Land and Rent Costs to Business make Australia uncompetitive

Hi Geoff, Feel free to continue this discussion. Debating Georgism requires quite a lot of skill and I can easily trip up. Here is how I see it. It is not just third world rental costs that Australian business cannot compete against, it is average rent and housing costs in Western Europe, in countries like France. The system in those countries taxes land-speculation and the transmission of inheritances outside family and tends to keep people movements down, agricultural land intact and businesses local. The English speaking countries all pay ridiculous prices in land purchase and rent. They are all artificially stimulating population growth to keep those prices high, and they suffer from continuous, frenetic population movement. You write, "Obviously this doesn't solve the population growth problem, which is one of the root causes of our troubles, but reducing property prices and rents certainly wont eliminate that problem either." However, while property developers can raise the value of their land and developments by importing customers, high land values cause population growth. If you reduce the opportunity to make money out of land speculation then population growth becomes a cost rather than a source of money. If land were no longer commodified, there would be no incentive to import more customers. Henry George does not tax that kind of land-speculation. He taxes the hoarding of 'undeveloped' land that might, if 'developed' yield financial returns. This method punishes leaving natural spaces alone wherever humans might turn them to some kind of financial profit. Your point about raising production is problematic because it requires more and more production as pressure of population raises land-costs. That assumes that it is possible to endlessly leverage production on manpower or other fuels, but that is a game of diminishing returns and if it were endlessly possible there would not be so much chiseling over wages or much need for land speculation to acquire material wealth. We are all working harder and harder for less, and paying more for less land. People now work longer hours than they did in the 1950s, yet, in Brisbane for instance, only the very rich can afford the houses on generous blocks that working families once lived in. Also, did you understand that high wages are necessary for workers to pay for high rents? Thus land costs underly wage costs. But it seems to me that Henry George did understand the problem of high rents and how they were undesirable. His idea was that any business that would pay high rents would do so because it made higher profits due to services that accompanied high rents (roads, electricity, many clients, government offices etc). When the rents exceeded the profits, the businesses would move further out. What would happen if transnational corporations came in and drove up the rents and then caused all the small businesses to crash? Did he say anything about that? The Henry George system brilliantly utilises population density as a factor in land values but, as far as I can see, it unwittingly endorses a nightmare situation where people can be absolutely packed in slums by rentiers (people who get the rent) in the guise of productivity of land. The renters (people who pay the rent) must then work like slaves in the widget factories to pay the high rents that come with the higher land-values associated with the high population density. The theory is that the state will claw back those profits in land-tax and then somehow redistribute them to the rest of the population. This part of the theory is the best part, but, for me, suffers from the usual problems of governments removed from localities, which always seem to redistribute any taxes to their friends rather than to the whole community, so we need some kind of democratic input here. Democracy and natural affection for locality and community seem to be disregarded under Georgism. Under Georgism, it seems to be okay to move little old widows out of the houses they were born in, artists out of cheap garrets where they compose misunderstood masterpieces, and dreamers out of backyard sheds, to make way for widget factories. My view questions widget factories and suggests we need relocalisation and for more people to produce primary products and consume less secondary adn tertiary ones, notably the mass-manfufactured ones. Georgist values are survival values for pioneer towns, (and the same as current Australian mainstream economics ones). Neither work to facilitate climax communities where people might simply enjoy life simply and intelligently according to the ideals of ancient Athenian philosophers as oil declines and the population balloon of the 19th, 20th and 21st centuries quietly deflates. The Henry George perspective is pure economics and suffers from the problems of pure economics. That is, it seems to have no means of measuring values outside densely-populated areas and values which are barely commodifiable. For instance, it cannot take seriously intrinsic values of wild spaces, and positional values of natural ammenity. Nor does it understand the thermodynamic rules that are preserved in the natural world and on which our lives depend. Even if some very rich person or company is prepared to pay huge taxes to preserve a river or a stream, when that person dies or the company goes broke, under the Georgist system, that river or stream will inevitably be destroyed, heat islands will develop etc. Usually the stream has no chance and is the first thing to go. Georgism has no means to value other species and does not even count them. It gives materially productive output primacy at the expense of freedom not to work and freedom to enjoy life, ammenity and place. It suffers thus from the same problems of other forms of capitalism and of communism. Its chief selling point is that it redistributes monetary wealth to the community, through the collection of taxes. Its chief downside is that it surrenders community, place, self-government and democracy to an abstract market that responds to rules that reward population density and infrastructure alone. In this it differs little from our current system. You might point to systems that commodify trees and rare animals and tax companies to preserve them, as in Greenhouse tax schemes for locking carbon up or to promote the breeding of rare animals for legal trade. However these are very artificial and clunky solutions to problems which, in my opinion, would be much better dealt with by returning power locally, taxing land-speculation and land-commodification (see para one about inheritances.) Henry George was right to say that his system presented a solution to poverty, but it did not return land and self-government to people who had been deprived of it in the first place; it merely made the best out of the monetized reinvention of the world as a commodity market. It seems to me that Georgism will always nurture and defend growth. Growth is now a problem, as you say, and I don't think that Henry George would have stuck with his original recipe. He would have had to have allowed major importance for human rights and to have recognised the primacy of our ecological envelope over everything else. Pollution taxes don't do that either, by the way because people will pay to pollute and then charge their customers. It may surprise you to hear that I used to be on the Board at Prosper Australia. It was an admirable institution in those days.[1] I have a great admiration for Henry George and Georgism. It is an intellectual challenge to work out why it does not satisfy ecologically. From the ecological perspective, it is flawed, in my opinion, because it is unable to give importance to anything that does not have monetary value and it will always preference higher monetary value over lower monetary value, even if that lower monetary value contains all the things that people love. An example of this can be found in The Triangle Wars, by the way. The Triangle Wars is about a huge development for the Melbourne seaside suburb of St Kilda that was proposed and agreed to by the Port Melbourne Council against the objections of many residents of St Kilda. The residents objected because they valued the view that the development would block and they valued their continuing access to the remaining simple beach. They did not want to replace the relics of a 19th century Australian bohemia with a generic shopping mall. They were against higher density occupation of the area and they were against more shops. They said there was enough shopping. Henry George would have said that the residents of St Kilda should move out to Frankston (where similar developments are happening) or further out, to Hastings (where a huge development is happening). In the end under the conditions prevailing through high population growth in Australia, the residents of St Kilda would have had to have dispersed into the hinterland, half way to Culgoa to avoid major developments that sought to intensify the take from a captive population and to take advantage of established services. If they had done that, however, many of them might have lost access to their jobs and incomes. So Georgism in this case means that you have to wear the commercial impositions that accompany high population density. You do not have the right to say how your town will be run. (The residents won this battle for once in The Triangle Wars, by the way.) Georgism needs an ecological and a democratic component that is just as strong as the land-tax concept to work. At the moment it has no such thing. It also has no respect for locality. We need to see Henry George's system in the context of when he lived. He was looking at the upside of growth at that particular time in America. We are looking at the absolute downside today. Growth is our biggest problem today. Georgism is a recipe for higher densification. It punishes the preservation of space and green. Every city in Australia is being ruined by high rates that stop people from preserving nature anywhere close to houses and businesses. And towns and cities are now linked by multi-lane freeways, lined by endless suburbs, devoid of kangaroos, devoid even of farmland. So, even if you buy a car and travel for fifty km you still may not be able to experience the refreshment of natural surroundings and the sight of birds and other creatures. Geogism assumes that people will use land for 'production' (a thing that ecologists believe there is already too much of). However, under guise of 'production', landlords can simply rent out rooms to house dense populations at prices where the landlords will make a profit over the land tax. The people who rent the rooms will have to work harder in order to pay their rent. Making people work harder is supposed to be a 'good thing' if you believe that we need more 'productivity' but, again, I say, ecologists think we need less productivity. To avoid greater ecological overshoot, to slow down oil depletion, to reduce pollution, we need to produce less and to become fewer. The way to achieve this is to work fewer hours and pay less for land so that we can live more peacefully, happily and less frenetically 'productively'. In Georgism services are associated with population density and you pay for the services via land tax. However, in conditions of high population density, as services become scanty, people have no choice (as in Melbourne at the moment), yet land-prices continue to rise. I am sure that more dedicated Georgists will let me know what I have got wrong. It occurs to me that we cannot hold Henry George's theory responsible for solving everything. It is an economic tool more than a political system. [1] Regrettably, Prosper Australia (a very wealthy NGO) was taken over by members of the Socialist Alliance, the Refugee Action Collective and The Right to Life, and promoted particularly as EarthSharing. The people involved in this takeover objected greatly to its association with Sustainable Population Australia (SPA) and threatened to demonstrate outside Prosper Australia if Prosper allowed SPA to continue to have meetings there.