Geolibertarianism

Geolibertarianism is a political movement that strives to reconcile libertarianism and Georgism (or geoism). Geolibertarians are advocates of geoism, which is the position that all land is a common asset to which all individuals have an equal right to access, and therefore if individuals claim the land as their property they must pay rent to the community for doing so. Rent need not be paid for the mere use of land, but only for the right to exclude others from that land, and for the protection of one's title by government.They simultaneously agree with the libertarian position that each individual has an exclusive right to the fruits of his or her labor as their private property, as opposed to this product being owned collectively by society or the community, and that "one's labor, wages, and the products of labor" should not be taxed. Also, with traditional libertarians they advocate "full civil liberties, with no crimes unless there are victims who have been invaded." Geolibertarians generally advocate distributing the land rent to the community via a land value tax, as proposed by Henry George and others before him. For this reason, they are often called "single taxers". Fred E. Foldvary coined the word "geo-libertarianism" in an article so titled in Land and Liberty. In the case of geoanarchism, the voluntary form of geolibertarianism as described by Foldvary, rent would be collected by private associations with the opportunity to secede from a geocommunity (and not receive the geocommunity's services) if desired.

Geolibertarians are generally influenced by Georgism, but the ideas behind it pre-date Henry George, and can be found in different forms in the writings of John Locke, the French Physiocrats, Thomas Jefferson, Adam Smith, Thomas Paine, James Mill (John Stuart Mill's father), David Ricardo, John Stuart Mill, Herbert Spencer and Thomas Spence. Perhaps the best summary of geolibertarianism is Thomas Paine's assertion that "Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds." On the other hand, Locke wrote that private land ownership should be praised, as long as its product was not left to spoil and there was "enough, and as good left in common for others"; when this Lockean proviso is violated, the land earns rental value. Some would argue that "as good" is unlikely to be achieved in an urban setting, owing to the fact that there location is paramount, and that therefore Locke's proviso in an urban setting requires the collection and equal distribution of ground rent.

Even Austrian School, Nobel Prize-winning economist Friedrich Hayek expressed an appreciation for the special role of land in an urban setting, in his 1960 work, The Constitution of Liberty (University of Chicago Press, Chapter 22: "Housing and Town Planning," p.341): "In many respects, the close contiguity of city life invalidates the assumptions underlying any simple division of property rights. In such conditions it is true only to a limited extent that whatever an owner does with his property will affect only him and nobody else. What economists call the 'neighborhood effects,' i.e., the effects of what one does to one's property on that of others, assume major importance. The usefulness of almost any piece of property in a city will in fact depend in part on what one's immediate neighbors do and in part on the communal services without which effective use of the land by separate owners would be nearly impossible. ... The general formulas of private property or freedom of contract do not therefore provide an immediate answer to the complex problems which city life raises. It is probable that, even if there had been no authority with coercive powers, the superior advantages of larger units would have led to the development of new legal institutions -- some division of the right of control between the holders of a superior right to determine the character of a large district to be developed and the owners of inferior rights to the use of smaller units, who, within the framework determined by the former, would be free to decide on particular issues. In many respects the functions which the organized municipal corporations are learning to exercise correspond to those of such a superior owner."

Property rights

Geolibertarians consider land to be the common property of all mankind. They say that private property is derived from an individual's right to the fruits of their labor. Since land was not created by anyone's labor, it cannot be rightfully owned. Thus, geolibertarians recognize a right to secure possession of land (land tenure), on the condition that the full rental value be paid to the community. This, they say, has the effect of both giving back the value that belongs to the community and encouraging landholders to only use as much land as they need, leaving plenty for others.

This strict definition of property as all fruits of labor makes geolibertarians fervent advocates of free markets.

Poverty and welfare

According to the Law of Rent (one of the most important and firmly established principles of economics) the guiding parameter behind wages is what is called the margin of production. Roughly speaking, the margin of production is the amount of wealth that a person could produce working on land that is free of rent (marginal land): when anyone chooses to work for someone else instead of working for himself on the free land, it is because he gets a higher wage. Thus, the margin of production represents an absolute floor on wage level in any society, under free market circumstances.

The differences between geolibertarians and other libertarians arise at this point. Geolibertarians recognize that the rule of law, protection of private property and provision of public goods are undoubtedly public benefits, but the resulting economic advantages go wholly to landowners because they control access to those benefits. As a result, it is economically feasible for many to hold economically valuable land out of use and still profit from the general rise of rents. This is in contrast to most capital goods, which can benefit their owner only if they're put into the service of others, that is, if they're used for production rather than withheld from production. Thus, as the great self-made industrialist Andrew Carnegie observed, "The most comfortable, but also the most unproductive way for a capitalist to increase his fortune, is to put all monies in sites and await that point in time when a society, hungering for land, has to pay his price."

The combination of private retention of publicly created increases in land value and land-use zoning laws creates an even stronger economic pressure to hold valuable land out of use or in an inferior use: rezoning a land parcel to allow more intensive, higher-density use often results in a very large increase in the land's value. If the owner of a vacant site permits productive use of the site, that will normally mean constructing substantial improvements; but once the newly built improvements are in place, local land-use and zoning authorities are extremely reluctant to redesignate the land's permitted use until the improvements have depreciated to the point where they are worth only a small fraction of the land's value, typically a period measured in decades. The owner knows that eventually, the land must be rezoned as the community grows. His hope and expectation of rezoning and the resulting increase in value in the near term consequently makes him unwilling to permit improvement and use of the land lest it delay his inevitable rezoning windfall.

Though speculation in idle sites is for these reasons often profitable to their owner (and even when not profitable, keeping sites idle is often the rational choice from the standpoint of the owner's financial expectation), continued retention of land without usage (or in sub-optimal use) causes those who actually desire to use land to settle for lower quality of land. This pushes the margin of production downwards, resulting in lower wages.

Elimination of the incentive to hold land out of use, along with higher employment (because more land is in use) and lower prices of land (resulting in lesser need of financial capital for going into business) is expected to result in a high level of prosperity and substantially reduce the need for welfare. Historical examples of jurisdictions with high land taxes bear this view out. In addition, recovery of the publicly created rent of land for the purposes and benefit of the public that creates it would allow replacement of current taxes on sales, incomes, etc. that impose costs not only on those who directly pay them but on all other producers and consumers, who pay a portion of such taxes as a result of burden shifting. Such taxes are a significant cost even for people too poor to pay any income tax.

Perhaps most importantly to the problem of poverty, private property in land violates people's rights to liberty -- the pre-existing, natural liberty to use the opportunities nature provided. The requirement that the producer pay a landowner for access to the economic advantages government, the community and nature provide is a burden that the most productive and even ordinary working people may be able to bear with passable grace; but absent poverty relief programs, it consigns the least productive workers to the least productive land, and thus to destitution. Most geolibertarians advocate restoration of the equal individual right to use land via either a flat, universal, personal land tax exemption, or an equivalent citizens' dividend paid for out of recovered land rent that can be applied to one's own land tax liabilities. As land rent typically accounts for the great majority of the poor's housing costs, a personal land tax exemption applicable to tenants as well as owners would reduce their housing costs to near zero, greatly reducing the need for poverty relief programs, associated cash payments, or indeed a citizens' dividend.

Other libertarians dispute the geolibertarians' theory on the economics of private property and note that a property owner would need to own a significant portion of all available land in order to be able to affect rent prices by refusing to allow that land to be put to use, and that this scenario is unrealistic. However, this criticism misses the point: as aggregate land rent is a slowly rising fraction of GDP, the land is increasing in value anyway, no matter what any individual landowner may be doing or not doing with it, and the growth of communities makes rezoning all but inevitable. The prospect of a rezoning windfall in the near term provides all the incentive needed for the owner to keep land out of productive use indefinitely.

The land value tax and the citizen's dividend

A supply and demand diagram showing the effects of taxation on a good with a perfectly inelastic supply, such as land. Note that the burden of the tax falls entirely on the producer, and there is no deadweight loss.

Geolibertarians advocate the land value tax for a number of reasons. As explained already, it is seen as a means of upholding the equal right to land. It is also the tax most compatible with the free market. It does not distort the price of goods, nor does it discourage productivity, since it does not affect the cost of production.

Geolibertarians argue that, since public utilities and services increase land value, they could essentially fund themselves through the land value tax. In this way, the tax can fund the functions of government so long as it contributes to the community. Some geolibertarians believe that all tax revenues beyond these functions should go towards a citizen's dividend, an equal payment to the whole community. Some others have argued that the citizens' dividend should come first, and then individuals can arrange by contract to have portions of it go to fund specified services.

Criticisms

One criticism of geolibertarianism is economic: that their analysis of fallow land as the major cause of poverty is wrong. Critics point out that in many places, such as Bolivia, poverty endures despite an abundance of idle land. Geolibertarians counter that the very idleness of land leads to poverty; they point out that the government of Bolivia does not keep good records of land tenure (arguably the most important function of government), which makes secure production impossible.

Most neoclassical economists do not deal with land as a separate factor of production, but rather treat it as capital.

A criticism of the geolibertarian view of property is that scarcity determines the necessity of property rights. Thus, the fact that land is scarce is seen as all the more reason to make it private property. However, geolibertarians draw a distinction between land ownership and land tenure (see above).

Some consider the term Geolibertarianism to be misleading because the root libertarian implies that the application of force to individuals would not be used, while a centralized authority excising a tax or fee implies the opposite meaning.

See also

• Freiwirtschaft
• Georgism
• American individualist anarchism
• Individualist anarchism
• Agorism
• Left-Libertarianism
• Libertarian Democrat

External links

• Thomas Paine Network
• A Landlord is a Government - The Libertarian Basis for Land Rights
• Geo-Rent: A Plea to public economists by Fred E. Foldvary
• Between State and Anarchy: A Model of Governance by Fred E. Foldvary
• Really Natural Rights
• "Geolibertarian". Libertarian Wiki. Retrieved April 8 2005. {{cite web}}: Check date values in: |accessdate= (help); Unknown parameter |dateformat= ignored (help)
• Geoism in American Quaker John Woolman's "Plea for the Poor"
• Murray Rothbard and Henry George — a critical review of Georgism/Geolibertarianism from an Austrian School perspective.