What about "I can afford to pay for the privilege because my father worked his butt off and made lots and lots of money" is that still ok?
(If anything, since you don't have any choice in which father you get and since an ineffective or even missing father affects your life in lots of ways, there's an argument that people without hard-working, diligent fathers should have extra support from society to make up for it. But it would be better to just address the root causes of why not having great parents puts you at a disadvantage in life.)
The biggest practical problem is that it's very difficult to distinguish "I worked my butt off" from "My father worked his butt off" and "His father had generational wealth." Money is money, and the inheritance tax is far below 100%. So simply putting land access on the free market, if the market is denominated by money, does not effectively implement this proposal: it reduces in practice to the non-rational value judgments mentioned earlier, largely because very few people can earn enough salary to compete with once-modest savings that have been invested for generations. (And money persists across the years, so if society ever mis-valued something in the past, correcting that valuation now does not affect money that's already in people's hands. I guess that's the case for reparations in a nutshell, hm.)
One potential approach is to require that access to land involve the ongoing payment of money that dwarfs the one-time purchase cost (if there even is one), which approximates giving land access to those who are presently doing valuable things for society and not those who just happen to have money. If you're currently working your butt off, even if you're young, you can keep affording it; if you are relying on savings or generational wealth, it's going to run out.
It occurs to me that this is approaching the Georgists' land value tax, though from a different direction.
Also, how do you know society mis-valued John's grandfathers contributions? If John's grandfather invented the axe, thereby incrementally improving millions of lives, and generating vast wealth for himself, such that his contribution is still "being paid back" in some sense by society by allowing John to coast, this seems neutral to me. Remember, this is true for only a very small % of society. Instead of trying to implement a rule-based system to correct it and thereby creating other problems (such as creating a steep inheritance tax), good old-fashioned social pressure can go a long way. Celebrate the rich who use their wealth for beneficial purposes, and shame those who do not. Public appearance is important for business, but make it even more-so. Instead of celebrating flaunting of wealth, celebrate giving to charity. I see the rise of the tech elite already moving us in this direction.
Yeah, I don't think my proposal is foolproof. (Among other things, it sucks for the coal miner who no longer has a job, and is great for the new hire at Facebook!) I do think it's a little bit closer to the ideal than land access based on wealth though.
> If John's grandfather invented the axe, thereby incrementally improving millions of lives, and generating vast wealth for himself, such that his contribution is still "being paid back" in some sense by society by allowing John to coast, this seems neutral to me.
I guess this now becomes a matter of political opinion, but I don't see that as a reason for John to get a place near the city center and you to be in the outer suburbs. It makes sense to me for society to repay John's grandfather for his work. It does not make sense to me for society to repay John for his grandfather's work.
Let me put it another way: Jonny's grandfather stole a million dollars in 1930 (which is, of course, much more than that now!). The money was never recovered. The grandfather was caught, ordered to repay the money, and put into prison where he died. Since it hasn't been repaid yet, the debt falls onto Jonny, who needs to come up with millions of dollars and whose wages are garnished. Is this just? Does doing this yield a better society?
I think it makes sense primarily to compensate people for their work and secondarily to incentivize valuable / productive work. I don't think "providing for your grandchildren" really accomplishes that. The grandchild is their own person; just as they're not responsible for the crimes of their ancestors, they're not responsible for the accomplishments of their ancestors either. And I really don't think people would cease to make accomplishments like inventing axes if they knew that they could only achieve a good life for themselves and not for their grandchildren.