How not to write an LVT rebuttal: featuring a moped

Candidate: ducati998 – Henry George Land Tax [again]

Right from the start, you get the feeling that Ducati doesn’t really know what he’s arguing against. In response to the assertion that land is not the product of labour:

True. However without ‘labour’ land produces nothing. Even the fruit trees that may already exist, require the fruit to be picked.

I’m confused as to what point Ducati is trying to make here.  Bear in mind that if you substitute the word ‘capital’ for ‘land’, then you have a stock Marxist argument against interest.  Is Ducati a marginalist (as he later tries to assert) or not?  More to the point, it is equally valid to say that without land to work on/in, labour produces nothing.  The fact that labour and land cannot produce independently of the other has no relevance, at least not one that Ducati appears able to elucidate.  Moving on…

Things said better than I could

Was going to try and do more work on my Rothbard rebuttal tonight, but have gotten sidetracked by several things.  First this from Robin Smith.

Again note that The Money was not the piece of paper. The paper is merely a proxy for for that peculiar thing, The Money. Which is the faith I put in Al’s promise to pay upon redemption of the piece of paper.

When we take money for goods and services, we are really exchanging our labour for the ability to demand that another gives us something created by their labour later on. Accepting money is only half an exchange.

So many times I hear talk of money in terms that divorces it from it’s social foundation (and goldbugs tend to be the worst).  I’ve been meaning to do an update to an earlier post I did on money, but thanks to Robin, I don’t think I have to.  Cheers

Second, via the Renegade Economist, some excellent LVT advocacy by a guy called Edward Miller.  Interestingly, in the comments is a link to an attempted rebuttal. I’ll post a few comments on it next…

(Also, check out the first comment on that LVT rebuttal, it has an interesting link to a somewhat novel take on a theory of property rights)

This fiddled statistic….it is not ready!….

(Bonus points if you can name the advert referenced by the title)

I’m looking for some hard data here people.  Help me out!

Apparently, the average amount households spend on mortgage+council tax per week is £67.30.  That sounds like hogwash to me, so I’ve set up a poll.  Feel free to share this far and wide!

 

Adventures in Openness #1: Something that started by the Poole

[Have come to the conclusion that I need to walk the walk a bit and start revealing more of myself - which means telling the stories that I, whether rationally or not, don't really like talking about.  Here goes...]

I should preface this by saying that there were a few things that ‘started by the Poole’ and this is just one of them, but it’s the one on my mind right now so it’s the one getting told.

‘Poole’ refers to a church singles event that happened back in the summer over a weekend in..well….Poole.

At Poole, I met a girl (I met a few, but I’m only telling one story here, remember?) – Codename: Grace.  Ironically, the first time I saw her on the Friday evening I didn’t even really notice her, but rather her friend.  Grace didn’t really register at the time.  It wasn’t until the following afternoon when activities had migrated to the beach, that I finally took notice.  I have to say, I wasn’t impressed.  Her and her friends quickly appeared to isolate themselves from everyone else, and I came to the conclusion that this was the ‘fit & don’t-we-know-it’ group.  The annoying kind because even though you know you’d be wasting your time with them, you end up attracted to them anyway and loathing yourself for it.  And so it was that I wanted to talk to Grace anyway, but simply not having the nerve to take on her AND her friends.

Fast-forward to the Sunday morning breakfast, as I looked for somewhere to sit with my Rice Krispies (they always take me back to my childhood!) I saw someone I knew, an empty chair next to her and in the next chair was Grace sitting by herself.  This was my chance, and for once I took it.  It was actually a very easy conversation, and during it I made a startling discovery.  She remarked that she’d come to Poole with the goal of meeting 10 new people, because she often struggles with it.  It was at this point that I learned…

Lesson #1: First impressions are unreliable!

What I’d taken as haughtiness was, in fact, shyness.

There was a bit of a hiccup with getting her number later in the day (and that’s a story I’m not yet ready to tell – it’s seriously pathetic!), but in the end, success was had and some time later a date was arranged.  From my perspective it was extremely stressful because I really didn’t have much of a plan, and what plan I did have was pretty rubbish (like going to a museum when it’s shut….genius, Fraggle!).  That said, it was enjoyable and we talked pretty much the whole time, I don’t remember there being any particularly awkward pauses – well, except for the point where she demanded to know why I didn’t think a particular feature on a building was breathtakingly beautiful (if it sounds like a strange moment, that’s because it was!).  For some reason I totally locked up at that point.  I felt like I really *should* have an answer for the question, but the truth was I didn’t.  It didn’t bother me one way or the other, but I’d managed to in that moment convince myself that that was somehow a character defect. Thus…

Lesson #2: Don’t take everything so darn personally!

I still wonder whether when we parted that night, she was hoping I would kiss her or something.  As it was, I’d decided beforehand that it was too early for anything like that, but I admit I felt a bit disappointed in myself afterwards that I didn’t simply consider the situation on it’s merits. (and no, I’m not entirely sure what I mean by that)

The last time I saw Grace was at another event a week or so later.  By this time though, my shyness had reasserted itself and I found myself unable to approach her even after we saw each other and said Hi.  We spoke very briefly a couple of times, but nothing substantial.

Lesson #3: Don’t think that there’s time for you to be shy.  You have no idea what’s coming…

At the end of the day before she left I gave her a gift that referenced the date and was utterly surprised when she then announced she was going to kiss me on the cheek!

Lesson #4: Sometimes awesome things happen.  Enjoy them while they last!

Little did I know that in this case it wouldn’t be lasting very long at all.  When I next spoke to her (with the intention of arranging another date), she informed me that she’d just started a relationship.  <Sigh>

The problem with real stories is that usually, the narrative is incomplete.  There are a fair number of questions outstanding for me (which are basically an attempt to see things from her perspective).  I have to accept that those questions will never be answered…

Lesson #5: You need a way to learn without feedback, because you can’t rely on it being available.

Poole itself was an interesting experience for me because I experienced myself in a way that I’m not used to – that weekend I became almost semi-confident and have found myself frustrated that I’ve been unable to capture that and bring some of whatever Pixie dust I ran that into back then with me into the normal world.  Yet another mystery to ponder…

Revelation

I’ve been very tempted recently to delete one of my previous posts, of which I am now well and truly embarrassed.  The form is clunky, the function is foolishness and the message is borderline childish.  I must, however, absolutely resist that temptation.  I hate mistakes with a passion (I clearly remember getting upset several times in my last year of lower school when I didn’t get 100% on a maths test – especially if my best friend did!  Yeah….I’m a really good friend…), but what I hate more is other people knowing about them.

Nevertheless, to hide my mistakes is to hide *me*, and I’ve become far too effective at hiding myself.  You cannot truly love a thing a that is not revealed.  Which means if you are not revealed, you cannot be loved.  The best you can achieve is owning a facade that is loved, but that is not actually you, and thus leaves you unfulfilled.  Indeed, don’t be surprised if you find yourself resenting someone for loving the facade instead of you.

I have a long way to go.

US Debt and…meh…

It’s hard for me to get excited about the US debt crisis (except for the hilarous BBC headline that Apple had more cash to spend!).  It’s two people standing in a burning building arguing what channel to watch.  If it wasn’t tragic it would be comedy.

It’s a classic example of the false battle between left and right.  The left sees a problem, a disturbance in the force, but the only thing they can think of to redress the balance is to take the results of peoples hard work and try and work out who needs it.  A kind of enforced charity.  The right, meanwhile, bleats that if only the left would stop trying to enforce charity, the rich would do it themselves and the disadvantaged would find plenty of voluntary charity to soothe their plight.

Trouble is, as a wise man once said:

“Charity can only palliate present suffering a little at the risk of fatal disease. For charity cannot right a wrong; only justice can do that. Charity is false, futile, and poisonous when offered as a substitute for justice. This is the fatal taint that runs through all the efforts of the rich and influential to aid the unemployed, with which our newspapers now are full. Like the gatherings of clergymen called in Chicago by Editor Stead – blinded leader of the wilfully blind – their spirit is that of men pretending to look for what they are determined not to find; of men, like those of Moscow of whom Tolstoi tells, willing to do anything whatever to help the poor – except to get off their backs. “

The politicians argue over how much should be taken/given (and by whom) in order to pay for x or y,  never asking why in the world x or y is needed in the first place.  Something caused that need.  Repair the cause and the need will vanish.  Otherwise, you’re part of the problem, get out of the way!

Love has a price tag

There are some things that though discomforting to see at the best of times actually become horrific when viewed with the Georgist lens, and this Newsnight piece (don’t forget to watch the video) is a good example.  If you think the British are hung up on housing, you ain’t seen nothing yet!

The Prodigal’s Inheritance

Just a quick random observation from the ol’ parable.  When the son asked for his inheritance so he could blow it up his nose, as it were, the dad appears to have just said “Okay, then!”  Not sure why that’s significant, or even if it is at all, but I find it intriguing.

LVT v House Prices

Robin Smith and I are debating whether LVT will cause house prices to rise or fall.  I say fall, he says rise.

My reasoning is as follows:

The price of a house has two components, the price of the structure and the price of the site.  What happens to the price of the site?  Well, consider a real-life example from a colleague of mine.  He was looking to move closer to work and found a house in his price range and seemed to him worthwhile buying and he made an offer.  Then numerous problems appeared, one of which was a curious encumbrance that his solicitor found in the title deed.  It effectively said that the parish could, at any time, make a charge of all property owners in the village to pay for maintenance of the village church.  This amongst other things made him wonder whether to go ahead until some spanner thrown by his then-current mortgage company somehow took the decision out of his hands.

(In the end, he did find another place, and despite a couple of us telling him he was mad, took out an interest-only mortgage to get it.  It’s not gonna end well…..)

What’s my point?  A liability that attaches itself to land reduces the selling price of that land, because it makes it less attractive.  And as that’s exactly what LVT is, that’s exactly what it will do.  The question is, how much of the site value will remain in the selling price?  Well, that depends on what percentage of the rental value that’s taxed.  Robin suggested 100% so let’s work with that.

The selling price of land consists of:

1. The capitalised rental stream from the site
2. + A certain ‘hope’ value that the rental stream will increase (in a crash, this turns to ‘despair’ and is a negative number)
3. - Liabilities attached to the site (capitalised if necessary)

With 100% LVT, a site with a current rental value of £100/month will be taxed at £100/month, so clearly the only component of the price left to consider is the hope value.  However, any increases in the site’s rental value (due to an advancing economy, and even for the initial spike as incomes are no longer taxed) get wiped out when the tax is reassessed, so there’s no point buying land expecting to benefit from rental increases.  This means that hope value is zero, therefore land selling prices are zero. That’s not to say that the land is now worthless (Rothbard makes that mistake and thus loses the plot completely), but rather that it’s value is all represented in the levied tax.  There’s nothing left to capitalise.

This is what I mean by LVT breaking the link between rents and house prices.  The rental values can do anything they like – so long as the tax is reassessed accurately and regularly, land title will pass, not with money changing hands, but tax liabilities.  In practice, I’m sure people would try speculating at the start of the tax year and try to make a bit off the rising value before it is reassessed.  The actual values involved would be tiny though.

The only thing left to consider is the price of the structure itself. This, of course, is not affected by the site tax, and has entirely different supply and demand characteristics.  House structures will behave like any other consumer good (ie an advancing economy will tend to lower the price/improve the good), and as house builders no longer have to play the land speculation game, it will be a much more efficient market.

So what does this mean for LVT?  Well, the current system strongly encourages owner-occupation, due to the concept of being ‘free-and-clear’ once the mortgage is paid off.  The fact that much of the benefit is actually taken by the banks in the interest is usually not understood.  People essentially over-pay in the early years in order to have an easy life when they retire (that was until MEW’ing anyway – but you can’t legislate for stupidity!).  Hence the aggrievment when anyone mentions taxing their land.  They’ve just gone through being taxed to get where they are, and usually they expect to get it (and maybe some more) back when they sell.  If the rent is freshly taxed, they lose the land portion of that.  If you’ve spent your whoe life basing your affairs around a fundamentally different system, that will always be a tough pill to swallow.

This also raises questions about those who are mortgaged.  The future rental value has already gone to the previous owner/been pledged to the bank, so LVT would be double taxation, just as other taxes are now.  Anyway, I’m starting to ramble, so….any questions?

Why I will say ‘Yes’ at the referendum

(This post is about the Alternative Vote aka Instant-runoff Voting referendum happening on Thursday in the UK – My super-short explanation of how AV works is here)

There’s a lot been said about the upcoming referendum and I’m not gonna try and summarise it here, other than to say that most arguments against AV also apply to FPTP (First-past-the-post, the current system), and usually do so in a greater fashion.  For an in-depth examination, this post is informative, although extremely long and technical.  It’s worth taking the time to understand though, this decides how we’re governed after all…