Shownotes
Not all of our listeners are anti-capitalist but it’s safe to say that most of us object to the accumulation of massive wealth solely by virtue of inactive, unproductive ownership. Sitting on idle property is a particularly egregious way of accruing riches, often to the detriment of surrounding communities that are forced to tolerate eyesores in their midst for decades on end. Depreciation has been a windfall for the ruling elite.
Our guests, Joshua Vincent and Rich Nymoen, are proponents of the land value tax, or LVT, associated with 19th-century political economist and journalist Henry George. The term "Georgist philosophy" refers to the economic analysis and social philosophy he advanced.
Neither Josh nor Rich promote the confiscation of property. Value is derived by different means:
...it's the rental value, not the actual land itself that belongs to the community. And most of that wealth is publicly created, is community-created. If you look at a city, almost all of its value - some comes through the location - but most of the value comes from the investments that have been made into that city: infrastructure, sewers, schools, fire protection, that kind of thing. And so I think it's our view that none of that wealth should be short-stopped by private operators, private players, rent-seekers.
In this country, property taxes fall equally on land and buildings. When landowners improve or develop their holdings, their taxes go up, serving as a disincentive to improvement. Josh and Rich explain how communities can use the land value tax to encourage productive use of property and collect revenue benefitting the locality. The LVT applies pressure to develop vacant or unused sites by dramatically increasing the taxes on these properties, while improved lots will see significant reductions.
Josh and Rich describe some remarkable successes, particularly in Pennsylvania, as well as the challenges they face when first attempting to introduce these concepts to recalcitrant officials. They find that they need to use both the carrot and the stick.
The LVT has supporters as diverse as Joseph Stiglitz, Milton Friedman, and our recent guest, Michael Hudson. The financial industry’s connection to land is of critical importance. Most bank lending is tied to real estate. Since people borrow from a bank in order to purchase land, they’re essentially paying the land rent to the bank.
So that's really how the 1% is being created: by all these land rentals and natural resource rentals being paid to the finance industry. Whereas if you were paying it to the community, it would be shared more equally than being funneled to the top. You may be aware that the board game, Monopoly was originally intended to teach these principles?
This interview contains a good balance of the micro- and macroeconomics of Georgism, some strategies for applying them, and the community benefits that ensue.
Josh Vincent is Executive Director of the Center for the Studies of Economics, a 501(c)3 organization dating back to 1926. One of the group’s endeavors is the Center for Property Tax Reforms.
urbantoolsconsult.org
centerforpropertytaxreform.org
@JoshuaRVincent
@urbantools
Rich Nymoen is the President of Common Ground USA, a 501(c)4 affirming that “all persons have equal and common rights in the earth and its resources.” He is on the board of the Robert Schalkenbach Foundation.
commonground-usa.net
schalkenbach.org
@rnymoen2
@Schalkenbach
