If a property is purchased into the commons in exchange for a typical 20 times the annual rent, the people (rightful landlords) lose out on 20 years of rent. It sounds dreadful until you realize that from that point onward, all the rent goes to the people; not 20 years, not 40 years, not 100 years, not 1,000 years, not a million years, but the billions of years until the Earth falls into the Sun. In the scheme of things, the 20 years of rent lost isn’t even noise. Unfortunately, Henry George failed to understand this; one of three serious flaws in his logic that prevented his great vision from becoming reality.
Suppose the “Commons Corporation”, under strict charter, initially purchases 1000 acres of land, less than a two hour commute from a major city. They sign an agreement with the county to turn over 30% of the rent in lieu of property taxes. Suppose the other 70% of rent is used to purchase more land. Because only 70% of the rent is available it will take 30 years, rather than 20 to double the Commons Corporation’s land holdings. In 300 years, they will have increased their land holdings 1000 times to a million acres. In 600 years, they will have increased their land holdings one million times to a billion acres and before 900 years have passed, they will own all the land on Earth. And is not 900 years mere noise, in exchange for the billions of years the rent on all Earth’s land will flow to its people (a requirement of the corporate charter), eliminating taxation on productive labor, as well as poverty? Of course, a 900 year project is rather foreboding.
Viral Community Theory is the science of accelerating this process. The goal is to accelerate the process by a factor of 15, reducing 900 years to a mere 60. Almost all proposed techniques are consequences of Ricardo’s Law of Rent.
It can be argued that the land value of a dominion is equal to its wealth. The arguments for this are beyond the scope of this essay, however, the much weaker statement, universally accepted, that the land value of a dominion is highly correlated with its wealth, is all that is required to make the following point.
Acquisition of all the land is not the primary objective. Acquisition of all the land value is!
An increase in land value at one location in a dominion is either accompanied by an increase of wealth in the dominion, or a decrease in land value at another location in the dominion, or most likely a combination of the two.
Our objective is then to drive up the land value of land purchased by the Commons Corporation. This will not only increase our own rents, but in some combination increase the wealth of the dominion and lower the asking price for neighboring land. Because an increase in wealth will also tend to increase the land value of our immediate neighbors, our goal, as cruel as it sounds, is to increase internal land value without increasing wealth. While the means don’t usually justify the ends, using the tools employed by every land speculator in the country, to end land speculation, end poverty, end taxation, and end war, seems justified.
One way to do this, already mentioned in the 900 year example is the elimination of property taxes. Because the county has agreed to take 30% of the rent, in lieu of property taxes, people can build expensive homes on the land they rent, without paying taxes. This increases internal land value without increasing total wealth, and thus lowers external land value.
Of course, as internal land values rise, actual rents will follow by definition. Freezing nominal rents at the initial bid price for a period of time will turn actual rent into imputed rent which is profit for the tenant. This can have the effect of exponentially increasing the initial bid price at annual auctions as the community proves itself.
Confining development to a dense center of owned land creates a “speculative ring” of idle land between the center and potential targets of acquisition. This serves to both lower the price of contiguous targets and increase the competition between contiguous sellers. The core can grow in the direction of maintaining a consistent radius.
These techniques, on their own, will not succeed in creating a successful viral community. Without infrastructure, nobody cares if they are saving a few bucks; certainly not the wealthy and their businesses, the primary objective of the first 20 years. Hold on to your seat. We are going to give our wealthy tenants something that is completely legal, completely moral, completely ethical and available nowhere else in the world, certainly not in the United States: slave labor!
It is not what you think, whatever you are thinking. It is perhaps the most revolutionary idea ever conceived of; one that will change the calculus forever. It is the creation of a new social class. Not since Marx’s dictatorship of the proletariat has such an inversion been proposed. Only this one will work. It is called the landlord-working class.
When land is purchased by “Commons Corporation,” it is not yet owned by the commons. Initial investors, if needed, have restricted ownership of up to 50% of the land, while the landlord-workers have restricted ownership of the remaining 50% to 100% of the land.
Landlord-workers earn one Class-B share of ownership for every hour worked. They build the infrastructure, run the cities, and are rented out cheaply to local businesses and residences. They are housed in nice dormitories, have free medical insurance, a 24-hour buffet and a tiny allowance. The harder they work, the more valuable the land – land that they own. In the first 20 years, profits from the landlord-workers will dwarf profits from the frozen land rents. This money is used to increase land value through infrastructure and buy more land. Although the landlord-workers will have at least a 50% claim on land value at the start of the period, they are projected to have at least a 95% claim on land value at the end of the first 20 year period, called Phase I.
During Phase I, the landlord-workers start and staff a hospital and university. Free medical care is provided all residents and due to the low cost of staffing, medical care becomes the primary export.
At the end of Phase I, it is projected there will be 400,000 acres of undeveloped land, 43,000 acres of developed land, and a population of over 300,000, including 60,000 landlord-workers (called Affeercianados). As per agreement, near the end of Phase I, all rents are unfrozen, and trebling (discussed in the first essay on collection theory) kicks in. Imputed rent is converted back into actual rent and the true land value can be ascertained. For now assume the formula land value = ground rent x 20.
At the end of Phase I, we introduce the concept of a currency backed by land value in the commons. This is essential. (Controlling the hyper-inflationary nature of this currency was discussed in the previous essay on Intellectual Property and Monetary Theory.) Of course, at the end of Phase I, there is no land in the commons. The land is owned by the Affeercianados and investors.
Once the true land value is ascertained through the lifting of the rent freeze, the Affeercianados and investors are required to sell to the commons at 20 times ground rent. The currency, pegged at 2-1 parity to the U.S. dollar, is good for the payment of ground rent, and at the hospital and university. It is a biometric virtual currency called the VIP, and can be earmarked for one-time specific use prior to a transaction.
During Phase-II, increases in developed land value will not be reflected in an increase in currency, placing deflationary pressure on the currency. It is projected the currency will be widely accepted and even horded.
Affeercianados, who put in 20 years, 50 weeks per year, 60 hours per week, are projected to receive an inflation-adjusted $1.5 million, each. They will also receive an annuity of about $79,000 annually as undeveloped land is developed, auctioned and brought into the commons. They are also now permitted to profit from the hospital, university and other businesses they started. All told, 20 years of slave labor will move them into the top 1% and the rest of us 20 years closer to the end of taxation, the end of poverty, and the end of war.
I will discuss Phase-II and Phase-III in the next installment. If your curiosity has gotten the better of you, feel free to read about viral community theory in depth in AFFEERCE Volume II – The Plan, freely available on the AFFEERCE.org website.
This article is a part of an ongoing series explaining the AFFEERCE Georgism implementation based on the ideas of economist Henry George. The fruits of our labor belong to us alone while the land belongs to each of us and to all of us. AFFEERCE is an acronym for Alternative Families + Free Enterprise + Universal Entitlement + Balance of the RCs + Enlightenment. To further understand, check out AFFEERCE Volume I – The Vision at AFFEERCE.org. For more info on AFFEERCE natural rights, See AFFEERCE – Volume I – Chapter 8 – The Natural Rights of Mankind. For an introduction to AFFEERCE, See AFFEERCE Volume I – Introduction and AFFEERCE Volume I – Chapter 1 – What is AFFEERCE? See also the stand alone PDF “What is AFFEERCE”a 12 page introduction. All of these are available free on the AFFEERCE website http://AFFEERCE.org.
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