Georgism

Georgism (also known as geoism and geonomics) is an economic philosophy holding that the economic value derived from land, including natural resources and natural opportunities, should belong equally to all residents of a community, but that people justly own value that they fairly create. The Georgist paradigm offers solutions to social and ecological problems, relying on principles of land rights and public finance which attempt to integrate economic efficiency with social justice. Georgism is consistent with free trade and the abolition of tariffs.Georgism is concerned with the just distribution of economic rent caused by natural monopolies, pollution, and the control of commons, including title over natural resources and other contrived privileges (e.g., intellectual property). Any natural resource, which is inherently limited in supply, can generate economic rent, but the classical and most significant example of 'land monopoly' involves the extraction of common ground rent from valuable urban locations.Georgists argue that taxing economic rent is efficient, fair, and equitable. The main Georgist policy tool is a fee assessed on location value, often referred to as a land value tax (LVT). Georgists argue that socially captured rents can reduce or eliminate existing taxes on labor and investment that are unfair or inefficient. Some Georgists also advocate for the return of surplus public revenue collected from economic rent back to the people through a basic income or citizen's dividend.Economists since Adam Smith have observed that, unlike other taxes, a public levy on land value does not cause economic inefficiency and even stimulates economic activity. A land value tax is often said to have progressive tax effects, in that it is paid primarily by the wealthy, and it cannot be passed on to tenants, workers, or users of land. Land value capture would reduce economic inequality, increase wages, remove incentives to misuse real estate, and reduce the vulnerability that economies face from credit and property bubbles.The philosophical basis of Georgism dates back to several early proponents such as John Locke, Baruch Spinoza, and Thomas Paine, but the concept of gaining public revenues from natural resource privileges was widely popularized by the economist and social reformer Henry George and his first book, Progress and Poverty.Henry George wrote that his plan would call upon people ""to contribute to the public, not in proportion to what they produce . . . but in proportion to the value of natural [common] opportunities that they hold [monopolize]."" He went on to explain that ""by taking for public use that value which attaches to land by reason of the growth and improvement of the community,"" it would, ""make the holding of land unprofitable to the mere owner, and profitable only to the user."" Under George's plan, it would be impossible for speculators to hold valuable natural opportunities like urban real estate unused or only partly used. George claimed this would have many benefits, including the reduction or removal of tax burdens from poorer neighborhoods and agricultural districts; the removal of a multiplicity of taxes and expensive obsolete government institutions; the elimination of corruption, fraud, and evasion in the collection of taxes; the enablement of true free trade; the destruction of monopolies; the elevation of wages to the full value of labor; the transformation of labor saving inventions into blessings for all; and the equitable distribution of comfort, leisure, and other advantages that are made possible by an advancing civilization.Where free competition is impossible, such as telegraphs, water, gas, and transportation, George wrote, ""[S]uch business becomes a proper social function, which should be controlled and managed by and for the whole people concerned."" Georgists were divided by this question of natural monopolies and often favored public ownership only of the rents from common rights-of-way, rather than public ownership of utility companies themselves.Georgist ideas were popular and influential. Political parties, institutions and communities were founded based on Georgist principles during that time. Early followers of George's philosophy called themselves Single Taxers, associated with the idea of raising public revenue exclusively from land and privileges, but the term is considered a misnomer because Georgists do not consider their proposals to be true taxes and they usually support multiple funding mechanisms. In classical and Georgist economics, the term 'land' is defined as all locations, natural opportunities, resources, physical forces, and government privileges over economic domains, which is closely related to the concept of commons. Georgism was coined later, and some prefer the term geoism or geonomics to distinguish their beliefs from those of Henry George.