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0 pointsnybble416y ago0 comments

The landlord provides a usable piece of land close to these amenities. They, along with others, contribute to making the area worth living in. They aren't being paid for the use of any nearby amenities, just for having the foresight to develop land in the correct location to synergize with the surrounding improvements. Is choosing the location to build not part of their contribution? And likewise for encouraging the later development of facilities in proximity to their own property? Frankly the idea behind the "unearned benefit" narrative—that a landlord ought to earn the same profit for land in a bad location as for land in a good location—is a bit ridiculous. Attempting to negate the value the owner derives from good placement in the community is counterproductive.

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5 comments · 2 top-level

pydry6y ago· 2 in thread

>The landlord provides a usable piece of land

They neither made the land nor made it valuable, so they're not "providing" it in any meaningful sense. They're relinquishing their state provided entitlement to expel users of the land with state-backed violence. In exchange for resources.

JoeAltmaier6y ago

Ask an automaker: did they make the iron? No, it was a supernova 1B years ago.

pydry6y ago

Valuable mining rights should, broadly speaking, follow the same rules as land under georgism. rather than, say, "renting" it from some guy who has land deeds that say "i own this mountain".

what turns iron ore into a car is labor, which you should pay the laborer for.

that is, unless you think you should have a greater share of mineral rights than somebody else for some reason.

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ethanbond6y ago· 1 in thread

No, landlords do not provide land. The land was there long before the landlord and will be there long after the landlord is gone, too.

The landlord, as evidenced by the fact that you are calling the land good or bad prior to having been developed by the landlord, should earn no profit based on that difference, because that difference would exist regardless of who – if anyone – is the landlord.

If the landlord makes some particular investment in addition to the "natural" or community-driven component of the land's value, she will keep all of the upside from that investment.

To repeat: All the gains generated by improvements upon the land – or enhancements in the "usability" of the land – will be retained by the landlord.

That is sufficient incentive for landlords to productively develop on valuable land. More importantly, it is a disincentive to speculating on that land (or withholding it from the market/withholding it from productive use). This is of course a behavior you see all over high value areas.

nybble41OP6y ago

> No, landlords do not provide land.

They provide access to their land, which is the same thing. This debate is not about who (or what) created the physical dirt. It is about the economic value of the property, which only exists as a result of human action.

> as evidenced by the fact that you are calling the land good or bad prior to having been developed by the landlord

You misread. The land is known to be good or bad in retrospect. At the time it was developed that classification was only speculative. This particular landlord thought the land would be good and thus worth developing. Others disagreed and didn't bid as highly for it. The landlord is rewarded not for others' efforts but for the fact that they were right when they predicted that this would be a good location for their development.

> All the gains generated by improvements upon the land – or enhancements in the "usability" of the land – will be retained by the landlord.

To the best approximation either of us will be able to come up with that is 100% of the market value of the land. However, you are speaking in terms of ideals. In practice only the cost of building physical structures on the land will be counted as "improvement". There is no need to guess; this is the legal standard which is already applied in the rare situations where improvements must be valued separately from the land. However, it severely understates the property owners' contributions to the overall value.

> More importantly, it is a disincentive to speculating on that land (or withholding it from the market/withholding it from productive use).

The fact that you fail to see the economic value of speculation is a depressingly common failing among LVT supporters. Putting land to a lower-value use now prevents it from being put to a higher-value use later, which destroys wealth. Speculation holds the land ready for the higher-value use, which is why it is rewarded.

Here's a hypothetical example: Say there's a plot of land which could be used for either warehousing or family homes. If you simply put it up for auction right now for a term of perhaps 50 years you'll get $100M from the warehouse representatives or $80M from family home developers. Whichever way you go you'll be locked in to that use for at least 50 years. However, trends show that the warehouse industry is in a decline, whereas demand for family homes in that area will likely increase to $150M within ten years—meaning that if you just take the highest offer now then you will be losing out on $50M of value and those families won't have enough homes. In the best case there will be a significant cost incurred to demolish the warehouses and rebuild. The correct answer here is to speculate based on the trends that a higher-value use will come along and allow only short-term, non-destructive uses of the property in the interim rather than auctioning it off immediately. Or even leave it vacant for a few years if there are no such uses.

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