Archive for August, 2007

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Chicago area land value exceeds $1 trillion

August 30, 2007

Finally received Lincoln Institute’s new book Land Policies and Their Outcomes. David Barker (apparently of the University of Chicago) estimated land values for four metro areas by looking at vacant land sales. Assuming that each such sale represents the per-acre value of land in its immediate area, he finds that for the Chicago 8-county MSA total land value is $2.188 trillion. From this he deducts streets and concludes that the rest of the land is worth $1.872 trillion. Of course, not all of this could be subject to a land value tax, for instance public facilities and favored nonprofits are exempt. Still, it seems that the taxable value would exceed $1 trillion. And this doesn’t count all the other privileges which could be taxed without reducing productivity.

The paper does include a much lower estimate reached by an alternative method, but that method assumes land to be worth only the difference between the parcel price and the depreciated cost of building whatever is on it. And excludes vacant land. And has some other limitations.

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How the sinking rich brought prosperity

August 8, 2007

According to economic historian Gregory Clark, the industrial revolution occurred because people developed “the middle-class values of nonviolence, literacy, long working hours and a willingness to save…” And this happened because the poor lived in such wretched conditions that the rich out-reproduced them.  Not enough of the working class children survived to do the work, so  many children of the rich, carrying these “middle-class” values, ended up in the working class.  They carried the values with them: “Thrift, prudence, negotiation and hard work were becoming values for communities that previously had been spendthrift, impulsive, violent and leisure loving.” This made the industrial revolution possible.

That’s my summary of Nicholas Wade’s review in yesterday’s New York Times of Clark’s forthcoming “A Farewell to Alms” (to be published by Princeton University Press).  Apparently it’s based on a huge amount of detailed research.

It seems to contradict Georgist theory in a couple of ways.  First, Clark assumes that to some extent values are genetic, whereas George emphasized that people are pretty much identical everywhere, with social institutions explaining the main differences.  Second, it implies that the formula for prosperity is to let the children of the poor die, and make the rich kids work.  Well, maybe making the rich kids work wouldn’t be so bad.

Thanks to NewsTrust for bringing this to my attention.

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What’s missing from the Burnham Plan centennial

August 1, 2007

Folks around Chicago are getting ready to observe the centennial of Dan Burnham’s 1909 “Plan of Chicago.” We’ve all heard about it, but who has actually read it?

Not me, so I figured I would borrow a copy from the Chicago Public Library.  Not the 1909 original, of course, but there were reprints in 1970 and 1993.   But although CPL has several copies, apparently none of them circulate.  No problem, this is a 1909 document, so it should be free of copyright.  But as far as I can tell, nobody has placed it on-line.  Sounds like a good project for the Plan of Chicago Centennial Initiative

I did spend a little time reviewing a noncirculating copy.  There’s all kinds of wonderful stuff, but I focused on the final chapter.  “Legal Aspects of the Plan of Chicago,” by Walter L. Fisher, is where issues of financing are discussed.   Except for the railroad terminals, there was no indication of funding by anything other than the real estate tax, applied equally to land and improvements.  Fisher did note that, in some places, public authorities could acquire more land than needed for the improvement, and sell the surplus to help capture some of the benefit, but this wouldn’t be feasible in Chicago.

Thanks to Robert Piper for alerting me to this project.