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How to Make a Perfect World

...in one simple step.

Overview

All taxation should be replaced with ground rent. Ground rent is the rental value of bare land at any given location. Funding government through ground rent will create ever increasing wealth and ever improving government, leading to a perfect world.

"Ground-rents, so far as they exceed the ordinary rent of land, are altogether owing to the good government of the sovereign, which, by protecting the industry either of the whole people, or of the inhabitants of some particular place, enables them to pay so much more than its real value for the ground which they build their houses upon... Nothing can be more reasonable than that a fund, which owes its existence to the good government of the state should be taxed peculiarly, or should contribute something more than the greater part of other funds, towards the support of that government." (Adam Smith, The Wealth of Nations, Book 5, Chapter 2)

 
 
 
     Main advantages of ground rent over tax
 
  1. Honest government
    Ground rent belongs to society. When society collects ground rent it merely collects its own money. This is more honest that tax, which is taking someone else's money.
     
  2. More efficient use of land
    If land must be paid for then people will only use what they need and sell the rest. It will be bought by people who can use the land more efficiently. Rent will never be too high, because if it is then people will just use less land. This reduces governent income, forcing them to lower the rent.
     
  3. Most efficient use of all resources
    These arguments apply to all natural resources, not just land. To economists, "land" includes resources like the air, the water, the electromagnetic spectrum, etc.
     
  4. More recycling, more renewables
    When land is taxed but work is not, raw materials will cost more but everything else will cost less. Leading to more recycling, use of renewable energy, etc.
     
  5. More beautiful land
    A government's income will depend on how much money people will pay to live and work in an area. So beauty will become the top priority. Beauty means attractiveness. Hence beauty attracts people. Easy ways to make an area attractive are to remove litter, plant beautiful lawns and trees, etc.
     
  6. More production, lower prices
    Ground rent fixes your tax costs. So additional work is tax free. This creates lower costs, bringing more sales, hence more production. For example, if ground rent was set at exactly the same rate as businesses now pay in tax. After producing the same as before they could produce a more, free of all taxes, and therefore at a much lower cost, and so attract more buyers. Of course, fixed costs are expensive if you can't sell as much one year. But that is already true for all other fixed costs and the solution is well known. Have a core of permanent land plus an option on extra land that can be added or released as needed.
     
  7. Transparency
    Ground rent is based on the market value of land, which can be tracked by anybody. So anybody can measure the value added by a government's actions.
     
  8. Less market failure
    Ground rent measures the overall value of society. So it does not allow costs to be hidden. That is, it does not allow market failure. Market failure is where a government or business can make money by doing harm. For example, taking money by restricting choice, or hiding information, or causing pollution. But ground rent captures the total value of any region, so no costs can be hidden.
     
     
     
    Results for the economy as a whole

     
  9. Fair rents
    If ground rent is too high, people simple won't use the land. That reduces the market rental value until it is low enough for people to choose to pay.
     
  10. More jobs
    See the earlier point about increased production: somebody has to do the extra work.
     
  11. Longer term thinking
    Land values are strongly affected by beauty, good neighbours, infrastructure, etc. Those things measure long term value, well beyond the next election cycle.
     
  12. Better information
    Ground rent measures everything that makes a location desirable. So through regression analysis, the value of every political choice can be objectively measured. Regression analysis is s set of statistical tools for working out the relationship between data. For example, if we have many examples of house prices, we can work out how much value is added by location and how much is from other things. The more data we have, the more precisely we can measure everything. For example, building a road adds value to houses. Litter in the street reduces value. Good neighbours add value. A bad neighbour reduces value. The more carefully we measure land value, the more we can calculate the true value of everything.
     
  13. No tax avoidance
    Land cannot be hidden. So ground rent ends tax avoidance.
     
     
     
    Results for businesses
     
  14. Increased supply of skilled people
    Ground rent is much simpler than other taxes. This frees up armies of tax accountants to do useful work instead.
     
  15. More time for top managers
    A single ground rent is simple and cannot be avoided (land cannot be hidden). So managers will spend much less time on tax matters.
     
  16. Unlimited supply of land (for any efficient use)
    Finding a more efficient use of land makes it more valuable. This raises ground rent. This increases the supply of less efficiently used land being sold.
     
  17. Lower land prices (to balance rent)
    The total price of land (initial price plus annual ground rent) is limited by what buyers are willing to pay. So if rent goes up the price must come down.
     
  18. Lower overall land prices
    Ground rent means underused land will be sold. This increases the supply, enabling buyers to offer less.
     
  19. A more stable economy
    With full ground rent, merely owning land (or similar natural resources) brings no profit. So land speculation will end. So the economy will be more stable. For example, we will not have spiralling house prices one year and then house prices crash the next year.
     
     
     
    Renters and homeowners
     
  20. Lower interest rates
    Interest exists so that lenders profit from lending. A more stable economy means lenders can charge less and still be sure to make a profit.
     
  21. Cheaper apartments
    Ground rent is based on location, not building height. And ground rent allows tax free work. So it will be very cheap to add extra floors (and hence extra apartments).
     
  22. Cheaper rents
    If landlords charge more, people will simply move to cheap apartments instead. So landlords will have to charge less. Of course, for low rise houses they cannot afford to charge less, so the rental sector will move toward taller buildings. This frees up land for other purposes such as parkland (as parks increase the value of houses nearby).
     
  23. Homeowners will profit Homeowners currently pay more tax than they should, based on the small amount of land they own. So their tax bill will go down. This is why you currently pay more than your share: if people can own land without paying rent, landowners will receive unearned wealth. If they use this wealth to buy more land then their unearned wealth increases. This wealth allows them to influence lawmakers. So inequality becomes normal: a small number of people own a lot of land but pay relatively little tax. To see how this works, play the game "Monopoly". It was originally called "the landlord's game" and invented to show how inequality (ultimately a monopoly) naturally arises. Ground rent corrects this by making people pay tax in accordance with the land they own.
     
  24. Retired homeowners will profit
    Currently retired people have sufficient numbers to veto ground rent if they wish. So they must also receive generous compensation. For example: compensation equal to the ground rent they would pay until they die.
     
  25. All landowners can profit
    Landowners may oppose ground rent. But ground rent creates exponential growth. This is therefere enough money to pay any fixed transitional cost, no matter how large. See "larger economy" and "instant wealth" below.
     
  26. Consumer confidence
    More jobs, lower prices, more stability etc., lead to greater consumer confidence (in spending money and trying new ideas).
     
  27. More investment
    Ground rent measures everything we value, and does so efficiently. So it is easier to see the value of investments, so more will be invested. For example, a new road might cost a billion dollars. But ground rent might show it adds 1.5 billion in value. So the 1.5 billion can be added to ground rent, and the 0.5 billion profit is net profit to society. Note that a later result of ground rent is competition bringing ever improving information. So eventually, every investment that has value automatically pays for itself.
     
  28. A job you love
    Lower prices and cheaper rent means jobs that were previously uneconomic now become possible. For example, a person could live very cheaply in an apartment in order to live as an artist, or set up a not-for-profit business that can survive on just modest donations.
     
  29. Full employment
    More productivity and investment, a more stable economy and more jobs in enjoyable areas mean anyone who wants to work can do so.
     
  30. A many times larger economy
    Many of these changes create extra growth every year. This compound growth means the economy will become many times larger. For example, if ground rent provides an extra 2 percent growth, in 35 years the economy will be twice the size it would have been under a tax system. That is, twice as big as the growth we expect anyway, so perhaps four times its present size. Then it would double again and again.
     
  31. Society's income will also expand exponentially
    At first a large amount of unused land will be sold, but land prices will then find their natural level. Then demand will rise as the economy grows. So ground rents (society's income) will increase at a similar rate to the economy as a whole.
     
  32. Instant wealth
    As soon as future growth is known, we can use it right now by issuing bonds. For example, if we expect a billion dollars of income in ten years, we can issue bonds that promise to pay that money to someone. Those bonds can be sold for cash today,
     
    A perfect world
     
  33. Competition to attract workers
    Full employment means businesses must keep workers happy, or lose them to another employer.
     
  34. Competition between regions
    Each region will need people to pay the rent. So they will compete to attract you. And full employment (and low rent) means you can move easily.
     
  35. Make deals with government
    Ground rent simplifies what we pay to government, while increasing the demand for workers. So it is easier to make deals. For example, "if ten of my friends move to your region you will make a million dollars a year. Change one little rule for us and we will do it." For added incentives, make a larger group, offer to pay a little more, take fewer services (e.g. handle some things yourself), etc.
     
  36. Choose your ideal government
    As more groups make deals, regions will specialise in providing exactly what different groups want. Or lose to regions that do. For example, chose a more libertarian government, or a more socialist one, or a more Christian one, or a more environmentally friendly one, or a more crime free one, etc.
     
  37. Create your ideal government
    Some people's idea of ideal government is libertarian. That is, each person can create their own rules. That is, create your own government with friends. This freedom cannot be abused. Because if your new government makes your neighbours' land less attractive in any way then the parent government must pass on those charges to you. If it does not then it loses income. So only good neighbours can survive.
     
  38. More efficient government
    As governments specialise, we can see which ideas attract the most people. Governments that use that information will gain more rent.
     
  39. Government you can trust completely
    If a government loses trust it will become less attractive, and hence less wealthy. So governments will become more trustworthy to survive.
     
  40. Rewards just for doing good
    As people trust their governments, governments can better identify and reward citizens who make a location more attractive. Those that do, will grow. For example, you allow your government to install more cameras. They note that some citizens drop litter, while others never commit any crime. This affects land values. Rent can be adjusted accordingly. Note that a person could, if they wished, live in a very small apartment and making "doing good" their full time job: rather than pay rent they would be paid for how they increase the value of every property around them.
     
  41. Better decisions at every level
    Rewards for doing good imply a database that tracks a person's reputation. This can be used to help everyone make better decisions. For example, before making a decision you can learn whether person X or business Y is dedicated to making others' lives better, or devoted to it own short term gain.
     
  42. Better science
    As governments compete they must invest more in science, to find new ways to make a society attractive.
     
  43. Towards zero crime
    Better decisions mean any anti-social person has to change or they won't make any money. Better science means we can spot who is hiding their real intentions. Note that any surveillance will be acceptable to the people, or they will simply leave to find a government that suits them better.
     
  44. Free movement of ideas
    Rewards for doing good and better science mean we can set more ideas free, and simply reward creators for the results. For example, a new idea might cost a million dollars to develop, but produces a dollar's worth of reassurance to two million people. By charging them 60 cents on ground rent, everyone profits.
     
  45. Reduced stress
    Full employment, enjoyable jobs, ideal government, no crime etc., will reduce stress. For example, some people may decide to live extremely cheaply in order to work justy a few hours a week, and spend the rest of the time doing whatever they want.
     
  46. Solving "the immigration problem"
    Businesses and regions will compete for workers. This reduces any danger of others "taking your job", leading to freer movement of workers, more eficient allocation of labour, and a reduction in world poverty.
     
  47. No global poverty
    Faster growth from ground rent means other nations must copy or decline (relatively). Free movement of workers accelerates the process.
     
  48. Equality
    We live in a physical universe. So anything that makes one person more productive than another is physical. So it can be copied, leading to more equality. By allowing people to choose their ideal government, with more sharing of information, ground rent allows more copying of the best ideas. Governments that encourage fair copying will out perform those that don't.
     
  49. No danger from robots
    Equality solves the robot problem: whatever advantages robots have, we can copy them. For example, mobile phones give us computer level memory, robot tools give us robot level efficiency, etc. Freedom to copy means if one group or individual gains extra benefits, so can other groups or individuals.
     
  50. Full funding for the sick
    Equality means we have a roughly equal chance of getting sick, and ground wealth provides the wealth and science to solve it. So we will, in order to survive.
     
  51. Animal welfare
    Better science means better fake meat. Once it is better (and cheaper) than real meat, animals will only have value for their natural animal behaviour. Note that ground rent produces a more beautiful world, so we will tend to increase their natural habitat.
     
  52. Kindness to people and animals
    Any region with a reputation for unkindness will attract fewer people. So ground rent will lead to pressure to demonstrate kindness. That is, helping the weak. For example, being kind to animals or to humans in trouble.
     
  53. No dictators
    Dictators, by definition, reduce choice. This implies slower economic growth. For example: A dictator may siphon wealth into his own pockets, put incompetent friends in key positions, divert money into building a police state, etc. Over time the difference between the dictator's state and the same state under ground rent may be a trillion dollars per year. So dictators make their countries por. So they can be bribed to step aside. For example, the dictator can be quietly offered a hundred billion dollars to live as a merely symbolic monarch in a palace. If he refuses, a similar offer can be made to any generals who are in a position to remove him. Is this a reward for evil? No, because all dictators do is tax work and own land without paying rent. If we support those principles then we are doing the same, though on a smaller scale. Hence it is only fair that we pay. We created the problem.
     
  54. No war
    People generally do not like to die, so wars rely on showing people even worse choices. Ground rent removes the worse choices, thus ending war. For example, a religious terrorist will tend to be either poor, reliant on the poor, or sympathetic to the poor. By removing poverty we remove his motivation and support. Note that economics has already ended war for many of us. Rich, comfortable nations no longer fight each other. Ground rent just brings everybody into the rich club. By ending crime, rewarding the good and supporting science, ground rent ensures that any rogue madmen are quickly identified before they can deceive many others.
     
  55. A world based on love
    "Love" means choosing to make someone else happy. Ground rent makes a world where governments compete to attract people: that is, to make them happy.
     
  56. Anything you can imagine
    Ground rent brings exponential economic growth in a world devoted to making you happy. So anything you can imagine becomes possible.

 

 

 

How to make the change

The need for ground rent is easy to prove. It's simple economics: stealing is economically inefficient. But persuading people is much harder: all our history and social structures and how we think is alll based on theft. So here are seven methods for changing from tax to ground rent:

  1. Vocal:
    Talk about economics. Help people understand why ground rent is the property of society.
  2. Institutional:
    Do the research. Talk to Georgist groups. Become an expert on previous attempts to institute ground rent. Take an economics degree. Join a political think tank. Be provocative. Change the conversation among experts.
  3. Emotional:
    Next time something horrible happens in the news, point out (gently) that we could just choose a perfect world instead. It's realistic and simple.
  4. Political:
    Think of a way to compensate landowners, that does not let them just keep the money then go back to their old ways. Then you have a strategy where everybody wins! Then join a political party and get them excited aboutit.
  5. Religious:
    Talk about Moses. If we had folowed the message of the Bible we could have had three thousand years of compound growth. Even the poorest person today would be rich enough to own his own star system by now.
  6. Audacious:
    Find a multimillionaire. He can buy land, and make a model ground rent community. Then let it expand., Then use his experience to become a consultant to the world's governments: he can double their national wealth for the small price of ten billion dollars a year. Thus he becomes the world's first trillionnaire.
  7. Other:
    Use your brain to find a new strategy that nobody else has thought of. Use your drive to change the world: find a way to make it happen!

I wish I could do one of these myself. But persuasion requires different mental tools: you need to be able to out-think a competitor in real time, and enjoy the battle. I can't do that. Can you do that? Then you can save the world.  

 

 

 

Ground rent defined

Ground rent is the rental value of a location. Not the house, not the crops and fences that a farmer might have added. Not anything that the owner did. Just the value that bare land would have at that location.

Who creates location value?

A location has a certain value even if its owner does nothing at all. So location value cannot be created by the landowner. All of that value depends on the actions of society as a whole. If society did not exist, or if it did nothing, nothing could have any price. So it is the actions of society in general that creates a price. Yes, the owner is part of society, but so are a thousand or a million other people.

Location value is the value of society's work

Location value measures how much a person will pay to live there That is, it is the value of everything good a society does: building roads and schools, providing safety, adding beauty, being good neighbours, etc.. So ground rent is the value of society's work. The landowners goes to work and improves the land, and society does the same: it goes to work and improves the land. If we pay each for their work then we will get more work like that.

Tax is theft. Ground rent is society merely collecting it property

It follows from what went before that tax is, in effect, theft. But ground rent is society merely collecting its own property. Let's move away from theft and toward creating wealth instead. Then see what happens.

 

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