Georgist Economics

References

• Georgism Wikipedia Article

Related

• Natural Monopolies
• • A natural monopoly is a monopoly in an industry in which high infrastructural costs and other barriers to entry relative to the size of the market give the largest supplier in an industry, often the first supplier in a market, an overwhelming advantage over potential competitors.
• Land Monopoly
• • Concentration of land ownership refers to the ownership of land in a particular area by a small number of people or organizations. It is sometimes defined as additional concentration beyond that which produces optimally efficient land use.
• Land Value Tax
• • A land value tax (LVT) is a levy on the value of land without regard to buildings, personal property, and other improvements upon it. Some economists favor LVT, arguing it does not cause economic inefficiency, and helps reduce economic inequality. A land value tax is a progressive tax, in that the tax burden falls on land owners, because land ownership is correlated with wealth and income. The land value tax has been referred to as the perfect tax and the economic efficiency of a land value tax has been accepted since the eighteenth century. Economists since Adam Smith and David Ricardo have advocated this tax because it does not hurt economic activity, and encourages development without subsidies.
• Progressive Tax
• • A progressive tax is a tax in which the tax rate increases as the taxable amount increases. The term progressive refers to the way the tax rate progresses from low to high, with the result that a taxpayer's average tax rate is less than the person's marginal tax rate. The term can be applied to individual taxes or to a tax system as a whole. Progressive taxes are imposed in an attempt to reduce the tax incidence of people with a lower ability to pay, as such taxes shift the incidence increasingly to those with a higher ability to pay.
  • The opposite of a progressive tax is a regressive tax, such as a sales tax, where the poor pay a larger proportion of their income compares to the rich (e.g., spending on groceries and food staples varies little against income, so poor pay similar to rich even while the latter has much higher income).
• Regressive Tax
• • A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases. "Regressive" describes a distribution effect on income or expenditure, referring to the way the tax rate progresses from high to low, so that the average tax rate exceeds the marginal tax rate.
• Tax
• • A tax is a mandatory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization to collectively fund government spending, public expenditures, or as a way to regulate and reduce negative externalities.
• Tax Rate
• • In a tax system, the tax rate is the ratio (usually expressed as a percentage) at which a business or person is taxed.

• Citizen's Dividend
• • Citizen's dividend is a proposed policy based upon the Georgist principle that the natural world is the common property of all people. It is proposed that all citizens receive regular payments (dividends) from revenue raised by leasing or taxing the monopoly of valuable land and other natural resources.
• Seigniorage
• • Seigniorage is the difference between the value of money and the cost to produce and distribute it. The term can be applied in two ways:

1. 1. 1. Seigniorage derived from specie (metal coins) is a tax added to the total cost of a coin (metal content and production costs) that a customer of the mint has to pay, and which was sent to a sovereign of the political region.
      2. Seigniorage derived from notes is more indirect; it is the difference between interest earned on securities acquired in exchange for banknotes and the cost of printing and distributing the notes.

• Payroll Taxes
• • Payroll taxes are taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their employees. Most economists agree that the economic incidence of a payroll tax falls largely or entirely on workers in the form of lower wages.
• Deadweight Loss
• • In economics, deadweight loss is the loss of societal economic welfare due to production/consumption of a good at a quantity where marginal benefit does not equal marginal cost (to society - in other words, there are either goods being produced despite the cost of doing so being larger than the benefit, or additional goods not being produced despite the fact that the benefits of their production would be larger than the cost.
• Economic Bubble
• • An economic bubble is a period where current asset prices greatly exceed their intrinsic valuation, being the valuation that the underlying long-term fundamentals justify. Bubbles can be caused by overly simplistic projections about the scale and sustainability of growth, and/or the belief that intrinsic valuation is no longer relevant when making an investment.
  • Bubbles usually form as a result of either excess liquidity in markets, and/or changed investor psychology. Large multi-asset bubbles are attributed to central banking liquidity.
• Cap and trade
• • Carbon emission trading (also called carbon market, emission trading scheme (ETS), or cap and trade) is a type of emissions trading scheme designed for Carbon Dioxide (CO₂) and other greenhouse gases (GHGs).
• Cap and share
• • Cap and Share is a regulatory economic framework for controlling the use of fossil fuels in relation to climate stabilization.
• Universal Basic Income
• • Universal Basic Income (UBI) is a social welfare proposal in which all citizens of a given population regularly receive minimum income in the form of an unconditional transfer payment, i.e. without a means test or need to work.
• Geolibertarianism
• • A political and economic ideology that integrates libertarianism with Georgism. It favors a taxation system based (as in Georgism) on income derived from land and natural resources instead of on labor, couples with a minimalist model of government, as in libertarianism.
• Covenant
• • A covenant, in its most general sense and historical sense, is a solemn promise to engage in or refrain from a specified action.
• Minarchy
• • A night-watchman state, also referred to as a minimal state or Minarchy, whose proponents are known as minarchists, is a model of a state that is limited and minimal, whose functions depend on libertarian theory.
• Anarcho-capitalism
• • Anarcho-capitalism is an anti-statist, libertarian political philosophy and economic theory that seeks to abolish centralized states in favor of stateless societies with systems of private property enforced by private agencies, based on concepts such as the non-aggression principle, free markets, and self-ownership.

Notes

Georgism, also called in modern times Geoism and known historically as the single tax movement, is an economic ideology holding that people should own the value they produce themselves, while the economic rent derived from land - including from all natural resources, the commons, and urban locations - should belong equally to all members of society. Developed from the writings of American economist and social reformer Henry George, the Georgist paradigm seeks solutions to social and ecological problems, based on principles of land rights and public finance that attempts to integrate economic efficiency and social justice.

• Georgism is concerned with the distribution of economic rent cause by land ownership, natural monopolies, pollution rights, and control of the commons, including title of ownership for natural resources and other contrived privileges.
• Georgists argue that taxing economic rent is efficient, fair, and equitable. The main Georgist policy recommendation is a tax assessed on land value, arguing that revenues from a land value tax (LVT) can be used to reduce or eliminate existing taxes that are unfair and efficient. Some Georgists also advocate for the return of surplus public revenue to the people by means of a basic income or citizen's dividend.
• Henry George popularized the concept of gaining public revenues mainly from land and natural resource privileges with his first book, Progress and Poverty (1879).

• Georgist ideas were popular and influential during the late 19th and early 20th centuries. Early devotees of George's economic philosophy were often termed Single Taxers for their political goal of raising public revenue mainly or only from land-value tax, although Georgists endorsed multiple forms of rent capture (e.g., seigniorage) as legitimate.
• The term Georgism was invented later.

Main Tenets

• Henry George is best known for popularizing the argument that government should be funded by a tax on land rent rather than taxes on labor.
• George used thought experiments to deduce the idea that many problems that beset society: such as poverty, inequality, and economic booms and busts, could be attributed to the private ownership of the necessary resource: land rent.
• According to George, people justly own what they create, but natural opportunities and land belong equally to all.
• George preferred taxing unimproved land value and leaving the control of the land mostly in private hands.
• Georgists have observed that privately created wealth is socialized via the tax system, while socially created wealth in land values are privatized in the price of land titles and bank mortgages.

Economic Properties

• Standard economic theory suggests that a land value tax would be extremely efficient - unlike other taxes, it does not reduce economic productivity.
• Milton Friedman refers to Henry George's tax on unimproved value of land as the least bad tax.
• As land tax would improve the use of land and redirect investments toward productive, non-rent seeking activities, it could even have a negative dead-weight loss that boosts productivity.
• It was Adam Smith who first noted the efficiency and distributional properties of a land value tax in The Wealth of Nations.
• Henry George wrote that his plan for a high land value tax would cause people to contribute to the public, not in proportion to what they produce ... but in proportion to the value of natural [common] opportunities that they hold [monopolize].
• A high land value tax would discourage speculators from holding valuable natural opportunities (like urban real estate) unused or only partially used.

Sources of Economic Rent and Related Policy Interventions

• Income flow resulting from payments for restricted access to natural opportunities or for contrived privileges over geographic regions is termed economic rent. Georgists argue that economic rent f land, legal privileges, and natural monopolies should accrue to the community, rather than private owners.
• • In economics, land is everything that exists in nature independent of human activity.
• George emphasized ground-rent because basic locations were more valuable than other monopolies and everybody needed locations to survive. He predicted that over time technological advancements would increase the frequency and importance of lesser monopolies, yet he expected that ground rent would remain dominant.
• Sources of economic rent analogous to ground-rent:
• • Extractable resources (minerals and hydrocarbons)
  • Severable (forests and stocks of fish)
  • Extraterrestrial domains (airway corridor usage)
  • Legal privileges that apply to specific locations (taxi medallions)
  • Restrictions/taxes of pollution or severance
  • Right-of-way used by railroads, utilities, and ISPs
  • Issuance of legal tender
  • Privileges that are less location dependent but that still exclude others from natural opportunities
• Where free competition is impossible, George wrote: [S]uch business becomes a proper social function, which should be controlled and managed by and for the whole people concerned

Georgism and Environment Economics

• The early conservatism of the Progressive Era was inspired partly by Henry George, and his influence extended for decades afterward.
• Georgism is related to the school of ecological economics, since both propose market-based restrictions for pollution.

Revenue Uses

• The revenue can allow the reduction or elimination of taxes, greater public investment/spending, or the direct distribution of funds to citizens as a pension or basic income / citizen's dividend.

Synonyms and Variants

Most early advocacy groups described themselves as single taxers and George reluctantly accepted the single tax as an accurate name for his main political goal - the repeal of all unjust or inefficient taxes, to be replaced with a land value tax (LVT).

• Geoism is a synonym for Georgism.

Influence

• Georgist ideas heavily influenced the politics of the early 20th century.
• Economists still generally favor a land value tax. Milton Friedman and economist Joseph Stiglitz both approve of the land value tax.

Communities

• Several communities were initiated with Georgist principles during the height of the philosophy's popularity. One such community is Fairhope, Alabama, which was founded in 1894 under the auspices of the Fairhope Single Tax Corporation.
• In 2023, Detroit mayor Mike Duggan and Michigan State Representative Stephanie Young proposed replacing existing property taxes with a land-value tax.

Institutes and Organization

• Various organizations still exist that continue to promote the ideas of Henry George.

Reception

• There were many early critics of Georgism - among capitalists, who feared that current landowners would not be fairly compensated, and communists, who believed that the idea was futile when implemented in a capitalistic system , alike.