dsyddall:I agree that B doesn't own the physical item he has performed his rearrangement on. What I'm saying is he owns the service of rearrangement, which is why he is entitled to sell it.
If I understand you correctly, then I think I agree. Furthermore, I think B does sell the service of rearrangement - to A, who pays him a certain amount of money that could be called a "wage", a "salary", etc.
dsyddall:I'm not saying that "exclusive" should be inserted into the definition of ownership generally. Only in the case of ownership of one's body.
Okay. That's not what it sounded like to me before, but okay.
dsyddall:The exclusion of humans from land is implicit in its definition. Land refers to naturally occurring resources, and humans aren't a resource.
Are you treating the proposition "humans aren't resources" as a premise or as a conclusion?
dsyddall:Since I presume what you're really interested in is not the definition, but why Georgists don't consider humans to be owned in the same sense that land is owned, I believe I answered that when I said: dsyddall:Why must I have exclusive legitimate control over myself? It follows from a simple reductio ad absurdum. To deny exclusive legitimate control over one's body is to deny the right of life, since if another person can legitimately control you, they can legitimately direct you to commit suicide. It is also true that exclusive legitimate control of land follows from a reductio ad absurdum. If I cannot have exclusive legitimate control of land, then no work that I produce can be secure and I lose the right to sustain myself and my right to life. However, my right of exclusive legitimate control of land must be balanced against other people's equal rights to exclusive legitimate control of land, which follows from their equal right to life. This is the difference between land and my body - no-one else has an equal right to my body, they only have a right to their own body.
dsyddall:Why must I have exclusive legitimate control over myself? It follows from a simple reductio ad absurdum. To deny exclusive legitimate control over one's body is to deny the right of life, since if another person can legitimately control you, they can legitimately direct you to commit suicide. It is also true that exclusive legitimate control of land follows from a reductio ad absurdum. If I cannot have exclusive legitimate control of land, then no work that I produce can be secure and I lose the right to sustain myself and my right to life. However, my right of exclusive legitimate control of land must be balanced against other people's equal rights to exclusive legitimate control of land, which follows from their equal right to life. This is the difference between land and my body - no-one else has an equal right to my body, they only have a right to their own body.
As I mentioned before, the reductio ad absurdum only holds if the right to life is also included as a premise. There is no logical reason why the right to life must be included as a premise.
dsyddall:As far as this discussion is concerned I'm content to assert it as a brute fact.
Okay. We're in disagreement here, though. I personally derive the right to life from self-ownership, not the other way around.
dsyddall:To answer your question more directly, I'm aware of various materialistic attempts to define "personhood", which supposedly grants the right to life, but so far I haven't heard an account that I consider satisfactory. But I don't think the failure to successfully account for the right to life warrants the conclusion that such a right doesn't exist.
Rights don't exist in an external material sense (i.e. outside of the mind), just like value doesn't exist in an external material sense.
dsyddall:That's not my claim. My claim is that since even poorly allocated or unallocated land is already profitable, the marginal incentive to allocate land to the highest bidder is reduced in the absence of LVT. Therefore, in any given instance, the likelihood of it being allocated to the highest bidder is reduced. This does not entail the impossibility of land being allocated to the highest bidder.
Fair enough. It certainly sounded to me like that was your claim, though. Anyway, do you agree that the following is a more systematic version of the above: "The marginal incentive to allocate land to the highest bidder is necessarily lower in the absence of LVT than it is in the presence of LVT."
dsyddall:LVT encourages land to be allocated to the highest bidder by increasing the marginal incentive of doing so.
Okay, see above.
dsyddall:Quite possibly not, but it remains the case that production is driven onto less productive land.
So if it's not necessarily the case that "the same production" would have occurred using the more productive "land" otherwise, then it follows that there's not necessarily an economic cost to someone exclusively owning "land" and allocating it according to his own wishes. The question becomes when is there such an economic cost and how exactly can it be determined.
dsyddall:I think that economic values are subjective, but that talk of "objective values", such as "the market price" (which doesn't refer to any particular individual's subjective value) can nevertheless be meaningful and useful so should not be ruled out merely because it is a reification. (Similarly, all scientific theories are reifications, but that doesn't make science meaningless or useless.)
I don't consider market prices to be objective values. If you do, then it seems that you're equivocating over the word "value".
dsyddall:The highest bid can't be below the second-highest bid (clearly). What I meant was the highest bid can be divided into two parts. The first part has a value of the second highest bid and is economic rent, while the second part is the remainder and is wages or capital yield. The highest bidder is entitled to his wages and capital yield, but not the economic rent, since he produced the wages and capital yield but not the economic rent, which exists whether he produces anything or nothing.
Okay. What is your definition of "economic rent"?
dsyddall:Economic rent does exist. Things like a good location and access to services provide value that people are willing to pay for, but a landowner receives them at no cost.
If you define "economic rent" as "goods that (presumably) would've been produced otherwise" (notwithstanding my previous question), then how does something that doesn't exist nevertheless exist? Furthermore, how can one even know the "value" of the goods that (presumably) would've been produced otherwise?
And again you're using the gnomic aspect. Are you really claiming that all landowners always and necessarily receive at no cost "things like a good location and access to services" that provide value that people are willing to pay for?
dsyddall:Economic rent [is taken by landowners].
How can landowners take something that doesn't exist in the first place?
The keyboard is mightier than the gun.
Non parit potestas ipsius auctoritatem.
Voluntaryism Forum
dsyddall: Graham Wright: I don't think we can say for sure that more Rembrandts would be exhibited. The higher costs of holding them might mean museums are less likely to want them, relative to other goods which are not subject to the tax. Like Monets, for example. For the museum, the cost of holding the Rembrandt is not higher. The inelasticity of supply means that the entire burden of the tax is borne by the supplier (and the museum is not supplying the Rembrandt, it is renting it from its owner). In fact, the cost to the museum will most likely be lower, since more Rembrandts that were held speculatively will be made available to the market. I was talking about the Rembrandts already owned by the museums. dsyddall: Graham Wright: And even if this does turn out to be the case, I don't think we can say for sure that that would be a good consequence economically-speaking. Who's to say that we're not better off with some of the Rembrandts kept out of sight? If for some reason there is a series of fires in museums and the ones on display get destroyed, future generations will be extremely grateful to the speculators - who profited handsomely - keeping some of the paintings under wraps. The risk of loss is compensated for in the price paid by the museum to the owner. So what? The treasured paintings are still lost, and it wouldn't have been that way if economic incentives hadn't been altered to favor 'immediate use' over speculative 'holding out of use'. dsyddall: Graham Wright: Now you might say that land cannot be destroyed, so the analogy fails, but that's not the point. The point is that speculators play a useful role in the economy. Do you accept this? For example, take a wheat speculator. He buys at harvest time in the expectation that the price will be higher next spring when supplies are low. The wheat speculator makes a profit, and benefits the rest of us by making wheat available all year round, and making the price of it remarkably stable given the seasonal nature of the good. You could look at the situation in November and say 'Look at all this wheat that is being held out of use! If we distort economic incentives so that these wheat speculators release their wheat onto the market, prices will plummet! Everyone can have more wheat!'. Of course, depending on how successfully you achieved your goal, prices would plummet but then they would skyrocket in the spring, and the wheat may even completely run out. Yes, speculation in this case is useful, because it can help to stabilise production over time. But speculation can't have this effect in a good that is no longer being produced. No, speculation stabilises PRICES over time. There was no production going on in my example, because wheat cannot be produced between November and Spring. The total supply in November must last through to next harvest, and if it weren't for people engaging in speculation, it would all be gone before then. How next year's production would be affected by all this is irrelevant. The wheat is in fixed supply throughout the time-period involved. So the analogy holds. Do you accept that speculators are a crucial part of markets (even for goods in fixed supply) and that their effect is to make resource-allocation more efficient with respect to time? This shouldn't be any more difficult for you to accept than that arbitragers are a crucial part of markets and that their effect is to make resource-allocation more efficient with respect to location. Speculators buy low NOW to sell higher LATER. Arbitragers buy low HERE to sell higher THERE. Speculators are the reason we have wheat all year round at stable prices. Arbitragers are the reason the price of wheat is similar no matter where you are. dsyddall: Graham Wright: So if you accept that it would be economically destructive to 'induce' speculators of wheat to flood the wheat market, rather than hold out of use until a time it might be more demanded, I do not see how you can accept precisely the opposite conclusion when it comes to land: that it would be economically beneficial if land being speculated upon were 'induced' into being put to use now rather than being held out of use until a time it might be more demanded. 1. Wheat is a consumable good and is used up. Land is not. 2. Wheat can be withdrawn from the economy now and stored for later. Land cannot. 1. Land may not get 'used up', but it does get used. And land tends to be highly committed, in the sense that altering the use of land tends to involve considerable cost: namely, destroying the improvements on it that combined with it in it's previous use that are not needed for it's new use. If a patch of land has a house on it, and someone wants to build a block of flats on it, he has to acquire the land but also buy the house and then destroy it. This makes starting a new project on committed land more costly than starting a new project on relatively uncommitted or bare land. 2. There is a sense in which land can be withdrawn from the economy, or held out for later. Isn't that what this whole 'problem of speculators' is about? Land being withdrawn from or held out of the economy by big bad landowners? But a land decision-maker could decide that a piece of land is going to be worth more in the long-run if he waits and doesn't commit the land for a couple of years, waits to see what happens to demand, then makes the decision about what to build on the land later. If he's right, the land has been used as efficiently as possible. That would be equivalent to someone deciding to hold onto his wheat for a while, and then sell it in the spring. dsyddall: Graham Wright: Are there no conceivable circumstances under which the 'best possible use' of land is to 'hold it out of use' (or 'not make productive use of it' in your words), waiting for it's price to rise? If a speculator is convinced that the most productive use of land is to hold it out of use, the LVT does not prevent him from doing so. What it does is ensure that he bears the economic cost (or, if his assessment is correct, keeps the gains) of him doing so. Yes, but the benefit of LVT is supposed to come in the form of less speculators, less land being held out of use. If you admit that sometimes the best thing to do economically is to have a patch of land kept bare for a while, uncommitted, then how can you say that it's necessarily beneficial to shift some of the land that is currently uncommitted into being committed? dsyddall: <-- By the way, any idea why my posts seem to keep breaking out to the side like this? No, sorry. This forum is quirky like that. Government Explained 2: The Special Piece of Paper Law without Government | Post Points: 35
Graham Wright: I don't think we can say for sure that more Rembrandts would be exhibited. The higher costs of holding them might mean museums are less likely to want them, relative to other goods which are not subject to the tax. Like Monets, for example.
I don't think we can say for sure that more Rembrandts would be exhibited. The higher costs of holding them might mean museums are less likely to want them, relative to other goods which are not subject to the tax. Like Monets, for example.
dsyddall: Graham Wright: And even if this does turn out to be the case, I don't think we can say for sure that that would be a good consequence economically-speaking. Who's to say that we're not better off with some of the Rembrandts kept out of sight? If for some reason there is a series of fires in museums and the ones on display get destroyed, future generations will be extremely grateful to the speculators - who profited handsomely - keeping some of the paintings under wraps. The risk of loss is compensated for in the price paid by the museum to the owner.
Graham Wright: And even if this does turn out to be the case, I don't think we can say for sure that that would be a good consequence economically-speaking. Who's to say that we're not better off with some of the Rembrandts kept out of sight? If for some reason there is a series of fires in museums and the ones on display get destroyed, future generations will be extremely grateful to the speculators - who profited handsomely - keeping some of the paintings under wraps. The risk of loss is compensated for in the price paid by the museum to the owner.
dsyddall: Graham Wright: Now you might say that land cannot be destroyed, so the analogy fails, but that's not the point. The point is that speculators play a useful role in the economy. Do you accept this? For example, take a wheat speculator. He buys at harvest time in the expectation that the price will be higher next spring when supplies are low. The wheat speculator makes a profit, and benefits the rest of us by making wheat available all year round, and making the price of it remarkably stable given the seasonal nature of the good. You could look at the situation in November and say 'Look at all this wheat that is being held out of use! If we distort economic incentives so that these wheat speculators release their wheat onto the market, prices will plummet! Everyone can have more wheat!'. Of course, depending on how successfully you achieved your goal, prices would plummet but then they would skyrocket in the spring, and the wheat may even completely run out. Yes, speculation in this case is useful, because it can help to stabilise production over time. But speculation can't have this effect in a good that is no longer being produced.
Graham Wright: Now you might say that land cannot be destroyed, so the analogy fails, but that's not the point. The point is that speculators play a useful role in the economy. Do you accept this? For example, take a wheat speculator. He buys at harvest time in the expectation that the price will be higher next spring when supplies are low. The wheat speculator makes a profit, and benefits the rest of us by making wheat available all year round, and making the price of it remarkably stable given the seasonal nature of the good. You could look at the situation in November and say 'Look at all this wheat that is being held out of use! If we distort economic incentives so that these wheat speculators release their wheat onto the market, prices will plummet! Everyone can have more wheat!'. Of course, depending on how successfully you achieved your goal, prices would plummet but then they would skyrocket in the spring, and the wheat may even completely run out.
dsyddall: Graham Wright: So if you accept that it would be economically destructive to 'induce' speculators of wheat to flood the wheat market, rather than hold out of use until a time it might be more demanded, I do not see how you can accept precisely the opposite conclusion when it comes to land: that it would be economically beneficial if land being speculated upon were 'induced' into being put to use now rather than being held out of use until a time it might be more demanded. 1. Wheat is a consumable good and is used up. Land is not. 2. Wheat can be withdrawn from the economy now and stored for later. Land cannot.
Graham Wright: So if you accept that it would be economically destructive to 'induce' speculators of wheat to flood the wheat market, rather than hold out of use until a time it might be more demanded, I do not see how you can accept precisely the opposite conclusion when it comes to land: that it would be economically beneficial if land being speculated upon were 'induced' into being put to use now rather than being held out of use until a time it might be more demanded.
dsyddall: Graham Wright: Are there no conceivable circumstances under which the 'best possible use' of land is to 'hold it out of use' (or 'not make productive use of it' in your words), waiting for it's price to rise? If a speculator is convinced that the most productive use of land is to hold it out of use, the LVT does not prevent him from doing so. What it does is ensure that he bears the economic cost (or, if his assessment is correct, keeps the gains) of him doing so. Yes, but the benefit of LVT is supposed to come in the form of less speculators, less land being held out of use. If you admit that sometimes the best thing to do economically is to have a patch of land kept bare for a while, uncommitted, then how can you say that it's necessarily beneficial to shift some of the land that is currently uncommitted into being committed? dsyddall: <-- By the way, any idea why my posts seem to keep breaking out to the side like this?
Graham Wright: Are there no conceivable circumstances under which the 'best possible use' of land is to 'hold it out of use' (or 'not make productive use of it' in your words), waiting for it's price to rise? If a speculator is convinced that the most productive use of land is to hold it out of use, the LVT does not prevent him from doing so. What it does is ensure that he bears the economic cost (or, if his assessment is correct, keeps the gains) of him doing so.
dsyddall: <-- By the way, any idea why my posts seem to keep breaking out to the side like this?
No, sorry. This forum is quirky like that.
Government Explained 2: The Special Piece of Paper
Law without Government
Does CCR (community collection of rent) distort or does it optimize the timing of development? Today's fiscal system distorts the timing by imposing taxes on capital goods and subsidies to land value. In a pure market, neither would exist, and the timing would not be distorted. Without CCR, landowners would implicitly pay a community rent for public goods, because it is unlikely that market-based payments would be based instead on sales prices or income unrelated to the public goods. With complete and explicit CCR, there is also no distortion, because the rent payment is independent of the actions of the developer entrepreneur. CCR converts the implicit opportunity cost of foregone rent revenue with an explicit rent payment based on the highest and best use of the site as estimated from uses and rentals in the neighborhood. Though monetarily equivalent, these are psychologically different, as an explicit payment has a different psychological effect than an implicit cost that one may not think about much. Thus CCR promotes a more efficient timing of development relative to merely implicit payments by spurring lazy site holders to optimize their timing.
Economic rent is income not needed to put a factor to its most productive use. The economic rent of land is the rental paid by the highest bidding tenant (at the rental offered by the second-highest bidder) minus the normal costs of landlording.
Graham Wright: I was talking about the Rembrandts already owned by the museums.
I was talking about the Rembrandts already owned by the museums.
In that case the cost of paying the tax is offset by a reduced purchase price.
Graham Wright: dsyddall:The risk of loss is compensated for in the price paid by the museum to the owner.So what?
dsyddall:The risk of loss is compensated for in the price paid by the museum to the owner.
Graham Wright: No, speculation stabilises PRICES over time.
Graham Wright: 1. Land may not get 'used up', but it does get used. And land tends to be highly committed, in the sense that altering the use of land tends to involve considerable cost: namely, destroying the improvements on it that combined with it in it's previous use that are not needed for it's new use. If a patch of land has a house on it, and someone wants to build a block of flats on it, he has to acquire the land but also buy the house and then destroy it. This makes starting a new project on committed land more costly than starting a new project on relatively uncommitted or bare land. Why should a person who wants to acquire land with a house on it pay anything less than the market price for land with a house on it? A speculator might reduce the cost of acquiring the land for the developer of the flats 15 years in the future, but only at the expense of reducing production for the economy as a whole in the meantime. Why should the economy as a whole incur the cost of reduced production only so that a developer can buy land cheaper? Graham Wright: 2. There is a sense in which land can be withdrawn from the economy, or held out for later. Isn't that what this whole 'problem of speculators' is about? Land being withdrawn from or held out of the economy by big bad landowners? But a land decision-maker could decide that a piece of land is going to be worth more in the long-run if he waits and doesn't commit the land for a couple of years, waits to see what happens to demand, then makes the decision about what to build on the land later. If he's right, the land has been used as efficiently as possible. That would be equivalent to someone deciding to hold onto his wheat for a while, and then sell it in the spring. LVT does not foreclose this option to the speculator/developer. It only ensures that the gains made from the change in use after the two years of withholding must be equal to or greater than the loss made during the two years of withholding (since only otherwise does the speculator/developer make a net loss). Graham Wright: Yes, but the benefit of LVT is supposed to come in the form of less speculators, less land being held out of use. If you admit that sometimes the best thing to do economically is to have a patch of land kept bare for a while, uncommitted, then how can you say that it's necessarily beneficial to shift some of the land that is currently uncommitted into being committed? As I note above, the LVT only causes this shift in the case where the speculator would as a consequence make a net loss (i.e., where the withholding causes a loss from the perspective of the economy as a whole). | Post Points: 20
1. Land may not get 'used up', but it does get used. And land tends to be highly committed, in the sense that altering the use of land tends to involve considerable cost: namely, destroying the improvements on it that combined with it in it's previous use that are not needed for it's new use. If a patch of land has a house on it, and someone wants to build a block of flats on it, he has to acquire the land but also buy the house and then destroy it. This makes starting a new project on committed land more costly than starting a new project on relatively uncommitted or bare land.
Graham Wright: 2. There is a sense in which land can be withdrawn from the economy, or held out for later. Isn't that what this whole 'problem of speculators' is about? Land being withdrawn from or held out of the economy by big bad landowners? But a land decision-maker could decide that a piece of land is going to be worth more in the long-run if he waits and doesn't commit the land for a couple of years, waits to see what happens to demand, then makes the decision about what to build on the land later. If he's right, the land has been used as efficiently as possible. That would be equivalent to someone deciding to hold onto his wheat for a while, and then sell it in the spring.
Graham Wright: Yes, but the benefit of LVT is supposed to come in the form of less speculators, less land being held out of use. If you admit that sometimes the best thing to do economically is to have a patch of land kept bare for a while, uncommitted, then how can you say that it's necessarily beneficial to shift some of the land that is currently uncommitted into being committed? As I note above, the LVT only causes this shift in the case where the speculator would as a consequence make a net loss (i.e., where the withholding causes a loss from the perspective of the economy as a whole). | Post Points: 20
Yes, but the benefit of LVT is supposed to come in the form of less speculators, less land being held out of use. If you admit that sometimes the best thing to do economically is to have a patch of land kept bare for a while, uncommitted, then how can you say that it's necessarily beneficial to shift some of the land that is currently uncommitted into being committed?
dsyddall: Graham Wright: I was talking about the Rembrandts already owned by the museums. In that case the cost of paying the tax is offset by a reduced purchase price.
The reduced purchase price also means a reduced selling price, so they cancel out. The cost of paying the tax is not offset by anything.
dsyddall:So the museum bears the burden of the loss, not the economy as a whole.
dsyddall: Graham Wright: No, speculation stabilises PRICES over time. Of course, I don't disagree, but in this case the difference is semantics. The demand for wheat is relatively stable over time, so saying that speculation stabilises its price over time is functionally equivalent to saying that it is stabilising supply.
dsyddall: Graham Wright: 1. Land may not get 'used up', but it does get used. And land tends to be highly committed, in the sense that altering the use of land tends to involve considerable cost: namely, destroying the improvements on it that combined with it in it's previous use that are not needed for it's new use. If a patch of land has a house on it, and someone wants to build a block of flats on it, he has to acquire the land but also buy the house and then destroy it. This makes starting a new project on committed land more costly than starting a new project on relatively uncommitted or bare land. Why should a person who wants to acquire land with a house on it pay anything less than the market price for land with a house on it? A speculator might reduce the cost of acquiring the land for the developer of the flats 15 years in the future, but only at the expense of reducing production for the economy as a whole in the meantime. Why should the economy as a whole incur the cost of reduced production only so that a developer can buy land cheaper?
Graham Wright: 1. Land may not get 'used up', but it does get used. And land tends to be highly committed, in the sense that altering the use of land tends to involve considerable cost: namely, destroying the improvements on it that combined with it in it's previous use that are not needed for it's new use. If a patch of land has a house on it, and someone wants to build a block of flats on it, he has to acquire the land but also buy the house and then destroy it. This makes starting a new project on committed land more costly than starting a new project on relatively uncommitted or bare land.
dsyddall: Graham Wright: 2. There is a sense in which land can be withdrawn from the economy, or held out for later. Isn't that what this whole 'problem of speculators' is about? Land being withdrawn from or held out of the economy by big bad landowners? But a land decision-maker could decide that a piece of land is going to be worth more in the long-run if he waits and doesn't commit the land for a couple of years, waits to see what happens to demand, then makes the decision about what to build on the land later. If he's right, the land has been used as efficiently as possible. That would be equivalent to someone deciding to hold onto his wheat for a while, and then sell it in the spring. LVT does not foreclose this option to the speculator/developer. It only ensures that the gains made from the change in use after the two years of withholding must be equal to or greater than the loss made during the two years of withholding (since only otherwise does the speculator/developer make a net loss).
Fred Foldvary: Does CCR (community collection of rent) distort or does it optimize the timing of development?
Does CCR (community collection of rent) distort or does it optimize the timing of development?
Yes, that is the question.
Fred Foldvary:Today's fiscal system distorts the timing by imposing taxes on capital goods and subsidies to land value. In a pure market, neither would exist, and the timing would not be distorted. Without CCR, landowners would implicitly pay a community rent for public goods, because it is unlikely that market-based payments would be based instead on sales prices or income unrelated to the public goods.
Nobody's talking about today's fiscal system, or taxing capital goods. And none of us here are worried about public goods being "underfunded" or anything like that, because we know that even roads, defense, lighthouses, etc can and ought to be provided privately. So I don't know why you brought this up.
Fred Foldvary:With complete and explicit CCR, there is also no distortion, because the rent payment is independent of the actions of the developer entrepreneur. CCR converts the implicit opportunity cost of foregone rent revenue with an explicit rent payment based on the highest and best use of the site as estimated from uses and rentals in the neighborhood. Though monetarily equivalent, these are psychologically different, as an explicit payment has a different psychological effect than an implicit cost that one may not think about much.
I don't know what you mean by this.
Fred Foldvary:Thus CCR promotes a more efficient timing of development relative to merely implicit payments by spurring lazy site holders to optimize their timing.
On what basis do you call one site holder "lazy" and another usefully keeping his land uncommitted? Why is it more optimal to have land committed to projects sooner rather than later, as it would be without CCR?
Graham Wright: dsyddall:LVT does not foreclose this option to the speculator/developer. It only ensures that the gains made from the change in use after the two years of withholding must be equal to or greater than the loss made during the two years of withholding (since only otherwise does the speculator/developer make a net loss). Right, but the economic "selling point" of the LVT, the reason it's supposed to be good for the economy, is that it will reduce the amount of land left uncommitted. And I agree it will likely have this effect, but there's no reason to consider that good for the economy. The tax makes it more costly to hold land, so relative to a situation with no LVT, land will be committed sooner than it would otherwise be. Do you agree with that? As I note above, only in the case where the cost of withholding for a particular duration is greater than the increase in gains made after that duration. Graham Wright: Then tell me why it's necessarily a good thing to have land committed sooner than it otherwise would be. It is not necessarily a good thing to have land committed sooner. But (as implied above) in the cases where it is, LVT encourages it. In the cases where it is not, LVT does not have that effect. | Post Points: 20
dsyddall:LVT does not foreclose this option to the speculator/developer. It only ensures that the gains made from the change in use after the two years of withholding must be equal to or greater than the loss made during the two years of withholding (since only otherwise does the speculator/developer make a net loss).
Graham Wright: Then tell me why it's necessarily a good thing to have land committed sooner than it otherwise would be. It is not necessarily a good thing to have land committed sooner. But (as implied above) in the cases where it is, LVT encourages it. In the cases where it is not, LVT does not have that effect. | Post Points: 20
Graham Wright: Fred Foldvary:With complete and explicit CCR, there is also no distortion, because the rent payment is independent of the actions of the developer entrepreneur. CCR converts the implicit opportunity cost of foregone rent revenue with an explicit rent payment based on the highest and best use of the site as estimated from uses and rentals in the neighborhood. Though monetarily equivalent, these are psychologically different, as an explicit payment has a different psychological effect than an implicit cost that one may not think about much. I don't know what you mean by this.
Can you explain which part you aren't sure about so that others might be able to help?
Fred is saying that (in the case of uncommited, underdeveloped land with no tenant) the calculations of the developers AND the broader economy are improved when rent is paid upfront by the titleholder, explicitly, rather than being an implicit and hidden subsidy, calculated ex post facto when the rent is capitlized into the sale price 15 years later.
That is, the economic costs are explicitly expressed in the real-time rental price and obvious to everyone concerned, as in the case of Manhattan skyscrapers built on leased land.
dsyddall: Graham Wright: dsyddall:LVT does not foreclose this option to the speculator/developer. It only ensures that the gains made from the change in use after the two years of withholding must be equal to or greater than the loss made during the two years of withholding (since only otherwise does the speculator/developer make a net loss). Right, but the economic "selling point" of the LVT, the reason it's supposed to be good for the economy, is that it will reduce the amount of land left uncommitted. And I agree it will likely have this effect, but there's no reason to consider that good for the economy. The tax makes it more costly to hold land, so relative to a situation with no LVT, land will be committed sooner than it would otherwise be. Do you agree with that? As I note above, only in the case where the cost of withholding for a particular duration is greater than the increase in gains made after that duration. Graham Wright: Then tell me why it's necessarily a good thing to have land committed sooner than it otherwise would be. It is not necessarily a good thing to have land committed sooner. But (as implied above) in the cases where it is, LVT encourages it. In the cases where it is not, LVT does not have that effect.
Graham Wright: dsyddall:LVT does not foreclose this option to the speculator/developer. It only ensures that the gains made from the change in use after the two years of withholding must be equal to or greater than the loss made during the two years of withholding (since only otherwise does the speculator/developer make a net loss). Right, but the economic "selling point" of the LVT, the reason it's supposed to be good for the economy, is that it will reduce the amount of land left uncommitted. And I agree it will likely have this effect, but there's no reason to consider that good for the economy. The tax makes it more costly to hold land, so relative to a situation with no LVT, land will be committed sooner than it would otherwise be. Do you agree with that? As I note above, only in the case where the cost of withholding for a particular duration is greater than the increase in gains made after that duration. Graham Wright: Then tell me why it's necessarily a good thing to have land committed sooner than it otherwise would be. It is not necessarily a good thing to have land committed sooner. But (as implied above) in the cases where it is, LVT encourages it. In the cases where it is not, LVT does not have that effect.
Graham Wright: Then tell me why it's necessarily a good thing to have land committed sooner than it otherwise would be. It is not necessarily a good thing to have land committed sooner. But (as implied above) in the cases where it is, LVT encourages it. In the cases where it is not, LVT does not have that effect.
I'm talking about the margin here. Say you have a parcel of land (or a Rembrandt) and a speculator (with no LVT) decides to hold it uncommitted and he ends up waiting 5 years before committing it. When you have an LVT, it will change the calculation for him, and he might hold it out of use for only 2 years, say. In both cases he is maximising his profit. The question is whether the original 5 years hold out represents the actual best use of the land, and the 2 years is a distortion, or the original 5 years was a distortion and the actual best use of the land would be 2 years hold out, then commit. I don't know how you can so confidently assert the latter. So, again, why is it necessarily a beneficial consequence of the LVT to have (some) land committed sooner than it would be without the LVT?
Jerry Payton: Graham Wright: Fred Foldvary:With complete and explicit CCR, there is also no distortion, because the rent payment is independent of the actions of the developer entrepreneur. CCR converts the implicit opportunity cost of foregone rent revenue with an explicit rent payment based on the highest and best use of the site as estimated from uses and rentals in the neighborhood. Though monetarily equivalent, these are psychologically different, as an explicit payment has a different psychological effect than an implicit cost that one may not think about much. I don't know what you mean by this. Fred is saying that (in the case of uncommited, underdeveloped land with no tenant) the calculations of the developers AND the broader economy are improved when rent is paid upfront by the titleholder, explicitly, rather than being an implicit and hidden subsidy, calculated ex post facto when the rent is capitlized into the sale price 15 years later. That is, the economic costs are explicitly expressed in the real-time rental price and obvious to everyone concerned, as in the case of Manhattan skyscrapers built on leased land.
Thanks for trying, but this doesn't really help. I don't know what point you are making.
Graham Wright: When you have an LVT, it will change the calculation for him, and he might hold it out of use for only 2 years, say. In both cases he is maximising his profit. The question is whether the original 5 years hold out represents the actual best use of the land, and the 2 years is a distortion, or the original 5 years was a distortion and the actual best use of the land would be 2 years hold out, then commit. I don't know how you can so confidently assert the latter. So, again, why is it necessarily a beneficial consequence of the LVT to have (some) land committed sooner than it would be without the LVT? If it maximises profit over the long term to commit the land after two years with an LVT, then why would it not maximise profit without an LVT? | Post Points: 20
When you have an LVT, it will change the calculation for him, and he might hold it out of use for only 2 years, say. In both cases he is maximising his profit. The question is whether the original 5 years hold out represents the actual best use of the land, and the 2 years is a distortion, or the original 5 years was a distortion and the actual best use of the land would be 2 years hold out, then commit. I don't know how you can so confidently assert the latter. So, again, why is it necessarily a beneficial consequence of the LVT to have (some) land committed sooner than it would be without the LVT?
Graham Wright: The reduced purchase price also means a reduced selling price, so they cancel out. The cost of paying the tax is not offset by anything.
I'll rephrase Fred again (from the previous page):
Fred Foldvary: The tax on Rembrandts will not reduce the revenue to the museum, as the visitors will pay a fee based on their desire to see the art, not on who receives the revenue. The tax would reduce the price of Rembrandts to the amount for which the profit from them is the same as before. The reduction in the purchase price, and thus also of the expllicit or implicit interest on the loan or equity offsets the tax payment.
The tax on Rembrandts will not reduce the revenue to the museum, as the visitors will pay a fee based on their desire to see the art, not on who receives the revenue. The tax would reduce the price of Rembrandts to the amount for which the profit from them is the same as before. The reduction in the purchase price, and thus also of the expllicit or implicit interest on the loan or equity offsets the tax payment.
The tax is offset by greater equity, and the price to each indivdual consumer goes down. The tax would actually not arise in the first place unless the demand for equity already existed. It would be a policy based on the rational expectation of "80%" of the population demanding equity in Rembrandts -- it's a bad example because this is not actually the case.
Land on the other hand has universal 100% appeal to everybody whether they realise it or not.
Graham Wright: So the museum is not part of the economy as a whole? What? And are you really saying that it is not a bad thing for "the economy" if treasured paintings get destroyed? Yes, fires occur and therefore speculation is good and taxes are bad. Shall we treat this as a premise, a conclusion or have you just made a non-sequitur? Graham Wright: Do we agree that speculators play a useful, beneficial role in the economy (namely, getting supplies to where they are most demanded, across time) even for goods in fixed supply and not able to be (further) produced? Not to go off on a tangent here, but I have to wholeheartedly disagree with the notion that PURE speculation ever has a stabilizing effect. It may unavoidable and unharmul in small doses, but I think from any objective viewpoint it always increases volatility. In the case of wheat, the farms or groups of farms often have their own storage capacity, their products go through at least 2 brokers (in the form of whosale elevators and smaller smaller distributors) before hitting the mills, which is the last possible choke point before the you are primarily on the more stabile demand side of the equation dealing with more perishable goods. The farmers, elevators, brokers, and distributors are not hapless animals, ignorant of their role in the supply and demand equation. They in fact have access to better information with which to speculate on the value of the goods and services they are providing, because that is their sole business. Producers and consumers do not need the help of middlemen who are only there to jerk the prices around to nobody's benefit but their own. Let's be consistent: do the central banks improve stability when they speculate on the demand for currency in the economy? I was under the impression that the entire Austrian position was that stability would be improved by removing this speculation and returning to a more direct supply and demand equation. Are we to draw distinctions in the supply and demand equations for land, wheat and money? | Post Points: 5
Graham Wright: Do we agree that speculators play a useful, beneficial role in the economy (namely, getting supplies to where they are most demanded, across time) even for goods in fixed supply and not able to be (further) produced?
Do we agree that speculators play a useful, beneficial role in the economy (namely, getting supplies to where they are most demanded, across time) even for goods in fixed supply and not able to be (further) produced?
dsyddall: Graham Wright: When you have an LVT, it will change the calculation for him, and he might hold it out of use for only 2 years, say. In both cases he is maximising his profit. The question is whether the original 5 years hold out represents the actual best use of the land, and the 2 years is a distortion, or the original 5 years was a distortion and the actual best use of the land would be 2 years hold out, then commit. I don't know how you can so confidently assert the latter. So, again, why is it necessarily a beneficial consequence of the LVT to have (some) land committed sooner than it would be without the LVT? If it maximises profit over the long term to commit the land after two years with an LVT, then why would it not maximise profit without an LVT?
Graham Wright: When you have an LVT, it will change the calculation for him, and he might hold it out of use for only 2 years, say. In both cases he is maximising his profit. The question is whether the original 5 years hold out represents the actual best use of the land, and the 2 years is a distortion, or the original 5 years was a distortion and the actual best use of the land would be 2 years hold out, then commit. I don't know how you can so confidently assert the latter. So, again, why is it necessarily a beneficial consequence of the LVT to have (some) land committed sooner than it would be without the LVT? If it maximises profit over the long term to commit the land after two years with an LVT, then why would it not maximise profit without an LVT?
Dan, you've been arguing that "LVT encourages land owners to put land to the best possible use" and you've made it clear that you consider the lack of an LVT to have the negative economic consequence of encouraging land owners to 'hold their land out of use'. The economic benefit of LVT, according to you, is that there will be less of these land speculators. In other words, that some of the land which, in a market without LVT, would be 'held out of use' (uncommitted) would be 'brought into use' (committed) in a market with the LVT.
Your question above is equivalent to 'why would LVT have any impact on land use?' You tell me, since we both agreed many posts ago that LVT will have an impact on land use.
Graham Wright: dsyddall:If it maximises profit over the long term to commit the land after two years with an LVT, then why would it not maximise profit without an LVT?Your question above is equivalent to 'why would LVT have any impact on land use?'
dsyddall:If it maximises profit over the long term to commit the land after two years with an LVT, then why would it not maximise profit without an LVT?
Still waiting on your reply to my last post, dsyddall.
Hi Autolykos, can you check the posts written by Fred Foldvary. I think your questions about economic rent are answered there.