E Why Wall Street Ought To Favor A Gradual Decline In The Cost Of Land

When a friend expressed concern for the high price of land, this is what I told him.

Working together, here is how we will gradually reduce the cost of land to manageable proportions: As Henry George, many classical economists recommended, and, mirabile dictu, not one but 8 Nobel laureates in economics all agreed, the price of land will gradually decrease if taxes are imposed on the value of land. The reason is simple and is ingrained in the mechanics of the market. When taxes are imposed on land, many landowners will want to sell their land; latifundia will gradually disappear; hence, with an increase in the market supply of land, its price can be expected to decrease.

Hidden in this proposition is the expectation that land value taxation will not just be “another” tax. It will gradually replace congeries of taxes, from income taxes to corporate taxes.

With the reduction of corporate taxes, corporate Wall Street will benefit as all other industrial and commercial corporations will benefit.

Hidden even deeper in this chain of thought is the expectation that the cost of Government will have accordingly to decrease. And it will decrease, not by denying access to all sorts of currently available social services, from Welfare to Medicare, but by finding new/old methods of payment for them. 

To discover new methods of payment for social services, there is no other way than to restructure the private economy by making it more productive through an equitable distribution of income and wealth—equitable, not equal. This appears to be such an impossible dream because we have not really given much serious thought to it. 

We have been inveigled in the ideology of equality. To insist on it, we need equity, not equality. This means that all participants in the economic process will receive what is due them, neither more nor less. As is widely demonstrated, by this simple “trick” people become more productive.

In so doing, the rules for the distribution of income and wealth will no longer be dictated by an abstract efficiency of the market, but by 
a set of concrete rules established by the private market itself ahead of engaging in the process of creation of wealth.

In the fishing industry, for example, ancient established rules determine the percentage of the value of the catch going to the owner of the vessel, the percentage going to the captain, the percentage going to the crew. Everyone knows the rules in advance; an agreement is reached not only because the justice of the rules has been determined by deep cultural and moral decisions, by themselves well tested by trials and errors over the centuries; but also because these are abstract and inflexible rules. They govern the industry as a whole and forever. People who do not like them are free to apply their abilities elsewhere.

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Carmine Gorga is president of The Somist Institute.

Disclosure: Visit http://www.somist.org/

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