Misleading Label

Hey, all, big thanks for taking this idea—society recovering and sharing the land value it generates—seriously. Even among those who finds its ethical basis appealing, most everyone still has questions. Like, is there a downside, any negative consequences?

The name of the reform that’s familiar to most people is “land value taxation”. Not a great name, for two reasons. One, to recover ground rent, society need not resort to a tax. Other fiscal tools—like fees, leases, land dues, etc—work as well if not better.

Two, those mechanisms do not carry the baggage of tax. They do not reinforce the state being superior, the citizen inferior. And usually, politicians not only get to tax as much as they can get away with, they also get to spend any way they agree on, quite often to please one another—i.e., wastefully. Usually taxes are not earmarked for a particular program while fees, etc, tend to be.

And three … remember the old joke? There’s three kinds of economists; those who can count and those who can not. Anyway … the taking is only half the story; the sharing is the other half. LVT is all inhale, no exhale, as hobbled as a one wing dove, missing it’s more attractive half. Sharing is a lot more heartwarming and gladdening and welcome in the ears of citizens than “tax”. Marketing-wise, trying to ride the tax unicycle is vastly harder, needlessly so, than riding a two-wheeler (recover then disburse).

Further, the institution that recovers the annual rental value of land, locations, and resources need not be government. A public trust could do it. That entity would then disburse the recovered rents as dividends to residents (a la the Alaska oil trust dividend).

Isn’t Prohibition A Better Counter Than Taxation?

We environmentalists are supposed to deal with the big picture. John Muir, founder of the Sierra Club, supported the land tax as did most logical thinkers in his era. He said, tug on any one thing in the universe and find it connected to everything else.

Would requiring owners to pay dues (or taxes or fees or whatever) to community force them to develop their land? Believing it would, environmentalists seek exemptions for urban gardens, parks, wilderness, etc. Yet winning exemptions is opening Pandora’s Box. The policy paves the way for those with money and clout to get what they want exempted, like their old family home or rural retreat.

And exemptions for housing does not create more affordable housing but less. The exempted area gets invaded and gentrified by the better off. As in Portland OR, the more advantaged save millions in the Pearl District (an old warehouse district) where the less advantaged can no longer afford to reside.

Exemptions are not necessary since imposing land dues (or land tax) can not force development. Only government can get away with building white elephants. Owners can only develop when they can profit. If a project does not look profitable, owners can not borrow or attract investors. If one goes ahead anyway, they go out of business.

Occasionally, environmentalists succeed in making certain land off limits to development then rest on their laurels. They’re like those poor Indians who believed in treaties with the US. Or newlyweds starry-eyed over marriage vows when half end in divorce. Or the Third Reich going to last 1k years. Some minds need the self-deception. Yet forever can end any day.

Dave Brower, ex head of the Sierra Club and founder of Friends of the Earth (who’d sleep over when he came to town), noted, “our victories are temporary, our defeats permanent”. He was lamenting saving only part of Grand Canyon, recalling we can never recover Hetch Hetcy, more awesome than Yosemite. Environmental laws, rulings, and zonings are precarious, on the chopping block when political winds shift, as winds do as long as demand keeps rising.

Demand Overwhelms Damns

Rather than look at just one location, look at the whole region. Where does forbidden development go? Not up in smoke. It relocates somewhere else, to a place that may be even more pristine and less appropriate for development. We don’t “protect region X” but “displace developers (or loggers or miners or etc) from region X to region Y.” Let’s make clear where we intend displaced development to go.

While land dues might go up on sensitive sites, likely they’ll also go up on vacant lots, too. Under-used downtown sites would be the places to absorb development, not parks. So you’d get much more efficient urban land use. Once you get that, you greatly reduce motorized transport—an essential for reversing carbon emissions. Furthermore, if land dues extend to forests, they reward logging companies who let their trees reach mature value. That might sound counterintuitive but the math is clear.

What threatens land is not land dues but demand, a growing population, due to birth rate or new residents moving in. To make sensitive land truly, lastingly, safe, we must do something about demand. The only solid thing to do is halt human population growth. That has happened in Europe where societies are stable and comfortable. Taking that cue, the greenest, most ecological thing environmentalists can do is to spread prosperity—something the sharing of rents can do.

The economic approach is based on “pay for what you take” and pay it to those impacted—their society—five ways.
* Polluters of the environment bid for Emission Permits.
* Extractors of natural resources carry Restoration Insurance.
* Developers of locations make an Ecological Security Deposit.
* Those who violate standards protecting an ecosystem’s carrying capacity are mulcted Fines. And …
* Landowners pay Land Dues (or Deed Fees or …).
All those payments “internalize the negative externalities” to put it in (ugly) academic jargon. Meaning, having to make those payments spurs land users to align their choices with the needs of nature.

In sum, recovering land value does not threaten land. However, even better, sharing land value does safeguard land. Rent shares, conversely, “externalize the positive externalities, being the value of locations”. The residential dividend or Citizens Dividend turns land value into commonwealth.

Getting that money in the pocket monthly would compensate owners for not being able to develop pristine land. It’d also make everyone realize, hey, my share is greater when my world is healthier. Where there’s no pollution and no overstepping carrying capacity, land values are higher, so land dues are higher, so my rent share is higher, so I indeed vote to not just “protect” region x but to use efficiently all the land in my region.

Efficient land use—economically—also includes non-use. Regional values are much higher where some parts of the region are kept pristine. Every empirical example shows that. Imagine Manhattan without Central Park. With wall-to-wall development, it’d lose tons of location value. Thus the land dividend puts everyone on the same side.

From Controlling Others To Aligning Interests

The biggest problem environmentalists face is themselves. Like most middle class Americans owning homes on pleasant, convenient sites, they have a hard time seeing land value as not theirs, but as common wealth. Yet it is natural rent that motivates the development and depletion and resulting pollution. Allowing land to enrich the few rather than everyone, that moral blunder undergirds all our environmental troubles. The most fundamental reform that “greens” could win would be to normalize the notion of socializing the worth of Earth.

The ones who’re crippling the effort to contain development and eliminate emissions are the ones who’re afraid to let go of their familiar old political gains such as zoning. It’s like the kid on the monkey bars who’s afraid to let go of the bar he holds which he must do if he’s ever to grab the bar in front of him and finally reach the other side, the promised land, of nature in eco-ilibrium, the harmony of society and ecosystem, of Man Not Apart, as Brower liked to say, quoting the poet Robinson Jeffries.

The approach of prohibition is a religious/political approach. It’s Nancy Reagan’s “just say no” (to drugs), we substitute “to development”. It does not address need. Nor demand. Nor majority values. Nor inculcating our green values. A different approach, albeit not so psychologically rewarding or it’d be our default approach, is two-pronged. One is economics (public revenue reform). The other is story-telling. Enthrall the public with tales of Johnny Appleseed, and forester Big Bill Kreuger, and others.

Let’s finally align human law with laws of nature and of human nature. If we can’t see the big picture, I doubt anyone else can, and the fate we humans get will be the one we deserve. So let’s geonomize now!

BTW, I’ve been a dues-paying member of most green groups and I used to live on a land trust.