patrick.net

Me arguing with a communist on my Substack:

https://patrickdotnet.substack.com/p/patricknet-memes-wed-sep-04-2024/comment/67915786

I sympathize with your wanting to believe, but it's not even remotely close. Communism murdered way WAY more people than fascism: Stalin, Mao, Pol Pot. People want to keep the results of their own labor, so communists have to kill people to take their stuff to "redistribute". And after a bit of this, no one bothers to produce anything anymore because they see it will be stolen. Then everyone still left alive is poor.

But let's talk about what we agree on: as productivity increased over the last 50 years or so, workers got none of the gains. It all went to stockholders.

All that stuff produced ultimately came from land. Thing of a car. Every part of it was from land: metal, glass, rubber, even the gasoline. No one made the land, but all the profits from land go to the land owners anyway.

Or think of a landlord. OK, he built or maintains a building. That's real work and he should get paid for that part. But owning the land? That's not work. That's just taking from others, also called "non-productive rent-seeking":

https://en.wikipedia.org/wiki/Rent-seeking

That unearned land rent is the only appropriate object of taxation, and should be taxed at 100%. Taxing away the profits from land ownership will not hurt the economy in the least. It's not like less land will be produced.

But taxing earned income is bad, because that discourages work. And taxing sales is bad because that discourages commerce, and commerce makes everyone better off as people engage in voluntary trade with each other.

So the owners of businesses are doing something good by producing, but something bad by taking unearned profits from land ownership. Neither the pure capitalist nor pure communist is doing the right thing.

The impediment to implementing Georgism is psychological. As people start to accumulate land, they LIKE the ability to exploit everyone else without working anymore, simply by owning the land. Everyone hopes to exploit everyone else by owning as much land as possible. Mostly we see this when people buy a house. They want the price of the house+land to go up without doing any work. So pretty much everyone who buys a house instantly becomes anti-Georgist because he or she is hoping to take unearned income from others who need somewhere to live.

Patrick says

So pretty much everyone who buys a house instantly becomes anti-Georgist because he or she is hoping to take unearned income from others who need somewhere to live.

That scenario only works if one owns a trailer park and charges trailer owners to park without providing any services. Owning the land under my house is not an example of charging someone else or getting unearned income. In fact, I have to pay the county a tax apportioned to that land so that is like Georgism in practice.

Owning the land under your house is a bet that the land value will rise due to the development of the economy nearby so that you can eventually sell it for more and profit from the work of others.

But yes, to the degree that property tax is taxing land, it is a bit of Georgism already.

The house value and improvements to the land should be completely untaxed.

Patrick says

Owning the land under your house is a bet that the land value will rise due to the development of the economy

"development of the economy?" Try "inflation." Inflation that causes the tax to increase every other year and increases the cost of selling and replacing.

Well yes, there are both.

All assets inflate without necessarily increasing in value as the Fed prints ever more dollars.

But there is also an increase in land value as the economy around that land develops. That can run the other way as well, as in Detroit.

I would argue that the land value only goes up as long as the population keeps increasing. Once we reach an infection point where world population growth stalls or reverses to decline, it will likely not appreciate anymore or even depreciate.

Trump is going to open up federal lands for development. it’ll be wild again.

Patrick says

Me arguing with a communist on my Substack:

Well, there's your problem right there.

Communists are to be shot, not 'argued with'.

HeadSet says

"development of the economy?" Try "inflation." Inflation that causes the tax to increase every other year and increases the cost of selling and replacing

Both you and Patrick are correct.

FortwayeAsFuckJoeBiden says

Trump is going to open up federal lands for development. it’ll be wild again.

Sure he will.

He also just promised to young ppl he would slash the cost of a house by 50% by abolishing regulations that cause expensive housing construction costs.

But those regs are almost entirely local and state. He can't touch those even if Congress goes along.

But it is excellent politics for him to make these empty promises.

mell says

I would argue that the land value only goes up as long as the population keeps increasing. Once we reach an infection point where world population growth stalls or reverses to decline, it will likely not appreciate anymore or even depreciate.

Yes, that seems true. Detroit is confirmation. As the population shrank, driven away by violent crime, the land prices also declined dramatically.

Job density also matters. Where jobs are increasing, land prices increase, soaking up unearned income off the work of others. Which is pretty much the central thesis of Georgism.

Patrick says

Job density also matters. Where jobs are increasing, land prices increase, soaking up unearned income off the work of others. Which is pretty much the central thesis of Georgism.

State to state comparison would not to look at Detroit (although that stands out all on its own) but say, California or even Oregon vs West Virginia).

Patrick says

Where jobs are increasing, land prices increase, soaking up unearned income off the work of others.

So, the many times that lands prices have decreased, does that mean that those "others" have soaked income of the landowner?

I don't see how.

HeadSet says

So, the many times that lands prices have decreased, does that mean that those "others" have soaked income of the landowner?

First, it's the other way around. And second, obviously what goes up can go down. Again, look at West Virginia after Obama nuked the domestic coal industry.

DemocratsAreTotallyFucked says

HeadSet says

So, the many times that lands prices have decreased, does that mean that those "others" have soaked income of the landowner?

First, it's the other way around. And second, obviously what goes up can go down. Again, look at West Virginia after Obama nuked the domestic coal industry.

I think we agree here.

https://www.coffeeandcovid.com/p/trumps-october-surprise-friday-october

For months, Trump has been chipping away at the income tax. No taxes on tips here, no taxes on Social Security there. Now he’s finally, quietly, without details, letting the media do the work, come all the way out into the open. The New York Times ran a potentially world-changing story yesterday that nobody noticed, headlined, “Trump Flirts With the Ultimate Tax Cut: No Income Taxes at All.

It is finally all coming together and making sense. Tax cuts and tariffs, as explained in the article’s subheadline: “The former president has repeatedly praised a period in American history when there was no income tax, and the country relied on tariffs to fund the government.”

Holy checking account, Batman. ...

But now, you can see the whole thing. Perhaps this is Trump’s October surprise, the unplayed card that Trump held in reserve (and is still keeping the details close to his chest). End the income tax and fund the federal government through tariffs. So simple. Even if it did result in higher prices for foreign goods and services (encouraging domestic alternatives, by the way), it would just be a sales tax.

As Trump pointed out, this can easily work. We’ve run the country this way before, for a long time. This is exactly how we used to do it. The proposal is simple, elegant, and practical. But economists never thought of it, which is why they’ll oppose it.

Only President Trump could have proposed something so radical and right.

No income tax and no sales tax are central tenets of Georgism.

I think Trump will have the Vatican out of the IRS and DC Administration Nexus. The Babylonian debt slavery Ponzi cycle requires the obliteration of creditors and the account holders periodically to balance the books and drive resources ever upward to the oligarchies. This is usually accomplished by strategized war. DC is already bankrupt and in absurd debt.

Who ever knew that the Vatican operation was always about tweaking the debt slavery? The IRS is in Puerto Rico operated by Dominicans. They take the taxes, Vatican decides what their vig is, then they deposit the remainder in the IMF and issue debt bonds back to us at interest from our own money.

I keep reading over and over in Plutarch about crises where the rich own almost all the land and everyone else is deeply in debt. Then finally there is some kind of revolution which redistributes the land and erases the debts.

Happened many times in ancient Greece and Rome. Also, the Old Testament has rules that the land belongs to the 12 tribes in certain allotments which cannot be changed, and that there should be a debt "jubliee" every 50 years.

The key driver of rising income inequality is the stagnation of real wage growth for the bottom 80% or so of U.S. households (Taylor and Ömer 2020). Real wage growth was suppressed below labour productivity growth, and this led to a secular decline in the share of wages (and a rise of profits) in national income. The main cause of the wage growth suppression has been the abandonment of full employment as the primary target of macro policy-making, in favour of inflation control, at the end of the 1970s. Fiscal policy was deprioritized in favor of monetary policy, conducted by independent central banks, single-mindedly focused on building credible reputations as inflation hawks, and counter-cyclical fiscal stabilization was made anathema by subjecting fiscal policy-making to rigid and deflationary rules, irrespective of the business cycle. For a period of time after the global financial crisis of 2008, austerity zealots, dreaming of expansionary fiscal consolidations, intensified the fiscal repression, bringing about one of the slowest and most costly economic recoveries from a crisis in history.

Labour markets were enthusiastically deregulated, with the explicit and generous approval of central banks and governments, to break the structural inflationary power of unions and to create a flexible reserve of surplus workers with no choice but to work in temporary low-wage jobs in what is now known as the ‘gig’ economy. Globalization and offshoring contributed to breaking the countervailing power of organized workers because they offered corporations (the threat of) an opt-out possibility that was not available to workers. Taken together, the change in macroeconomic policy regime produced a structurally low-inflation economy, based on ‘traumatised workers’ in precarious jobs, who could not plausibly fight for higher wages and more secure employment conditions, given their daily struggles and the systemic biases they are facing. The wellspring of cost-push inflation had been radically removed.

Stagnant wages and incomes for the 90% mean that income (and wealth) inequality rises and that aggregate household savings go up (as shown by Mian, Straub and Sufi). Higher household savings reduce consumption demand, which holds up fixed business investment for the domestic market. In effect, aggregate demand growth stagnates, and pressures for demand-pull inflation evaporate. With inflation (and expected inflation) being low in structural terms, central banks lower the interest rate, in accordance with the recommendations based on the monetary policy rules proposed by establishment economics.

The low interest rates, in turn, fuel asset-price bubbles, creating wealth gains for the rich, and over-indebtedness for the bottom 90% of households, which use cheap credit to finance essential expenses on education, medical care and housing. This reinforces wealth and income inequalities, and pushes up asset prices even more, but this does not lead to higher economic growth and better jobs, because the richest 10% use their savings and wealth gains not for investments in the real economy, but to speculate in financial markets. The past two decades have made it abundantly clear that the gains made by the top 10% in financial markets do not trickle down to the real economy.

https://www.nakedcapitalism.com/2024/10/as-german-industry-implodes-countrys-wealthiest-make-out-like-bandits.html