Land value is mostly human made.
Indeed it is. The value of a location in large part derives from public/ collective investment.
The "money's worth" of (say) fertiliser, effort, bricks and mortar (I think of this as "Capital") invested in a location, is another issue.
The increase in the rental value of a location which is derived from (say) a new Metro, constitutes an unearned windfall gain for lucky land owners living near the stations. Henry George's case was that those who have exclusive rights of use of the Commons of land/location should compensate those they exclude. This tax on the privilege of exclusive use of the Commons of land was his "Single Tax", and it enables the capture by Society of publicly funded unearned or windfall increases in land values.
Martin:
Propertisation [In German I would use the word Vereigentümerung; in German there is the word Eigentum and Besitz, the latter, litteraly something you sit on, meaning the physical possession of something. The latter meaning a legal title to own something. In this case I'm talking about the legal title, when I say propertisation] is the only meaningful invention in the profession of economics in thousands of years. The age of industrialisation would never have happened, without propertisation, including the propertisation of land. The very high recent Chinese growth is the effect of propertisation. Money is mostly backed by land property, and some time ago money was backed by metals - a natural resource as well. Credit hardly works without collateral - and access to natural resources is a vastly better collateral than work, especially, when even slavery is illegal.
Agreed, with the caveat that it is exclusive physical possession.
Unfortunately there is a conflict of interest between the absolute owner of land, and the provider of temporary finance capital (credit) who secures a temporary claim over the land with a mortgage agreement. Similarly there may be a similar conflict between an absolute owner, and a temporary user or tenant.
We take these conflicts for granted, and they are inherent in the very nature of finance capital.
I am pointing out that there is now emerging a new third possibility based upon the use of an "Open" Corporate - such as the UK Limited Liability Partnership (LLP), or its close cousin the US LLC - where the governing agreement may take any form the members agree.
We may encapsulate all of the rights of use and usufruct which actually constitute the property relationship (it is not actually an Object) within such an "Open" Corporate as a framework.
We may then issue Units (not unlike a Redeemable Preference Share in a conventional Corporation) which are redeemable in rental value, and sell these to Investors in order to fund development or otherwise.
The outcome is that it possible using what I call a "Land Partnership" to create what is in fact a new property right of indefinite duration ie for as long as I use the Capital invested in the land I pay a "Capital Rental" to those who provided it. And for as long as I have exclusive use of the location, I should pay a "Location Rental" or "Location Benefit Levy" to the local community whom I exclude.
Everywhere Else' from de Soto. Actually capitalism doesn't fail everywhere else totally, but especially in Africa, where propertisation sometimes is in conflict with traditions, it often fails pretty much.
In places like Africa, land is perceived as a Commons belonging to the tribe, rather than to individuals. In other societies eg genuinely Islamic societies, the position is that absolute ownership of land is God's alone, and it is expected that a payment will be made to society for the use of it.
Now some people may not like the modern society and don't feel to be part of it or profit from its wealth. They may disagree with the idea, that the state can create such an instution as legal title to own. But that small minority is essentially denying the other people on the planet the right to live, as without the productivity gains, enabled by propertisation, many people simply would die.
I disagree. I believe that no man has the absolute right of ownership of a Commons such as land, non-renewable resources, water, or knowledge.
ie there is no Divine Right of Capital.
However, I believe that it is essential that there be a right of exclusive use of such Commons in certain respects, and that those who are granted such privileges for an indefinite period should compensate those they exclude for as long as they do so.
The innovation I am proposing and developing consists of the novel use of new partnership-based (as opposed to statutory or judge-made)legal protocols for the sharing of production/ revenues on the one hand, and the sharing of risk on the other.
So I agree that propertisation is necessary. But it should be a form of propertisation benefiting the many, rather than - through the mathematics of compound interest, coupled with the enclosure of Commons - concentrating wealth inexorably in fewer and fewer hands - as we have seen, and which is asystem even now melting down. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
Many countries to have some taxes on land ownership. Some even quite significant. Usually they are adjusted, when the land is sold. A problem I have with the idea to adjust them regularly for valuation is, that it can happen that way, that you are taxed out of your home without a change in your income, e.g. you have a house and have calculated, that with your income in a relative save position, e.g. in the public service, are able to pay for it. Now a new Metro is build. This can double the value of your house in the market (e.g. in Munich suburbs this a realistic scenario). If the tax is adjusted for the valuation gain, the tax will double, and you might not be able anymore to pay it. Maybe your partnership based approach has a solution for that. But the 'old economy' model doesn't provide such possibilities easily. [Not to mention that in villages the local land owners are often the ones, that are politically active and shove windfall gains on to each other; e.g. real world politics is corrupt]
I don't think that such a tax should be the single tax. Land ownership is important but it isn't the only thing that determines the capacity to contribute to the public budget. Why should a family with a chronically ill parent pay the same for the public budget as childless people earning lots of money by work, just because they occupy the same amount of space? Income and consumption are as well approximate measures for capacity to contribute.
Yes. So they can't mortgage their land e.g. to buy fertiliser. Somebody who has access to fertiliser will have to form a partnership with them... Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
A problem I have with the idea to adjust them regularly for valuation is, that it can happen that way, that you are taxed out of your home without a change in your income, e.g. you have a house and have calculated, that with your income in a relative save position, e.g. in the public service, are able to pay for it.
So you're for strict rent control with vacancy resets? In other words, landlords shouldn't be able to raise rents except when the tenant moves out and is replaced by someone else? After all, it's an even worse problem for renters since rent tends to be rather more than property tax.
Many countries to have some taxes on land ownership. Some even quite significant. Usually they are adjusted, when the land is sold. A problem I have with the idea to adjust them regularly for valuation is, that it can happen that way, that you are taxed out of your home without a change in your income, e.g. you have a house and have calculated, that with your income in a relative save position, e.g. in the public service, are able to pay for it. Now a new Metro is build. This can double the value of your house in the market (e.g. in Munich suburbs this a realistic scenario). If the tax is adjusted for the valuation gain, the tax will double, and you might not be able anymore to pay it. Maybe your partnership based approach has a solution for that.
You identify valid issues, and yes, I do have a solution.
The occupier of the land will have the option of paying taxes by joining the Community Partnership and transferring Units of land rental value to the community via the location levy.
ie he may pay in kind.
One of the outcomes of the model I am describing is of the gradual introduction/evolution of a Rental Pool.
The key mechanisms for introduction of unitised rentals as what is essentially a new geographically bounded currency are:
(a) a solution for "distressed" property owners. So anyone wishing to refinance their mortgage may do so;
(b) an optimal and non-toxic, means of equity release (which is what is happening, above to pay the taxes).
I don't think that such a tax should be the single tax. Land ownership is important but it isn't the only thing that determines the capacity to contribute to the public budget.
I agree totally with you. Henry George lived in simpler times, when land value constituted a much greater proportion of value in circulation than it does today.
There are other privileges available upon which to make a levy.
First, I would make a carbon levy on the use of carbon-based fuels (ie the privilege of use of non-renewables) and also on other mined resources. This would be used to fund the transition to renewable energy.
Second, I would replace all corporate taxes, taxation on dividends, and VAT with a simple levy on the gross revenues of any entity where investors benefit from the untaxed (or inadequately/imperfectly taxed) privilege of limitation of liability.
Simple, unavoidable, easily collectable (via networked clearing), and getting rid of a massive burden of cost and overheads (ie government tax bureaucracy, and the private sector accountancy/avoidance/minimisation industry) to society. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
[...] Actually capitalism doesn't fail everywhere else totally, but especially in Africa, where propertisation sometimes is in conflict with traditions, it often fails pretty much. In places like Africa, land is perceived as a Commons belonging to the tribe, rather than to individuals. In other societies eg genuinely Islamic societies, the position is that absolute ownership of land is God's alone, and it is expected that a payment will be made to society for the use of it.
[...] Actually capitalism doesn't fail everywhere else totally, but especially in Africa, where propertisation sometimes is in conflict with traditions, it often fails pretty much.
If you want to help Africa, forgive the debts. Give them a chance to build economies without a Tchengis Khan-lite levy of compounded debt repayments.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
While external debt may be a problem in some cases, I strongly doubt, that it is regularly the case. When you say, the best people can do is working for the gov't this is not exactly a sign of too little funds for the gov't. Working for multinational corporations isn't bad - if the corporations have business in Africa.
One effect of questionable protection of property, is people in Africa, that somehow gathered funds, don't invest them in Africa, but (so far) in Switzerland. If not even the local people trust in the legal safety of business, foreigeners have even less reason to do so. Of course in recent years some countries have made progress, e.g. google 'gapminder' to see a tool to get access to UN statistics. Unfortunately there are countries like Zimbabwe, that have made steps backwards. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
Another issue for Africa is that on most of the continent, the infrastructure really isn't anything to write home about, except in the sense that you'll have plenty of time to write home if you try to use it to get from A to B. And of course, there's the whole rainforest belt, where it's pretty limited how much European-style industrialisation you can do at all, due to the climate. Property protection really comes rather far down the list of Things To Do.
To illustrate, recall that Yeltsin's Russia had very good de jure property protection (considering the lack of popular legitimacy of the Yeltsin regime, de facto is another story...). This did not prevent a massive capital flight to flag-of-convenience countries.
It is very clear, that Russian oligarchs tried to get their money out of Russia to get it out of reach of politics. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
Actually regime changes are good opportunities to simply default on debt.
That did not happen even in the "heroic" examples of South Africa or, say, Poland. They had to "honour" debts of their oppressing predecessors. Nothing was forgiven with "good" regime changes is Latin America either.
As the external debt acts as a tax or a tribute, it is a persistent problem in the developing countries. It is as if the West ended overt colonization, but succeeded in keeping a financial yoke.
African local economies were bulldozed long ago - we hardly knew them. Only blocks close to the corrupt governments can usually "gather some funds" - and they often seem to be more in friendship with neo-collonist "business partners" than own citizen. Corruption in those governments is not exactly a trouble for Western elites, still.
Countries can just refuse to honour debt obligations, like Argentina did. The question is usually, if they remain credible to attract new credits afterwards. In case of Argentina, it seems yes.
If you wait for the creditor to say, hey, I don't want your money any longer, you can wait a long time. Why is the creditor a creditor in the first place?
Where is this a problem? I looked at wikipedia List of countries by external debt.
This is gross debt, not net debt. Bit for most poor countries, even if they would have zero assets elsewhere, the external debt to GDP ration isn't problematic. The net external debt is ~20% for the US, which can't have catch up, high growth development. Zimbabwe seems to be seriously overdebted, but that is probably more due to the shrinking GDP than due to the high debt before Mugabe.
Debts that really keep them from going would be something like net external debt several times the GDP, if all other stuff would be fine. There isn't a fraction of that.
African local economies were bulldozed long ago - we hardly knew them.
When were these African local economies there? Today in most African economies the HDI should be higher than at the time when the first colonial efforts were undertaken.
Only blocks close to the corrupt governments can usually "gather some funds"
Right, that is where the money is, e.g. due to development aid. What they need is a functioning private sector.
and they often seem to be more in friendship with neo-collonist "business partners" than own citizen
There partners aren't neo-colonist. They may be business partners or just criminals or both in a sense. The existence of criminals isn't shocking at all. Of course you will find someone to transfer your wealth out of the country, if you want, if you pay him. Should I complain about Italians colonising Germany, because their Mafia makes great deals, here? Those business people don't have a mandate by our people. And actually I trust my gov't to make decisions according to their best knowledge and usually sufficient integer. Corruption of course exists here, too.
Corruption in those governments is not exactly a trouble for Western elites, still.
'Western elites' mostly simply ignore Africa. So why should it be a big trouble? If you never set foot on that continent, never buy or sell anything there, from where should the big trouble come? Nevertheless most Western gov'ts have now laws, that make corruption in foreign countries a crime at home. It is not self evident, that one has to have such a law, because it hinders your own business people to make deals, when competitors from other countries engage in bribing. One can as well say, this is a sovereign country, and if the officer demands a fee so be it. That is the opposite of colonialism. You accept the rules, the locals make. Colonialism would be, when we make their rules. We don't and actually we can't. Do you want more Bush wars in countries to bring them democracy and freedom? Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
Countries can just refuse to honour debt obligations, like Argentina did. The question is usually, if they remain credible to attract new credits afterwards. In case of Argentina, it seems yes. If you wait for the creditor to say, hey, I don't want your money any longer, you can wait a long time. Why is the creditor a creditor in the first place?
I see the role of investors as overvalued. They provided just money - other aspects should be valued as well. As this crisis is settling down in East European countries (for example), reliance on external capital flows only increasingly looks like a doubtful strategy, especially when own industry is "gone" and trade balance perspectives are pure.
As the external debt acts as a tax or a tribute, it is a persistent problem in the developing countries. It is as if the West ended overt colonization, but succeeded in keeping a financial yoke. Where is this a problem? .... Debts that really keep them from going would be something like net external debt several times the GDP, if all other stuff would be fine .... ... What they need is a functioning private sector.
Where is this a problem? ....
Debts that really keep them from going would be something like net external debt several times the GDP, if all other stuff would be fine ....
... What they need is a functioning private sector.
If the global crisis is going to deepen, many countries may see their debts jump over total GDP, just as Zimbabwe. This is akin to going "underwater" with your mortgage.
African local economies were bulldozed long ago - we hardly knew them. When were these African local economies there? Today in most African economies the HDI should be higher than at the time when the first colonial efforts were undertaken.
I don't know how exactly you can measure Human Development Index (HDI) of past non-Western societies. But I guess that biological indications (thus excluding education, in particular) were less behind the West than they are now. And the tribes could possibly have social-economic tricks that, although not fitting into our general ideologies, were very useful in making the people happy.
and they often seem to be more in friendship with neo-collonist "business partners" than own citizen There partners aren't neo-colonist. They may be business partners or just criminals or both in a sense .... .... 'Western elites' mostly simply ignore Africa.
There partners aren't neo-colonist. They may be business partners or just criminals or both in a sense ....
.... 'Western elites' mostly simply ignore Africa.
Valued by whom? I don't think that gov'ts anywhere in the world see investors as more than money providers.
As this crisis is settling down in East European countries (for example), reliance on external capital flows only increasingly looks like a doubtful strategy, especially when own industry is "gone" and trade balance perspectives are pure.
But their industry isn't gone. The problems in Eastern Europe seem to me to be the result of a credit crunch. I can't see big underlying problems.
Africa isn't hard hit by the crisis. The low international dependency of Africa is this one time a good thing. Nevertheless, yes, in can happen. It can happen as well to rich nations as Iceland or Ireland. But it is not the reason for slow improvements on the last decades.
But I guess that biological indications (thus excluding education, in particular) were less behind the West than they are now.
I'm pretty sure, that child mortality is now much lower than in precolonial times, or what do you mean with biological conditions. In linear terms the difference to the West should be as well smaller. On logarithmic scale, the difference may not be smaller, because the West had gains there as well.
And the tribes could possibly have social-economic tricks that, although not fitting into our general ideologies, were very useful in making the people happy.
Quite possible. I doubt there is any way back, though; or at least 'conventional' development will be as doable as going back.
Some circle is still lazily profiting from dirty deals and debt collections. How much do we know, which 'Western elites' are not included?
From sheer volume, we know, that probably not much are included. Most banks etc. simply don't have business in Africa.
While there is so much disparity between human suffering and exported wealth, the term "colonist" applies.
The bulk of denied wealth is denied by people, that have come to power in genuinely African movements. Westerners [individuals] stand by as bankers, dealers, advisors; (usually) not making African law with military invasions. The term colonist doesn't apply. Real colonialism probably would be better for Africans today than their own sovereignty. Despite all problems French oversea territories are better off than their independent neighbours. But who wants to do colonialism today, when pillage and robbery isn't accepted any more? Not so long ago in the West aristocrats sold their subjects as soldiers [so no volunteering as mercenary, but mandatory military service] for foreign wars to finance opulent live styles. Seems to me to be similar to what African leaders do now. This is simply normal feudal ruling. Nothing unusual. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
I see the role of investors as overvalued. They provided just money - other aspects should be valued as well. Valued by whom? I don't think that gov'ts anywhere in the world see investors as more than money providers.
Secondly, all policy decisions are made for the sake of pleasing the investor class. We may debate, whether those policy decisions are really improving economy in some or other sense, but one thing is clear: each new reform ir policy decision "somehow" is making money providers happier compared to other people. This is especially clear in "developing" economies like Eastern Europe, where everything is rationalized and done for the sake of investors.
As this crisis is settling down in East European countries (for example), reliance on external capital flows only increasingly looks like a doubtful strategy, especially when own industry is "gone" and trade balance perspectives are pure. But their industry isn't gone. The problems in Eastern Europe seem to me to be the result of a credit crunch. I can't see big underlying problems.
The underlying problem is: macro-economically East Europeans cannot offer anything significant to the world markets. Their dreadful trade balances were concealed by a credit bubble for some time. And it is not only the global credit crunch and trade imbalances made naked. Now their people have a big post-bubble debt burden to pay-off. In the contracting economy that looms very large.
While there is so much disparity between human suffering and exported wealth, the term "colonist" applies. The bulk of denied wealth is denied by people, that have come to power in genuinely African movements. Westerners [individuals] stand by as bankers, dealers, advisors; (usually) not making African law with military invasions. The term colonist doesn't apply. Real colonialism probably would be better for Africans today than their own sovereignty. Despite all problems French oversea territories are better off than their independent neighbours. But who wants to do colonialism today, when pillage and robbery isn't accepted any more?
The bulk of denied wealth is denied by people, that have come to power in genuinely African movements. Westerners [individuals] stand by as bankers, dealers, advisors; (usually) not making African law with military invasions. The term colonist doesn't apply. Real colonialism probably would be better for Africans today than their own sovereignty. Despite all problems French oversea territories are better off than their independent neighbours. But who wants to do colonialism today, when pillage and robbery isn't accepted any more?
'Western elites' mostly simply ignore Africa
Apart from the massively lucrative diamond, gold, oil and more prosaic mineral rights, and certain kinds of agriculture.
Africa is potentially a ridiculously rich continent, made poor by some very traditional colonial pillage.
Apartheid was always as much about diamonds and gold as it was about simple racism.
And that market exists in The West(TM).
Clamp down on all the diamond smuggling, dirty oil deals and so on and so forth, and you might actually create an incentive structure that isn't quite so badly skewed towards looting.
Kinda the same way that a British effort at prosecuting Russian oligarchs in London for tax evasions might have stopped the looting of Russia.
