Libertarianism is the ethical proposition that all and only coercive harm is evil. Geoism (also called “Georgism” after Henry George) is the proposition that the rent of land should be either shared equally or used for public revenue. Geo-libertarianism combines these two philosophies into equal self-ownership and equal rights to the rent of natural resources. In contrast, allodial libertarians believe in the absolute ownership of land either by the first claimants or by those inheriting land from a conquest that left no documented survivors.
An allodial libertarian, Mike Cuneo, recently wrote an article opposing geo-libertarianism. I will now provide a geo-libertarian reply.
First of all, Cuneo defines libertarians as those who seek minarchy, a limited state. But in fact, some libertarians are anarchists, as they believe both that human equality implies voluntary governance, and they believe that a stateless society can be peaceful and sustainable. Therefore geo-libertarians can favor geoism without a state, and some do, contrary to Cuneo’ s assertion that geo-libertarianism is necessarily statist.
Cuneo begs the ethical question of the proper ownership of land. He asserts that allodialism is correct and the equal-benefit view of geoism is incorrect, with no justification. His statement that geoism uses “aggressive violence” to force landowners to pay rent to a community is false if the members of the community are the proper owners.
Cuneo accuses geo-libertarians as believing there is a collective ownership of land value or rent. That is false, because geo-libertarians believe that the rent is rightfully the property of the individuals of a community, in equal shares. The collective aspect is the governance that implements the collection and distribution of the rent, rather than of the rent itself.
Geoists sometimes use language that confuses those not familiar with its ethics and economics. Such is the case in the Wikipedia article on “Geolibertarianism” article cited by Cuneo. For example, some geoists say that landowners should compensate others for “excluding” them from a site. Critics such as Walter Cuneo can then say that the same logic would imply that an owner of a car also excludes others and should compensate them. The land exclusion argument derives from the equal rights to the rent; there is nothing bad about exclusion itself.
Cuneo says “There is nothing special that says land should have different rules of ownership than, say, baseball bats.” But what makes land different from labor is that it was created by nature rather than by human action, and self-ownership cannot apply to what the self did not create.
Cuneo agrees that the supply of spatial land is fixed, but points out that the use of land can expand. But the expansion of use and the existence of unused land are irrelevant; what matters is that the rent is created by natural benefits and by the presence of a community. Land rent comes from the scarcity of land of that quality, but geoism does not depend only on scarcity, since labor is also scarce.
Another confusing term used by Georgists is that allodial ownership prevents an “equal access”to land. What geoists mean is that the collection of all the economic rent of land brings the purchase price down to about zero, and that provides better access to the purchase of land by lower-income people whose credit worthiness is uncertain to lenders. But geoism supports the individual right of exclusive possession when the title holder pays the community rental, hence geoism is not really based on physical access. Walter Cuneo is focusing on the unfortunate terminology without analyzing the fundamental principles of geo-libertarianism.
Cuneo criticizes Winston Churchill for saying that land is a perpetual monopoly. Again, Cuneo focuses only on the superficial appearance and not the underlying reality. Sure, land titles are exchanged, so an owner does not necessarily have perpetual title. But Churchill and George used the classical meaning of “monopoly” as the inability of entry to expand the supply. The only wayto buy scarce land is to purchase it from a previous owner. Land is a classical monopoly the way taxi permits are when their supply is fixed. This monopoly of land is perpetual because the land itself does not get used up, and it does not run away even when taxed.
Churchill wrote that the land owner “skims” the cream of the economy. He meant that the surplus from production is land rent, taken by the landowner who does nothing but hold title. Cuneo retorts that “There is no ‘ skimming’ when someone offers to sell some land, and another party agrees to buy it.” But the skimming is the natural rent of the land, and also the rental generated by public goods paid for by taxes on labor and goods. A buyer of land is paying the present value of these future rents to the previous owner, whose capital gain, along with his previously kept rents, indeed skim the cream.
Cuneo then makes the common error in mixing labor and capital goods into land. He points out that “landlords” invest their time and resources to maintain and invest in real estate. But the economic meaning of land excludes labor and capital goods. The pure “land” lord is the economic role only as a land title holder, aside from his other roles. When the holder of land also applies his time, the person is in the role a worker earning wages. When he invests in development, he does so as a capital lord.
Walter Cuneo then argues that a similar geoist argument could be made for water. Its natural supply too is limited. Water too is essential for life. “Why aren’ t Geo-Libertarians endorsing a Water Value Tax?” In fact, they do endorse a water-value tax, because natural water is land, as is oil in the ground. The tapping of land rent should include the economic rent of water and other material lands.
He then argues that geo-libertarianism has the potential to create a class of people who become “Land Value Tax assessors.” But there is a similar class of people who privately appraise jewelry, collectibles, and real estate. In a proper system, assessments on land value could be appealed, ultimately to a jury, and if the governance is abusing land-value assessments, the juries would say no, and the people could replace the governors.
Cuneo says land-value taxation has unanswered questions, such as how often the tax is paid. The answer is that the collection period should be whatever is most convenient. Most people pay utility bills monthly, so a monthly rent payment would be reasonable. But if electronic payments can be done at little transaction costs, then a daily payment would be even better. As to the question of who decides, the elected representatives would set the general po licy, and so in a proper governance, ideally with small-group voting, the people ultimately decide.
Cuneo asks a good question, what happens if a title holder cannot pay. The answer is that he can move out, or the rent can be deferred, or else the property no longer benefits from community services such as security. These are institutional and implementation questions that are secondary and only important if the primary issue of proper ownership of land is agreed to. The question of who should wash the dishes is secondary to the issue of whether the institution of marriage is proper. Just because there is no single answer to “who washes the dishes” does not imply that marriage itself inherently unwarranted.
Cuneo asks, how “will Geo-Libertarians guard against an ever increasing state that seeks to suplement the Land Value Tax with other taxes and fees such as an income tax, a sales tax, etc?”That is a general problem with minarchy, or limited government, not with land-value taxation as such. There are two answers: 1) there is no guarantee, so anarchism is better, but anarchism also has no libertarian guarantees; 2) that is why we need a libertarian constitution and a governance structure that best preserves liberty, unlike today’ s mass democracy.
Walter Cuneo questions the meaning of the concept presented by the natural-law philosopher John Locke, that people may own land and its rent only if there is land of that quality freely available to others. The answer is simple. If land is free, it has no rent. A market rent implies that such land is not free, so Locke’ s proviso kicks in, and human equality implies an equal benefit from that rent. One may then possess land under the condition that the rent is paid to the proper owners, the members of the relevant community.
Cuneo then criticizes the concept of the “commons” as “just another way to allow mob rule via a majority vote.” No, the commons is simply land that is freely available to all with no user fee, like the sidewalks that any peaceful person may use. If a mob rules a sidewalk, it is not a commons. Today’ s commons such as the oceans could be converted into private possessions, and geo-libertarianism would not oppose this, so long as the rent is equally shared, but there will always be a commons at the frontier of use, such as in outer space. Does the existence of a commons beyond satellite orbits imply “mob rule”?
The main problem with Cuneo’ s argument is that he does not confront the basic issue of the proper ownership of the land rent. He presumes that allodial ownership is morally correct, but does not explain why titles derived from conquest and not from self-ownership are morally proper. Cuneo also ignores the fact that the governmental provision of public goods generates a higher rent and land value, which is a subsidy if the taxes fall mostly on labor and goods.
Policy analysis is properly comparative. Given a state, case for land-value taxation is that it is morally and economically better than taxes on income, goods, or value added. Cuneo ignores this comparative analysis. Secondly, within an anarchist setting, since there are no taxes on labor, goods, value added, and entrepreneurship, land owners would have to pay for the services they benefit from, and that would be geo-libertarian. But by overlooking a voluntary implementation of geoism, Cuneo blocks out this insight. In conclusion, this anti-geoist argument is rebutted: geo-libertarianism is moral, honest, truthful, sincere, and economically sound.
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FRED E. FOLDVARY, Ph.D., is an economist and has been writing weekly editorials for Progress.org since 1997. Foldvary's commentaries are well respected for their currency, sound logic, wit, and consistent devotion to human freedom. He received his B.A. in economics from the University of California at Berkeley, and his M.A. and Ph.D. in economics from George Mason University. He has taught economics at Virginia Tech, John F. Kennedy University, Santa Clara University, and currently teaches at San Jose State University.
Foldvary is the author of The Soul of Liberty, Public Goods and Private Communities, and Dictionary of Free Market Economics. He edited and contributed to Beyond Neoclassical Economics and, with Dan Klein, The Half-Life of Policy Rationales. Foldvary's areas of research include public finance, governance, ethical philosophy, and land economics.
Foldvary is notably known for going on record in the American Journal of Economics and Sociology in 1997 to predict the exact timing of the 2008 economic depression—eleven years before the event occurred. He was able to do so due to his extensive knowledge of the real-estate cycle.