On Objective Public Finance
Objectivists have not confronted the land issue, hence lack a coherent position on public finance.
January 17, 2016
Fred Foldvary, Ph.D.

Objectivism is a philosophy created by Ayn Rand. Its basic beliefs include:

  1. the existence of objective reality, independent of human thought,
  2. life and the pursuit of one’s happiness and self-interest as the standard of value, and
  3. only a free market enables the full pursuit of self-interest while achieving maximum prosperity.

The question investigated here is the public finance proposed by Objectivism, as the philosophy is minarchist, proposing a limited government rather than anarchism. The Objective Standard journal (Vol 7, No. 2, 2012) had an article by Craig Bibble on Objectivist policy, “How Would Government Be Funded in a Free Society?” Virtue of Selfishness, Rand writes, “Any material element or resource which, in order to become of use or value to men, requires the application of human knowledge and effort, should be private property—by the right of those who apply the knowledge and effort.”

But should the benefits of nature be privately held by a few at the expense of the rest? In the entry on egalitarianism, Rand upholds “equality before the law, the equality of fundamental, inalienable rights.”

We can integrate these elements into what should be a coherent Objectivist theory of taxation. It is sufficient for the application of human exertion that there be private rights of possession. Land rent is a surplus, and equality of rights implies an equal ownership of what man’s mind and labor does not produce: the benefit of land, which is its rent. Therefore government does not initiate force when it taps the land rent for public revenue, since the title holder only properly has the rights of possession.

The rent should be distributed equally to the people in cash and in the public services of a limited government. The land value tax would also eliminate the subsidy to landowners that would otherwise take place. Donations to government could then finance optional programs such as space exploration.

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Fred Foldvary, Ph.D.

FRED E. FOLDVARY, Ph.D., (May 11, 1946 — June 5, 2021) was an economist who wrote 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 taught economics at Virginia Tech, John F. Kennedy University, Santa Clara University, and San Jose State University.

Foldvary is the author of The Soul of LibertyPublic 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 included 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.