Re: 1911 Reference Book Defines Georgism

royls@xxxxxxxxx wrote:
On Wed, 03 Oct 2007 15:54:59 -0500, "lysander@xxxxxxxxxxx"
<lysander@xxxxxxxxxxx> wrote:

No, you didn't post any data, that is just another lie; and the
arguments have all been proved fallacious.


The data are in the citations if Roy can understand them. These papers do not assume correlation means causation.

http://www.worldbank.org/urban/symposium2007/papers/whitehead.pdf

"Changing emphases
In practice the starting point for the Bank has tended to be strongly market oriented with
much of the emphasis on improving property rights, getting rid of regulatory constraints
and encouraging the use of pricing both to improve resource allocation and to generate
revenue. In particular much of the analysis has been concentrated on identifying land
supply elasticities and much of the policy on attempting to increase these elasticities.
An over simple version of their implicit model is set out in figure 1. If left to the market
the supply is seen as nearly infinitely elastic. Regulation introduces inelasticites,
increasing price, reducing the amount of land made available and reallocating wealth to
land owners. The deadweight loss is the triangle abc and is likely to be significant. As
such it is a comparative static equilibrium model with no externalities or other market
failures.
The evidence to support this approach comes from detailed case studies of housing
markets across the range of developed and developing countries (refs Malpezzi and
Mayo, Malpezzi and Maclennan; Swank et al; Barker etc) These tend to show that
supply elasticities vary enormously between countries – and, where data are available,
between different areas of each country. In particular they show that in Korea, Malaysia,
the UK and in most European countries all of which have well developed regulatory
environments elasticites are low, ranging from 0.5 – 2.0.. Implicitly in most developing
countries formal sector supply elasticities are similarly low although informal sector
development may reflect underlying greater elasticity. The exceptions identified are
Thailand and the United States – with supply elasticities up to 10 in the US. Both of these
countries are seen to have strongly market oriented frameworks which favour
development. The conclusion therefore appears to follow that regulation is more likely
to do more harm than good."


....

"First the supply of raw land in most developed countries is undoubtedly potentially
elastic – except in countries with extreme constraints. Even Hong Kong and Singapore
have not fully developed all the land in their countries. In most countries only a small
part of the surface area has been subject to development. However raw land in most
instances is not the relevant variable. What matters is developable land with services
and accessibility.
The most obvious reason why land may not be readily supplied is the provision of
infrastructure – which normally requires a reasonable clear plan to reduce risk and ensure
provision – let alone the capacity to finance investment with very long term payouts and
often very limited capacity to raise revenue directly from the services – such as roads –
provided.
Secondly it is not always possible to replicate accessibility simply by constant levels of
investment – to that extent the cost of land with similar attributes increases as the urban
system becomes larger. At the same time the costs of intensifying the use of the urban
area increase with the density of use of land. Both of these factors mean that the cost of
expanding equally productive land may rise with scale. The underlying supply elasticity
is therefore necessarily more inelastic.
In addition as urban systems grow and urban activities expand there is increasing
evidence of negative externalities associated both with congestion of transport and
utilities and of pollution which impact on health and wellbeing of the population but also
on climate and sustainability. These shift the optimal supply curve to the left. Moreover
regulation may be the simplest way of taking these factors into account.
Three important consequences follow from this discussion:
• the supply curve of serviced urban land is likely to be relatively inelastic – and the
more so the more the urban system is developed successfully;
• as the costs of land are increased by development the price of that land is also
higher;
• regulation may properly reflect the costs of negative externalities and at the same
time may increase the benefits achieved by individuals – and therefore further
increase the price."

Side note http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTURBANDEVELOPMENT/EXTHOUSINGLAND/0,,menuPK:341083~pagePK:149018~piPK:149093~theSitePK:341077,00.html

shows how bank lending on real capital has increased.


http://www.informaworld.com/smpp/content~content=a713774788~db=all

"If land taxation is to be used as an instrument of land-use planning, then it is the intention that the taxation affect land use. If land is taxed so as to raise income for the public purse, or if charges are levied on development to help finance the associated external works, then it is usually the intention that the tax has no, or only a small, effect on land use. The size of these effects can be estimated if the price elasticities of demand for, and supply of, land are known. This paper sets out the theory necessary for making these estimations, and applies it to some topical issues in the Netherlands. The estimated price elasticities are low. As a result, it is predicted that the effects on land use of some taxes which have been proposed (to reduce the use of land for house building, and to stimulate the use of contaminated land and brownfield sites) would be small."

Note low not 0.

http://books.google.com/books?id=4nd6alor2goC&pg=PA81&lpg=PA81&dq=elasticity+of+supply+raw+land&source=web&ots=mFbTLRVM5w&sig=72YLJTbhJJq2_4y1mCEGmMxQqR8

pg. 81 shows my argument for why land is like another good and not necessiarly perfectly elastic. "But in reality, natural resources do not differ form the run of capital goods in that they require inital development and subsequent maintenance charges. If by land we mean resources given by nature for use without cost, a large part of territorial resources are not land at all: fields that have to be drained, cleared, and manuered are as much the product of past labor as machines. If land is a factor of production, it must be said to exist of the heritage of equipment and improvements of the past given to the present generation as free goods. The classical predisposition to regard land as not producible is largely due to thinking of land in physical rather than economic terms. "

My argument exactly.

What we add,

" ... for the most part, modern economist have abandoned notion that there is a need for any special treatment of rent. In a long-run stationary equilibrium, the total product is resolvable in wages and interest payments to labor and capital (Note this means P=MC=AC)- there is no third factor of production- and the theory of marginal rent is only of interest because it marks the first apparence of the marginal theory in economic theory."

This book is actually a very good text on economic history.

.

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