Comment by bariumbitmap | Hacker News Reader

Comment by bariumbitmap | Hacker News Reader

There's a lot here to absorb, but one thing I've always wondered about Georgism and Land Value Tax is whether land supply is actually inelastic:

> Land, however, is not built. Land is inelastic in supply, and landowners don’t “provide” land the way laborers provide labor and investors provide capital; they un-provide land by excluding others from using it. Building supply can change in response to a tax change, but land supply cannot.

But many cities actually can increase their land supply via land reclamation. This can be done by filling in waterways or otherwise altering the landscape to make it suitable to build on. Chicago, for example, built the land under the Adler Planetarium by filling in rubble along the shore of Lake Michigan. Boston is an even more impressive example; Back Bay used to be a bay of the Atlantic Ocean, not an entire neighborhood of a city with very high cost of living.

Cities can also lose land. Sometimes this is due to natural causes like erosion, sea level rise, or disasters like earthquakes and volcanic eruptions. Other times a lack of regulation might permit pollution to make land unlivable or infeasible to build on. Land owners can't create natural disasters, but they can advocate for policies that strongly influence effective land supply, such as whether building codes allow building on certain kinds or soil or require resistance to earthquakes.

Does this change the calculus from a Georgist economic perspective? If not, why?

Land means location in this context. Filling in seabed (which are literally termed "water parcels" as a term of art) to make dry land is technically improving it. The straightforward policy recommendation is therefore to exempt reclaimed land from taxation (perfectly in line with a policy of not taxing improvements) for e.g. the first 50 or so years (well past the investment horizon) and begin taxing it as conventional land thereafter -- this comports with George's philosophy for how to handle edge cases like e.g. landscaping that start off as improvements but over a long enough time horizon eventually become regarded as part of the permanent landscape.

Alternatively, reclaimed land is usually a state initiated enterprise in most cases. In those situations, the land can simply be leased out by the state. This is literally what NYC did with Battery Park city!

https://blog.landeconomics.org/p/georgism-through-land-leasi...

But you can multpliy location by building up (there is some energy and time inefficiency in having to go up and down but in theory you can also build multiple layers of transportation), so how that works?

I see how it works but all you're doing is making more efficient use of the given parcel of land. The value of the land already prices in its development potential. A parcel that could legally, physically, and feasibly accommodate a high rise will be worth more.

> one thing I've always wondered about Georgism and Land Value Tax is whether land supply is actually inelastic

It isn't actually perfectly inelastic, but looking at land reclamation (and erosion!) relative to the ease with which places to live can be added to a locale, the supply of land is relatively inelastic. Even then, that kind of misses the core of George's argument about land value.

George himself distinguished land from labor and capital by looking at it through the lens of whether the economic value of a piece of land needed to be attributable entirely to improvements undertaken on that land. This is his "all natural opportunities or forces," and those are where the constraint lies.

For land reclamation in particular, there are two things to look at: (1) the value attributable to the land reclamation effort; and (2) the residual site value. (2) is land rent, and the Georgist model really is predicated on the relationship the surrounding community has with a piece of land. As it goes, if the community's feelings toward, say, a reclaimed waterfront are tepid, that reclaimed land won't have much value (even if the land reclamation were undertaken at great expense!), and won't command high land rents.

You are confusing "location" and "dirt"

When georgists refer to land, they are referring to locations - not dirt.

Locations refer to the sections of physical 2D space that makes up a country. Why 2D when the world is 3D? Because parcels are allocated and segmented based on a 2D model.

Locations are best thought of as being similar to "spectrum" (what typically gets auctioned off every few years to the highest bidder) - there is a total fixed amount. Nobody made the physical space, and nobody will make more of it in the future. It all existed before life even began on this planet, and it will exist long after all of us are dead.

I think this is actually the problem with Georgism. The world has plenty of dirt. Locations are in short supply. Georgism taxes away the gain from the creation of Locations, which is an important economic activity. For example, most of London's suburbia was created by the building of the metropolitan railways around 100-150 years ago. Places that were too far from London to be useful suddenly became Locations, and the railway companies made back the money they spent to build the railways by selling these new Locations for home building (now known as Metroland).

Although we don't have LVT in the UK, it interesting that we have another restriction on the creation of Locations: Planning laws in the UK are extremely hard and expensive to navigate and get permission to build pretty much anything, so the creation of new Locations is pretty much impossible. And that doesn't seem to be a good thing.

> Georgism taxes away the gain from the creation of Locations

The premise of Georgism is that there is no creation of locations (at least unless you're in the business of creating planets).

> Places that were too far from London to be useful suddenly became Locations

No, those were always locations, before and after the construction of railways made them more valuable. Accordingly, Georgists ain't interested in taxing the gains of the railways themselves; we're only interested in taxing the gains of the landowners profiting off of their land suddenly being more valuable from no contribution of their own. Under LVT the railway companies still would've made their money back in droves — probably moreso if they're only paying taxes on the land under the railroads instead of the actual railroads themselves!

Take the Netherlands as an extreme example of this; something like 17% of the country is reclaimed land. There's not many places you could do that.

Since unreclaimed "land" if it can be owned, can not generate any rents, it won't be taxed at all. But if all the additional value of making it usable were taxed away with a full LVT, it creates very little incentive to reclaim it and make it usable.

I think the best thing to do would be to exempt reclaimed land from land value tax for a period of time. Just like we grant monopolies for patents for a fixed value of time to incentivize sharing of the secrets.

If you got 50 years on reclaimed land without tax, it would heavily incentivize its creation.

> Cities can also lose land. Sometimes this is due to natural causes like erosion, sea level rise,

When there's a full LVT, the transactional sale price for land is very close to $0, because your land rents are taxed away. That leaves only the buildings as something that's lost to the natural disaster, so in many ways this might be far better for property owners.

It would also alleviate many of the challenges with relocation when necessary, from flooding, etc. Since the land is no longer the valuable part of the relationship estate, only the building must be moved/replaced.

All that is true and I suppose there could be tax policies to encourage land reclamation, but this is more likely to run into environmental concerns. It’s literally an edge case.

on the other hand, having been enacted almost nowhere, what is there to discuss besides theoreticals and edge cases?

The key is that land is accidental in a way - people don’t want “land” per se they want to DO something with the land - and if the valuations are high enough you get multiple uses.

The reality is that in the vast majority of places the valuations just aren’t there.

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