Mark Wadsworth

This is a spare 'blog in case my main 'blog at markwadsworth.blogspot.com isn't working

Killer Arguments Against LVT, Not (139)

Trooper Thompson in the comments to KLN #98

Secure property rights are necessary for progress in all manner of ways. (1) Land ownership is not a protected state monopoly. (2) The state justifies its existence by (amongst other things) claiming to protect our property rights. (3) In fact it can play the part of aggressive invader (one example: Diego Garcia). (4)

Land is not a creation of man, but land bears the same relationship to man as the fruit he gathers. He mixes his labour with the land, and thereby gains a property in it. (5) This property he can sell. I do not grasp the Georgist distinction between land and all other things. No doubt you can refer me to an earlier chapter.(6)

1) Agreed. Motherhood and apple pie.

2) Yes it is. Without a state there can be no land ownership and without land ownership there can be no state. Otherwise, why would there ever be such a thing as ‘border disputes’ where two armies battle for the right to decide who ‘owns’ a certain strip of land?

3) Agreed. And states do very much protect property rights; which includes state-protected monopoly rights. For sure, there are ‘compulsory purchase orders’ from time to time, but the government doesn’t do this for fun.

4) Doesn’t that contradict his statement at (2)?

5) Well yes of course. If our hero buys an empty plot suitable for a house, and he builds a suitable house at a cost of £100,000, then under a Georgist view point, he has ‘property in’ i.e. owns the first £100,000 of the total value of the land and buildings. The rest is location value and was generated by ‘society in general’.

It’s the same as if you buy a car for £10,000 and park it on your drive. The car belongs to whoever paid for it (or built it), and if you were to sell the house inclusive of the car, £10,000 of the selling price relates to the car and not the land/location. The car, like the building, is a separate concept to the pure land/location.

6) This is the nub of TT’s argument aka ‘punching a tree’, I’m sure I have done a chapter on it, but let me advance another example to illustrate my point:

a) A farmer owns all the land from the outskirts of a nearby town all the way up to the edge of a cliff along a nice bit of coastline, which is assumed to be a solid cliff not liable to erosion. He sells off a fifty yard wide strip along the cliff edge which is parcelled up and holiday homes, chalets, beach huts etc are built along it.

b) This involves a fair bit of expenditure, but however humble these huts or chalets may be, they command a vast premium over the actual build cost because they have the nicest views. The farmer will collect the bulk of that location value as a windfall profit, let’s call it a million quid for sake of argument.

c) Unfortunately, the engineers and geologists were wrong, and a few decades later, a whole chunk of cliff, fifty yards wide collapses and falls onto the beach. The location value of the strip of land which the farmer originally sold off is now £nil, as it’s just a strip of boulder-strewn beach which is flooded at high tide (and thus belongs to Crown Estates anyway)

d) Following further inspections, the engineers and geologists conclude that there was a particular fault line, that the newly exposed cliff face is much more solid rock and unlikely to be eroded (and insurance companies are happy to take on the risk). What happens to the location value of the land that has effectively moved fifty yards closer to the beach and from which you can now enjoy the views?

e) The location value of that strip must now be a million quid, so the chalet owners’ loss is the farmer’s gain; he can sell off another strip for a million quid and the whole cycle starts again. He has in no way ‘mixed his labour with the land’ to generate a million quid profit, it is pure windfall arising from the destruction of land and buildings ‘owned’ by others.

f) Thus location values depend on people and views and so on, as long as the views are there and there are people prepared to pay for it, the location value cannot be destroyed and is to some extent independent of the physical land.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: