Rothbard’s rebuttal of georgism is often referenced by opponents as if it ends all debate on the topic. This is unfortunate, because there’s a lot of interesting discussions that can come out of reading it, as long as you have a good grounding in how Georgism works. Here, I will attempt such a discussion.
To do this, I shall attempt to summarise Rothbard’s writings before pointing out where his misunderstanding of where land value comes from leads to his complete misreading of how Georgism would work in practice.
You can read my pithy, bullet-point summary of Rothbard’s text, but you might as well read the original. If you’re astute, you’ll notice a couple of times, Rothbard contradicts himself (For example – Do Georgists want to tax rents at 100%? According to Rothbard: Yes AND No.), but it can be useful to examine his arguments even when he does so.
I’ve split the discussion up into categories to try and consolidate thoughts that are connected.
Land – Abundance and the Landowner’s function
The Effects of LVT and How to Price it
This is my chaos 
Firstly, let me say that I appreciate your clarity of exposition on the topic of land value taxation, something which unfortunately cannot be said for its many proponents.
I am very curious to hear your thoughts on the following paper:
Click to access critique_of_george.pdf
Thanks and great work!
Thanks, I try.
The Caplan paper is rather odd, in that it doesn’t read much like an academic treatment, rather a thinly veiled polemic, to the point of comedy in places. It deserves a fisk, but I should warn you, it will take a while (I’m easily distracted).
Bryan Caplan has a flair for the (intellectually) dramatic, and even if we take his argument at face value, it still seems like a marginal consideration in practical application. Still, would enjoy seeing you dismantle the argument from a Georgist perspective.
The Land Value Taxation debate has managed to survive several centuries; surely, I can afford it a few more months or years. Please take your time 🙂
Yes, please. I second ka1m. Fred Foldvery wrote a rebuttal to Caplan, but his paper costs $35. As yet, no rebuttals from Gaffney or Tideman. However, I can say with certainty that Caplan’s argument only applies in any meaningful way to extractable natural resources, and only if the implementation were poor. There are no new ideas in the paper, and he assumes things about LVT methodology that are not accurate.
Hi Nate, I did a rebuttal to the working paper they published in 2012 here (it’s over 5 posts): https://fraggle.wordpress.com/2012/12/04/caplangochenour-v-georgism-part-1-the-distortion-field/
I’ve only seen a few pages of the final paper but what I saw appeared to be word-for-word identical, so I’m loathe to pay good money just to re-read the same drivel.
This appears to be mostly an honest attempt to support the position. It however lacks intellectual rigor. I have not read all of it yet, so am still open to the position being plausible, but having read the summary of Rothbard’s points and the “Land is abundant except when it is not” I am seeing both flawed reasoning and editorial bias sneaking into the discussion. Here are some egregious examples:
From summary of Rothbard: “He has forgotten about time, ergo Georgism is wrong” This is not correct. “He has forgotten about time, ergo this guy is wrong” would be a more honest summary.
In trying to refute this claim (which I have no opinion on), “…Nowhere have I seen Georgists say that any currently-used land should be rendered idle.”
Here is the reply, “The man who sets out from the Eastern [US] in search of the margin of cultivation, where he may obtain land without paying rent, must, like the man who swam the river to get a drink, pass for long distances through half-tilled farms, and traverse vast areas of virgin soil, before he reaches the point where land can be had free of rent i.e., by homestead entry or pre-emption. He (and, with him, the margin of cultivation) is forced so much farther than he otherwise need have gone, by the speculation which is holding these unused lands in expectation of increased value in the future.”
This only supports Rothbard’s point, mostly made before the quoted text, and does not refute the quoted point by Rothbard above.
The author then continues, “George completely understood that as land withheld from use is brought back into use, land beyond the margin that was of necessity brought into use, now no longer needs to be. Right, so with that bogeyman out of the way, let’s…”
The first sentence may or may not be true (I don’t know), but it is not supported by the above passage. He doesn’t seem to understand the value of the rent in determining the value of the use of that land as this guy is only interested in rent free land, he necessarily must go further than he would if he paid rent (for better land). Simply economics. Furthermore, Rothbard’s claim remains to be refuted. George in the passage didn’t say that this land held by speculators should be idled (since no one is willing to pay the rent) or, saliently, that some currently used land somewhere should be rendered idle.”
Here are the other fallacious syllogisms on the Land is abundant paper.
1. Pasted here for completeness:
So what is this function that is so vital to the well-being of an economy? It has two components:
The site owner brings sites into use
Erm…….what?! That’s the one thing the landlord does not do. It is the ‘man who builds on, and improves, the land’ that brings a site into use. A landlord cannot compel a site to be used, he can only forbid.
—
This is a misinterpretation of what Rothbard meant. He meant that only when the economic justification exists will the land be brought into use. If the owner is not the user, then when the demand from a would be improver is sufficient, the ask price, set by the owner, is what the gating factor for bringing the land into us.
If the improver is the owner, obviously he/she decides when this is economically warranted. The point being ignored (though perhaps dealt with later) is that someone has to be the owner (as in controller) of the land. That person/small group via some mechanisms “brings sites into use”.
2. The author, attempting refute Rothbard, “Now this is interesting, because Rothbard ascribes to the Landlord the great wisdom of being able to see just which use will ‘satisfy the consumers in the best possible way’, but gives no indication of just how landlords achieve this grand feat. For those of you now wondering what the secret is, all will be revealed here, but the short answer is: They grant access to whoever pays the most. The great wisdom is the ability to look at a set of numbers and determine which is the highest. Heady stuff…”
I was sad when I saw this as only simple economic theory is at play here. Each person in an exchange believes they are (and sine the occasional mistake, “are”) imprvoing their utility or else they wouldn’t agree to it. Thus, in an open auction, the person who is willing to bid the most values the good the most. They won’t value it the most unless they believe they will get that much out of it. Therefore, the only economic statement that can be made is that the person who is willing to pay the most is mostly likely to put it into the most productive use for human ends. Some have a hard time grasping this, but there is no other way to allocate resources effectively than a competing system of bids & asks. Humanity thrive to the degree free trade is expanded to more people and more goods.
Hi GWK, thanks for commenting. To be honest I’m kind of disappointed that you think my editorial bias is only ‘creeping in’. I was going for a more ‘front and centre’ style. I like to think it shows up better in the later installments. Don’t get me wrong, I think my reasoning is relatively sound, but I don’t see how I could be cast as a neutral observer. Anyway, minor point I guess. Anyway, you brought some specific comments, so let’s look at those:
“He has forgotten about time, ergo this guy is wrong” would be a more honest summary.
You might need to look up the definition of ‘pithy’. If this is your criticism of the summary, I’ll take that as a sign I did a pretty decent job.
“This only supports Rothbard’s point, mostly made before the quoted text, and does not refute the quoted point by Rothbard above….The first sentence may or may not be true (I don’t know), but it is not supported by the above passage.”
I’m simply baffled by how you managed to reach this conclusion. I thought “He is forced so much farther than he otherwise need have gone” was fairly straightforward. But then, your explanation is even more baffling:
“He doesn’t seem to understand the value of the rent in determining the value of the use of that land as this guy is only interested in rent free land, he necessarily must go further than he would if he paid rent (for better land). Simply economics.”
You’ve misunderstood George’s point. He’s referring to Ricardo’s Law of Rent (Wiki has a pretty good article on it). Where people are free to utilise whatever land they want, the best sites tend to be used first. As more land is used, the next best sites are then occupied. At any given moment, the “next-best available land” is what Ricardo calls the margin of production, and the difference in productivity between marginal and super-marginal land is the driver of land value. Marginal land defines the zero-bound; because the productivity on the margin is worse than anywhere else it is unviable to pay for its use. In factor income terms, the Rent is zero.
George’s point is that if someone is able to simply declare by fiat that the “next-best available land” is actually unavailable, then the margin is, by that declaration, relocated somewhere else to a worse location, somewhere that wouldn’t have been used yet. The presence of the restriction displaces economic activity. Remove the restriction and there is no longer a need to use the worse site.
Onto your second set of objections:
“This is a misinterpretation of what Rothbard meant. He meant that only when the economic justification exists will the land be brought into use.”
No, Rothbard’s claim is that the Landlord’s economic function, the very reason Landlords are useful ‘qua Landlords’ is to determine when economic justification exists. I’m saying that claim is nonsense, that Landlords are not in any better position to know when economic justification exists, and that sites can be brought into use perfectly well without them being present.
“The point being ignored (though perhaps dealt with later) is that someone has to be the owner (as in controller) of the land. That person/small group via some mechanisms “brings sites into use”.”
I actually can’t remember right now if I talk about this specifically or not later on, but the only fundamental minimum for ordered economic activity on a site is that the actors must be able to do their work undisturbed. While that often means that other actors must be specifically excluded, the manner and basis of that exclusion is a separate question. There are also situations where exclusion is not required, even with multiple actors on the same site. It is the using of land that is the more fundamental, not the owning. The system you use to determine who controls a given site is the very crux of the issue under discussion. Simply assuming that sites must be ‘owned’ in the Rothbardian sense is to beg the question.
“Therefore, the only economic statement that can be made is that the person who is willing to pay the most is mostly likely to put it into the most productive use for human ends.”
Yes, which is what I said! But the deeper point I’m trying to make is that the Landlord has no meaningful input into that process. He just gets paid at the end of it. Rothbard put the cart before the horse, apparently believing that without the landlord, none of this would happen.
“Some have a hard time grasping this, but there is no other way to allocate resources effectively than a competing system of bids & asks. Humanity thrive to the degree free trade is expanded to more people and more goods.”
Agreed. Which is why I support LVT. Some have a hard time grasping this, but Propertarianism is an impedance to the free market. (I do talk about this later).
I would add one housekeeping point. If you want to comment on later points in the series, please do so on the page it’s found on rather than this one. It’ll help keep things more organised.
Harold Kyriazi’s ‘Libertarian Party at Sea on Land’ seems to have been quoted extensively here – without accreditation.
I’ll take your word for it. I wouldn’t know, I’ve never read it.
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