Land is a Big Deal: Why rent is too high, wages too low, and what we can do about it

by Lars A. Doucet

The conflicts of the last century have trained us to see capital and labor as two fundamentally opposed camps–if we want to stimulate growth and economic progress, it means squeezing workers, and if we want to take care of workers it means accepting higher taxes, more barriers to starting and running a business, and a hit to overall economic growth (or so the conventional wisdom goes). But what if we've been missing out on a crucial piece of the puzzle, something that flips the entire script?

In this book, an evaluation of and elaboration on Henry George's seminal work, Progress and Poverty, Lars A Doucet uncovers the hidden role of land in shaping the entire economy - and once you've seen it, you can't un-see it. Land, and the policies that govern it, hold an incredible and largely forgotten power over our lives. When land is wasted and squandered, we get sky-high rents, oppressed workers, ruined businesses, depleted natural resources, a polluted earth, and an impoverished society. Land is a big deal, and this book will explain the problem and what we can do to solve it.

Genres: Economics, Politics, Nonfiction, Urbanism

306 pages, Paperback

First published October 15, 2022

Reviews

[Peter Faul · Rating 4 out of 5]

This is a reasonably short introduction to and justification of Georgism. The book can be split into two parts with the first offering a summary of Henry George's main arguments, and the second putting the various theoretical claims to the test with reference to modern data.

The first part successfully distills the main arguments of George down into far fewer pages than Progress and Poverty. This makes it a lot more accessible and so hopefully I'll have more luck convincing people to read up about Georgism now! One aspect that I thought could have been explained clearer was the mechanism by which the productivity gains of technological progress are all swallowed up by landlords. Technically all of the information is there, but it requires work to put it all together.

The second part is somewhat mixed for me. About half of the questions answered I thought were relevant and interesting and the other half I felt were really of minor importance in terms of evaluating the efficacy of Georgism.

Nevertheless I'm glad this book exists!

[Andrew · Rating 3 out of 5]

Summary is simple. The boomers own too much land, and it is crippling economic productivity and human flourishing. We should tax land to disincentivize land hoarding and speculation.

[John · Rating 2 out of 5]

Read this to learn what Georgism is. Quickly got sick of the “by George” jokes. But was convinced that taxing land sounds good. I skimmed a lot of the bits with graphs though so I probably don't really understand the full implications.

My main question after reading this is that if there are countries which have implemented a and land value tax, why have they set it at like 30% or whatever - rather than 85%?

[Andrew Wyman · Rating 5 out of 5]

Should be mandatory read for anyone interested in Economics. Land ownerships is the biggest factor that drives all economic activity. This pairs incredibly well with Henry George’s Progress and Poverty

[Knight-Adept · Rating 5 out of 5]

Lars Doucet gives a detailed but accessible overview of the ideas and claims of the unjustly neglected political economist, Henry George. George argued that the fundamental cause of poverty was the accumulation of private land rent, and argued that the way to create a just and prosperous society was to tax only land and not labor or capital. Lars then turns to the data to look at how Georgism's claims work out empirically and address some common objections. First, in an advanced economy, does land even matter anymore? Turns out, yes- it's more important than ever (the increasingly furious dispute over housing availability is a good indicator). The role of land in the economy is hard to see sometimes, but it is the foundation- literally- for every other economic interaction; thus the title of the book. Second, can a land value tax like George proposed just be passed on by the landlord and end up getting paid by tenants instead? Nope; a land value tax doesn't affect the supply or the demand of land, so it can't change the price. Landlords already charge as much as they can get away with; if they try to charge more, tenants will just move. Finally, can land value even be accurately known and assessed? Yes, and actually it is already valued all the time by people like fire insurance assessors, who have to know what a plot will be worth if the building on it burns down. Lars is confident enough in this that he's started a company that uses machine learning to sell land valuation tools to assessors, so he's definitely put his money where his mouth is.

All in all, Land is a Big Deal is a great book and I highly recommend it for anyone interested in Georgism or economics generally.

[Timon Ruban · Rating 3 out of 5]

A very thought-provoking read about how the rewards for creating wealth should be distributed between labor, capital and land.

"There's infinite capacity to increase capital and to increase labor, but none to increase land. And since wealth is a function of how they play against each other, land should be thought of as common property."

Doucet makes a compelling case for a tax on land value being the "least bad tax". It creates no negative side-effects on the balance of supply and demand of what is being taxed. We cannot make more or less land and land cannot leave the country if it's unhappy about a new tax policy. Taxing it will help curb land speculation (where you buy land and then do nothing valuable with it, just speculating on its value going up because others do the hard work of increasing productivity or the attractiveness of nearby land).

But it also felt oddly biased, randomly throwing in unqualified opinions disguised as facts ("To be clear, Economic Rent is a bad thing—all taking, no giving.") and leaving the elephant in the room completely unaddressed: the biggest wealth creation of our time is happening in the land of bits, not atoms.

Doucet will still be happy: he convinced me that taxing land more and other things less is directionally right. But I don't think it's the silver bullet he makes it out to be and I'd love to see someone offer an equally thoughtful rebuttal to his take.

[Jeremy Ray · Rating 4 out of 5]

A job well done by Doucet to break down an infamously hard-to-understand economic theory about land. This book explains the theories of Henry George and his proposed solution - a 100% land value tax - as well as bringing it into the modern era. There are recent case studies and academic studies that Doucet dives into, objections that he deals with, predictions from George that are proven prescient, and charts, charts, charts!

I recommend reading a physical book if you can -- I have the audiobook, which does about as great a job as you can explaining the charts, but the graphics come thick & fast. There is of course an online resource when you can view them, but being an audiobook I was either commuting or doing chores for the most part while listening. Having the charts there visually while you read would be ideal.

If you've read the original book review by Doucet on Astral Codex Ten, the basic facts will be familiar to you but it's still worth picking up this book for a deeper dive into land assessment methods, real-world case studies, and dealing with questions like "won't a land value tax be passed on to tenants?".

I'm still determined to actually read George's Progress & Poverty, but I wouldn't want to be without this book which covers everything between P&P's publication and now.

[Thomas Sedkowski · Rating 5 out of 5]

One of the most convincing economic ideas I've come across in a very long time. A fat added bonus is that the book is lightly written and meets you at eye-level. Some (typically idealogically strong) economic scripts tend to brush past their tenuous links, but Lars Doucet does everything he can to turn every stone as he deals with aspects of Georgism that are empirically poor. He dives deep.

What I found particularly appealing about Georgism is
- no deadweight loss (it doesnt screw with incentives as land is in fixed supply and immovable)
- it's relatively easy to implement (it's already to a minor extent baked in to property taxes, so it's not some utopian makeover that requires a tremendous amount of political power to see through)
- a large margin for error & incremental results (even if don't accurately assess land values, or don't go for the largest LVT straight away, we should still see large improvements, so we dont have to go all-in to start with, although the theory convinced me we should)

That of course in addition to the societal aches that it would soothe, such as rent problem and allowing for significantly lower income taxes, UBI or whatnot which in turn could have a host of other positives.

[Trey Hunner · Rating 5 out of 5]

Am I in a cult now? I feel like I'm now a follower of Henry George. 😅

This answered many of my questions about Georgism and it was fairly accessible despite this being a very wonky subject.

This book is all about implementing a "land value tax" and it does a good job of explaining what that means and what the consequences might be. A land value tax feels like an extreme marriage of capitalism and socialism, as it would (sort of) abolish private ownership of land while encouraging the market to make the best use of each piece of land.

For the sake of affordable housing, abolishing/loosening zoning laws and reducing regulatory requirements around housing construction seem more important, but I'm MUCH more sold on the idea of a land value tax after reading this book. A land value tax really does seem like the most justice-oriented AND efficiency-oriented tax though. I'll be excited to see more governments try out a variation of one.

[Victor Nielsen · Rating 5 out of 5]

This book is the best I've found to explain the proposition made by Henry George and its context to modern criticism.

It starts with a summary of Henry George's arguments - especially about why land value taxes might be useful.

The book then goes on to talk about some of the main criticisms of the land value tax idea.

Lars ends up with a list of needs for us to understand the land value tax better, which is a great way to involve people interested.

I do wish that the book would discuss more of the benefits (and theoretical/empirical proof thereof) and more of the critique, but research is still missing for this.

[Casper Klop · Rating 5 out of 5]

Very fascinating subject. Interesting to read how the ideas of Henry George, written 150 years ago, can still (or maybe again!) be so relevant. The book is written as a kind of long blog post, which makes it both very accessible and somewhat rough. It reads easily and all ideas are introduced clearly, but some parts lack some substantiation, and a few diagrams are difficult to read. The writer himself is passionate, and at times very funny. I hope that the book will have a second, better edited and expanded version, to further highlight this important topic of land taxes.

[Gabe Reyes · Rating 4 out of 5]

I've talked a lot about land taxes but I haven't read a lot about them, there was only one paragraph in my public finance textbook on them. This book is good about keeping it approachable and light, although maybe a little to informal and normative for serious readers.

[Ibrahim Sowunmi · Rating 5 out of 5]

I don't write reviews often but this is a nice breakdown of one approach to what i believe is one of the biggest issue within the west. If you want less of something tax it, and land speculation is arguable the biggest economic drag I can thing of. Great read and well written.

[Nick · Rating 5 out of 5]

You'll never think of land the same.

[Niclas Küpper · Rating 4 out of 5]

Extremely Convincing. You can tell that it was adapted from a blog-post. While I am glad this book exists as a book, it is probably better to read it in its original form.

[Will Murray · Rating 4 out of 5]

The content is fascinating and really convincing - the style is lacking with the annoying “by George” liberally peppered throughout

[Frido Alonso · Rating 5 out of 5]

the rent is too damn high!!!!!

[Max Stone · Rating 3 out of 5]

I loved this as a blog but the campy style and the “I did a quick web search and I didn’t find the data I wanted so I made a reasonable guess” is fine in a blog but not in a $30 book.

Also the author claims to address the biggest problems with his idea (e.g. can we accurately assess the value of land) but doesn’t touch or acknowledge what I think is the likely issue of how to get from here to there. He says it will make housing cheaper and do so with all sorts of benefits and I basically believe the thesis but lord I don’t see how you can do practically do something that is going to crash real estate prices. I guess maybe you could, just because I can’t think of a way doesn’t mean there isn’t one, but the challenge isn’t acknowledged.

I feel bad writing a negative review because I did really like the book review blog this originally appeared as. But a book is a different medium than a blog and this great blog is not a very good book.

[Abe Niederhauser · Rating 4 out of 5]

We want an economy that rewards people who create value for society. Capitalism generally does this well, rewarding entrepreneurs, innovators, and other risk-takers whose efforts benefit us all. This economic growth is what has lifted billions out of poverty. However, all is not well in paradise. Why is the rent so damn high? Especially relative to wages? Henry George believed it was because we treat land as capital and that land needed to be treated differently. The ideas he put forward in the late 19th century are now known as Georgism.

Is land different? As mentioned before, capital gets rewarded when an innovation or business generates value. What about landowners? Georgists point out that the value of land is largely determined by location. A plot of land in a bustling city is worth far more than an identical plot in a remote region, not because of any action by the landowner, but because of the collective actions of the surrounding community. In other words, a landowner is being rewarded without generating value for society in the way that capital does.

What should we do about this? By George, tax land at 100%! His proposed tax would only be for the annual rental value of the land itself, not for the buildings or other improvements to the land. The idea is that this would remove the incentive for speculators to hold land without using it in a way that creates value. The revenue from the tax could also be used to eliminate taxes on labor and capital, thus keeping more money in the pockets of those creating value, all while simultaneously putting downward pressure on rents. And lower rents don’t just make housing more affordable, they make everything more affordable, because businesses paying lower rents don’t have to incorporate higher rents into their prices.

Would it work? I don’t know, but even Milton Friedman thought a land tax was the least bad: “In my opinion, the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago.” This book explores the current evidence, common objections, and challenges associated with such a policy. Accurately assessing land values separately from improvements is not easy. Skeptics also doubt that the tax would have as sizeable of an effect on rents and efficiency as Georgists claim. And the biggest issue with dramatic economic changes is generally their unintended consequences, so obviously, more research needs to be done. Interestingly, there is a billionaire trying to build a Georgist city to test the idea. By George, that’s pretty cool!

“Rognlie got a lot of attention for pointing out some major flaws in Thomas Piketty's famous book, Capital in the 21st Century. Piketty's main argument is that the rate of return to capital is greater than the overall rate of economic growth, and that this is leading to wealth concentration and inequality. Rognlie pointed out in his paper that Piketty was improperly handling the depreciation of capital assets. Once you account for this, you find the outsized returns to ‘capital’ driving inequality are due almost entirely to housing.”

Note: There are many theories about why the rent is too damn high. This is just one. Another important one is housing regulation (NIMBY vs. YIMBY).

[Max G. · Rating 4 out of 5]

This book reads like a long blog post (oh wait, it is).

I thought it was informative and convincing overall, but I found some parts a little boring, so I stopped reading it for a few months.

I have often observed when I read economics books that I struggle to remember their contents. For some reason, it just doesn't really stick in my memory. I find myself nodding along and everything making sense while I read it, but in hindsight, I couldn't really explain the arguments to you.

Here, I also have only a few takeaways, like, "Land Value Tax seems like a pretty good idea," but I would struggle to lay out how exactly an LVT works and what the evidence is. I know I could create some Ankis and whatever, but that takes a ton of effort.

[Yannick M · Rating 5 out of 5]

Wonderful book, I'm sure this will cause many to see the cat.

Sad that it is missing the practical case studies of substantial implementation of the LVT, but I'm glad to hear this will be included in future editions.

[Jake Whitehouse · Rating 5 out of 5]

A fantatsic, in-depth look into the most important policy for improving the world the political don't talk about