Exploring Georgism: Reshaping Economic Equity and Development

Abstract
This paper delves into the socio-economic philosophy of Georgism. Georgism advocates for a single tax system based on the value of the land. While complete Georgism may face challenges due to preexisting policies, Georgist principles can be implemented by policymakers to benefit the economy. This paper goes over that and how it benefits the general population with something like Urban Sprawl. The paper discusses how Georgism incentivizes development and business growth and how these Georgist ideals came to be.

Introduction
Imagine a world where everyone had equal access to land and natural resources. Where poverty, cost of living, and pollution were drastically reduced. Welcome to the world of Georgism, a socio-economic philosophy that gives power to the land. Georgism refers to the idea developed by Henry George, that people should own the products that they produce, however, labor, natural resources, and land are owned by all members of society and thus taxed, known as a single tax system. Although, at its core, this version of Georgism would not be completely possible, cities could meet in the middle to better the state of the socioeconomic state. A change like this could completely change the economic landscape and it is important to be educated on possible changes if Georgism was introduced. This paper is designed for policymakers, economists, and citizens to hear and consider the workings of Georgism and its potential to reshape an economic system.
While this offers a compelling vision for equal land distribution in society, its complete implementation faces challenges due to the pre-existing private land ownership systems and the taxation that comes with them. However, policymakers can adopt measures inspired by Georgist principles to move towards a possibly more sustainable economic system. The Georgist economic system has many implications including an improved distribution of resources and environmental sustainability. It requires more attention because of its potential to address economic imbalances, foster new development, and reshape the economic landscape as a whole.

Current Issues
In recent years, cities have faced many economic challenges, ranging from a declining revenue stream in a city as big as Detroit ("Detroit wants to"), to an increase in urban sprawl in suburban areas (Behnisch et al.). As economic challenges emerge, some economists are looking at Georgist economic principles as an alternative solution. Georgism suggests taxing only the value of the land instead of buildings, which offers potential economic benefits. However, its implementation and logistics bring concerns. Both sides of the topic need to be examined carefully.

What is Georgism?
Georgism is a socio-ecomomic philosophy that was developed in the late 19th century. This advocates a unique approach to taxation of land ownership by proposing the concept of a single tax on the value of the land itself. Not the buildings or infrastructure. The idea behind it is to make land and wealth more equally distributed throughout the community, making housing more available and boost more income with the incentive of paying back the taxes.

The Appeal
The primary positive of Georgism is its ability to allow for more business growth and reduce the cost of living. A report from The Economist documents Detroit’s consideration of a Georgism framework to recover from its debt. Within the documentation, the city sees a huge benefit in this system and claims that the cost of living would be significantly reduced and that 97% of homeowners would receive a tax cut. As far as the city’s view on stimulating business growth with this framework, they argue that a lower tax rate will encourage more investments in properties ("Detroit wants to"). The article explains that taxing land instead of buildings encourages more businesses to form and thus generate more revenue for the city making the cost of living lower. In theory, a Georgist framework is a win-win for the city and citizens and this could help the city recover from its lack of funds.
Moreover, Georgism has the potential to support more vibrant urban environments by incentivizing efficient land use and addressing issues such as land speculation. Land speculation is an investment strategy where an individual or company purchases a piece of land solely to hold out on it until one can make a profit from its appreciation in value (Predin). Because they never have the intent of developing the property to better the area, the strategy results in vacant lots of land and lowers proper development in a community. According to the data firm, Regrid, land speculation is especially high in Detroit. However, Georgism offers a promising solution to mitigate land speculation and promote better urban development ("Detroit wants to"). This is because one of the key ideas of Georgism is that promotes more productive land use by encouraging landowners to utilize land more efficiently since the tax burden is based on the value of the land. There is a huge incentive to own a business that people want rather than sitting on an abandoned property until one can make a profit.

Uncertainty
There are a lot of things to consider when making a major economic change which causes some doubt and uncertainty. For instance, a transition to a Georgism framework might need a good amount of time for people to adjust. A research paper from George Mason University explains that this hesitancy in adjustment from the masses is evident when governments are willing to substantially change their property rights to a certain demographic, leading to an additional change in expectations (Gochenour, Caplan, 12). Regime uncertainty, or policy uncertainty, is when there is doubt from the government and concern that a big economic change would do more harm than good (Ruoyun, Yang). This would be a concern when it comes to adopting Georgism as many questions come up when it comes to making a change like that i.e. “Would a Land Value Tax create enough funds for the city?”.

Effect on the General Population
Implementing a land value tax would help tackle urban sprawl in cities. As proposed by Spencer Banzhaf’s research, his findings indicate that a single tax system, coming from Georgist principles, can lead to smarter growth patterns and leading to denser development as an outcome (Banzhaf). A researcher from Santa Monica, Roland Sturm, found that areas with a higher sprawl score, experience more diseases or other health issues. For example, data indicates that conditions like asthma and allergies show higher prevalence in an area with a sprawling score of 150 than in an area with a score of 50. A sprawl score is a common measurement of urban sprawl; the higher the sprawl score is, the more spread out the population is, and vice versa. (Sturm). This research indicates that a focus on urban sprawl would be an appropriate approach to tackling public health due to the correlation between health issues and sprawl scores. Because Georgism incentivizes denser populations and has a close correlation with physical health, it has a significant effect on the general population.

History of Issue
On Brompton Road in London, there lies an abandoned tube station. An article from The Independent depicts negotiations for the purchase of this land. Note the use of the word land and not the word building. The tube station was purchased by a Ukrainian billionaire, named Dmytro Firtash, in May 2014. What has Mr. Firtash done with his £53,000,000 property? He has done nothing with it. The Guardian reports that the tube station has since stayed vacant as of 2017. Mr. Firtash will make a significant profit from doing nothing. This is only one example of the issue in the modern era, however, it is an issue of this likeness that inspired Henry George and the proposal of his Land Value Tax.

Henry George’s Goal
The original goal of Georgism is traced to its founder: Henry George. Henry George is an American economist who spoke out on topics regarding economic inequalities and land ownership. His published book from 1879, Progress and Poverty, argues that land is a finite resource that could belong to the community as a whole rather than going to waste. This system is built on the idea of having one tax that taxes based on the value of land. According to Henry George, the single tax would encapsulate the notion that labor or capital are unearned resources. At the core of it all, Georgism aims to promote a more equitable distribution of wealth to the population (George, 4).

History of Henry George
Henry George, born on September 2nd, 1839, in Philadelphia, Pennsylvania, lived a significantly influential life led by remarkable and diverse life experiences that shaped his beliefs and influence. Raised in a modest household, Henry received an incomplete education, attending formal education, however, never completed high school (Mille). Nevertheless, he never gave up on learning and being persistent with his curiosity. Throughout his life, he had seen many economic inequalities. One of the earliest examples in his life was his journey to Australia at the age of 16, which allowed him to experience firsthand the hardships of the economic instability during the depression of the 1850s. This early exposure to economic inequalities changed his views of the world and laid the foundation for his future work (Nock). Henry George continued to travel around the world, eventually ending up in San Francisco. It was there that he experienced some epiphanies that would shape his study of economics. His time in San Francisco was miserable; with a second child on the way and unable to find a job, he wondered why the depression that he had seen across the world kept happening. He started a newspaper called the San Francisco Daily Evening Post, where his Land Value Tax idea first started getting written down. Unfortunately, he had little success making money for his family and eventually ended up in New York City. This would be where he published his best-known work that gained him his notoriety, Progress, and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth: The Remedy (Nock).

Popularity
In 1979, after the publishing of his book Progress and Poverty, it still gained little notoriety for months, despite a major effort to get it published. However, the book was translated into German where it did better with reviews. However, it wasn’t until the Irish Rent War that he would receive his notoriety. Ireland was a very highly discussed topic in the press at the time, and Henry George decided to publish a pamphlet regarding possible solutions there are in Ireland (Nock). This would get his name out in the United States and eventually, he became a worldwide influence. Progress and Poverty sold approximately 2,000,000 copies worldwide and became a bestseller title (“Excerpt from Henry”).

Perspectives
The implementation of some Georgist principles has already occurred within cities and towns across the world, best known as a split-rate tax. The Federal Bank of Chicago explains that a split-rate tax entails two separate kinds of land taxes. There is one on the land itself and one for the improvements of the property. In doing this, land taxes could be on the higher end, however, development would be taxed at a much lower rate. This can be seen as a way to incentivize development which is a key idea of Georgism (Kepner, Mattoon). Furthermore, many more places have adopted systems inspired by Georgism, as opposed to adopting it as a whole, thus still giving researchers a glimpse into its weaknesses and viability.

Pennsylvania
The case of Pittsburgh presents a significant shift in the implementation of Geogist principles within tax systems. In 1913, Pittsburgh adopted the split-rate tax supported land value taxation for many years, and combated land speculation in the city exceptionally well. However, in 2001, Pittsburgh retracted its split-rate tax led to a massive revaluation of land value tax ideas and how viable they were (Hughes, 5). But why did this happen? The same report from The University of Pennsylvania, states that the abrupt stop of split-rate taxes was due to the ever-changing economic and political landscape. The tax system had a great deal of speculation throughout its entire life span, even dating back to the first new mayor of Pittsburgh in 1914. Mayor Tom Murphy’s decision in November 2000 to create imbalanced tax rates, supported by the city council, was a crucial turning point. The people of Pittsburgh who had concerns of land value taxation to begin with, had heightened skepticism after the decision was made by the Mayor. Ultimately, the situation eventually led to the removal of land value taxation in Pittsburgh (Hughes, 11).

Alaska
Alaska created the Alaka Permanent Fund in response to the oil boom of the 1970s, demonstrating a commitment to resouce management and ensuring there is wealth for future generations. Alaskans established the fund to preserve oil revenues for future use, which reflects Georgist ideas to preserve the oil for themselves rather than the government the oil with no repercussions (Alaska Permanent Fund Corporation). Economist, Joseph Stiglitz, emphasizes the importance of pricing scarce resources to their true value. By capturing the opportunity cost associated with limited resources like oil, the fund generates revenue to address poverty and fund public goods. (Batt, 48). Once again, this aligns with the ideals of Georgism by using rent on scarce resources to promote equality.

Analysis
Optimal Solution
The arguments regarding the adoption of Georgism all have their positives and negatives. By logic, this leaves a case of asking for a happy medium. Meeting in the middle would be the better option, because the amount of change implementing Georgism on a large scale, would cause too large of a shock because the system was not there from the beginning. Citizens will be divided or confused. A perspective from the New York Times states that the fundamental version of Georgism is unrealistic, however looking at it from a broader framework would be much more viable and useful (Dougherty). A broader framework implementation could be an adoption of some principles but not a complete overhaul of the taxing system. The government could implement a hybrid between Georgism and traditional land taxes. Doing so would improve land and fix some of the problems that we have right now. Additionally switching over would require education to the public to ensure everyone is aware of what is changing and possibly put some concerns to rest and to highlight the positives of what is to come out of this.

Conclusion
The Georgist economic system hopes to improve resource distribution and promote economic stability whilst promoting fewer inequalities and many factors of society such as housing. Given its potential to address these issues and stimulate development, Georgism deserves more consideration. Georgism offers the ability to rescue a city as big as Detroit from major debt and help solve the land speculation problem within major cities. However, Georgism isn’t too prevalent due to the uncertainties of making a large economic change like that as seen in the case of Pittsburgh. Acknowledging the challenges and benefits, a middle ground would be more suitable to implement in the current socioeconomic state. Because of this, I urge you as the reader to advocate for informed discussions to educate more people on possible solutions to economic issues. This encourages policymakers to take more action to address these problems with educated decision making to pave the way for a more prosperous future in society.

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