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Henry George’s proposal in action

April 22, 2007

Today’s Tribune gives us another example of the community collecting the rent: Chicago Park District harbors.

For many years, boat slips were greatly underpriced, so in order to get one you had to bribe a Park District employee. In 1996, harbor management was contracted out to Westrec Marina Management. Rates were raised and continue to increase. Harbors were improved and the number of spaces increased from 4400 to 5100.

A slip for your 35-foot boat at the popular northside harbors will cost you $3418 if you’re a Chicago resident, with a 25% surcharge for nonresidents. Fees are expected to yield $20.4 million in 2007, against $7.3 million operating costs. Of course there are also capital expenses, but the balance goes into the Park District’s general fund (although part of the cost is municipal tax which presumably goes to the City).

Of course there are people complaining about the cost: “It saddens me to see these prices get to the point where some people have to reconsider whether they can afford to do it anymore. With the way the economy’s going, fewer people will be able to get into boating in the first place,” says one boater.

You will always get people complaining, on behalf of the poor, that their costs should be reduced. It is obvious that boaters are not poor people. If you don’t want to pay to keep your boat in Chicago, there are less expensive harbors at Waukegan, Winthrop Harbor, Michigan City, and elsewhere. There are cans and star docks (which I guess require one to row out to one’s yacht) for as little as $1200/year.

Henry George’s proposal is really this simple.  The community makes land valuable.  That value belongs to the community, who should collect it in the form of a periodic payment for the exclusive right to use a piece of it.  Even when the land is water.

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2 comments

  1. Thanks taxpayer. The community indeed creates the value. It’s nice to see others out there who are learning economics for the real world. Although it would be nice to see some of this revenue generated through resource value taxation returned to people in some form of Citizrn’s dividend much like the Alaska Permanent Fund. http://www.pfd.state.ak.us/index.aspx there’s nothing like a little incentive to get the ball rolling!

    Scott


  2. Good point. Last year, the Alaska dividend was $1106.96, which amount was given to virtually every permanent resident of Alaska (prisoners and some others excepted) as a share of the state’s mineral wealth. (The state collects royalties from natural gas, petroleum, etc., invests part of these in the stock market, and passes the dividends on to the people.)

    I don’t know all the politics behind the 1976 constitutional amendment that set up this arrangement, but I suspect it resulted from the special conditions: small population, big mineral wealth, payers being mainly large prosperous corporations.

    Mineral revenue also allows Alaska to maintain relatively low tax burden, with no state tax on personal income nor retail sales. See http://taxfoundation.org/research/topic/11.html

    One would expect that, given these benefits, the cost of real estate in Alaska is higher than it would otherwise be. I’m not aware of any studies looking at the issue. It would be a challenging research project, since Alaska is special in so many ways.



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