Killer Arguments Against LVT, Not (489)

Emailed in by Benj from The Library of Economics and Liberty [sic]:

The author picks up on this pro-LVT argument:

Solution: A land tax. The first person to find some unused land gets to claim it, but also, the person who owns a particular piece of land at any given time has to pay a tax approximately equal to the intrinsic value of that land (the value not due to human labour). The tax money should then be distributed evenly among society.

That’s a very hypothetical example, but hey. Note the key words “the intrinsic value of that land (the value not due to human labour)”. The author is clearly thick and twists it round to the opposite.

Here’s the KLN:

To put this in the form of a common-sense moral dialogue:
A: Welcome to the island!
B: Thanks. Now hand over half the surplus value of your land. You owe it to me.
A: This is my land. I’m the one who farmed it. I was going to give you some to help you out, but you’re scaring me.

Who says it’s his land? Land ownership can only really exist under the umbrella of a government, i.e. consensus backed up by force. Or just force. What if they were both washed up at the same time but one of them managed to save a revolver and bullets from the ship wreck? Who do you think gets to own the land?

B: You’re entitled to your value-added, sure. But you have to share the raw productivity of nature with me.

This bit is actually correct. But the author is wilfully blind as to what the “raw productivity of nature” means…

A: Seems unfair.
B: Well, let me point out that you seem to have an inborn knack for farming.
A: True, I’ve always had a green thumb.
B: Interesting. I wasn’t born with this talent, so you also owe me half the value of your inborn green thumb. I think I’m going to like this island!

Exactly not. The point about Georgism is not taxing the value of individual skill and effort. No way is the newcomer entitled to half the total value of the output. He is – ultimately – only entitled to half of what he himself would be prepared to pay in rent/tax.

If the land is incredibly difficult to farm and/or the newcomer is absolutely rubbish at farming, the land is of no value to the newcomer and the “intrinsic value of that land” is zero as far as the newcomer is concerned.

If, on the other hand, farming on that island is really easy because there are a load of pre-existing edible plants, fruit-bearing trees and incredibly tame animals, only a small fraction of value of the food is due to individual skill and effort (somebody has to go out and collect it and bring it back) and most of the value is a freebie, like sunshine or rain.