I love alarming Dierdre, if only because it is so much fun discussing with her. So let me respond both to her point, and also explain how I see my arguments relating to Georgian philosophy.

I think Dierdre's alarm shows two different ways of understanding markets and liberty, and that difference may  explain why I am a closet Georgian, and she is not.

Property rights for me are a decision variable of society--that includes all aspects of property rights--and I see taxes as modifications of property rights, so there I think Deirdre and I agree-the difference between the power to tax and the power to change property rights is not great.  I also agree with Dierdre that to give government a source of income that can let it go wild is problematic, but that I think is a separate issue.  One can design the system in which the social rents are returned to the people in an extra-governmental way--through the creation of an agency whose job it is to negotiate these leases (I'd see them staggered, and potentially renegotiated starting 50 years before they are due) and to return the money to individuals in society--most likely equally, in some fashion similar to Alaska's citizen fund from the oil revenues the state accrues. So I don't think that our concern about state power is our source of disagreement.

I think our source of disagreement is that I see property rights as tools of society--and that their allocation has to be considered in the same way we analyze tax analysis and markets--what would be the most efficient allocation of property rights that achieves the ends that we want. I do this reasoning in a Rawlsian/Buchanan type thought experiment--how would individuals with our knowledge today in the original state of nature--have designed property rights to achieve the desired ends. So just as there are an efficient set of taxes, there are also an efficient set of property rights, and my claim is that the current structure of property rights is not "efficient" in that sense, since a redesign of them would better achieve the ends I think society wants to achieve. Now changing property rights may be impossible--that's a separate issue, but as a thought experiment--I think it is a valid point, and it shows how economist's theorizing has been incomplete--they analyze efficiency of taxes and not efficiency of property rights.

Georgians, in my view, see rents (interpret returns to activities with highly inelastic supply) going to individuals without drawing from those individuals much effort. They see an alternative way of taxing that would achieve the ends more efficiently, and that efficient way fits their sense of fairness. It does for my sense of fairness as well. They propose redesigning taxes to achieve that end. In my view, the issue of land vs. structure is a bit of a red herring--it is an example of a factor in inelastic supply, but as was pointed out in the discussion, there is some elasticity in everything, and the strongest Georgian  argument is general, and is not dependent on land per se. In the absence of additional information, that general insight should guide taxes, which is very close to what the Ramsey Rule states. I agree with that as a normative goal. But I go beyond that and see all property rights (and other rules governing society) as operating procedural rules.

Dierdre sees property rights as inalienable and as part of how one defines liberty. Thus, she does not want to separate the analysis of liberty and property rights. Taxing of land as a normative goal goes against that very view, and one has to accept that normative view of how one believes society should be designed if one is to accept my view that the structure of property rights should be seen as endogenous variables.  She is willing to accept the results of existing property rights because not to do so undermines liberty, which is lexicographically preferred to other normative goals. I don't accept that assumption in my "original state" analysis, although I might accept it as a working rule in situations where the rules are so set that they cannot be changed without undermining other aspects of our society.


David Colander