Who is Henry George? you might ask. A good question. A simple answer would be a 19th century printer who believed that a single tax on land would be an effective social liberator. As students of Urban Economics might recall, George argued that rises in land value (as distinct from the structures put on land) come largely from social rather than private investments; thus, such rises should be taxed and used to meet various public purposes.
In today’s Financial Times, Martin Wolf opines that we (at least policy makers in the US and UK) provide both cheap capital and insufficient taxation on these “unearned” increments in land value. Furthermore, he believes that such value increments should be taxed if we seek to avoid credit cycles of the sort we have recently experienced. One might view existent policies as the opposite of “think global, act local” since the resulting credit booms and busts (based on securitized loan packages sold to an integrated, world financial system) have spread well beyond their their initial homes. “Freemarketeer” Wolf, acting as a reincarnated “socialist” Henry George, sees the need to halt these land and credit cycles with a land increment tax.
As noted in my comment on Michael Spence’s opinion piece, also in today’s FT, in the previous LU Econblog entry, it’s not clear to me how political logic will help us to break these destructive cycles.