Larry wrote that "[t]he basic Georgist insight is that public goods...can be profitably financed in ways that do not seriously disturb the existing allocation of resources." And he refers to urban economics texts as a place where you can find the name "Henry George" attached to this insight. Too bad for urban economics which, like television economics, is perhaps yet another case of too many wings of economics. As I see it, Larry, this second basic insight is just as wrong as the first one. Probably more so, since it employs the policy non-relevant idea of a public good. The insight you describe assumes that resources somehow exist without entrepreneurship. The problem of allocating them is a simple maximization problem. Yet, in a market economy there would be no resources without entrepreneurship. Parcels of land would exist, but they would not be a resource. And no one would know how to use the land to satisfy wants. One of the tasks of entrepreneurship is to identify how items like parcels of land in different places and other items and actions can be combined and coordinated to satisfy consumer wants. Assume that, in a market economy, entrepreneurship has appraised the land and put the different parcels to different uses. If parcels of land are taxed, entrepreneurs will act differently toward land than otherwise. (Keep in mind that I am talking about a modern economy. Even primitive peoples know very well how to use parcels land. But they have no markets and no entrepreneurship. The �average Jane� in a modern market economy has practically no idea of the most economical use of a parcel of land.) Under these conditions, taxing site values would affect entrepreneurship in the same way that a tax of any other kind would affect it. I will grant that the Georgian tax cannot affect the production of improvements to land that have already occurred. Bygones are bygones. I will also grant that such a tax is an easy way to raise revenue to pay for �public goods.� But the Georgian tax does affect the production of NEW improvements. It causes landowners to build taller and deeper in order to economize on the use of land. However, extra stories to a building that are added only because of a land value tax will not ordinarily be in the interest of consumers. If it were not for the tax, the city would expand in length and width, instead of in height and depth. Of course, the problem is more complicated than one can describe by referring to only three dimensions. But this should be sufficient to make my point. This second insight, it seems to me, is just the first insight in a different package. The Georgian tax is still an effort to tax the elusive unearned increment. Could we say that it is an exercise best studied by economists in yet another wing of economics, �advertising economics�? Pat Gunning