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Grandchildren and Future Generations

Some years ago, I heard William McDonough, then the dean of the architecture school at the University of Virginia, speak to a group of women who cared about the environment. He kept coming back to a theme which I found moving: how do we love all the children -- our children, our grandchildren, everyone's grandchildren, and future generations? How do we design our systems to create a sustainable environment so that we leave them a liveable world?

Georgists have an answer to the social and economic aspects of that question.


Mason Gaffney, correspondence (used with permission)

We, like you no doubt, are basking in the unearned increment of the land under our house, turbo-charged by tax-exemption.  Two of our older children in Marin County are basking, too, and we take comfort in their well-being.  We deserve this, right?  Are we not of The Greatest Generation (how we love that toadying title)?  But how will your grandchildren afford a home at today's prices?  We get the increment, but they get the excrement.  Oh, well, the plunging dollar, crumbling infrastructure, far-called navies and troops melting away, soaring interest rates, higher taxes, incredible public debts coming due ... it'll all be different soon.  We may all grow poor together.


William F. Buckley, Jr.: Home Dear Home

The real estate boom is a familiar phenomenon. Most people are predicting that it will, if not burst, at least wilt. But the basic components aren't going to change, not unless we have a catastrophe of sorts, something economists don't feel obliged to integrate into their speculations.

The components are:

  • a relatively wealthy community;
  • the hard desire to own one's own house, along with the ambition to make it more and more comfortable and pleasing;
  • the dependence of building sites on immediate amenities (sewage, power); and
  • strategic sources of nourishment (jobs).

The convenience of infinitely available land faded as urbanization brought on heavy dependence on elements that weren't always available to homes on the range. Schools and hospitals are not only useful for educating children and curing the infirm. They are necessary to attract affluent home buyers.

Jon Gertner, writing for The New York Times Magazine, gives a useful account of the home-building industry. Here are some basic indices.

  • We have 34 million rented apartments at this point and 74 million owner-occupied homes.
  • The pool is being fed
    • by immigrants seeking houses,
    • by children growing and seeking their own homes, and
    • by the elderly wanting a second house in which to vacation or retire.
  • The home-building industry has constructed about 13.5 million single-family homes since the mid-1990s.

So why is the cost of housing so high?

We learn that the average new house nationwide now sells for nearly $300,000. The writer tells us, "I asked (a builder) what our children -- my kids are both under 8, I told him -- would be paying when they're ready to buy.

"'They're going to live with us until they're 40,' (the builder) said matter-of-factly. 'And when they have their second kid, then we'll finally kick them out and make them pay for the house that we paid for. And that house will cost them 45 to 50 percent of their income.'" ... read the whole column


Nic Tideman:  A Bill of Economic Rights and Obligations

Our nation was founded on the idea that we are all created equal, that we are endowed by our Creator with certain inalienable rights, and that among these are life, liberty, and the pursuit of happiness.

In living, expressing our liberty, and pursuing happiness we sometimes conflict with one another, so we need a shared understanding of the extent of the sphere of equal rights given to every person, and beyond that sphere our obligation to respect the rights of others. This Bill is concerned with the economic aspects of these rights and obligations. ...

In fulfilling its obligation to ensure that future generations had opportunities at least as great as those of the present generation, people would want to take account of:

1. The amount of land per capita, adjusted for the quality of land;
2. The level of technology that will be available;
3. The education and any initial wealth that is provided to all children;
4. The level of public infrastructure;
5. The level of public debt;
6. Environmental quality;
7. The price of depletable natural resources.

Decreases in some items could be offset by increases in others. If people wanted to have more children than could be provided with opportunities equal to those of the present generation, Congress and state legislatures would have an obligation to tax those who wanted to have children, so that people would have fewer children, and so that all children could be provided with an initial endowment upon attaining maturity, to compensate for reductions in other items on the list.  Read the entire article

Nic Tideman: The Case for Site Value Rating
The Social Justice of Site Value Rating
The Efficiency of Site Value Rating
How Valuations would be Made

Both for reasons of social justice and for reasons of economic efficiency, site value rating deserves a continued place in the programme of the Liberal Party.

The case for site value rating in terms of social justice is founded on two understandings: first, that the value of land in the absence of economic development is the common heritage of humanity, and second, that increases in the rental value of land arising from economic development and government expenditures should be collected by governments to finance those activities. What is meant by "land" is the unimproved value of sites and the value of extractable natural resources such as North Sea oil.

While there may someday be institutions capable of implementing a recognition of land as the heritage of all humanity on a worldwide basis, in the absence of such institutions each nation should implement a recognition that land within its boundaries is the common heritage of its citizens. This is accomplished not by making the nation a gigantic Common or by instituting government management of all land, but rather by requiring all persons and corporations that are granted the use of land to pay a fee or tax equal to what the rental value of the land they control would be if it were in an unimproved condition.

The case for site value rating in terms of economic efficiency is founded on the fact that a tax on resources that are not produced by human effort is one of the few sources of government revenue that does not reduce incentives for people to be productive. Two other revenue sources that have this virtue are taxes on other government-granted privileges such as exclusive use of radio frequencies and taxes on activities with harmful consequences, such as polluting the air. An economy will be more efficient if revenue sources that do not diminish productivity are employed to the greatest possible extent before any use is made of taxes that impede productivity.

What makes a tax efficient is that the amount of tax that is due cannot be reduced by reducing productive activities. When incomes are taxed, people can reduce the amount of taxes owed by working less. They do so, and the productivity of the economy falls. When houses are taxed, people can reduce the amount of taxes owed by building fewer house and smaller houses. They do so, and the housing shortage worsens. But when the unimproved value of land is taxed, there is no resulting diminution in the quantity of land. Thus taxes can be levied on land without diminishing the productivity of an economy. And shifting taxes from other, destructive bases to land will improve the productivity of an economy.

Subsequent sections explain in more detail these social justice and efficiency arguments for site value rating, describe procedures for implementing such a tax system, and explain why a variety of potential objections are without merit. ...

In general, young persons will benefit more than older persons from a move to site value rating, because they tend to own less expensive plots of land if they own land at all, and they have many years ahead of them to benefit from reduction in other taxes. Those who are yet unborn will benefit most of all, because their birthrights to equal shares of the provenance of nature, as well as to the product of their labour, will be recognized. Net financial losses will tend to be greatest for older persons. Their houses will fall in sale value. They will be required to pay annually the rental value of the land on which their houses sit, without as much in reductions of their income taxes, and with fewer years ahead of them to reap tax savings. On the other hand, they will have less concern about providing for their children, because houses will be much easier for their children to acquire. Further offsetting any claim to compensation would be any past unearned profits that potential claimants had made on ownership of land. ... Read the whole article

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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper