Uploader Comments (ourearthhome)
All Comments (16)
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Do a search on Fred Harrison on Youtube. He has some well viewed professional videos on LVT.
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Jack may have contributed to his land's value increase. What made the values rise was activity of the community. They built the road, rail systems, provide security via police, the fire dept, etc. THEY provided the services and created the land value because of their activity. Jack keeps ALL his profit from the weeds. The Land tax on the land's value pays for the services he enjoys. If Jack assisted in increasing the value it is because he is making lots of PROFIT.
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Nostalgia:The short answer to your question is that Jack did not raise the value of land, The community did. Only community creates and raises land value. No community no land value. It is not unfair for Jack to have to pay higher land rent but it is unfair for landlords to keep increased land rents since they did not create the land, the value of land, the rental value of land or the circumstances (such as Jack discovering a way to make land more productive) whereby they can increase rents.
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Suppose Jack, found a field full of weeds and he rented that land at a low price. Jack, however, is an entrepreneur who makes use of weed to produce totally clean and very cheap energy resource. Under a Georgist economic system the rent that he has to pay will increase dramatically. Is it fair that he pays more for the rent of the previously useless land? The community did not make the value of the land increase, Jack is the one who increased the value of the land!
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Jack did not create the land thus he does not deserve to own it. The land belongs to the whole community. But the Pareto effect still applies in this situation. A minority (20%) always produce the majority (80%) of the result. 80% of the value of the land was due to the labour of 20% of the community. In our example, I would have to say that Jack created 80% of the value of the rent. Doesn't he deserve to retrieve more benefits from the value of the land than any other person in the community?
Nostalgia07: There is nothing wrong with owning land. The security of tenure aspect of landownership is essential to proper use of land. What Jack does not deserve nor does anyone else is to collect the value of land that only the community creates. Pareto does not apply in my opinion. All equally create land value not just those who produce. Imagine if the 80% disappeared and the effect on land values. Jack produced the crop he produced but by his separate individual self 0% of land value.
If we use this line of reasoning, then we can also say that Bill Gates should not profit from the increased demand for Windows OS because he did not create the people who demand his product.
Yes and that would be the way it worked if Bill could not patent/copyright his work. One should be able to reap what one sows so patent/copyrights make sense to allow reaping to happen when what one invents/discovers can be easily produced by others. If Jack could patent his discovery he would personally profit but still his rent would go up. Bill Gate's rent has gone up. The increased land rent belongs to the community although it is now mostly pocketed by private owners who do not create it.
Why isn't Jack the one who increased the value of the land?
The rent had a very low rent because there was no demand for it at all. After Jack's discovery, demand has increased dramatically, thus leading an increase in cost of the rent which Jack must pay. That's the law of supply and demand.
Please point out the fallacy in my reasoning.
Nostalgia: the short answer is that Jack did not himself create the increased demand for land. Increased demand came from others and only exists because of the very existence of others. Jack would have to be able to claim responsibility for the existence of others to be able to say with any truth that he was responsible for increasing demand for land and its increased rental/sale value. This is why it is well recognized that land value is created by the community and not individuals.