Astral Codex Ten

Citizen's Dividend

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Citizen’s Dividend

Article

Citizen’s Dividend is a recurring concept in the Astral Codex Ten archive, appearing 2 times across 2 issues between April 16, 2021 and December 09, 2021. The archive places it in contexts such as ""Citizen’s Dividend” or what we see as UBI”; “what George calls a Citizen’s Dividend”; “the Citizen’s Dividend (what we would now call a Universal Basic Income)“. It most often appears alongside California, China, George.

Metadata

  • Category: Concepts
  • Mention count: 2
  • Issue count: 2
  • First seen: April 16, 2021
  • Last seen: December 09, 2021

Appears In

Source Context

Recovered passages from the original issue text. When the raw archive preserved outbound links inside the source passage, they are listed directly under the quote.

Your Book Review: Progress And Poverty
April 16, 2021 · Original source
Henry George is variously known for leading an early movement that popularized Universal Basic Income, sporting a fancy beard while shouting "The Rent Is Too Damn High!" and inspiring a popular board game that was shamelessly ripped off and repackaged as Monopoly.
Inline links: inspiring a popular board game
This isn't just sentimental fiction, this is something that really does happen. Isn't Georgism just going to price the poor Carl Fredricksens out of their homes so that someone with a more """productive""" use can have it instead? There's several good response to this. For starters, if you're worried about kindly old people losing their homes, that's a thing that's happening already, and most of the time it's because The Rent Is Too Damn High, and our existing system is net worse on this score. We are currently facing an unprecedented crisis of evictions in tandem with the COVID pandemic, and it's not like things were peachy before. And even though homelessness seems to be declining in the US overall, it's getting worse in the most prosperous cities, exactly as George predicted. Okay, maybe it's better for renters, but what about people who own their homes, like Carl? Isn't it unfair to stick them with land taxes that might kick them out? What if they're retired? Remember, let's not confuse land tax with land confiscation, Here's George (emphases mine): I do not propose either to purchase or to confiscate private property in land. The first would be unjust; the second, needless. Let the individuals who now hold it still retain, if they want to, possession of what they are pleased to call their land. Let them continue to call it their land. let them buy and sell, and bequeath and devise it. We may safely leave them the shell, if we take the kernel. It is not necessary to confiscate land; it is only necessary to confiscate rent. Okay, but you have to admit that even if the state isn't confiscating everybody's land, if you can't pay your land taxes you have no choice but to sell your land, right? Isn't this morally unjust to the Carl Fredricksens of the world? First, it's not a given that Mr. Fredricksen will be worse off on net: he already pays income and sales taxes, capital gains on any investments, as well as property tax which taxes both land value and the value of his house. As speculators leave the real estate market the land tax that replaces his property tax drop will drop, and his house is an improvement that goes entirely untaxed. Also, if the speculators holding onto all the most valuable real estate in the downtown districts are forced to give it up, there won't be as much competition for land and so there's a good chance developers won't be interested in trying to buy up land in a bedroom community in the first place. BlueRepublik further points out that LVT can be used to fund a Universal Basic Income, which should soften the blow considerably: Keep in mind also that the Georgist Land Value Tax is pair with a "Citizen's Dividend" or what we see as UBI, so that it's not the government claiming land rent, rather the land rent is taxed and split up equally for all men. But as a matter of political practicality, in the rare event that after all that Mr. Fredricksen still somehow finds himself in the hole after LVT is applied, Nate Blair suggests a deferment option to grandfather the Carls of the world through the transition: The LVT gets assessed annually for everyone, but owner occupiers (businesses and homeowners) can apply to defer the sum of those payments until they sell or transfer the land. Government can charge a nominal interest. A final point of modern application of land value taxes is to level the playing field between different areas by eliminating "cost of living" discrepancies that arise entirely from speculative rent. This is pretty relevant given the "location pay" debate going on in Silicon Valley right now in response to increased remote work as a direct consequence of the COVID pandemic. Back to George. Great, we've taxed ground rent at 100% and eliminated speculation and all other manner of social ills. Now what do we do with the money? Lots of things! For one, you can get rid of some other taxes. Back in George's day it was even argued that a 100% land value tax on ground rents should be the only tax – the "Single Tax," replacing all other tariffs, duties, and other taxes (keep in mind this was in the late 1800's and Federal income tax wasn't introduced until the 16th amendment in 1913). Remember, all these other taxes have deadweight loss. Income tax is a tax on labor, and so taxing it means we really do get less productive labor. The portion of property tax that targets improvements punishes you for investing in improvements, and sales tax is just straight up regressive, hitting the poor harder than the rich. There's some argument today about whether the "Single Tax" would be enough to fund the modern US budget, with some Georgists saying it would be sufficient and others saying we would still need some other taxes but could at least significantly offset what we already have. But by George, another thing we could do is just give all the money back to the people, as BlueRepublik mentioned above. This could be used as a straightforward Universal Basic Income – what George calls a Citizen's Dividend, or what Andrew Yang calls the Freedom Dividend. It could also be used for the funding of public goods. George doesn't see this as an act of charity on the state's behalf – the value of the land has its origin in the productive labors of the entire community, so it's a simple act of justice to give the returns to those who actually produced the value, which is society at large. Another effect George asserts is that once land is no longer monopolized, labor is no longer forced into one-sided competition, so wages start to go up. Even better, laborers now have far more opportunity to go into business for themselves, which spurs innovation and investment. So to sum up, if we tax the ever loving hell out of ground rent, George says we'll see the following benefits: Make housing much more affordable
Inline links: really does happen, crisis of evictions, getting worse in the most prosperous cities, "location pay" debate going on in Silicon Valley, Citizen's Dividend, the Freedom Dividend
Fund a Universal Basic Income and public goods
Does Georgism Work? Part 1: Is Land Really A Big Deal?
December 09, 2021 · Original source
For those of you wondering who this "Lars" guy is, I'm the Astral Codex Ten reader who reviewed Henry George's Progress & Poverty for the book review contest. Henry George is the founder of an economic philosophy known as Georgism which is principally concerned with the deprivations caused by unchecked rentiers. George is famous for promoting two specific policies, the Land Value Tax (LVT) and the Citizen's Dividend (what we would now call a Universal Basic Income).
Inline links: Progress & Poverty, Georgism
In real life you can't accurately assess land value separately from improvements, so even if LVT would work in theory, it doesn't work in practice Today we'll start with point 1, and subsequent articles posted in the next two days will address points 2 and 3. I'll probably write further articles on the subject, but I make no presumptions about whether I'll have worn out my welcome on Astral Codex Ten by then. If you haven't read the Book Review yet, I've posted a brief recap of the relevant concepts below. Otherwise, feel free to skip directly to the subsequent section. 0. A Brief Recap Georgism is a school of political economy that is really upset about, among other things, the Rent Being Too Damn High. It seeks to liberate labor and capital alike from those who gatekeep access to scarce "non-produced assets," such as land and natural resources, while still affirming the virtues of hard work and free enterprise. George uses the term "Land" to mean not just regular land, but everything that is external to human beings and the things they produce–nature itself, really. Georgism's chief insight is to move economic thinking from a two-factor model (Labor and Capital) to a three-factor model (Land, Labor, and Capital). It's chief (but not only) policy prescription is the Land Value Tax (LVT), which taxes real estate at as close to 100% of its "land rent" as possible (the amount of rent due to the land alone apart from "improvements" such as buildings). In actual practice, most Georgists seem to think 85% is a reasonable figure to target. Let's carefully unpack what those terms means. "Land value" refers to the full market value of a property, excluding all of its improvements, such as buildings. This is the portion of a property's value arising solely from its location and natural attributes (agricultural fertility, endowment of stuff like water, minerals, etc.). "Land rent" (AKA "ground rent") refers to the recurring rental income a property is capable of generating from the market because of its land value. It is Land Rent which Land Value Tax is intended to capture. You can think of it as a Location or Site Value Tax if that's more helpful. It's not a tax on the full market purchase price of a property, nor is it a fixed amount of tax per acre of land, but rather a tax proportional to the market value of the land alone (or better yet, the land rent). When assessed correctly, as LVT approaches 100% the market selling price of the land itself will approach zero. Don't let the "100%" confuse you, either. If a piece of land costs $10,000 to buy, and is leased for $500/year, then an LVT that captures 100% of the land rent is $500/year, which works out to a 5% annual tax of the land value. LVT should not be confused with a property tax. Property taxes consider land plus improvements (typically buildings). An LVT considers land value alone. Georgists assert that if we sufficiently tax land in this manner, we'll not only end the housing crisis but also fix a bunch of misaligned incentives that cause poverty to persist alongside economic progress, while raising a bunch of revenue that can lower or even eliminate other less efficient taxes, such as sales and income taxes. This is because virtually all economists agree that LVT has zero "deadweight loss"–a fancy word for a drag on the economy that makes certain activities no longer profitable. Other taxes with no deadweight loss include Pigouvian taxes on bad things, like congestion and pollution. But won't landlords just raise the rent to make up for the LVT, passing the burden of the tax on to the tenants? Georgists say no, because land is special in that it is scarce and nobody can make any more of it. Indeed, LVT is a rare form of taxation that actually boosts the economy, because it discourages rent-seeking and speculation. Some Georgists even go so far as to say that LVT can raise enough revenue to replace all other less efficient taxes, becoming the so-called "Single Tax," but this is not a universally held position among modern Georgists. To be clear, proponents of the "Single Tax" believe that LVT is sufficient for all public purposes and that no other taxes (such as income tax, capital taxes, and tariffs) are necessary for revenue generation, although they still might support carbon taxes or "sin taxes" on things they want to discourage. Georgism doesn't begin and end with the LVT, however, and the movement isn't solely concerned with real estate and tax revenue. Henry George was an early proponent of what we now call "Universal Basic Income," or as he called it, the "Citizen's Dividend" (funded by LVT, naturally). But even if you threw every penny of LVT revenue into the sea, the anti-sprawl effects of the policy are appealing enough by themselves to earn the endorsement of YIMBY's and urbanists like Strong Towns. If you take Georgism to its natural conclusions, you might start to question government-enforced monopolies over other kinds of "Land," such as electromagnetic spectrum, water and mineral rights, and orbital real estate for satellites, not to mention the deadweight loss created by intellectual property gatekeepers over, say, research papers. And if you have my day job as an analyst for the video games industry, one day you'll find yourself applying the observed 30-year history of housing crises in MMO's to virtual real estate sales in leading blockchain games. Some people come to Georgism because of their aversion to income and capital taxes, some want to use LVT to fund generous social programs, some are motivated by the beneficial environmental effects, and some just think the Rent is Too Damn High. No matter where you come from on the political compass, there's probably a way to mix up a club soda and Georgism that's right for you. 1. Is Land Really a Big Deal? Paul Krugman speaks for many mainstream economists when he admits that Georgist analysis is sound, but he insists that it's a moot point because land just isn't important anymore in the modern economy: Believe it or not, urban economics models actually do suggest that Georgist taxation would be the right approach at least to finance city growth. But I would just say: I don't think you can raise nearly enough money to run a modern welfare state by taxing land. It's just not a big enough thing. By George, if land just isn't a big deal, then LVT can't raise much money, the problems of speculative landownership are vastly overstated, and you can stop reading this article. The main tension between Georgists on the one hand, and Marxists and Neoclassicals on the other, is that the latter two significantly downplay land, centering the whole discussion instead on labor and capital. For Georgists, land is the key to understanding the whole economy. Krugman's main complaint is that LVT can't raise enough money, which is a response to the "Single Tax" movement in particular. In George's time, it was popular to advocate for a 100% Land Value Tax and the elimination of all other taxes. Keep in mind that in George's time, there was no federal income tax, and state and federal spending was much lower, so whether LVT could raise enough money wasn't nearly as controversial as it is today. But even if it turns out that a modern-day "Single Tax" isn't enough to cover the federal budget, Krugman misses the point. The purpose of LVT is not just to raise revenue, but to end speculation, rent-seeking, unaffordable housing, and wasteful, environmentally damaging sprawl. LVT is worth doing for those good effects alone. The revenue it generates doesn't need to fund literally every penny of government spending to still be a win, which is why Georgist economist Terrence Dwyer calls LVT "better than neutral." Liberal Krugman and conservative Milton Friedman both seem to agree that LVT has no deadweight loss, which means LVT, unlike income and capital taxes, doesn't create a drag on productivity. This means that if we can raise enough money from LVT, we can reduce at least some inefficient taxes, such as those on labor, while keeping government spending the same. Not only could this be popular politically, it would also boost the economy. Those are the claims Georgists make, at least. Let's see if they're true. Here are a few testable hypotheses that capture different aspects of land being a "really big deal": Most of the value of urban real estate is land
Inline links: the Book Review, political economy, Pigouvian, YIMBY's, Strong Towns, research papers, housing crises in MMO's, leading blockchain games, Paul Krugman, Milton Friedman, deadweight loss
Now some of you might be nervous at this point. Are those awful Georgists about to ruin me with LVT? I can certainly sympathize, seeing as I'm a homeowner myself. This is where I think the Citizen's Dividend (UBI) should probably come in.