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…

The rationale offered for private property in land starts out as stock Faux-Lib fare:  Mix your labour…<yawn>…no, I don’t know the meaning of the word ‘Proviso’…<yawn>… [this stuff's been done to death]

…and then this little gem:

As land is more plentiful than labour, land that you had, and continued to mix your labour with, became ‘property’.

Now this is novel, and implies that as soon as labour is more plentiful than land then homesteading no longer becomes the way to appropriate land.  Note this, as he contradicts himself on this point pretty soon.

First though, a word on ‘Argumentation Ethics’.  Now I’m not a big fan, it has to be said.  One thing about it though, bugs me more than anything else, and that’s the often made claim that it

eliminate[s] conflict.

Now the pedant in me thinks the name should be a bit of a giveaway here, but for those of you who haven’t worked it out, I’ll give you a heads up.  If you are having to justify something by argumentation, then you are already in conflict! It’s too late to avoid it, or eliminate it.  You may be able to resolve it, but the elimination ship has sailed.  Theories of property rights can never avoid conflict, because conflict comes about due to incompatible desires (typically, more than one person wanting to use the same object or space simulataneously), which is not a thing that any theory can control.  We want what we want, the only question is whether we can (or even should) get it.

From here on, Ducati becomes more and more incoherent, exemplified most often by quoting some of Miller’s post, then waffling about nothing in particular.  For example, in response to the idea that once all land is owned, all latecomers are automatic trespassers, Ducati acknowledges the ‘reductio ad absurdum’, but then simply restates the property theory that has just been shown to be absurd, thus contradicting the earlier point of the relative abundance of land/labour, and then adds an additional error in claiming:

I will only mix my labour with land if I own the wealth produced.

Certainly, one of the privileges of land ownership is the opportunity to labour on your own terms, but that’s kind of the point.  Once all the land is owned, newcomers cannot enjoy these same freedoms claimed by the current owners.  You now have a group of psuedo-slaves, who *must* labour under someone else’s terms or else die.  Note that this state of affairs doesn’t require that all land is occupied, but merely owned, which, when you have the property bar set ridiculously low as AnCaps do (Punch a tree, own it forever), will occur sooner rather than later – and that’s assuming that all land is equal…

Then there’s the frankly nonsensical response to Adam Smith’s observation that societal progress increases land values:

Adam Smith is simply incorrect. The value imputed to land flows backwards from the valuation made by consumers through the purchase [exchange value] of consumer products. Thus the value of land depends on its productivity. High marginal productivity will earn a higher return than lower marginally productive land.

It’s pretty impressive to say that someone is wrong and then explain it by saying nothing that actually disagrees with what you said was wrong.  That’s a special kind of fail.  Why do improvements in societal circumstances increase rents? Because they increase productivity, either by improving industry or directly satisfying the wants of the people.  These are not opposing concepts!

This nonsense goes on:

• Repeatedly making the point that rent cannot rise above total production when absolutely nobody claimed that it could.
• Making the same point even when it has no bearing on the section being supposedly rebutted
• Suggesting that growth rates are all simply a function of capital.

to name a few.  The most ludicrous part of all, though, is Ducati’s discussion of monopoly:

Our old friend Adam Smith again. Monopolies are, and can only ever be, government granted privilege.

Ahhh….the delicious irony.  Of course that is entirely true, it’s just that Faux-libs have a blind-spot when it comes to their notion of property in land.  They just can’t bring themselves to actually see it for what it is:  The establishment of mini-states that grant monopoly privileges over their territory.  If you are going to have eternal ownership of a part of the earth, then it must either be granted by a state or you must become a state, with all that that entails.  If you think you’re going to ‘eliminate conflict’ with the dispossessed by the Righteousness of your Argumentation Ethics, then you need professional help.

Ducati, oblivious to the irony just invoked then goes on a merry and somewhat verbose discussion of monopoly including some graphs about marginal cost which is just silly when discussing land (as it doesn’t even *have* a marginal cost – you can’t make more of it!).  Even more bizarrely, this is a discussion that is repeated, apparently verbatim, near the end for no apparent reason as soon as the word ‘war’ is mentioned.

To be honest, at this point I start getting bored.  It’s just the same old same old, and lots of it too.

“When you impose costs on man-made objects, you see a reduction in supply. The supply of land, on the other hand, is fixed.”

Yes it is. But so what? To be productive land must be mixed with labour and capital to make it productive. You raise taxes on land, you reduce its productivity, which lowers the creation of wealth, lowering the living standards of everyone.

Simply not true.  The productive powers of land do not change because a tax has been levied on it.  The profit maximising strategy remains unchanged.  Thus taxing ground rent cannot impinge on production.

A tax on ground rent will capitalise the tax, pushing the liability of the tax onto the original owner, later owners escaping any liability of the tax.

This is a classic case of looking through the wrong end of the telescope.  The capitalised value of land as it stands is the expected benefit of rent avoided/available.  That benefit is pushed onto the current owner (who didn’t create the value), later owners pay it in advance.

Rent is a ‘cost’ of production. Any producer, our entrepreneur, believes, and speculates upon creating production that he can then sell to consumers, or if producing capital goods to the lower producer. Thus ‘rent’ is simply part of his economic calculation.

It is a cost to the land-user, yes, but it is irrelevant to the user who gets paid.  Land value tax does not and cannot increase the total amount of rent paid by the user (hence why marginal costs remain unchanged).

I won’t go on with the multitude of further places where Ducati tries to assert that LVT affects production.  He just says the same thing over and over.  The rest is traditional Austrian monetary theory which, being myopically unable to consider land, overestimates monetary effects in the business cycle.  That’s not to say that it’s not a useful topic, it’s just not going to be properly understood while people treat land as just another kind of capital.

The more nonsense I see written trying to debunk LVT, the more I find myself agreeing with Robin Smith, that the problem is mostly a moral one.  As long as you see claiming a piece of the earth as your own forever as acceptable, you can never understand the economics.  The cult of the landlord is strong, but at some point we need to realise that we simply must stop robbing each other and excusing ourselves if we actually want to see the world we claim we do.  Otherwise our hypocrisy will condemn us to irrelevance.

And now for the moped!

This one's a non-runner...

H/T to Team Benzina

PS – One factual point raised was whether housing costs were included in the CPI or not.  It’s probably worth pointing out at this point that the British CPI excludes housing costs, so if the original article was aimed at a British audience (which is a possibility), then that would explain the discrepancy.

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)

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!

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…

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.

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!

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?

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…

The main benefit of AV to my mind is that it encourages honest voting.  Under FPTP, there is a very obvious pressure to vote for your second or third choice, in order to prevent someone you would like even less winning.  This is referred to as Tactical Voting, but let’s call it what it really is – dishonest.  We have a system that encourages people to lie on their ballot and then expect politicians to tell the truth.  Under AV, there is a much reduced risk of an honest vote turning out to be detrimental to what you wanted to happen.  That risk still exists (and as far as I know, no voting system can eliminate it entirely), but it’s harder to exploit and riskier.  Under AV it’s possible to vote ‘over-tactically’, whereby trying to be clever actually makes you worse off.

The other benefit of AV is that of increased information.  Putting one ‘x’ against one candidate throws away an awful lot of information about why you voted the way you did.  By using rankings, you are better able to express just what it is that is important to you, because let’s face it, no single party’s platform exactly describes anyone’s views, not even of members of that party.

To me, increased honesty and information in voting is vital before reasonably expecting increased honesty and information from government.

Now, AV is not my first choice of voting reform.  It is by no means perfect.  A lot of what the ‘Yes’ campaign claims it will do (like making MP’s work harder – whatever that means) is simply wishful thinking.  When I was looking at this a few years ago, I settled on the Single Transferrable Vote, although I’ve heard of others since then, so don’t know if that’s still my preference.  As it turns out, the Lib Dems like STV as well, which makes it less likely to ever happen

That said, the choice at the referendum is not between FPTP and STV.  The question is whether I prefer AV above the current system.  Some people have suggested that somehow rejecting AV will make whatever reform they really want more likely.  This ignores history.  Whenever anyone has ever wanted to change anything, it always happens in degrees, but it’s always the first step that is the hardest.  Social movements require inertia.  If AV happens, it’s effects will be examined and scrutinised in the light of day.  It’s deficiencies will be demonstratable, but also it’s successes.  There will be very public debate about “where we go from here?”.

If, on the other hand, AV is rejected, any discussion of electoral reform will be cast back into the wilderness for a long time.  How many of you would be surprised to learn that the Commons actually passed a bill bringing in AV in 1931?  I certainly was.  Back then, it was the Lords that prevented it from going ahead, but how much time and scandal has gone by before another opportunity to change something has arrived?  A ‘No’ vote really is a vote to keep things exactly as they are.  If that’s what you really want, then by all means go ahead, but the real reform discussion will never start when we refuse to take a first step and say “We really can’t stay here!”