A compelling review of the authors work, but I think there would be benefit from dropping the early references to UBI: LVT is an interesting approach and line of reasoning. UBI is a political hotbed with deeply acrimonious feelings on all sides.
When you align one idea with an external one, you are adopting all that external baggage - it's a cheap way to get a few additional people to agree, but at the cost of a bunch of other people seeing what they perceive as warning signs of a class of ideas they are suspicious of.
It's important to have confidence in your idea, on its own merits.
It's actually a really key part of the functioning of the LVT. It is fuel to grow the economy, just like the LVT is the stick that punishes those who hold back the economy by hoarding land.
At least, that's my opinion. Carrot based economic policies have a tendency of working in multiples of the money involved, and penalties a bit less than that.
More money in the hands of the entire population have a multiplicative effect in the economy, as it spurs more spending, and that spending is organic choices by tons of people, rather than it just sitting in the investment accounts of a few wealthy people.
The fuel of capitalism is a large population of consumers. To be extent that we have inequality and we have lots of people that are unable to make economic choices due to poverty, we limit the growth of the economy.
One of the lessons of macroeconomics is that subsidizing demand doesn’t really grow the economy, it’s mostly just results in inflation. Obviously not a hard law but if UBI causes people to work less then the economy will shrink, no matter how much stuff people want to buy.
Inflation is caused by the Fed's 2% inflation target. If tomorrow Congress passed a UBI, backed by nothing extra, the Fed would respond by raising rates, and inflation would be the same exact long-run value of their target.
But a UBI funded through an LVT is much better than that. An LVT is a non-distortionary tax. This means that increasing the tax does not change behavior. But it is not only non-distortionary, it also reduces the ability to speculate as land tax rises. This causes the LVT to be a net-good tax, in much the same way that not taxing carbon is a subsidy to those who burn carbon. The lack of an LVT is a subsidy to the owner of the land. Ending rent-seeking will thus cause the economy to grow. This would result in deflation, and so the UBI is necessary to bring us back to our inflationary target.
The article shows a good example where this will have a massive impact to the economy, even if it is not true in most of the world. That place is South Korea, where roughly 50% of the population lives in the Seoul Capital Area, which continues to grow every year. This has caused significant economic damage, as young people are unable to afford to have both families and a place to live in Seoul, but they must live there in order to have a job. They can simply not afford to live outside of Seoul, where housing is less, but wages are much less.
If they were to enact an LVT with a UBI(or as Georgists call it, Citizen's Dividend) then the population of Seoul that would prefer to move out into cities and towns throughout SK would finally be able to afford to do so. They would only need to be able to find a job that allowed them to live a lifestyle that they preferred.
That's what great about a policy that does not advocate for any particular out-come, but about reaching equilibrium economic states. For places that have to low density, it incentivizes density. For places that have to high density, it incentives spreading.
PeterHolzwarth · · focus · HN ↗
When you align one idea with an external one, you are adopting all that external baggage - it's a cheap way to get a few additional people to agree, but at the cost of a bunch of other people seeing what they perceive as warning signs of a class of ideas they are suspicious of.
It's important to have confidence in your idea, on its own merits.
epistasis · · focus · HN ↗
At least, that's my opinion. Carrot based economic policies have a tendency of working in multiples of the money involved, and penalties a bit less than that.
rudolftheone · · focus · HN ↗
Care to explain how it would work in practice?
epistasis · · focus · HN ↗
The fuel of capitalism is a large population of consumers. To be extent that we have inequality and we have lots of people that are unable to make economic choices due to poverty, we limit the growth of the economy.
HDThoreaun · · focus · HN ↗
ItsMonkk · · focus · HN ↗
But a UBI funded through an LVT is much better than that. An LVT is a non-distortionary tax. This means that increasing the tax does not change behavior. But it is not only non-distortionary, it also reduces the ability to speculate as land tax rises. This causes the LVT to be a net-good tax, in much the same way that not taxing carbon is a subsidy to those who burn carbon. The lack of an LVT is a subsidy to the owner of the land. Ending rent-seeking will thus cause the economy to grow. This would result in deflation, and so the UBI is necessary to bring us back to our inflationary target.
The article shows a good example where this will have a massive impact to the economy, even if it is not true in most of the world. That place is South Korea, where roughly 50% of the population lives in the Seoul Capital Area, which continues to grow every year. This has caused significant economic damage, as young people are unable to afford to have both families and a place to live in Seoul, but they must live there in order to have a job. They can simply not afford to live outside of Seoul, where housing is less, but wages are much less.
If they were to enact an LVT with a UBI(or as Georgists call it, Citizen's Dividend) then the population of Seoul that would prefer to move out into cities and towns throughout SK would finally be able to afford to do so. They would only need to be able to find a job that allowed them to live a lifestyle that they preferred.
That's what great about a policy that does not advocate for any particular out-come, but about reaching equilibrium economic states. For places that have to low density, it incentivizes density. For places that have to high density, it incentives spreading.