Re: Don't Forget Mises -- and Dump the Third Way!

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Date: Sat, 18 Sep 2004 22:27:46 GMT

On Sat, 18 Sep 2004 11:03:31 -0400, jmh <j_m_h@cox.net> wrote:

>royls@telus.net wrote:
>> On Mon, 13 Sep 2004 12:33:14 -0400, jmh <j_m_h@cox.net> wrote:
>>
>>>royls@telus.net wrote:
>>>
>>>>On Sat, 11 Sep 2004 11:07:23 -0400, jmh <j_m_h@cox.net> wrote:
>>>>
>>>>>royls@telus.net wrote:
>>>>>
>>>>>>On Fri, 10 Sep 2004 12:48:24 -0400, jmh <j_m_h@cox.net> wrote:
>>>>>>
>>>>>>>royls@telus.net wrote:
>>>>>>>
>>>>>>>>On Thu, 09 Sep 2004 22:29:54 -0400, jmh <j_m_h@cox.net> wrote:
>>>>>>>>
>>>>>>>>>royls@telus.net wrote:
>>>>>>>>>
>>>>>>>>>>On Wed, 08 Sep 2004 18:43:36 -0500, Albert <alwagner@tcac.net> wrote:
>>>>>>>>>
>>>>>>>>>The land input is still a productive
>>>>>>>>>factor input for which the owner wants some compensation.
>>>>>>>>
>>>>>>>>Simply _wanting_ something for nothing is not the same as earning
>>>>>>>>something by making a contribution. There is no doubt that land is a
>>>>>>>>production factor. The point is, the landowner's only function is to
>>>>>>>>collect money in return for not interfering with production. It's
>>>>>>>>morally and economically equivalent to a protection racket.
>>>>>>>
>>>>>>>Which implies that all Georgists are racketeers.
>>>>>>
>>>>>>??? Nonsense. Unlike the private landowner, the community _does_
>>>>>>have a function other than collecting the rent: to provide the
>>>>>>services, infrastructure, opportunities and amenities that create it.
>>>>>
>>>>>The fact that the community then takes the money and spends
>>>>>it elsewhere, which may or may not be valuable expenditures
>>>>>for everyone, is beside the point.
>>>>
>>>>No, it is not. We are assuming a responsible, democratic government
>>>>that acts on behalf of and in the interest of the community, not a
>>>>despot that takes the land rent and spends it on foreign wars. The
>>>>services, infrastructure, opportunities and amenities the community
>>>>provides are what create the land rent.
>>>
>>>What the rent is spent on does not matter,
>>
>> ??? Of course it does. The fact that it is the community that
>> creates the land rent, and that some of the costs it incurs thereby
>> can be recovered by charging for access to the land is very much to
>> the point.
>
>You're addressing the wrong point.

It is ever thus when I prove you wrong....

>You are starting
>from the presumption that someone is collecting the
>rent and saying that the rent is largely driven my
>network effects.

Both are facts, not presumptions.

>My claim was that no one can
>charge a rent for access to Land if we're taking
>a production-based theory of ownership--not the
>person and not the community as neigher created
>Land.

Wrong. Unlike the private landowner who seeks to own and to charge
others rent for what he never produced, the community does not claim
to own the land. It just administers possession and use thereof.
Similarly, the community does not claim to own its citizens, yet it
administers the legal framework within which they interact with each
other, assume and discharge obligations to each other, etc.

>The access fee to Land, be it charged by
>a person or a group is not legitimized by the
>claim that the fee will be spend on good things
>or even mostly given back to the person required
>to pay.

I agree that the fundamental justification for the community to charge
rent is not that the money will necessarily be wisely spent, but
rather that the community created the rent, and no one has any better
claim to it.
 
>>>Also, is that
>>>an implicit refutation of the Coase Therom?
>>
>> The Coase Theorem isn't about the real world. It's just an abstract
>> mathematical exercise.
>
>It certainly appears to underly an aweful lot of
>empirical studies and analysis within Law and Economics.

Most of them quite divorced from reality.

>Would you say the same thing about a demand curve?

To a certain degree, yes. Demand curves are sometimes drawn this way,
sometimes that, to suit whatever arguments are being made.

>It doesn't really exist in the real world either;
>it's just and abstract mathematical exercise that
>helps people organize thoughts for analysis and
>tends to produce fairly good results.

Demand curves are closer to reality and thus more useful than Coasian
arguments, which seem to me often intended to obscure rather than
illuminate the relevant issues.
 
>>>>>>>My statements have been made in the context of *given*
>>>>>>>ownership and not in the context of "why* or *how*
>>>>>>>ownership. I don't deny that that those are not important
>>>>>>>or interesting questions, only that they were not part
>>>>>>>of the inital claims about what is and is not productive
>>>>>>>and the follow claim that only that which is productive
>>>>>>>can claim a share of the output.
>>>>>>
>>>>>>The issue then is to define what is a "contribution to" production,
>>>>>>and the matter should be disputed on that basis, not on the basis of
>>>>>>who has a legal right to claim a share of it.
>>>>>
>>>>>Which should have been pretty clear from the discussion:
>>>>>the productivity of the factor included in the production
>>>>>process.
>>>>
>>>>Fine. Based on the productivity of the production factor owned, the
>>>>private landowner has just as much right to the land rent as the slave
>>>>owner has to his slaves' products.
>>>
>>>Or, as the discussion was actually being conducted,
>>>as the worker providing Labor or the investor
>>>providing Capital.
>>
>> Right. The difference is that unlike the claims of the landowner and
>> slave owner, the claims of the worker and capitalist are _not_ based
>> on nothing whatever other than formal ownership of a production
>> factor. They are based on their respective
>> _contributions_to_production, which would not have existed or been
>> contributed to production but for their efforts.
>
>But here is where we've been either at odds or cross
>purposes.

No, more accurately, here is where I am right and you are wrong as a
matter of objective fact.

>Neither the community nor the governemnt
>did anything related to the productive of the land.

That is of course just flat false.

>What you start to focus on here is that value generated
>through network effects that are collected in the form
>of land rents. That's actually a horse of a different
>color--but I do agree a natural distinction can be
>made between Land, Capital and Labor in this area
>that allows a non-arbitraty distinction between
>Land a the other two facotrs in terms of how we treat
>that value.

OK.

>At the same time there is a totally
>arbitrary way in which you threat the value generated
>by the network effects by granting that value be
>collected and kept by the owners of both
>Labor and Capital but not Land owners.

No. It is not arbitrary in the least. Because the elasticity of
supply for land is zero, the value generated by the network effects
all tends to go to land rent, none of it to labor or capital.

>Clearly
>there is a fairly large portion of the income
>going to both Labor and Capital that is due
>to the network effects present and completely
>independant of the direct contribution of either
>factor.

It _goes_ to labor or capital, but it doesn't _stay_ with labor or
capital.

Look at the difference in who actually _gets_ the value due to network
effects built up over the last several hundred years, which I think
you will agree is a stupendous amount of money.

The capitalist? Nope. Despite the fact that the modern equipment he
has created or paid others to create may be _millions_ of times as
productive as the primitive tools owned by his forebears, competition
ensures that he gets just a few percent a year on his investment, just
the same as -- or more likely, less than -- his forebears.

The worker? Nope. Despite the fact that he is _thousands_ of times
as productive as his forebear, he still gets just enough to eat, put a
roof over his head, and raise his kids (the improvement in his typical
standard of living being largely due to the fact that he has so many
fewer kids to raise than his forebear had).

The landowner? Bingo. Anyone who is willing can see clearly where
those thousands and millions of times greater productivity of labor
and capital have all gone: land rent, which, on the
_exact_same_piece_of_ground_, is now thousands or millions of times
greater than it was for the landowner's forebears centuries ago.

>Your "Right, The difference is that unlike..."
>then becomes a somewhat arbitraty claim.

Nope. It is fact. See above.
 
>>>>>But even here we're still moving away from the
>>>>>origianl point I was making. The argument being made that
>>>>>only Labor is productive was invalid and the disproof was
>>>>>to apply the claim to Labor and prove that Labor was
>>>>>not productive. Recall, the claim was that Capital on
>>>>>it's own doesn't do anything, it needs to be combined
>>>>>with Labor. Well, Labor in isolation from other inputs
>>>>>also has an output of 0; therefore Labor is unproductive.
>>>>>The argument was then shifted to Labor is the only
>>>>>"active agent" to shich I pointed out being active was not
>>>>>the same a productive and was never part of the definition
>>>>>of "productive".
>>>>
>>>>I agree, the claim that "only labor is productive" is either unclear,
>>>>unwarranted, or too broad to be meaningful.
>>>
>>>Which is why I am surprised at difficulty I had with
>>>you on this basic point
>>
>> You have never had any difficulty with me on that point. Perhaps you
>> are thinking of Albert.
>
>But Roy this entire discussion arose from that very point
>and the side track into the whole LVT/Gerorgist approach.

I only entered this part of the discussion to correct your statement
that the returns to the owners of land and capital are justified by
the productivity of the assets.

>The only objection I've really be raising--though it's
>made in several contexts so that's probably less than
>crystal clear--has been your claim that the community
>or government has any moral right to charge a fee for
>access to Land.

I don't know exactly what you intend by a "moral right." The
community administers peaceful possession and use of the land for the
benefit of all, provides security of tenure to the user, and creates
the land rent, all at considerable expense to the taxpayer. Who on
earth has a better moral right to the rent?

>This is not an issue about LVT or even
>Land Value. The use vale of land is not always driven
>by the network effects that underly the LVT perspective.

Even when land rent isn't driven by the advantages provided by
government and the community (which in that case are not what
primarily underlie the LVT perspective), security of tenure is
provided by government and the community, and more to the point, no
one else has a better claim to the rent.

>For some people and for some activities those network
>effects are unimportant within the contect of a specific
>activity. For those cases then the required fee for access
>to existing available land is little different than the
>private ownership case or the protection racket analogy.

Garbage. Land rent only exists where more than one person wants to
use the land. In the rare cases where propective users' desire to use
the land does not arise primarily from the advantages conferred by
government and the community, it is still the case that without the
security of tenure provided by government, any private user would be
subject to forcible dispossession by a rival claimant, and the land
would consequently be worthless as a production factor.

>You cannot make the moral case for Georgism,

I can, and have.

>only
>a (and won't say it's a bad one--or the best one either)
>pragmatic case. It's be you're essential insistance on
>the moral case that I've been disagreeing with.

Yet you cannot disprove a single statement I have made, while I have
disproved many of yours.
 
>>>and the resultant detour
>>>into the echange we had.
>>
>> The detour occurred because you claimed that the claims of capitalists
>> and landowners to their respective shares of output were equivalent.
>> They are not, and I accordingly corrected you.
>
>No, the detour occurred because you claimed that it
>the georgist propostion of collecting a fee for using
>land was justified by how the collected funds were spent.

No, the justification was that the rent arose as a result of previous
community spending, which should rightly be paid for by the ultimate
true beneficiaries thereof.

>I suppose I should have pointed out that your argument
>only explains the magnitude of the rents collected
>but does not justify the basic claim of collecting
>rent for access to Land per se.

Someone is going to collect the rent. Who has a better claim?

-- Roy L

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