letter to Gorbachev is bogus on its face

"...when you call the Gorbachev letter "Georgist,"
you are simply lying, as usual."
--------------------------------------------
---------------------------------------------

The following is distinctly Georgist. I am quite
confident that several of the supposed "signatories"
listed would never have signed off to such
nonsense, which is why the letter is bogus on its
face:-
------

Nicolaus Tideman (ntideman@xxxxxx)
Tue, 15 Dec 1998 12:56:21 -0500

In case you would like to see the open letter to
Gorbachev that Steve Malpezzi referred to, here it
is.

Nicolaus Tideman
-

November 7, 1990

Dear Mr. Gorbachev:

The movement of the Soviet Union to a market
economy will greatly enhance the prosperity of your
citizens. Your economists have learned much from
the experience of nations with economies based in
varying degrees on free markets. Your plans for
freely convertible currency, free trade, and
enterprises undertaken and managed by individuals
who receive the profit or bear the losses that result
from their decisions are all highly commendable.
But there is a danger that you will adopt features of
our economies that keep us from being as
prosperous as we might be. In particular, there is a
danger that you may follow us in allowing most of
the rent of land to be collected privately.

It is important that the rent of land be retained as a
source of government revenue. While the
governments of developed nations with market
economies collect some of the rent of land in taxes,
they do not collect nearly as much as they could,
and they therefore make unnecessarily great use of
taxes that impede their economies--taxes on such
things as incomes, sales and the value of capital.

Social collection of the rent of land and natural
resources serves three purposes. First, it guarantees
that no one dispossesses fellow citizens by
obtaining a disproportionate share of what nature
provides for humanity. Second, it provides revenue
with which governments can pay for socially
valuable activities without discouraging capital
formation or work effort, or interfering in other
ways with the efficient allocation of resources.
Third, the resulting revenue permits utility and other
services that have marked economies of scale or
density to be priced at levels conducive to their
efficient use.

The rental value of land arises from three sources.
The first is the inherent natural productivity of land,
combined with the fact that land is limited. The
second source of land value is the growth of
communities; the third is the provision of public
services. All citizens have equal claims on the
component of land value that arises from nature.
The component of land value that arises from
community growth and provision of services is the
most sensible source of revenue for financing public
services that raise the rental value of surrounding
land. These services include roads, urban transit
networks, parks, and public utility networks for
such services as electricity, telephones, water and
sewers. A public revenue system should strive to
collect as much of the rent of land as possible,
allocating the part of rent derived from nature to all
citizens equally, and the part derived from public
services to the governmental units that provide
those services. When governments collect the
increase in land value that results from the provision
of services, they are able to offer services at prices
that represent the marginal social cost of these
services, promoting efficient use of the services and
enhancing the rental value of the land where the
services are available. Government agencies that
use land should be charged the same rentals as
others for the land they use, or services will not be
adequately financed and agencies will not have
adequate incentive or guidance for economizing on
their use of land.

Some economists might be tempted to suggest that
the rent can be collected publicly simply by selling
land outright at auction. There are a number of
reasons why this is not a good idea. First, there is so
much land to be turned over to private management
that any effort to dispose of all of it in a short period
would result in an extreme depression in prices
offered. Second, some persons who could make
excellent use of land would be unable to raise
money for the purchase price. Collecting rent
annually provides access to land for persons with
limited access to credit. Third, subsequent resale of
land would enable speculators to make large profits
unrelated to any produc- tive services they offer,
resulting in needless inequity and dissatisfaction.
Fourth, concern about future political conditions
would tend to depress offers. Collecting rent
annually permits the citizens of future years to
capture the benefits of good future public policies.
Fifth, because investors tend to be averse to risk,
general uncertainty about the future will tend to
depress offers. This risk aversion is sidestepped by
allowing future rental payments to be determined by
future conditions. Finally, the future rent of land can
more justly be claimed by future generations than
by today's citizens. Requiring annual payments
from the users of land allows each year's population
to claim that year's rent. While the proceeds of sales
could be invested for the benefit of future
generations, not collecting the money in advance
guarantees the heritage of the future against
political excesses.

The attached Appendix provides a brief technical
discussion of issues of the duration of rights to use
land, the transfer of land, the assessment of land,
social protection against the abuse and subsequent
abandonment of run2Ddown property, and
redistribution among localities to adjust for
differences in natural per capita endowments. While
these issues need to be addressed, none of them
present insoluble problems.

A balance should be kept between allowing the
managers of property to retain value derived from
their own efforts to maintain and improve property,
and securing for public use the naturally inherent
and socially created value of land. Users of land
should not be allowed to acquire rights of indefinite
duration for single payments. For efficiency, for
adequate revenue and for justice, every user of land
should be required to make an annual payment to
the local government, equal to the current rental
value of the land that he or she prevents others from
using.

Sincerely,

Nicolaus Tideman, Professor of Economics Virginia
Polytechnic Institute and State University

William Vickrey, President for 1992 American
Economic Association

Mason Gaffney, Professor of Economics University
of California, Irvine

Lowell Harriss, Professor Emeritus of Economics
Columbia University Jacques Thisse, Professor of
Economics Center for Operations Research and
Econometrics University Catholique de Louvain,
Belgium

Charles Goetz, Joseph M. Hartfield Professor of
Law University of Virginia School of Law

Gene Wunderlich, Senior Agricultural Economist
Economic Research Service, U.S. Department of
Agriculture

Daniel R. Fusfeld, Professor Emeritus of Economics
University of Michigan

Elizabeth Clayton, Professor of Economics
University of Missouri at St. Louis

Robert Dorfman, Professor Emeritus of Political
Economy Harvard University

Carl Kaysen, Professor of Economics
Massachusetts Institute of Technology

Tibor Scitovsky, Emeritus Eberle Professor of
Economics Stanford University

Richard Goode Washington, D.C.

Susan Rose-Ackerman, Eli Professor of Law and
Political Economy Yale Law School

James Tobin, Sterling Professor Emeritus of
Economics Yale University

Richard Musgrave, Professor Emeritus of Political
Economy Harvard University

Franco Modigliani, Professor Emeritus of
Economics Massachusetts Institute of Technology

Warren J. Samuels, Professor of Economics
Michigan State University

Guy Orcutt, Professor Emeritus of Economics Yale
University

Eugene Smolensky, Dean of the School of Public
Policy University of California, Berkeley

Ted Gwartney, Real Estate Appraiser and Assessor
Anaheim, California

Oliver Oldman, Learned Hand Professor of Law
Harvard University

Zvi Griliches, Professor of Economics Harvard
University

William Baumol, Professor of Economics Princeton
University

Gustav Ranis, Frank Altschul Professor of
International Economics Yale University

John Helliwell, Prefessor of Economics University
of British Columbia

Giulio Pontecorvo, Professor Graduate School of
Business, Economics and Banking, Columbia
University

Robert Solow, Institute Professor of Economics
Massachusetts Institute of Technology

Alfred Kahn Ithaca, New York

Harvey Levin, Augustus B. Weller Professor of
Economics Hofstra University

The names of individuals appear in the order in
which they agreed to sign the letter. No individual
speaks for any organization with which he or she is
affiliated.

Appendix on Technical Issues

All individuals and enterprises should have the right
to continue using the land they have been using, for
as long as they are prepared to pay the rent of that
land. The amount of rent to be paid will vary as the
economy evolves. As is traditional in countries with
market economies, if land is needed for some public
purpose such as a highway, the judicial process
should guarantee the user fair compensation for any
improvements that have been made in good faith.
Every user of land should also have the right to
transfer ownership of the improvements on the land,
together with the right to continue using the land
upon payment of rent, to any buyer on any terms
upon which they mutually agree.

For the rent of land to be collected publicly, land
must be assessed, and then reassessed regularly.
The assessment process is simplified by the fact that
land rental values tend to change smoothly with
location. Initially, a map of the value of land can be
made by auctioning scattered sites on a rental basis,
and then interpolating for the value of other sites,
based on the experience of Western appraisers and
assessors regarding the manner in which the value
of land varies systematically. To update
assessments in future years, the assessment office
would auction sites that had been relinquished by
their users, or sites with improvements that were
almost fully depreciated, that had been acquired in
voluntary transactions. Interpolation would again be
used to estimate the rent of sites that had not been
transferred.

With all or nearly all of the rent of land collected
publicly, it would be necessary to guard against the
possibility that users of land with fully depreciated
improvements would abandon their property,
leaving the State to demolish the improvements in
preparation for the next use of the site. This
potential problem can be avoided by requiring every
user of land to post a government bond as a
"security deposit" that the land will not be
abandoned in a run-down condition. Interest on the
bond could be applied to the annual rent.

Collection of the rent of land is best managed by
local governments, but justice, as well as efficiency
in migration incentives, requires that the part of rent
that is attributable to nature rather than community
development be shared on an equal per capita basis.
Thus there is need of clearinghouse mechanism,
into which all localities would deposit collections of
rent from nature in excess of the average per capita
amount, and from which other localities would
receive compensation for their deficiencies of rent
from nature, relative to the average per capita
amount.
-


On Apr 2, 2:29 am, r...@xxxxxxxxx wrote:

.

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