Dear list:  
  
Warren Samuels and I have had a private discussion on  
this issue that he believes is worth sending to the  
list. So I agreed to send it. It is slightly edited.  
Warren's initial message was posted on May 17 and  
inadvertently reposted on May 24. The correspondence  
began when I replied privately to his reposting.  
Warren's most recent message, to which Larry Moss  
responded, neglected to include the correspondence  
that he meant to send.  
  
FIRST IS GUNNING'S REPLY TO THE SAMUELS COMMENT:  
  
  
Regarding "my" "refutation" of George, you know, of  
course, that I am really representing the ideas of  
others who, for reasons other than being wrong, have  
been disregarded. It seems to me that the burden is on  
you or others to identify what you claim are classes  
of unearned increments in the price of land -- i.e.,  
to tell how you would set about separating the income  
due to improvement and superior appraisal from some  
unearned increment. To me and my dead economist  
colleagues, the unearned increment is like the  
legendary animal that is always hiding behind me but  
which I could never see. Citing Henry George, as some  
others have done, is clearly insufficient.  
  
I doubt that one can meaningfully distinguish between  
improved and unimproved land. But even if one could,  
the problem is not even close to being solved. If the  
land is unimproved, who wants it? The demand for  
unimproved land, it seems to me, is practically  
non-existent. Even the poorest peasant who occupies  
land aims to improve it from his or her point of view.  
  
Let us imagine that somewhere in the world there is a  
parcel of unimproved land that nevertheless has market  
value. Then I maintain that the market value is due to  
one of two things, unless someone has made a grave  
error. First, it could be due to an expectation that  
the land will have use value  after it is improved.  
Such expectations vary from entrepreneur to  
entrepreneur. Second, it could be due to a speculation  
that some entrepreneur will find a valuable use and be  
willing to pay a higher price than the current one. In  
either case, the focal point, it seems to me, should  
be on the entrepreneurial appraisal not on the  
physical nature of the earth.  
  
Finally population does not cause land rent to rise.  
There are poor countries with very large populations  
where the price of land is quite low (the refugee  
camps in Sudan, for example) and there are places  
where the population density is very low but the price  
of land is very high (a private beach on the  
coastline). There may be a correlation between the two  
but that does not imply causation, one way or the  
other.  
  
  
SECOND IS SAMUELS' REPLY TO GUNNING'S REPLY  
  
  
My answers to your points are as follows:  
  
1. Land value taxation has been adopted around the  
world.  Even when not adopted the improved/unimproved  
distinction enters into appraisal.  
  
2. Like most anything else, appraisers have  
conflicting theories when it comes to valuation.   
Years ago I studied the subject but have not kept up.  
I also learned, from other sources, that the value of  
property varies for different purposes, as odd as it  
may seem:  taxation, purchase, sale, insurance, ... So  
I am neither disturbed nor surprised at imprecision.  
  
3. A substantial part of the portfolios of the ultra  
rich in every country--the details varying between  
countries--is holdings of land for long-term growth  
due to population pressure.  
  
4. During the final years of the USSR a petition was  
sent to Gorbie's regime proposing Georgian taxation.   
Signers came from every wing of economics.  
  
5. The problem which pervades Georgian taxation is  
choosing an historical base point for the calculation  
of economic rent.  
  
I think that the foregoing should cover most if not  
all of your concerns and objections.  
  
  
THIRD IS GUNNING'S REPLY TO SAMUELS' REPLY TO  
GUNNING'S REPLY:  
  
  
Warren, I know that the land tax has been adopted  
around the world. So have tariffs. In any event, I am  
not claiming that land taxes are a worse way for to  
raise revenue than, say, income taxes. I am just  
claiming that they won't achieve George's goal.  
  
I am not disturbed or surprised by imprecision either.  
  
Yes, the rich own land; but I will bet that this is  
because land is ordinarily a good hedge against  
inflation or because its services yield rental income.  
In any case, if you want to accomplish the objective  
of increasing taxes on the rich, there is a more  
direct way to do it.  
  
Too many wings of economics, I would suggest, tongue  
in cheek.  
  
In my view, it is impossible to choose a base year  
without entrepreneurship paying practically the entire  
tax either in retrospect or in prospect. If it is to  
pay the tax in prospect, the entrepreneur will simply  
shift to using his entrepreneurship somewhere else  
that is less in the interests of consumers.  
  
END  
  
  
Pat Gunning