Henry George is coming to town.


The 31st North American Conference of the Council of Georgist Organizations: "The Henry George Theorem at Work" will be held August 2-6, 2011 in Bloomington, Minnesota.

For those interested in the ideas of Henry George, or in innovative ways to tie the financing of public sector to value created by the public sector, including the Land Value Tax, this is an important event. We wrote about George in Planning for Place and Plexus.

Box 13.4 Henry George’s single (land) tax

Men did not make the earth . . . It is the value of the improvement 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. (Thomas Paine, Agrarian Justice, paragraphs 11 to 15)
A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent. (Adam Smith)

According to his granddaughter, actress and choreographer Agnes DeMille, Henry George was, at his death in 1897, the third most famous man in America, behind only Thomas Edison and Mark Twain. Over 100,000 people attended his funeral in New York. George was a political figure, a two-time mayoral candidate in New York (dying just four days before the election on his second bid), a newspaper publisher, and an economist. Born in 1839, he was in California during the gold rush and the railroad boom. He noted how railroads drove up land value and rents at a rate faster than wages.

He proposed in his best-selling economic tract Progress and Poverty that:

We should satisfy the law of justice, we should meet all economic requirements, by at one stroke abolishing all private titles, declaring all land public property, and letting it out to the highest bidders in lots to suit, under such conditions as would sacredly guard the private right to improvements. Thus we should secure, in a more complex state of society, the same equality of rights that in a ruder state were secured by equal partitions of the soil and, by giving the use of the land to whoever could procure the most from it, we should secure the greatest production.

These views do not make George a “communist,” though some have dubbed his ideas “commonism” because the land is held in common. In modern language, his most famous proposal is that of a single tax on land. The idea is simple in its core, but is easily confused with other concepts due to the complexity of modern tax codes. First, it is a single tax, so no other tax would be required. Second, it is a tax on land, not property. So the question of “What is land?” should be answered. Land is, in short, nature’s bounty; it includes geographic spaces, but also mineral deposits, natural resources, and the electromagnetic spectrum. It is what would exist without labor. The value of land, particularly the value of geographic spaces, does depend on labor and what is done with other geographic spaces. A square meter of land in downtown Tokyo may be worth a square kilometer (or more) in Alaska. Most of the value of that square meter of Tokyo, however, is due not to the improvements by its owner, but rather to the accessibility to the land, which is created by everyone else in society.

Taxing land based on the land value, rather than the property value, encourages full development of the land. The property tax discourages development of land, since all improvements are taxed. This helps result in an urban form of surface parking lots in big cities rather than developed land. The property tax also encourages leap- frog development in the suburbs. In contrast a land tax would apply the same tax to a parcel whether or not it were developed, thereby encouraging development to help pay the tax. This land value tax (LVT) is the current incarnation of the Georgist proposals. It is currently used in Singapore, Hong Kong, Estonia, and Taiwan, though not as the only tax.

This idea, however, is not as radical as it seems; four Nobel-laureate economists urged Mikhail Gorbachev to adopt the land tax in 1990 as the Soviet Union was turning away from communism. Modern Georgists generally favor movement towards a single tax, but recognize the political impossibility of an overnight change, especially one which would eliminate not only property taxes but also sales and income taxes. The idea is illustrated in Figure 13.7.

This policy would be in stark contrast to tax increment financing. Instead of subsidizing firms to develop fully, they would be taxed as if they were fully developed, and thus would it be more expensive if they don’t.



"Every proprietor owes to the community a ground rent for the land which he holds."

Very interestign concept.

Thanks for posting the information. George's theorys are interesting but it is much harder to find commentary about his ideas than many other economists. I'm curious about applcation of his ideas in the post agrarian/post industrial society of today. Land and location, in the physical world, are not necessariy the fundamental creators of value any more, and there are increasing technology solutions to the limits of the spectrum.

You probably don't remember, but we talked about George the first time we met after a talk you gave on Value Capture.

Land and location, in the physical world, are not necessariy the fundamental creators of value any more

As long as where something happens matters, then the Georgist analysis applies. The whole post-industrial thing is a red herring. Even tech companies tend to congregate (Silicon Valley for example, or Cambridge), because there is a benefit to having other knowledgeable folks nearby you, even in the internet age. That's the key to the whole thing, the understanding that there are benefits to being in one place as opposed to somewhere else, and that people will (and demonstrably do) pay good money to acquire them.

David Levinson

Network Reliability in Practice

Evolving Transportation Networks

Place and Plexus

The Transportation Experience

Access to Destinations

Assessing the Benefits and Costs of Intelligent Transportation Systems

Financing Transportation Networks

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This page contains a single entry by David Levinson published on May 4, 2011 8:05 AM.

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