The following is a two part posting:


First, let us consider “takings” – the use of eminent domain to create functional human settlement patterns. This topic was stirred up by the New London Hotel Case in the Supreme Court last June and was discussed at length last week on this blog:

(Before we start, yes this post is spilling more ink on the topic of “takings.” It is presented in the hope that it will lead to the spilling less ink on a whole range of issues as noted in PART TWO below.)

The problems and solutions raised by the recent series of postings and comments on the topic of eminent domain (26 Jan 2006 6:40 AM “BB&T Ahead of the Curve,” 27 Jan 2006 1:10 PM “Who Really Profits” and 27 Jan 2006 5:54 PM “Anonymous Graffiti and Cheap Shots” provide the basis for an important observation:

There is a solution that is completely unrelated to the emotional diatribes over “taking the poor widows house” and “property value/property rights.” This long overdue reform would cause most of the legitimate settlement pattern reasons to use eminent domain to disappear.

With the vast majority of the takings cases never coming up, it would be easier to develop a fair and equitable way to deal with the hard cases where balancing public rights and private rights is really the question.

Most of the cases where those concerned with the evolution of functional human settlement patterns would suggest use of eminent domain involve avoiding obscene monetary windfalls and preventing “real estate interests” from playing dog-in-the-manger with vacant and underutilized land until they are bought out. See “Who Really Pays” posted at 1:10 PM on 27 January.

The bottom line is that the current practice causes disaggregation and scatteration of human settlement pattern that cannot be sustained. Civilization depends on the evolution of Balanced Communities in sustainable New Urban Regions.

The “solution” (or at least a major step forward for vacant and underutilized land that triggers the need for the use of eminent domain)? We give you two words: Henry George.

Not two guys named “Henry” and “George” but one named Henry George. Mr. George was a 19th century “newspaper man” cum land economist why proposed a reform so simple, so logical and so powerful that he became a cult figure and was run out of the country by land speculation interests. If you do not already know a lot about Henry George, Google him.

In a nutshell, George argued that the property tax on land and improvements should be reformed to tax land and not tax improvements within the Clear Edge.

The George thesis is based on the reality that land has almost no value for urban land uses unless there is extensive public investment. The reasons why governments exist in the first place is the core issue here. Governments are formed to protect citizen’s heath, safety and welfare. Economic prosperity and social stability sustainability depend on enlightened government actions.

Stability – security and safety – provided or insured by the governance structure is required for functional markets in land and goods as well as for personal safety. Without these protections, there is no urban life and so no demand for urban land uses.

Mobility and access – roads, rails, pedestrian ways and the rights to use them are critical government contributions to urban civilization.

Of course, there are the “public utilities:” water, sewer, stormwater management, electricity, gas, telephone, cable, wireless, etc. are critical. There are forty plus or minus goods and services that make urban life possible and most are provided by or regulated by the governance structure.

If land owners each paid their fair share of the cost of providing those services regardless of what they built on the land, then almost no one would keep land vacant and underutilized as a strategy to secure future speculative profit. In addition, the public would not have to waste resources extending services, either directly (by paying for extensions e.g. roads and sewers) or indirectly (e.g consumers paying higher electric or cable rates).

(It goes without saying that those who own land outside the urban service area would pay far less than they pay now. There is some debate about the details of tax treatment in the Countryside but none inside the Clear Edge where the eminent domain problem is focused.)

Running urban services past vacant and underutilized land is very expensive. If you do not think this is the case, try a factor of 10. It is ten times more expensive to provide basic urban life support to dysfunctional human settlement patterns that it is to provide the same services to functional settlement patterns. That is the 10X Natural Law of Human Settlement Patterns and only address those services at the Alpha Neighborhood scale.

If the Henry George tax reform were implemented, it would wipe out most of the reasons to use eminent domain to aid the evolution of functional human settlement patterns that we have cited in the postings noted above and in previous discussion of eminent domain (See posting on this blog “New London Hotel Panic,” 23 June 2005.)


Now for the real reason for this posting:

Why not deal with all the social and political wedge issues that stir up partisans by focusing attention on a constructive way to solve the underlying problem rather than a knee jerk rush to a pandering “constitutional amendment” solutions that only addresses the surface condition and not the root cause?

In the case of the “do not raise taxes” issues the root cause can be gleaned from the Friday post and comments that dredged up the “bond rating crisis” (CA’s AAA Bond Rating Controversy: A Look Back,” 3:48 PM 2 Feb 2006).

The core problem is failure to allow the governance structure to evolve so that:

A The governance structure reflects the economic, social and physical reality of human settlement patterns, and

B The level of control is the level of impact

If governments evolved and were not moribund within ancient boundaries and saddled with outdated organizational structures citizens could understand and intelligently provide guidance for governance practitioners.

From time to time we will point out the underlying issue that plague discussion of:

Teen drivers auto accidents

Low public school test scores

And other issues directly related to human settlement pattern.


Share this article


(comments below)


(comments below)



  1. Sorry to post off-topic, but I have been reading this blog for a while now and decided to venture out on my own. Looking for people in the Shenandoah Valley who might be interested in joining.

    Keep up the good work!!

    Here is the link:



  2. Ray Hyde Avatar

    I seriously doubt Henry George ever used the words Clear Edge.

    He argued that speculation increased the value of rent beyond the margin of production and thus depressed labor. He argued that confiscation of the rent through land value taxation would do away with speculation.

    Notice the word confiscation.

    Henry George was long on theory and short on facts, many of which are the result of research by economists since the 1800’s. His theories are now largely discredited, principally by the journal “The Economist”.

    His idea on land taxation was that land fundamentally belonged to the people and so rent charged for its use should go to public funds: that profit that came from the land was somehow unearned income.

    The idea that land has almost no value for urban land uses unless there is extensive public investment ignores the fact that there is no reason for the public investment without the private investment that both precedes and follows it.

    That idea is without merit and it misrepresents George’s arguments. Among other things George argued that the Irish potato famine could have been avoided if the countryside got fair rent for the land values provided to the city.

    Consider someone who is far sighted enough to own land where you say it is most valuable, in the city. This is an area where infrastructure has been allowed to decay and thus become a slum. It becomes the proposed site of a new baseball stadium, which is a crazy quilt combination of public utility and private profits. Now, our owner has held the land and paid taxes on it by renting it out to whatever businesses could tolerate such poor conditions.

    A stadium need a lot of land and a lot of customers. Such a parcel is going to be expensive and that is why individual owners can afford only a small plot, such as our friend. But he has owned the land for years, maybe generations, subsisting on what it can generate, and paying taxes for services he doesn’t get. In this respect he is no different from many farmers.

    If the market suddenly changes because someone wants a baseball stadium, or country homes, that is not his fault: he didn’t create the market. For that reason it is unfair and disingenuous to call him a speculator. He has invested in the land and maintained it for years, maybe with little or no profit. If he gets a big profit at the end, then he is no different from a forester who gets nothing for decades, and then sells his timber when the price is highest.

    Suppose he formed a corporation and signed up all his adjoining neighbors as partners for the purpose of assembling a large parcel. He would be entitled to the value of the assembled land, which is different from the value of the individual parcels, land and to the value of the labor to create the corporation. In that case he would have created the property and he would clearly be entitled to what he could sell it for. He would have to take the risk that some owner would come along and pay the price.

    Instead, an outside corporation is formed, which enjoins the government to obtain the land at the individual parcel prices, and then hand the large parcel over to the corporation. What has occurred here is that the value of the assemblage has been stolen. Why our owner take the risk of making the assemblage if he knows that the baseball corporation can get the land some other way?

    You can’t argue that society is better off through eminent domain unless you subtract the loss occurred by individuals who couldn’t get the true going price.

    Taking land and turning it over to some one else, just so you can get more taxes, is government sanctioned stealing.

    Henry George would turn over in his grave, because he promoted his policies on the basis of greater distribution of wealth, not to concentrate more of it in the hands of capitalists.

  3. Ray Hyde Avatar

    The District Government is doing for Major League Baseball what MLB could not do on its own, taking private property in a prime location in the city and displacing people who have lived and worked their for decades. All in the name of a new baseball stadium.
    Scandalous. Truly scandalous.


  4. Jim Bacon Avatar

    The beauty of the “Henry George” idea — tax land, not improvements — is its simplicity. First, it won’t take an army of bureaucrats to administer. Indeed, it can be administered with the existing local government apparatus. Second, it reforms land use patterns by changing incentives — not through command and control.

    Furthermore, the Henry George solution is an eloquent solution in that property owners pay taxes largely in proportion to which their land increases in value through public investment. Landowners aren’t penalized for making improvements (a good thing), and they aren’t rewarded for holding land off the market (a bad thing).

    The one complication I foresee is establishing the “clear edge.” How is that determined. Given the fact that there is not, at present, anything resembling a clear edge, where would it be? And who would choose the demarcation line?

  5. Ray Hyde Avatar

    If this is such a good idea, why hasn’t it been adopted in 200 years? Is it because it has been thoroughly discredited by economists, or because it gets rid of an army of bureaucrats?

    There is no reason for the Clear Edge. That construct is a figment of the imagination. If this or any other system were to work by incentive, don’t you suppose there is a wide gradation in their effect?

  6. Agitator Avatar

    The idea of a Republic was such a bad idea that it was abandoned for almost two millinea, only to be taken up on a lark by those pesky American white, landholders known as the Founding Fathers, but then what did they know?

    Ideas can’t be discounted merely on the idea that they are “old”

  7. Ray Hyde Avatar

    Point taken. I guess I won’t hold my breath for the HG solution to take hold.

  8. E M Risse Avatar


    Turns out that if one applies the five natural laws, the Clear Edge would be easy to define and would be supported with emperical data.

    The Fifth Law (The 87 1/2 % Rule) documents that in spite of all the existing subsides and bad municipal, state and federal policy, most citizens alread live and work at densities and in patterns at the unit, dooryard and cluster scales that would create functional, Balanced Communties inside the Clear Edge. The problem is scatteration of these components and the amount of vacant and underutilized land between the components.

    Further, from air photos, due to the same factors that result in the 87 1/2 % Rule, one can define the probable location of the Clear Edge.

    Finally, the Clear Edge would evolve naturally with no regulation if all 40 +/- location variable services and goods were paid for at their real cost in a free market.


    Nice point about new ideas but Henry George does not have to wait 2000 years. New Zealand and Austrialia both follow the George pratice of land taxation — and both have much sharper Clear Edges.

    George had more impact in “The” Commonwealth than in the Commonwealth of Virginia. He was better recieved in London than in New York. In spite of this there are a number of applications in the Commonwealth of Pennsylvania. An active “two tier tax” advocacy group exists in the Federal District.

    Google Henry George to find out for yourself that much of the earlier post about the downsides of George is not based on fact.

    Almost without exception the original and the current George detractors are ones who now make, or hope to make, a lot of money from land speculation and from creating dysfunctional human settlement patterns.

    The most angry attacks come from those who own vacant and underutilize land inside the Clear Edge and those who want to develop land for urban uses outside of the many Clear Edges that do or should exist in the Countryside. We address this issue in our 26 May 2003 column at Bacons Rebellion “Beyond the Clear Edge.”

    All: The larger point of the post is that a sustainable future requires that citizens get to the bottom of issues, not beat one another with easy to toss out smoke bombs to obscure their true motives.


  9. Ray Hyde Avatar

    I stand corrected on the application of his policies: I’ll read up on Australia and New Zealand.

    One reason that New Zealand has a more successfully defended its open space is that they have recognized the value of open space and landowners are compensated for “environmental services” over and above their agricultural subsidies. It is probably an oversimplification to attribute all of their success to George.

    If open space is profitable, then there is no need to convert it.

    I still doubt that George ever said anything about his policies and a supposed clear edge.

    I’m sorry, but I simply refuse to acknowledge the five-natural-laws-as-invented-by-EMR. Aren’t the urbanized islands of development, or urban villages concept both an acknowledgement and a repudiation of your ideas? Don’t they require both some sort of an edge and also vacant and underutilized land in between?

    Assuming you are going to tax land on its value, how do you determine the value without a market? What would encourage someone to invest in improvements to the land if he thought they might be condemned in favor of some “better” improvement? Who decides what is “better” or “underutilized”?

    Why is investing in land any different from investing in any other asset that you hope will grow in value? What is the point of denigrating anyone who hopes to make a profit or calling every homeowner a speculator? Combined with your constant refrain of what is in the public benefit, that kind of talk sounds like borderline socialism.

    Indeed, Henry George did have more impact in England. George Bernard Shaw recounts how he and several others were converted to socialism after hearing George speak.

    George himself was not a socialist, however George did think that private ownership of land was not only wrong, but preposterous.

    That may very well be, but since the government has granted rights in land ownership, it will be very difficult to regain those rights for itself, unless it buys the land. This is exactly the proposition I have advanced: if the government wants to control the land, then its citizens are certainly free to tax themselves sufficiently to buy the land out from under their feet.

    It is all well and good to postulate on what should be. It is an entirely different matter to find a method by which it can occur that is politically and economically possible. So far, promoting various forms of socialism as a remedy for all our ills has failed to prevent people from getting richer.

    I don’t see that casting aspersions on their motives does much to advance your arguments. As for my comments on George, I’d be happy to provide the references and folks can examine their veracity for themselves.

  10. Jim Bacon Avatar

    Ray, you’re missing the point in getting hung up on Henry George. Nobody’s proposing revivifying George’s entire corpus of theory and applying it today. Ed Risse is merely noting that the idea of taxing land only — as opposed to taxing both land and improvements — is an idea that originated with George. Clearly, that core idea needs to be updated for 21st-century transportation technologies and settlement patterns.

    You should focus your argument on the merits of taxing land as opposed to improvements, not rail against ideas that nobody is advocating.

  11. Ray Hyde Avatar

    I stand by my comments. Henry George was a gas meter reader who stirred up a lot of controversy, but whose ideas went nowhere then, and have less likliehood of going anywhere now.

    Ed suggested George’s ideas as a solution, and that sounds like advocacy to me. I didn’t bring him up, but my ideas about him are far different from EMR’s. The comments I made are verifiable from other sources. If Ed thinks they are untrue, he can offer his evidence and argue against the authors: it’s no skin off my nose.

    I have offered to investigate those places where his ideas apparently have taken some root. Hardly what I call railing.

    You yourself said you disagreed with Ed on his position concerning eminent domain and land ownership was a fundamental condition of our society. (I don’t remember your words exactly). George on the other hand opposed land ownership entirely, although he recognized it as a fact.

    He never explained how you could value the land without a market, or how you would separate the value created by society from the value created by the owner. We have enough problems with valuations based on the market.

    We are still having the discussion about public values and private values, which raises an interesting question I have pointed out before. EMR and George think the value of the land comes primarily from the public investment in infrastructure. But now we are engaged in a process of requiring developers to pay full cost for their own infrastructure, which will invalidate George’s argument abut where land value comes from.

    It seems to me that if we go down that route we will lose all control over building plans, and developers might even lay claim to ownership of the infrastructure. Imagine wall to wall gated communities where you have to pay a toll to pass through. And some would advocate that we turn over our interstates and make them long skinny gated communities controlled by our private enterprise partners.

    Then there is your contention that holding land off the market is bad. That is a pure value judgement, same as calling land investors speculators. If you tax the land and not the structures, then I’d want to put up stuff all over the farm: I don’t suppose you would say that is a good thing, so what are we going to have, different tax structures for urban and rural areas?

    I think the only thing that should be taxed is commerce: exchange of money for labor or goods. The only thing that pays for anything is the flow of money. We should rejoice for those who make ungodly profits, and take our public share. If a speculator makes good, it is because he made a fair deal with someone who thought they were getting what they want at a price they could pay, otherwise the deal wouldn’t occur and the speculator would either wait longer or accept a lower price. We should thank him for his service in making the most money possible, and take our public share of the transaction.

    Urban areas cost a lot more to maintain and administer, and they also provide a lions share of the commerce, so this is a method whereby they can pay their own full allocated costs for their choice of location.

    Last year I built a barn from lumber cut by myself from my own timber. The only commerce was what I paid for the nails and the tin for the roof. I don’t think I owe anyone any tax on that structure, except for the nails and the tin, which I paid. Eventually I will sell the structure, and then you can collect the tax.

    Instead, I will get taxed for it every year it stands there, and by the time I sell it, I’ll be lucky to recover what I’ve paid in taxes on my own labor. But when I sell it I’ll still pay tax on the difference between what it cost and what it sells for.

    I’m sorry, in my opinion the land tax was a dumb idea then and a dumb idea now, whether it includes the structure or not.

    The only thing I’ve got to pay tax with is my income. By building that barn I have effectively lowered my income for as long as it stands, and you are right, that is bad policy. You are welcome to tax my income, but whatever I buy with what’s left is mine and the government shouldn’t be allowed to get their grubby hands on it again, unless I sell it for a profit.

    We don’t know how to separate the value of the land, the structure, the infrastructure, the location, and the external amenities or disamenities. But we know what it was bought and sold for, so we can get the profit easily. There is a plan that would liberate a whole bunch of bureaucrats.

    BTW, in case you missed it, I was arguing against George as a proxy.

  12. Jim Bacon Avatar

    Ray, you asked, “So what are we going to have, different tax structures for urban and rural areas?”

    Yes, that’s precisely the idea. That’s the point of the clear edge. Inside the clear edge, you tax land. Outside the clear edge, you tax land and improvements. That encourages intensive development inside the clear edge and non-intensive land uses, like farming and forestry, outside the clear edge.

    Frankly, I don’t care about Henry George. Instead of labeling the tax system the “Henry George” system, label it the “Australian” system or the “Kiwi” system.

    The American system for taxation was devised in the 19th century (or maybe earlier) as a proxy for taxing wealth. The guy with the bigger house, who was presumably richer than everyone else, paid the most in taxes. We have much more efficient ways of taxing wealth now. It’s called the income tax. We also have very different patterns of development than we did in the 19th century. Our current system of taxing real property is an outmoded artifact of history. We need to change it.

  13. Ray Hyde Avatar

    That is the wrong answer. You don’t get to promote what you want and where you want it unless you are willing to pay people to do what you want them to. It comes down to pay or force. You simply cannot expect a farmer to continue farming when the land prices make it uneconomical. And he doesn’t control the land prices or his destiny. You cannot expect a developer to provide infrastructure or affordable housing, unless he gets paid for it.

    Neither one of those guys is going to work “for the public benefit” unless they get paid. If you apply force, they will fight back, as the developers lobbies do. So the only question you have to answer is whether the public benefit is worth what you will have to pay. Everybody is in favor of the public benefit when you can steal it and not have to pay the price.

    You can, of course, artificially depress the land prices in the countryside through zoning, but don’t expect him to thank you for your “help”, because it is going to affect his economic well being. I spoke to a farmer in the Valley last weekend, and he said he thought it was time to get out before the rules get worse and tie his hands. The combination of inconsistency, incrementalism, and unfairness is making the environmental movement suspect among those they most need to recruit.

    Waving his hands up and down as if weighing two balls he said “My wife and I talk about it: 400 head of cattle or 4-5 million dollars.”

    If you want to encourage non-intensive uses you will have to make it as profitable as the alternative, or it won’t happen, unless you are willing to apply force.

    As last years article by an environmental advocate said “Don’t Zone the Scenery, Buy It.” In other words, put your money where your mouth is, if you expect results. My consistent message here has been that you are promoting methods that won’t work, because you are promoting methods that are “Free, No Cost”.

    If you really want to achieve the objectives you proclaim, you are going to need other methods, and they are going to cost money.

    I’ll agree real estate tax is outmoded: we need to get rid of it and tax commerce only: only cash pays the bills. If someone insists on some socialist agenda, then you can make the tax progressive.

    On one hand you say a single land tax will eliminate bureaucrats, but then we find out the assessments are far more complicated than we know how to do, and we need two entire tax systems to promote a dubious goal (Clear Edge), when we know the plan a) won’t work and b) Like George, will never be implemented.

    Save your time and breath and go find a plan that you can afford, can implement, and that works at least a little bit. A couple of weeks ago a woman wrote to the paper suggesting a mandatory county conservation corps under which everyone would provide forty hours of labor a year: like the old colonial road building plan.

    Now that, I could live with. If I had ten members of the public show up every weekend to help me maintain the farm “for the public benefit”, I could work them half to death for the forseeable future, and maybe even make some money.

    But if you think even that plan is “Free, No cost”, then think again.

  14. E M Risse Avatar

    Let us wrap up this discussion of Overarching Solutions for now.

    As we note in The Shape of the Future, before Overarching Solutions for dysfunctions rooted in human settlement patterns can be intelligently discussed there must exist both an agreed to Vocabulary and an a comprehensive Conceptual Framework for discussion.

    First Vocabulary:

    Jim is right. The issue is not Henry George and whether he slept with the mayors old girlfriend to get a job as a meter reader. The issue is that the system which George is credited with first articulating – tax the land not the buildings inside the Clear Edge (to use the vocabulary we have developed) – is a very effective way to insure the public costs of creating value in land for urban use is fairly allocated. Jim Bacon has made this very clear in his comments.

    If implemented, the “George” idea would have a range of beneficial impacts. One would be to eliminate the need for eminent domain in may cases.

    Second Conceptual Framework:

    It is not possible to discuss terrestrial navigation with someone who believes that the earth is flat. It is not possible to discuss celestial mechanics with someone who believes that the sun revolves around the earth. It is not possible to discuss physics with someone who believes that malicious apples cause bumps on the head. It is not possible to discuss human settlement pattern with one who rejects without serious consideration or attempting to replicate the calculations upon which they are based, the Natural Laws derived from the agglomeration of human settlement patterns over the past 50 years.

    Three other notes:

    No one in their right mind would hold that the Federal District non-government, the process they have used to pursue a baseball team or public spending to build big stadia to benefit private interests are examples of how to improve human settlement patterns.

    What this experience does show is who profits from the current practice of attempting to evolving more functional settlement patterns in the Federal District, New London and elsewhere. There are tens of thousands of acres of vacant and underutilized land in Virginia. This fact is a root cause of mobility and access dysfunction and of the Housing Crisis. That all this land is vacant and underutilized is the result of failures of governance at the municipal, state and federal levels. This is the focus of PROPERTY DYNAMICS.

    We know of no regulation in the United States which prevents a citizen from developing original concepts based on experience and observation and to publish them. Those who have not studied the Five Natural Laws of Human Settlement Pattern will be able to acquire The Shape of the Future at Bacons Rebellion. They can flip to Chapter Four and see the derivation of the Laws and collect the data necessary to prove to themselves that these laws – and many other Laws related to human settlement patterns – exist and that these science-based relationships cannot be dismissed anymore than other laws of physics, geometry or biology.

    Finally, there appears to be no end to extent to which those who stand to gain from playing dog-in-the-manger inside the Clear Edge and those who want to profit from scattering urban land uses outside the Clear Edge will go to discredit a thoughtful dialogue on Overarching Solutions to human settlement pattern based dysfunction.


  15. Ray Hyde Avatar

    I didn’t know that Henry George slept with the mayors old girlfriend to get that job as a meter reader. It is possible to learn something from these discussions after all.

    We don’t know what the results of George’s ideas might have been: they were never implemented. I’m certain to my own satisfaction that what you call the five natural laws will never receive wide recognition either.

    But here is Hyde’s law based on experience and observation: If you want to accomplish anything, start with something that’s achievable.

    The first corollary is: If you expect someone to do what you want, plan on paying them enough to make it worthwhile: you accomplish nothing with a deal refused.

  16. Joshua Vincent Avatar
    Joshua Vincent

    I hate coming late to a thread, but Henry George is alive and well. Henry George is not the only economist that proposed the idea of a land tax either: Adam Smith, the Physiocrats, Ricardo, John Stuart Mill, William Vickrey, Milton Friedman…well, you get the idea.

    If you want to see a version of the land tax in action, you need not go to Australia and New Zealand. Harrisburg, Altoona, Allentown and other Pennsylvania cities have all adopted the land tax within the last 25 years. Allentown adopted the two-tier land tax by popular vote in 1996.

    In Maryland, the Baltimore Legislative delegation asked for the Assembly to give them the right to enact the land tax (quashed this year by the Chair of the Ways and Means Committee).

    In New Jersey, the Regional Plan Association – not exactly a wild-eyed bunch – has adopted land tax as part of their five-point plan to fund education and government while reducing tax burden on homeowners. http://www.rpa.org

    Opponents are usually absentee property owners, corporate welfare developers, and parking lot owners.

    Say what you will, but an idea that is liked by William Buckley and Pat Toomey (President of the Club for Growth)on one hand and Michael Kinsley and Ralph Nader on the other seems worthy of consideration, not out-of-hand dismissal.

Leave a Reply