The Attractions of Geo-Mutualism
Appraisers Begone!
I am neither a philosopher, nor an economist, nor a political scientist, and so I’ve found myself a bit out of my scholarly depth in this symposium. Prior to these exchanges, I had only slight understanding of Georgist land use proposals, and it had not occurred to me that such proposals might be compatible with anarchism. That is to say, I have learned something from this symposium, and I am grateful in particular to the contributions of William Schnack and Fred Foldvary in presenting this new intellectual vista to me. At the risk of being the fool who rushes in where scholars fear to tread, I’d like to review here some of what I’ve learned and to make a few further points in development of the Geo-Mutualist position.
Ethical foundations. The symposium has helped clarify a fundamental rift between Lockeans, who want to ground property rights in land in unilateral individual action, i.e. somehow mixing one’s labour with the land, versus those who want to ground them in some form of community agreement. Kevin Carson begins by adopting the Lockean rationale with regard to acquisition of unowned or abandoned land; but when fleshing out what “use and occupancy” might mean as a practical matter, he falls back on the community agreement standard with a vengeance, even allowing communities the power to adopt arbitrary (from a Lockean standpoint) rules such as maximum lot sizes per household. This suggests to me that the Lockean rationale is fundamentally incompatible with Kevin’s Tuckerite approach. And William Gillis’s recent piece, The Organic Emergence of Property from Reputation, raises further questions about the coherence of the Lockean rationale in any framework.
Indeed, something that has troubled me from the beginning of this symposium is the very assumption that land is something that can be owned. As Chief Seattle (reportedly) said, “The land does not belong to us, we belong to the land.” Or in the words of Aldo Leopold:
We abuse land because we regard it as a commodity belonging to us. When we see land as a community to which we belong, we may begin to use it with love and respect … That land is a community is the basic concept of ecology, but that land is to be loved and respected is an extension of ethics. (emphasis added) –Foreward to Sand County Almanac
I can’t envision a practical land tenure scheme that takes into account the full scope of this ecological community, from microbes to mammals. The local community of humans will have to do. [1] In the Geo-Mutualist framework, community agreement takes the form of a rental agreement: an individual or a group pays rent/tax to a community land trust in return for the community’s agreement not to interfere with the renters’ use of a particular parcel of land. In comparison, the resolution of use-and-occupancy disputes by Tuckerite juries, under Kevin’s proposal, constitutes a huge loose cannon, making economic land-use planning all but impossible. As Kevin points out, this insecurity could be addressed by a title insurance system to socialize the risk. But why call into existence an otherwise unnecessary insurance industry, when the risk could be designed out of the land tenure system ab initio.
But while we’re discussing the ethics underlying various land tenure systems, we should not ignore the environmental consequences of these competing systems, which, as the Aldo Leopold quote above suggests, have a clear ethical dimension. Here, it seems to me, the Georgist proposal is particularly attractive, in that the Land Value Tax (combined with rigorous application of the common law doctrine of nuisance) forces full internalization of the environmental costs of economic activity, as discussed in William Schnack’s Geo-Mutualism and Ecology, or Sustainability and Internalizing Costs, available at http://evolutionofconsent.com/?p=988.
Compatibility with Anarchism. I’ll start with the obvious question: compulsory payment of land tax — in an anarchist society, WTF?! But the administration of a Georgist land trust need not take on state-like powers. While statist Georgists may assume that the revenues of the Land Value Tax would be subject to government-controlled spending, a Geo-Anarchist community could operate by the rule that these revenues are automatically returned directly to the community members, on an equal per capita basis, minus the (near-negligible) expenses of such administration. The land trust administration would therefore have no budgetary powers. Community members may then voluntarily agree to direct their wealth toward various collective projects — schools, roads, hospitals — but the administration of these projects can remain separate from the land trust.
Secondly, both William Schnack and Fred Foldvary assume, to varying degrees, that the tax rate for a particular piece of land will be assessed by a professional appraiser, working for the land trust administration. These appraisers begin to sound like state functionaries, whose assessments, being somewhat subjective, might be corrupted by bribery, blackmail, or private loyalties. Anarchists ought to be leery of any such scheme. But Fred suggests an elegant solution: put parcels of land up for competitive bidding. The highest bidder for a particular parcel gets it, and that bid establishes the bidder’s tax rate. Obviously, no one will bid more for a parcel than the value of the yield which the bidder expects to obtain from it. The bidder him/herself acts as the appraiser; there is no need for a cadre of professional land appraisers, unless bidders choose to hire them as consultants.
Some problems remain, however. First, it seems undesirable to subject people to the disruption of periodic bidding wars for their own residences. And no one presumably wants a system where the ill and aged, whose incomes are accordingly reduced, routinely get kicked out of their long-term dwelling-places, outbid by their younger and healthier neighbours. Fred Foldvary (personal communication) proposes to deal with this problem by using the open bidding process only when land first comes on the market; thereafter, he suggests, LVT rates would be set by an appraiser. But this reintroduces the appraiser as state functionary. And it doesn’t even solve the problem. The appraiser might still raise the LVT rate beyond the means of the aged or infirm resident. But if the problem is confined to residential issues, why not simply distinguish between residential and commercial land use? Residential-sized lots could be offered by the land trust in a narrow range of sizes, at a fixed rate per unit of area. If an individual or a household can carry on a business just on their residential lot, so much the better for them. If the business enterprise requires more land, though, they have to bid for it, on a regular basis. If moving represents a significant transaction cost, that will be reflected in the bids businesses are willing to make. Or, if there are still policy reasons to favour existing commercial tenants, they could simply be offered an automatic discount on their bids.
A further problem concerns the treatment of improvements to the land. It is crucial to the Georgist program that the tax be based on the unimproved value of the land, so as not to disincentivize wealth-generating land use. (For a general review of the economic virtues of Georgist Land Value Taxation, see Fred Foldvary’s Geo-Rent: a Plea to Public Economists, available at http://www.foldvary.net.) But how can a bidder be asked, with a straight face, to ignore the value of million-dollar improvements to the property? Again, to address this problem, Fred (personal communication) falls back on the expertise of professional appraisers, who routinely separate out land value from improvements, by estimating the replacement value of the improvements, and/or comparing improved land to similarly situated unimproved land. And again, I’m uncomfortable with this solution. Instead, let’s say we look at the actual cost of the improvements — and we impose on the improver the burden of documenting these costs, in materials and labour. We further have some fixed schedule for amortizing these costs over the useful lives of the improvements. The bidder could then bid on the full value of the land, including improvements; but a portion of the rent would go to compensating the previous tenant, or whoever made the improvements. The remainder of the bid is the unimproved LVT. No subjective estimate of costs by a professional appraiser is required. If the previous owner/improver requires a lump-sum pay-out, this could be treated as an interest-free loan, recouped by the land trust from the ongoing LVT + improvements payments from the new tenant. A land-holder who makes improvements is assured that s/he will fully recoup the cost of the improvements if s/he subsequently loses the land to a higher bidder.
I’m not entirely confident that this proposal adequately addresses the problem. Improvements that may have had a high subjective utility for the previous tenant — e.g. a three-storey-tall statue of Jesus — may be a mere eyesore to the subsequent tenant, who will nevertheless have to pay for them as part of the bid. As I said above, I’m not an economist, and there may be undesirable consequences of such an arrangement which I’m failing to foresee. If so, I invite feedback from more economically sophisticated readers. In any case, I am optimistic that some method can be worked out for separating out land value from improvements, without resorting to subjective judgements by land trust functionaries.
What community? An objection that has cropped up repeatedly in this symposium focuses on the (ostensible) appeal to some sort of discrete, pre-existing community, by both Georgists and Tuckerites. However, communities are not, like states, discrete entities with clear borders and unambiguous membership. Rather they are fuzzy, complex, overlapping webs of relationships of varying strengths among individuals and groups. And an individual may be affiliated in various ways and to various degrees with a range of different communities. How then do we identify the community corresponding to a particular Georgist land trust? I don’t see that it actually matters. This Georgist “community” does not need to be a community in anything like the full, messy sense of the word. Perhaps it would be best not to use the word “community” at all. We simply need to divide the land itself into discrete regions, each to be administered by its own land trust. If one wants to use and occupy land within a particular land trust’s region, one must deal with that land trust, and the other people who use and occupy land within that same region. In most cases the geographic region of the land trust would presumably be drawn so as to coincide with hubs of rich social and economic interaction, i.e. some sort of organic geographic community. But if the land trust region corresponds only imperfectly with an organic community, so what? Membership in a particular land trust does not preclude formation of external social or economic ties. And as noted above, individuals could associate with each other as they wish to take on collective projects, without regard to Georgist land trust boundaries. Finally, I should add that Fred Foldvary’s Geo-Rent article, cited above, includes a theorem regarding the optimal size of a community for purposes of Georgist taxation, taking into account the number of workers in the community and the collective and private goods created by them. But frankly I’m unclear on how the relevant variables are to be measured, so the usefulness of the theorem eludes me. Again, I welcome enlightenment from more sophisticated readers.
Notes:
[1] Individual and collective ritual practice may help inculcate in humans concern for the well-being of the non-human members of the ecological community, cf. Starhawk, Dreaming the Dark.
