Jan 9, 2023, 8:00 AM ETInterview, Fireside Chat

Lars Doucet — Progress, poverty, Georgism, & why rent is too damn high

Georgism resolves the historical "pro-worker vs. pro-business" dichotomy by positioning itself as an ideology that supports both labor and capital production while opposing land speculation and rent-seeking.
The central thesis, drawn from Henry George's Progress and Poverty, is that poverty advances alongside technological progress because the value generated by societal productivity is captured as rent by landowners rather than distributed to laborers.
Land is defined not just as physical soil, but as any scarce, necessary resource that possesses locational value and cannot be produced by humans (e.g., physical land, domain names, spectrum, virtual plots).
The primary policy prescription is a Land Value Tax (LVT) levied on the unimproved value of land, excluding any taxes on buildings, infrastructure, or human improvements.
Ricardo's Law of Rent explains that competition for fixed land locations forces rents upward until they absorb the surplus value of labor and capital, effectively pricing lower-productivity individuals out of high-value areas.
Unlike taxing labor or capital, taxing the unimproved value of land does not create a "deadweight loss" because the supply of land is perfectly inelastic; one cannot produce more land in a desirable location.
Current property tax regimes incentivize land hoarding and "land banking," where owners keep valuable plots vacant or underutilized to avoid building costs while waiting for land appreciation to increase asset value.

The 19th-century American frontier closure marked the end of an era where individuals could access free productive land, leading to the full capitalization of land value and the onset of the modern inequality cycle.
The automobile expanded the "frontier" by enabling suburban sprawl, delaying the housing crisis but creating massive costs in pollution and inefficient land use, a frontier that is now closing again.
Virtual economies (e.g., Ultima Online, Final Fantasy XIV, Decentraland) have replicated real-world housing crises through virtual land speculation, proving that scarcity and rent-seeking dynamics exist independent of physical geography.
Historical evidence from Asia (e.g., Joseph Stiglitz's How Asia Works) suggests that land reform, which redistributed land from aristocrats to peasants, can drive rapid economic growth by incentivizing intensive farming over mechanized speculation.
The "Transitional Gains Trap" (Gordon Tullock) acknowledges that abolishing land speculation immediately harms those who bought land at inflated prices, necessitating a gradual transition to avoid economic disruption.

The author estimates that a 100% Land Value Tax could generate approximately $4 trillion annually, sufficient to fully fund Social Security, Medicare/Medicaid, or Defense spending independently.
The proposed "split-rate" property tax (zero tax on buildings, 100% tax on land value) is suggested as a revenue-neutral first step to gain political traction without raising overall tax burdens.
Revenue from LVT could be distributed as a "Citizen's Dividend" (Universal Basic Income) to offset regressivity and ensure all citizens benefit from the collective value of land.
The author critiques the current US banking sector, noting that two-thirds of bank loans are secured by real estate, creating a systemic risk where a radical LVT implementation could crash asset values if not transitioned gradually.
Norway's successful petroleum model serves as a template for taxing natural resources: a heavy severance tax captures the resource rent for the public while the state subsidizes the high capital costs of discovery and extraction.
Transition strategies include extending tax relief to vulnerable homeowners (e.g., the elderly) until sale or death, rather than seizing property or penalizing owners who developed land responsibly.

The concept of "land-like assets" applies to digital goods: domain names, virtual real estate in metaverses, and chart positions on streaming platforms, all of which offer first-mover advantages that function as economic rent.
The author applies Georgist logic to copyright, suggesting that shorter terms prevent the "ladder pulling up" effect where current owners block future innovation, urging that ideas eventually enter the public commons.
In space exploration, Georgism argues against private ownership of celestial bodies under the Outer Space Treaty; instead, space usage should be taxed to prevent monopolization and ensure fair access for future generations.
The author identifies a potential irony where the rise of private crypto transactions (which obscure income) could force governments to rely exclusively on land as the only legible tax base, effectively making crypto a "gateway drug" to Georgism.
The "Disneyland Question" addresses the paradox of a single entity internalizing all positive externalities of a city; in such cases, the entity functions as a private government, shifting the governance debate rather than negating the rent-capture principle.

Critics argue that identifying valuable land is subjective and requires complex bureaucracy; the author counters that modern mass appraisal techniques (multiple regression, geographic weighted regression) can accurately separate land value from improvements.
To prevent corruption in assessment, the author advocates for open-source algorithms, open data portals, and real-time assessment updates to allow public verification of property values.
The "search theoretic critique" suggests landowners might hide resources (e.g., oil) to avoid taxes; the author proposes a "Norwegian model" of subsidizing discovery costs and rewarding finders while capturing the resource rent.
The author challenges the idea that billionaires are solely wealth creators, noting that a significant portion of wealth comes from capturing land rent rather than productive labor or capital investment.
Implementation in Texas faces constitutional hurdles regarding "uniformity" of taxation; however, the author argues that differentiating land and building rates is a categorization issue, not a violation of uniformity, and can be legally tested.
The author is skeptical that income tax can be replaced entirely by LVT immediately due to the "Transitional Gains Trap" and the need to unwind existing real-estate-backed debt, favoring a gradual shift.

Lars Ducey is launching a startup, "Geoland Solutions," dedicated to modernizing municipal mass appraisal using open-source models to accurately price land value for LVT implementation.
Ducey's book, Land is a Big Deal, expands on the review that won Scott Alexander's contest, arguing that accurate measurement of land value is the prerequisite for any Georgist policy.
Ducey remains a game developer, working on Defenders Quest 2, while simultaneously advocating for Georgist economics through writing, consulting, and the new appraisal startup.
The author views the current resurgence of leftism in the US as a direct consequence of the closing "frontier" and the inability of the younger generation to access the land-based wealth that fueled previous generations.
Forward-looking statements suggest that as technology obscures income and capital flows (crypto, remote work), the land value tax will become the only viable method for the state to collect revenue.