*.<g>)

No, you're lying your ass off when you don't include the context that
Schultz was speaking about something else: agricultural development. "Why
is Ricardian Rent losing its economic sting? There are two primary reasons:
first, the modernization of *agriculture* has over time transformed raw land
into a vastly more productive resource than it was in its natural state, and
second, *agricultural* research has provided substitutes for *cropland*."
And the relevance of this to land being used for non-agricultural purposes
is...?

> So ... I'll be waiting for an explanation of their reasoning which
> you believe you've been refuting all along.
>
> But don't worry if you can't come up with it, just say so and I'll
> help you with it.
>
> I'm a helpful guy!

Right...a helpful guy, full of logical fallacies, snips out context to make
quotations misleading, etc.

>
> ~~~~~~~~~~
> * Oh, I found it! "2nd Century of the Conspiracy of Professional
> Economists Suppressing the Truth Of George" ;-)
>
>

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