Geolibertarianism

Geolibertarianism is a political movement that strives to reconcile libertarianism and Georgism (or geoism).[1][2] Geolibertarians are advocates of geoism, which is the position that all land is a common asset to which all individuals have an equal right to access, and therefore if individuals claim the land as their property they must pay rent to the community for doing so. Rent need not be paid for the mere use of land, but only for the right to exclude others from that land, and for the protection of one's title by government.They simultaneously agree with the libertarian position that each individual has an exclusive right to the fruits of his or her labor as their private property, as opposed to this product being owned collectively by society or the community, and that "one's labor, wages, and the products of labor" should not be taxed. Also, with traditional libertarians they advocate "full civil liberties, with no crimes unless there are victims who have been invaded."[1] Geolibertarians generally advocate distributing the land rent to the community via a land value tax, as proposed by Henry George and others before him. For this reason, they are often called "single taxers". Fred E. Foldvary coined the word "geo-libertarianism" in an article so titled in Land and Liberty.[3][verification needed] In the case of geoanarchism, the voluntary form of geolibertarianism as described by Foldvary, rent would be collected by private associations with the opportunity to secede from a geocommunity (and not receive the geocommunity's services) if desired.[4]

Geolibertarians are generally influenced by Georgism, but the ideas behind it pre-date Henry George, and can be found in different forms in the writings of John Locke, the French Physiocrats, Thomas Jefferson, Adam Smith, Thomas Paine, James Mill (John Stuart Mill's father), David Ricardo, John Stuart Mill, Herbert Spencer and Thomas Spence. Perhaps the best summary of geolibertarianism is Thomas Paine's assertion that "Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds." On the other hand, Locke wrote that private land ownership should be praised, as long as its product was not left to spoil and there was "enough, and as good left in common for others"; when this Lockean proviso is violated, the land earns rental value. Some would argue that "as good" is unlikely to be achieved in an urban setting because location is paramount, and that therefore Locke's proviso in an urban setting requires the collection and equal distribution of ground rent.

Nobel Prize-winning Austrian School economist Friedrich Hayek expressed an appreciation for the special role of land in an urban setting, in The Constitution of Liberty (1960).[5]

Contents


Property rights

Geolibertarians consider land to be the common property of all mankind. They say that private property is derived from an individual's right to the fruits of their labor. Since land was not created by anyone's labor, it cannot be rightfully owned. Thus, geolibertarians recognize a right to secure possession of land (land tenure), on the condition that the full rental value be paid to the community. This, they say, has the effect of both giving back the value that belongs to the community and encouraging landholders to only use as much land as they need, leaving plenty for others.

Some[who?] geolibertarians claim that the same reasoning justifies a pollution tax against those who degrade the value of common resources. Also, the common nature of the radio wave spectrum is sometimes viewed as a justification for the taxation of its exclusive use as well.

This strict definition of property as all fruits of labor makes geolibertarians fervent advocates of free markets.

Poverty and welfare

According to the Law of Rent the guiding parameter behind wages is what is called the margin of production. Roughly speaking, the margin of production is the amount of wealth that a person could produce working on land that is free of rent (marginal land):[6] when anyone chooses to work for someone else instead of working for himself on the free land, it is because he gets a higher wage. Thus, the margin of production represents an absolute floor on wage level in any society, under free market circumstances.

The differences between geolibertarians and other libertarians arise at this point. Geolibertarians recognize that the rule of law, protection of private property and provision of public goods are undoubtedly public benefits, but the resulting economic advantages go wholly to landowners because they control access to those benefits. As a result, it is economically feasible for many to hold economically valuable land out of use and still profit from the general rise of rents. This is in contrast to most capital goods, which can benefit their owner only if they're put into the service of others, that is, if they're used for production rather than withheld from production. Thus, as the great self-made industrialist Andrew Carnegie observed, "The most comfortable, but also the most unproductive way for a capitalist to increase his fortune, is to put all monies in sites and await that point in time when a society, hungering for land, has to pay his price."

The combination of private retention of publicly created increases in land value and land-use zoning laws creates an even stronger economic pressure to hold valuable land out of use or in an inferior use: rezoning a land parcel to allow more intensive, higher-density use often results in a very large increase in the land's value. If the owner of a vacant site permits productive use of the site, that will normally mean constructing substantial improvements; but once the newly built improvements are in place, local land-use and zoning authorities are extremely reluctant to redesignate the land's permitted use until the improvements have depreciated to the point where they are worth only a small fraction of the land's value, typically a period measured in decades. The owner knows that eventually, the land must be rezoned as the community grows. His hope and expectation of rezoning and the resulting increase in value in the near term consequently makes him unwilling to permit improvement and use of the land lest it delay his inevitable rezoning windfall.

Though speculation in idle sites is for these reasons often profitable to their owner (and even when not profitable, keeping sites idle is often the rational choice from the standpoint of the owner's financial expectation), continued retention of land without usage (or in sub-optimal use) causes those who actually desire to use land to settle for lower quality of land. This pushes the margin of production downwards, resulting in lower wages.

Elimination of the incentive to hold land out of use, along with higher employment (because more land is in use) and lower prices of land (resulting in lesser need of financial capital for going into business) is expected to result in a high level of prosperity and substantially reduce the need for welfare. Historical examples of jurisdictions with high land taxes bear this view out. In addition, recovery of the publicly created rent of land for the purposes and benefit of the public that creates it would allow replacement of current taxes on sales, incomes, etc. that impose costs not only on those who directly pay them but on all other producers and consumers, who pay a portion of such taxes as a result of burden shifting. Such taxes are a significant cost even for people too poor to pay any income tax.

Perhaps most importantly to the problem of poverty, private property in land violates people's rights to liberty—the pre-existing, natural liberty to use the opportunities nature provided. The requirement that the producer pay a landowner for access to the economic advantages government, the community and nature provide is a burden that the most productive and even ordinary working people may be able to bear with passable grace; but absent poverty relief programs, it consigns the least productive workers to the least productive land, and thus to destitution. Most geolibertarians advocate restoration of the equal individual right to use land via either a flat, universal, personal land tax exemption, or an equivalent citizens' dividend paid for out of recovered land rent that can be applied to one's own land tax liabilities. As land rent typically accounts for the great majority of the poor's housing costs, a personal land tax exemption applicable to tenants as well as owners would reduce their housing costs to near zero, greatly reducing the need for poverty relief programs, associated cash payments, or indeed a citizens' dividend.

Other libertarians dispute the geolibertarians' theory on the economics of private property and note that a property owner would need to own a significant portion of all available land in order to be able to affect rent prices by refusing to allow that land to be put to use, and that this scenario is unrealistic. However, this criticism misses the point: as aggregate land rent is a slowly rising fraction of GDP, the land is increasing in value anyway, no matter what any individual landowner may be doing or not doing with it, and the growth of communities makes rezoning all but inevitable. The prospect of a rezoning windfall in the near term provides all the incentive needed for the owner to keep land out of productive use indefinitely.

The land value tax and the citizen's dividend

Geolibertarians advocate the land value tax for a number of reasons. As explained already, it is seen as a means of upholding the equal right to access and use land. It is also the tax most compatible with the free market. It does not distort the price of goods, nor does it discourage productivity, since it does not affect the cost of production.

Geolibertarians argue that since public utilities and services increase land value, they could essentially fund themselves through the land value tax. In this way, the tax can fund the functions of government so long as it contributes to the community. As government spending on services and infrastructure becomes land rent, recovery of land rent for public purposes is the necessary and sufficient condition for government spending to pay for itself. Some geolibertarians believe that all tax revenues beyond these functions should go towards a citizen's dividend, an equal payment to each individual in the community. Some others have argued that the citizens' dividend should come first, and then individuals can arrange by contract to have portions of it go to fund specified services. Exclusive land tenure is necessary if the economy and society are to function at a level higher than that of hunter-gatherer tribes. As exclusive private land tenure through either private property in land or payment of rent to the community necessarily violates the right to liberty—the pre-existing right to use what nature provided, which all would otherwise be at liberty to use—consistent advocacy of liberty requires restoration of the liberty to use land through either an equal universal personal land tax exemption or an equivalent citizens' dividend that can be used to pay for access to land.

See also

Notes

  1. a b Foldvary, Fred E. Geoism and Libertarianism. The Progress Report
  2. Karen DeCoster, Henry George and the Tariff Question, LewRockwell.com, April 19, 2006.
  3. May/June 1981, pp. 53-55.
  4. Foldvary, Fred E. (2001-07-15). . anti-state.com. http://www.anti-state.com/geo/foldvary1.html. Retrieved 2009-04-15. 
  5. Hayek, Friedrich. The Constitution of Liberty. (University of Chicago Press, Chapter 22: "Housing and Town Planning," p. 341): "In many respects, the close contiguity of city life invalidates the assumptions underlying any simple division of property rights. In such conditions it is true only to a limited extent that whatever an owner does with his property will affect only him and nobody else. What economists call the 'neighborhood effects,' i.e., the effects of what one does to one's property on that of others, assume major importance. The usefulness of almost any piece of property in a city will in fact depend in part on what one's immediate neighbors do and in part on the communal services without which effective use of the land by separate owners would be nearly impossible. ... The general formulas of private property or freedom of contract do not therefore provide an immediate answer to the complex problems which city life raises. It is probable that, even if there had been no authority with coercive powers, the superior advantages of larger units would have led to the development of new legal institutions—some division of the right of control between the holders of a superior right to determine the character of a large district to be developed and the owners of inferior rights to the use of smaller units, who, within the framework determined by the former, would be free to decide on particular issues. In many respects the functions which the organized municipal corporations are learning to exercise correspond to those of such a superior owner."
  6. More precisely, this is known as the extensive margin of production. Equivalence between this extensive margin and the intensive margin entailed in modern marginal productivity theory of wages is easily established by an arbitrage argument.