Re: Historical comparisons

on 14 Mar 2006 20:17:00 -0800, William Mook <william.mook@xxxxxxxxxxxxxxxxx> sez:
` Thanks pete for that concise and informative reply! I learned
` something! lol.

` I have a few problems with Henry George's analysis; Here they are;

` THE EARTH IS NOT A PRODUCT OF HUMAN EFFORT - This is true,but not
` germaine, since the Earth in its natural state is useless to human
` society. To be useful,the earth must be developed. Also the degree of
` utility can vary based on the knowledge and creativity of the
` developer. So, the question for the human race becomes how do we
` inspire people to create ever more efficient methods of using the earth
` to benefit the rest of humanity. Clearly allowing developers to OWN the
` WEALTH they create, is one way of achieving this.

The (modern) Georgist would respond that every square inch of earth
has utility because it intercepts some quantity of solar energy
at least some of the time. The original Georgist argument went something
like at the bottom, you can usually extract some minimal amount of
farming or mining, or something, out of any plot of land. If someone
declares ownership of that land simply in order to keep other people
from using it, to extort a rent in order to permit the landless to
have access in order to eak out a subsistence living, then that owner
is preventing gainful use of the land, and earning either rent or
speculative profit from future sale, while not themselves contributing
anything in return. And going back in history, all land ownership
traces back to conquest, essentially to armed bullies and their
henchmen who declared their ownership by right of force of arms,
in effect stealing what had hitherto been regarded as a common
inheritance shared by all. This is particularly clear in most of
the dealings of europeans with the native americans.

One of the principle ideas of Georgism is that land is a fundamental
entity in economics, and should have its own standing, and never
be subsumed under any of the other items of economic thought,
like wealth or capital or whathaveyou.

By the way, I am not a Georgist, to the extent that I've never
read his stuff, nor looked into it. I've heard lots about it
from advocates I've encountered, and I quite like some of the ideas.
I don't know enough about it to answer many questions, and I
haven't run all of the ideas out to gauge their consequences
in detail. However, I am quite sympathetic to the notion that
land arbitrarily assigned to an elite is inherently an unjust
system, and all subsequent enrichment down through history resulting
from this arbitrary privilege is a form of theft, however benign
any instances of its administration might have been in practice.

` THE EARTH IS A GIFT FROM NATURE - True, but it is not germaine since
` this gift is useless in its natural form without the capacity of the
` earth being developed by some human agency.

But ownership does not confer exclusive ability to apply the development
and often just the opposite - the owner can let others do the
work and invoke his privilege of ownership to collect rent from
them.

` NO ONE HAS THE RIGHT TO SEQUESTER NATURE - Perhaps. But nature in and
` of itself is economically useless. People certainly have a right to
` own what they create with their minds and efforts. To this end
` developers of economically useful products from nature have the right
` to own the products they create from nature. The only justifiable
` restriction being third party effects, like pollution and public safety
` concerns, and destruction of resources that might be useful to more
` advanced development - for example, venting Helium-3 in the burning of
` natural gas.

` ESPECIALLY NOT TO CHARGE OTHERS FOR THE RIGHT TO OCCUPY IT - This has a
` lot of assumptions going into it. Why would anyone want to occupy a
` particular place on Earth? Because a developer made it particularly
` attractive for that purpose. Clearly a developer deserves to reap the
` rewards of his or her creativity and effort. Anothe rreason one may
` wish to occupy a particular place on Earth is because NEIGHBORING
` DEVELOPERS developed land - as in the case of New York City, and land
` in and around the city rises in value through no additional development
` effort. In this instance George might have a case - but it depends on
` the details.

` THE ONLY FAIR WAY TO MANAGE THIS UNEARNED BOUNTY IS FOR IT TO BE
` REGARDED AS THE COMMON INHERITANCE OF ALL HUMANITY - A couple of points
` here. Since the goal is to get people to figure out ways to use this
` common bounty efficiently for commercial benefit of all, we don't care
` so much what is fair, but with what will achieve this purpose! We can
` imagine a fair system that doesn't develop resources efficiently and as
` a result humanity lives at far lower levels of wealth than they
` otherwise might.

The Georgists I know are all in favour of free markets and private
capital. They just want to see land rent - and only land rent - go
to the public as common owners of the natural bounty of the earth.
Much more of the Georgian theory revolves around how the amount of
that rent is set, and I don't know much of those details. Basically
the intent is to ensure that any land must be worked by those most
capable of creating wealth from it, and no one can sit on it and do
nothing. Thus all are born equal in terms of access to real estate,
or at least much moreso than now. As I say, I don't know the
details, as for instance how land improvements are handled with the
land being always under lease, but I do know that the rent charged
by the People's Land Conservancy is based on the perceived value of
the land based on its location and natural resources, and never by
its added buildings and improvements, so there is no tax penalty
for adding housing and enhancements. the value of the rent is
to be determined by the market, so those who believe they can
make wealth from the land will bid on the rent based on their
expectation. I would guess the way it works is the buildings
are regarded completely separate from the land and are bought
and sold as any other goods.

We can also imagine a system that might not be
` absolutely fair, but workable and acceptable to all, that permits all
` of humanity to live far better than they otherwise might without the
` less than fair system in place. So, the goal shouldn't be fairness so
` much, as what works to the greatest benefit of the greatest number.

` THE ONLY FAIR WAY TO MANAGE THIS UNEARNED BOUNTY IS FOR IT TO BE
` REGARDED AS THE COMMON INHERITANCE OF ALL HUMANITY.- If the natural
` world is economically useless, it is pointless for humanity to make
` economic claims on it.

Obviously, if the natural world were useless to us, our species
would have starved to death.

Clearly humanity has an economic interest in a
` natural resource only after a developer has created a way to convert
` that natural resource to economic ends.

Clearly incorrect. Humanity has lots of interest in some natural
resources which are best left alone, and any disturbance to them
would degrade all of our quality of life. If we manage the earth
as a common good, we can determine those areas which we want to
keep free of development.

Then humanity can justifiably
` ask about third party effects as well as what sort of system of reward
` most efficiently brings those economic benefits to all, while inspiring
` everyone to do their best to create as much wealth as possible with as
` little resource as possible for society. Clearly allowing developers
` the right to own the products they make of the natural world, with
` restrictions due to legitimate third party concerns, is one way of
` achieving these ends.

` THE ONLY FAIR WAY TO MANAGE THIS UNEARNED BOUNTY - As I already stated,
` fairness is not the goal here, but maximal economic utility of whatever
` resources fall into our hands. Also, the bounty doesn't exist until a
` developer creates it,

that is nonsense. A wild berry field produces berries all on its
own, and needs no help to do so. Now, that field might produce
more if a skilled farmer were able to have access to it, and
it might have lots of other uses, as a site for a warehouse,
or a highway, or a power station, or a manufacturing plant,
but that doesn't mean it's useless just as it's found.

` so in a very real sense the developer has earned
` the bounty he or she receives.

A developer is entitled to what they have produced, not the land
on which they produced it.

` IS FOR IT TO BE REGARDED AS THE COMMON INHERITANCE OF ALL HUMANITY -
` While the natural world might be the common inheritance of all
` humanity, the natural world without the creativity of a developer has
` no ecoomic utility to humanity.

Staying alive is the original economic utility, and land was the
original means to do that. Undeveloped land.

So, such ownership is of no value.
` So, humanity claiming ownership of the natural world does nothing to
` improve the economic position of humanity. However, a developer that
` creates a new use for products found in the natural world CREATES
` wealth. Clearly by rewarding this developer for his or her efforts, we
` secure a process whereby developers are rewarded for their creativity
` and we inspire others to develop other resources.

As I'm sure you can see by now, that is not the same as ceding the
ownership of the land itself.

` AND THUS FOR IT TO REMAIN IN THE OWNERSHIP OF THE PEOPLE AS A WHOLE -
` The people owning a wilderness that has no value to them creates
` nothing of value for anyone. People claiming ownership of valueless
` resources does block the operation of developers who could develop
` economic utility from some of the products found in this wilderness.
` So, such claims are worse than useless. To the extent they discourage
` development, they harm the long term economic growth of humanity.

Yes, so instead of letting those people own the land, we keep it
in the ownership of the National Land Administration, the People's
Land Conservancy, the Government Rental Office, or whatever.

` THIS REQUIRES THE EXISTENCE OF A FULLY REPRESENTATIVE GOVERNMENT TO
` ADMINISTER THIS OWNERSHIP AND ENSURE THE BENEFITS OF BARE LAND ARE
` RETURNED TO THE COMMONWEALTH OF THE POPULATION AS A WHOLE - Several
` problems with this idea. First, Ken Arrow proved that there is no way
` to make rational collective decisions that benefit everyone the way we
` think they do. That is, governments don't work the way we think they
` do, and in fact, they are incapable of doing what we routinely think
` they can do. Second, there is a way around this though. We can create
` an EMERGENT SYSTEM that has a set of rules that automatically
` guarantees the social benefit we seek. This emergent system can occur
` in a free market.

As I said, the Georgists I know are all free market fans.

` Its Adam Smith's invisible hand. Third, bare land
` has no benefit to the commonwealth of humanity without the action of a
` creative element - the developer. Fourth, developers will not be
` inspired to create new uses for bare land and the products found
` therein, if they are not personally rewarded for this creative act.

Reward can be achieved without ceding ownership. It happens all the
time.

` Fifth, the commonwealth of population laying claim to bare land has the
` potential to block developers from laying claim to a portion of the
` value they create with their creative acts,which Sixth, robs humanity
` of the benefits of their creativity. Seventh, any economic utility of
` any particular piece of land is highly idiosyncratic, there is no
` general value that can be universally applied, so any universal
` statements are likely to be worse than useless in any practical sense.

The rent for any piece of land is to be determined by bid in the
open market, thus making it too expensive for a speculator to
try to sit on a piece of land without working it, hoping to
sell his lease for a profit. How land is to be chosen for offer
to rent or set aside for parks etc, I don't know. Perhaps the
Georgists don't believe in parks.

` If you can cogently and calmly and clearly answer these concerns of
` mine as you educated me on the original points, I would very much like
` to continue this disucssion.

As I say, I don't really know the mechanisms of the theory in detail.
It would be best if an actual modern Georgist would step up and
answer, as I am already at the limits of my knowledge of this.


--
==========================================================================
vincent@triumf[munge].ca Pete Vincent
Disclaimer: all I know I learned from reading Usenet.
.

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