Showing papers in "The American Journal of Economics and Sociology in 2001"

The Structure of Sprawl: Identifying and Characterizing Employment Centers in Polycentric Metropolitan Areas

Abstract: WILLIAM T. BOGART [*] ABSTRACT. This paper applies a consistent framework to four comparably sized metropolitan areas to identify and characterize their employment centers. Employment centers are identified as places that exceed a threshold employment density and a threshold employment level. They are also characterized as specializing on the basis of location quotient analysis. We find clear evidence of specialization in every employment center in the four metropolitan areas studied. Our interpretation is that what we are observing is a systematic change in metropolitan structure rather than a random sprawling of firms. We also find some evidence that the size distribution of employment centers follows the rank-size rule. This suggests that there is structure not only in the distribution of economic activity among the employment centers but also in their size distribution. Because less than 50 percent of metropolitan employment is within employment centers, future research should focus on understanding the more diffuse employment patterns. The rank-size rule gives some guidance as to the expected size distribution of employment throughout the metropolitan area. I Introduction The sweeping changes in metropolitan structure in the United States have led many to decry urban sprawl as a blight on the landscape. However, it is possible that much of this metropolitan decentralization has not been sprawl in the sense of random scattering of people and firms but rather a change in structure to reflect changing technology and preferences. A growing literature in urban economics looks for common features of decentralized metropolitan areas. This paper applies a consistent analytical framework to four comparably-sized metropolitan areas (Cleveland, Indianapolis, Portland, and St. Louis) to identify and characterize their employment centers. Employment centers are identified as places that exceed a threshold employment density and a threshold employment level. They are then characterized as specializing on the basis of location quotient analysis. If decentralization is occurring randomly, then we should find that some or all of the employment centers are not identified as specialized. We find, to the contrary, clear evidence of specialization in every employment center in these four metropolitan areas. There is also some evidence that the size distribution of employment centers follows the rank-size rule. Theoretical models of urban growth are now expected to generate the rank-size rule for city size distributions. Our finding that the rank-size rule holds for intrametropolitan size distributions suggests that it is possible that similar processes govern the growth and development of the parts of a metropolitan area as govern the growth and development of the metropolitan area as a whole. II Identifying Employment Centers An employment center is an area with both a high density and high quantity of employment. We use the transportation analysis zone (TAZ) as the geographical unit of analysis. A TAZ is composed of one or more census blocks, with the borders being supplied to the U.S. Census Bureau by the metropolitan planning organization in each metropolitan area. Our data are thus a snapshot of metropolitan structure in 1990. An interesting task for future research will be to link these snapshots (even at ten-year intervals) to better understand the dynamic processes driving metropolitan structure. The methodology developed by Giuliano and Small (1991) in their study of Los Angeles requires identifying TAZs with dense employment, combining adjacent employment-dense TAZs into groups, and measuring total employment in the groups. An employment center is defined as a cluster of contiguous TAZs, all with gross employment density exceeding some minimum D, and with total employment exceeding some minimum E. McMillen and McDonald (1998) and Bogart and Ferry (1999) use this methodology to study Chicago and Cleveland respectively. …

Leapfrogging, Urban Sprawl, and Growth Management: Phoenix, 1950–2000

Abstract: Through a case study of Phoenix, Arizona, this paper examines how urban sprawl is linked to opportunities for capital gains. It focuses on “leapfrogging,” in which developers skip over properties to obtain land at a lower price further out despite the existence of utilities and other infrastructure that could serve the bypassed parcels. The paper examines patterns of growth since 1950 and planners' efforts to structure that growth. It discusses two programs that addressed consequences of leapfrogging: development impact fees to help pay for infrastructure costs of new development and an Infill Housing Program to encourage residential development on vacant land. It concludes with a brief discussion of the future of growth management in Phoenix.

Collateralized Social Relations: The Social in Economic Calculation

Abstract: Traditionally, economists have viewed social relations as friction or impediments to exchange and have excluded social rela-tions from their analyses by assuming autonomous actors. Recently, however, a number of scholars -economists, sociologists, anthropologists, and other social scientists- have begun to discuss the numerous ways in which social arrangements both prompt and channel economic activity. Rational choice theory, social capital and network analysis, and agency and game theory, are among those approaches that consider the effects of social relations on economic action. In this paper we extend that discussion by arguing that social relations can function as collateral or assurance that an economic transaction will proceed as agreed by the parties involved. We review recent micro-economic theories and conjecture how they might be developed following this observation, which is derived from sociological and anthropological studies of economic action and organization

A City without Slums Urban Renewal, Public Housing, and Downtown Revitalization in Kansas City, Missouri

Abstract: Most scholarly efforts to understand the political economy of postwar urban redevelopment have typically viewed urban renewal and public housing as "housing" programs that originated with the "federal" government. Yet this view is problematic for two reasons. First, it fails to specify the key actors and organized interests, espe- cially real estate officials and downtown business elites, in the pro- grammatic design and implementation of urban renewal and public housing. Second, this view does not fully acknowledge the dislocating and segregative effects of urban renewal and public housing on cen- tral city neighborhoods and the role these private-public initiatives played in shaping demographic and population patterns in the post- war era. I draw upon archival data and newspaper articles, real estate industry documents, government reports, and interviews to examine the origin, local implementation, and segregative effects of urban re- newal and public housing in Kansas City, Missouri. I explore the role of the ideology of privatism—the underlying commitment by the pub- lic sector to enhancing the growth and prosperity of private institu- tions—in shaping the postwar "system" of urban economic develop- ment in which urban renewal and public housing were formulated and implemented. Focusing on the interlocking nature of race and class, I identify the critical links between urban renewal and public housing, and the long-term impact of these programs on metropolitan development in the decades after World War II.

Value Capture as a Policy Tool in Transportation Economics: An Exploration in Public Finance in the Tradition of Henry George

Abstract: H. WILLIAM BATT [*] ABSTRACT. Value capture is a means by which to finance capital infrastructure, particularly transportation services, in a way that allows for efficient economic performance, simple administration, financial justice, and social facility. Because American society needs to find new means to finance transportation capital investment, particularly public transit, value capture offers an essentially painless opportunity to achieve these goals. It has the ancillary benefit also of concentrating population densities in a way that makes public transit particularly viable. This study shows how value capture could have been used to finance a portion of the New York State Interstate Highway System, a nine-mile stretch of I-87 known as the Northway, from its southern terminus to the point where it crosses the Mohawk River in Albany County. This section is the most heavily traveled area of the Northway and has experienced the greatest contiguous development of any location along the Northway's 178 miles since its construct ion in the late 1950s. While the right of way and construction costs of this stretch were in the range of $128 million (current dollars), the additional land value that has been generated on its account within just two miles on either side has totaled $3.734 billion. This study shows that the capital finance of the Northway, at least in this area, could easily have been done by recapturing these windfall gains that fell to private landowners. One could argue that this added value, the direct result of public investment, should rightfully be returned to the public and should be recaptured to pay off the bonds that were issued to build the project, rather than left for opportunistic speculators to reap private gain. Value capture therefore offers a promising approach for funding future transportation development, leaving fees, that are presently used, to recover operating and environmental costs. I Introduction THIS STUDY EXPLORES how a large infrastructure investment in the Capital Region of New York State might have been financed through value capture with greater effect and benefit than the method that was used. As with every bit of the Interstate Highway System, the chosen method was the Highway Trust Fund, established in the 1950s, which relies upon motor fuel revenues to support both capital and maintenance costs. The cost shifting and the diversion of burdens which this approach entails has resulted in a transportation system that has been expensive, inefficient, and unbalanced. An alternate approach would have been to employ a method known as value capture. This method would have better balanced costs and benefits and also discouraged the over-consumption of infrastructure and land that we have witnessed under the existing approach. Although the interstate highway system is essentially complete and the only further costs involved for the most part are in its maintenance, value capture offers a convincing approach in ensuring that the highway systen will remain adequate to serve motor vehicle needs for the indefinite future. This can be done by the inducement it offers to capitalize on the land value created in the vicinity of the access and exit nodes, and the discouragement for speculators to continue holding their parcels off the market in expectation of future gains. Indeed, value capture can be an attractive means for the capital finance of future enterprises and infrastructure, particularly if the public elects to build transit projects to complement and redress our current over-reliance on private motor vehicle use. The record shows that the illustrations of value capture applied to date have been in the finance of public transit systems, not for highway service. But it can work for many infrastructure projects. II Motor Vehicle Ascendancy IN THE POST WORLD WAR II ERA, the pent-up consumer demand of the American population was nowhere more manifest than in the acquisition of motor vehicles. …

International Sister‐Cities: Bridging the Global‐Local Divide

Abstract: The growing emphasis on globalization has brought the analysis of global cities into sharp focus. The countervailing trend emphasizes the significance of the local. International sister-cities provide a site of analysis which illustrates the global-local interface and yet delves deeper. Providing an extension to an integrated approach to the study of sister-cities based on the multifold relationship between culture and commerce, this paper adds a further dimension by focusing on simultaneously operating multi-level entrepreneurial partnerships necessary to sustain active sister-city relationships. Drawing on New Zealand examples of twinning arrangements, it is demonstrated that the emergence and development of embedded partnership ties is vital to deriving sustainable economic and social benefits. A novel feature of this paper is the conceptualization of a hybrid form of entrepreneurialism, municipal-community entrepreneurship, which is argued as a valuable facilitator of the economic and social vibrancy of cities.

Persistent Advantage or Disadvantage?: Evidence in Support of the Intergenerational Drag Hypothesis

Abstract: By utilizing the Integrated Public Use Microdata Series (IPUMS) and a measure of occupational prestige (OCCSCORE) as a labor market outcome, the authors examine variations in the degree of labor market discrimination faced by several ethnic and racial groups in the United States between 1880 and 1990. Results demonstrate that the sharpest decline in labor market discrimination against blacks occurred between 1960 and 1980. For black males the extent of labor market discrimination was greater in all census years in IPUMS after 1880 until 1970, evidence contradicting the conventional expectation that market-based discrimination will decline progressively over time by dint of competitive pressure. Finally, after replicating George Borjas' ethnic capital exercise, the authors pool the 1880, 1900, and 1910 data to determine the relative magnitude of a group's gains and losses in occupational prestige due to group advantage or disadvan-tage in human capital endowments and due to favorable or unfavor-able treatment (nepotism or discrimination) of those endowments in the labor market. The authors then examine statistically whether the group human capital advantage or disadvantage and group exposure to nepotism or discrimination at the turn of the century affects labor market outcomes for their descendants today. Results indicate strong effects of the past on present labor market outcomes. Hence, the es-sence of the study is the statistical demonstration that there are significant and detectable effects on current generations of the labor market experiences of their racial/ethnic ancestors

Social Inequality and the Sociology of Life Style: Material and Cultural Aspects of Social Stratification

Abstract: The rising importance of dimensions such as age, gender, nationality, ethnicity, political attitudes, and multiple choices to organize the notion of “life course” has made the older class concept appear obsolete to the research sociologist. My thesis is that the current expanding discussions of lifestyles are not necessarily a substitute but a valuable supplement to social stratification theory. Lifestyle research can contribute to the question of the relevance of the class concept. The result of my investigation shows that lifestyle research, when connected to the writings of Thorstein Veblen, Georg Simmel, and Max Weber, can enrich research in the social sciences.

Zipf's Law for Cities and Beyond: The Case of Denmark

Abstract: Zipf's law for cities is one of the most conspicuous and ro- bust empirical facts in the social sciences. It says that for most coun- tries, the size distribution of cities must fit the power law: the number of cities with populations greater than S is inversely proportional to S. The present paper answers three questions related to Zipf's law: (1) does the Danish case refute Zipf's law for cities?, (2) what are the im- plications of Zipf's law for models of local growth?, and (3) do we have a Zipf's law for firms? Based on empirical data on the 61 largest Danish cities for year 2000, the answer to (1) is NO—the Danish case is not the exception which refutes Zipf's law. The consideration of (2) then leads to an empirical test of (3). The question of the existence of Zipf's law for firms is tested on a sample of 14,541 Danish production companies (the total population for 1997 with 10 employees or more). Based on the empirical evidence, the answer to (3) is YES in the sense that the growth pattern of Danish production companies follows a clean rank-size distribution consistent with Zipf's law. PREDICTION IN ECONOMICS, and in the social sciences generally, is a rather scarce commodity (Reder 1999) and perhaps an unattainable ideal (Aumann 2000). According to Aumann, the value of a good theory lies in its usefulness in structuring reasoning and, therefore, one empirical fact to be cited in favour of a theory is its diffusion in some population of scientists. In other words, the more use of a particular theory, the better. As Reder notes, economists tend to place higher value on tech- nique than content; clever theoretical ideas are valued over the assidu- ous gathering and careful presentation of data. And since mainstream

Modeling Agglomeration and Dispersion in City and Country: Gunnar Myrdal, François Perroux, and the New Economic Geography

Abstract: The new economic geography is a recent body of literature that seeks to explain how resources and production come to be concentrated spatially for reasons other than the standard geographic ones. Some authors outside the new economic geography have criticized it a simplistic, irrelevant, or passe. They claim it employs overly abstract analysis, prioritizes mathematical technique over realistic explanation, and is reminiscent of the much earlier worlds of Gunnar Myrdal and Francois Perroux - in comparison to which, however, it falls short. This paper investigates the similarities and differences between the new economic geography and the work of Myrdal and Perroux. It examines how the techniques of analysis and intuitive explanations of agglomeration compare between these economic sociologists and the new economic geographers. The paper highlights what has been gained and what has been lost by the new economic geographers, who generally eschew interdisciplinary study.

The Earth is the Lord’s

Abstract: George Bernard Shaw, in a letter written in 1905to Hamlin Garland, describes how, more than twenty years earlier, he had attended Henry Georgeʼsfirst platform appearance in London. He knew at once, he said, that the speaker must be an American, for four reasons: “Because he pronounced ʻnecessarilyʼ. . . with the accent on the third syllable instead of the first; because he was deliberately and intentionally oratorical, which is not customary among shy people like the English; because he spoke of Liberty, Justice,Truth,Natural Law, and other strange eighteenth-centurysuperstitions; and because he explained with great simplicityand sincerity the views of the Creator, who had gone completely out of fashion in London in the previous decade and had not been heard of there since.”

Crossing the Boundary of Economics and Sociology: The Case of Vilfredo Pareto

Abstract: The aim of this paper is to present the economic sociology of Vilfredo Pareto. It is argued that Pareto represents a mode of thinking that has not been used in economic sociology and barely considered in the other branches of sociology. The habitual bifurcation of Pareto into the economist and the sociologist is rejected. Pareto stresses the non-logical parts of human life, and he provides empirical examples of this in his writing. He was occupied with the dynamics in society as a result mainly of non-logical actions. It is shown how one may speak of a distinctly Paretian economic sociology, which primarily has its origin in his theoretical discussions. It is also shown that Pareto conducted empirical studies drawing from his version of economic sociology. Included is a presentation, as well as a discussion of Pareto's idea of rentiers and speculators, which is followed up by a more general discussion of economic types in the market.

Making the country work for the city: Von Thunen's ideas in geography, agricultural economics and the sociology of agriculture

Abstract: Von Thunen's Isolated State is a predictive model of how rural hinterlands organize agricultural production in relation to an urban center. Despite today's globalized food provisioning system, there are still some agricultural commodities that remain in US city hinterlands. The most prominent of these is milk. The spatial organization of dairying is therefore a topic in which von Thunen's notions of centrality are still pertinent. This paper will examine von Thunen and notions of centrality in the formulation of dairy policy in the US. His contribution has been very important to agricultural economists and agricultural geographers but less important to sociologists of agriculture, who see the spatial organization of food production around cities due as much to contingent, local political outcomes as to law-like notions of centrality.

The Long and Bumpy Road to Glass-Steagall Reform: A Historical and Evolutionary Analysis of Banking Legislation

Abstract: This paper focuses on understanding the role of interest groups and markets in influencing regulatory change. To that end, it first identities the interest groups surrounding the creation of legislation that separated commercial and investment banking in the 1930s and then identifies the interest groups involved in the more recent attempts to repeal the separation. Careful attention is also given to developments in the private market that affect the legislative process. This particular case study finds that existing orthodox economic and political science literature gives too much credit to interest groups and not enough credit to private market developments when analyzing policy development and reform.

Site Value Taxes and the Optimal Pricing of Public Services

Abstract: WILLIAM S. VICKREY (*) Introduction: Pricing Urban Services CITIES OWE THEIR existence to the presence of activities with economies of scale or density, and to transportation costs. With no transportation costs, activity would be scattered at random. With no economies of scale, all activity would be carried on in hamlets on a household scale to minimize transportation costs. In order to reduce transportation costs and take advantage of economies of scale, people live in dense settlements. Marginal Cost User Fees WITH BOTH ECONOMIES of scale and transport costs, it is efficient to organize economic activity unevenly over space, with cities being locations at which economic activity is concentrated. Decentralization of the efficient allocation requires pricing all goods and services, including public services, at short-run marginal social cost. The competitive free market is justified on the basis that it accomplishes this result for activities without economies of scale or where these economies are exhausted. For activities with economies of scale, pricing at marginal social cost will in general not cover total costs. A subsidy is then required if output is to be pushed to the point of taking full advantage of these economies. What should the source of the subsidy be? Here, I propose that the subsidy should be covered by a tax on site values--the value of urban locations. Marginal cost pricing of all goods and services, along with a tax on site values to finance the deficit of increasing returns activities, is both efficient and equitable. The mispricing of public services will reduce the potential benefits from urbanization. A subsidiary aim of this discussion is to examine how badly distorted the pricing of particular public services is in practice and what marginal cost pricing of these services would entail. Site Value Taxation IN ORDER TO permit marginal cost pricing of urban services, a subsidy is required to cover the fixed costs. The best source of that subsidy is revenue derived by taxing the rental value of land or sites. (2) That value is created in part by the very services for which the site value tax will pay. Taxes on site rents are therefore an efficient, equitable, and adequate method of subsidizing services that are priced at marginal cost. Site value taxation is nothing new. It is already a component of the property tax, which is actually two taxes in one. The property tax combines one of the best and one of the worst taxes we have. The portion of the tax that falls on sites or land values is the only major tax that is reasonably free of distortionary effects and is not intolerably regressive. The taxes on improvements and personal property are more difficult to assess properly. They impose excess burdens through undue discouragement of such investment. In the next section, I shall show how, under suitable assumptions, these urban site rents (over and above the rent on peripheral rural land) will be just sufficient, no more and no less, to provide the subsidies needed to supplement marginal cost pricing. Demonstrating the Principle with Models A Linear City Model In order to see why site value taxes are just adequate to subsidize urban services that are priced at marginal cost, let us consider a simple one-dimensional model. (3) Imagine a city laid out on a strip of oceanfront of uniform width. Imports can be landed and exports dispatched indifferently on any point on the frontage, but local (coastwise) transportation has a line-haul cost proportional to distance. Activities with economies of scale can be represented as having a fixed cost consisting of imports, variable costs consisting of imports, local outputs of other activities and land, all varying in proportion to output. If an activity wishes to increase the frontage it occupies, it will thereby increase the distance freight must be carried past this frontage, and require encroachment on the rural land at the edge of the city. …

On the Mythology of the Keynesian Multiplier: Unmasking the Myth and the Inadequacies of Some Earlier Criticisms

Abstract: JAMES C. W. AHIAKPOR (*) ABSTRACT. Keynes's multiplier story invites acceptance by building on the fact that people typically consume only a fraction of their income and that such purchases are incomes for sellers. By misrepresenting the classical definition of saving and the meaning of Say's Law, Keynes laid the grounds for extolling the virtues of consumption spending as determining income and employment growth. But the mythology of the multiplier story becomes clear when we ask, "From where do people find the means to purchase consumption goods, other than production?" The inadequacies of several earlier criticisms stem from their failure to focus on this fundamental point. I Introduction THE MULTIPLIER IS ONE OF THE MAIN building blocks of Keynes's aggregate demand management and income (employment) creation theory. Keynes (1936) focuses on consumption spending as the principal determinant of income growth, arguing that consumption releases purchasing power to producers and thereby validates their investment plans. Saving plays no positive role in supplying the funds for investment in Keynes's reasoning. He states, for example, "The investment market can become congested through the shortage of cash. It can never become congested through the shortage of saving" (1937:669), and "Saving has no special efficacy as compared with consumption, in releasing cash and restoring liquidity" (1938:321). Consumption spending thus is the means through which an initial amount of expenditure creates a multiplier effect. In a simplified model, [DELTA]Y = k[DELTA]Z = (1/s) [DELTA]Z where Y is nominal income (GDP), k is the multiplier, s is the marginal propensity to save, and Z is some "autonomous" expenditure , such as investment or government expenditure that does not depend on domestic savings. Keynes (1933, 1936), by his elaboration of Richard Kahn's earlier (1931) argument, thus exalts consumption spending to a magical significance in macroeconomic analysis, contrary to the classical emphasis on production and saving for investment in order to promote the growth of output and employment (Ahiakpor 1995). Such popular claims as "the current U.S. economic expansion is being driven by consumer spending" also reflects the Keynesian multiplier view. The Keynesian multiplier analysis has become a staple in macroeconomic education at the introductory and higher levels, without students being warned of the concept's fundamental misrepresentation of how an economy works. See, for example, Boyes and Melvin (1994), Case and Fair (1996), Gwartney, Stroup, and Sobel (2000), Mankiw (1998), O'Sullivan and Sheffrin (1998), Parkin (1997), Samuelson and Nordhaus (1998), Stiglitz (1997), and Taylor (1998) at the introductory level, and Abel and Bernanke (1998), Blanchard (2000), Dornbusch and Fischer (1994), Froyen (1999), Mankiw (1997), McElroy (1996), Galbraith and Darity (1994), Gordon (2000), and Hall and Taylor (1993) at higher levels. Some previous analysts have cast doubts on the validity or meaningfulness of Keynes's argument, such as Pigou (1933, 1941), Robertson (1936), Hawtrey (1950, 1952), Hazlitt (1959), Haberler (1960), Rothbard (1962), and Hutt (1974), but with hardly any success in limiting its widespread acceptance and teaching in macroeconomics. Stockman (1999:300-311) comes close to showing the error of the Keynesian argument by his references to "indirect effects," but nevertheless fails to give a clear refutation of the Keynesian multiplier argument because of his conceding an expansionary effect of consumption spending through a change in the rate of interest. In this article, I argue that the earlier criticisms have not been effective mainly because they miss pointing out the real illusion of the Keynesian multiplier story. (1) If one asked some fundamental questions, such as "From where does the initial spender get the income to spend?" or "What is saving other than the purchase of financial assets and not the hoarding of cash? …

Coordinating Opposite Approaches to Managing Urban Growth and Curbing Sprawl: A Synthesis

Abstract: THOMAS L. DANIELS [*] ABSTRACT. The purchase of development rights to farmland and open space has recently gained in popularity as a growth management tool. A purchase of development rights program pays the landowner for the unearned increment in exchange for strong deed restrictions, limiting the use of the property. On the other hand, land value taxation, a modification of Henry George's Single Tax, would tax land more heavily than improvements, thus encouraging the development of land. While land value taxation and the purchase of development rights appear to be opposing fiscal policies, they could be employed together as part of a regional planning strategy to encourage in-fill development within and near cities and to curb sprawl by retaining farm, forest, and ranch lands. I Henry George and the Evolution of Land Policy IN A 1997 PUBLICATION OF THE LINCOLN INSTITUTE, several authors suggested that Henry George's ideas about land markets need to be refined and adapted to current situations of land use, taxation, and urban sprawl.' Writing in the Gilded Age of the nineteenth century, George felt that powerful financial interests threatened to create a monopoly in land ownership. The majority of people would not be able to afford land or would be forced to pay exorbitant prices for it. The result would be an inefficient underutilization of land resources. George's famous Single Tax was aimed at breaking the speculators' hold on land and improving the distribution of wealth in society. The Single Tax would apply to land only and would capture all or nearly all of the economic rent of land and eliminate all or much of the monopoly rent, while providing governments with significant tax revenues. A further advantage of the Single Tax is that it could not be passed from landowners to land renters or buyers, because all pure rents wo uld be collected from the landowner or seller. Economists almost universally agree that unearned increments or economic rents to bare land can be taxed away without any disruption to economic efficiency [2] or diminution of the value or income of land improvements. [3] These are cogent arguments for the use of the Single Tax since the tax would fall only on unearned increments to land value and not on rising property values caused by improvements from labor and capital. [4] These unearned increments would accrue from nearby public improvements or improvements by one's neighbors that create a rise in the value of one's land. Hence, the tax would tend to force a landowner to make additional investments in capital and labor to develop the property more intensively or else sell the property to someone who would make those investments. Henry George envisioned the Single Tax as the only tax that would be needed nationwide. As yet, the Single Tax has not been implemented in America in its pure form. The closest example has been the split-rate land value tax that taxes land at a higher rate than buildings. Land value taxation embodies George's concept of differential tax rates on land and buildings. George's Single Tax-the extreme example of land value taxation--falls completely on land. Land value taxation levies a higher tax rate on land than on buildings, unlike the traditional property tax which applies the same tax rate to both land and buildings. For example, since 1979, the City of Pittsburgh has taxed land for property tax purposes at a rate five times as high as that on buildings. In the decade after the introduction of this variation of the Single Tax, the value of new construction in Pittsburgh increased by 70 percent compared to 1960-1979. The higher land tax may have compelled the owners of open land to construct buildings and to move up the timing of construction. In 14 midwestern cities not utilizing higher land taxes over the same two time periods, only Columbus, Ohio experienced an increase in building activity. …

IMF conditionality and objections: The Russian case

Abstract: Emerging economies in crisis typically request assistance from the International Monetary Fund (IMF). After evaluating the situation, the IMF makes a loan available to the country, conditional on certain policy reforms. Governments usually resist many of these measures and negotiation ensues. This paper analyzes the most contentious measures of IMF conditionality in the context of Russia after the August 1998 crisis. The most discussed measures include the budget deficit, structural reforms, and exchange rate policy. Our analysis suggests that to some extent the disagreement arose because the IMF is focused on changing steady states somewhat ignoring the transition path, while the Russian government is preoccupied with transitional dynamics without a clearly defined steady state concept

Edge Cities and the Viability of Metropolitan Economies: Contributions to Flexibility and External Linkages by New Urban Service Environments

Abstract: Economists have had little to say concerning the impact of Edge Cities in metropolitan complexes, much less about how they relate to the economy in general. The present paper is aimed at those concerns. It begins with a general overview of the Edge City concept as put forward by Joel Garreau. Following that it discusses metropolitan change in a pre-Edge City format. It then considers Edge Cities in the context of growth poles and discusses their role in providing economic linkages that facilitate change. The intent is to provide a better understanding of the impact of Edge cities upon host metropolitan areas and the economy at large.

Focus on Economic Theory Keynes on the “Nature of Economic Thinking”: The Principle of Non‐Neutrality of Choice and the Principle of Non‐Neutrality of Money

Abstract: GIUSEPPE FONTANA (*) ABSTRACT. In the last two decades there has been a flourishing of writings on the methodological approach of Keynes. Whereas broad interpretations of Keynes's work may have a role to play for future economics the main argument of this paper is to propose a return to the theoretical foundations of a truly Keynesian economics. In the main economic writings of Keynes it is possible to discern a body of beliefs, which is (a) consistent in its own terms and (b) susceptible of being used in the explanation of different realities. That body of beliefs is grounded on (1) the principle of non-neutrality of choice and (2) the principle of non-neutrality of money. Both principles were essential parts of the core of Keynes's A Treatise on Money (1930) and The General Theory (1936), and should be used as foundation for future development of Keynesian economics at the methodological as well as at the theoretical level. I Introduction IN THE LAST TWO DECADES there has been a flourishing of writings on the methodological approach of Keynes. (1) One of the main outcomes of that research is the idea that "a continuity between the Treatise's [A Treatise on Probability (l921/1973a)] epistemology and the method of his [Keynes's] economic writings existed" (Carabelli 1988:7). The idea is that Keynes during his career adopted a particular method of investigation based on the close connection between theory and practice. More precisely, according to Hicks "one has to talk about Keynes's methods, in the plural, since there are so many of them. It is not merely that there were changes of method between his three main books on money--the Tract on Monetary Reform of 1923, the Treatise on Money of 1930, and the General Theory of 1936. Even in the General Theory itself, the main method is a hybrid, a combination of two, which it is useful to distinguish. And there are the beginnings of other methods also" (Hicks 1985:52). It could be more appropriate to say that if Keynes always made a close connection between theory and practice it is also true that Keynes's thought about the form of that connection went on developing throughout his life. Recently, Harcourt and Sardoni (1994) have restated the same idea arguing that "Keynes's philosophical attitudes meant that in his economics he never liked to stray very far from actual happenings, from concrete situations and the use of language and concepts and practices which were grounded in them" (Harcourt and Sardoni 1994:134). According to these scholars Keynes's method represents the main legacy for the development of modern economics. Through the accidents of world history, then, Keynes's concerns seem again to have become our concerns. Of course there are still many differences between his time and ours, and it would be naive to say that we can hope to find concrete solutions for all of the problems of today's world in strategies formulated in the nineteen thirties. What we may reasonably hope to learn from Keynes and the interwar period, however, is something about the general nature of a social and economic reasoning that works in a world which power is diffused, but where the many of the problems facing the world ramify across nations and societies. (Davis 1994b:4) Whereas it is not difficult to agree with those ideas, the danger of a full commitment to such an approach is also evident. Keynesian economics in recent years has been defined as "a way of thinking" (Samuelson). Keynesian economics seems trapped in a vicious circle: in order to propose theoretical advances an appropriate methodology is recommended but the latter can only be put in place as long as there are important developments in the analytical structure. The main shortcoming of that approach is a never-ending debate on the methodological foundation of Keynesian economics. Moreover, the lack of a definite research agenda for the future of Keynesian economics left a vacuum that simplistic proposal filled. …

The Completely Decentralized City The Case for Benefits Based Public Finance

Abstract: An alternative to centralized top-down city governance is a multi-level bottom-up structure based on small neighborhood contractual communities. This paper analyzes the voting rules and public finances of decentralized, contractual urban governance and the likely outcome of such a constitutional structure, substantially reduced transfer seeking or rent seeking. Tax and service substitution, with lower-level funding and services substituting for higher-level public finance, is the general process by which the governance would devolve. Land rent is the most feasible source of such decentralized public finance, and local communities could also engage in local currency and credit services. Some empirical examples demonstrate the implementation of some of these governance structures.

Harry G. Johnson (1923–1977): Scholar, Mentor, Editor, and Relentless World Traveler

Abstract: LAURENCE S. Moss [*] I Samuelson on Harry, the Full Achiever IN THE BRITISH ACADEMY OBITUARY OF Harry, James Tobin called ours the Age of Johnson. That was a bit of a stretch, but admissible in an eulogy where, as Dr. S. Johnson observed, one is not under strict oath. Undeniably our Johnson did penetrate into every nook and corner of post-1940 mainstream economics. He was certainly among the most prolific of our clan. Indeed, although he died at age 54, the intensity at which he lived added up to at least two normal lifetimes. Harry seemed a driven man--self-driven. Articles bubbled out of him like songs from Franz Schubert and varied melodies from Mozart. He would travel 3,000 miles to attend a meeting, whittle away while the program droned on, polish off a nightcap quart of scotch, and then on the plane trip back home compose a paper dealing with some aspect of the subjects discussed. Before the word processor amplified scholars' capacity for good or ill, Harry's little portable typed out print-ready copy. Johnson surfaced in big-time science at Harvard following the war's end. He was born on a Toronto street where (I believe) Lone Tarshis, Harold Somers, A. F. W. Plumptre, and a number of other eminent Canadian economists had lived. Like Jacob Viner in an earlier Montreal generation, Harry had a distinguished physician brother. During the war itself Harry did have a brief sojourn in the Other Cambridge. Unaccountably, he did not at Harvard stand out remarkably in comparison with the several hundred post-war graduate students in economics. At MIT, three miles away, I would hear tales about Bob Solow, Jim Tobin, Carl Kaysen, and Tom Schelling. However, when Harry called on me at my office (along with a forgotten second face), I was obtuse enough to regard him as just another competent student. However, Sidney Alexander alerted me to Harry's unusual versatility and speed. Needing a grader to handle examination books, Alexander hired the first to volunteer, namely H. J. Later that day the books came back expertly graded and ranked. Since the normal expected time was three blue books per hour, Sidney was suspicious of a slovenly job. Checking, he reported to me, "They were optimally evaluated. Clearly we deal here with an extraordinary talent." Fellow editors were later to learn the same lesson. John Chipman was surprised to find out how prolific Pareto had been: his words of publication exceeded those of Keynes and Ricardo put together. When I mentioned this to the late, erudite Alexander Gerschenkron, I was told that Eli Heckscher, Bertil Ohlin, and Luigi Einaudi put Pareto to shame. Like him they wrote often for newspapers and general magazines; a book merely listing Einaudi's bibliography made a volume thicker than Marshall's Principles. Johnson, by contrast, concentrated on learned journal publishing. Certainly he was aiming for a lifetime total of more than 1,000 scientific articles. Given a normal life span of the Bible's three score and ten, he would surely have reached that goal. It was said that at Johnson's death he had 18 articles in proof. I wager that there wasn't a dud in the whole lot. The classical scholar and poet A. E. Housman was asked by a colleague about an item he had not included in his collected papers: "Did you think it not good?" Housman answered, "I thought it good. But no t good enough for me." I doubt that Harry let the wet rag of doubt kill off many of his plane-ride progeny. Friedrich Lutz said of a super-productive Harvard professional contemporary, "That man Seymour Harris can't hold his ink." A similar case was the mathematician Richard Bellman: he wrote important innovative analyses, but he may have written too much-so much that readers were not always sure whether they had or had not already read the Bellman result that arrived in the morning mail. (The same can never be said about the mathematician Paul Erdos, who died recently in his 80s, having authored or co-authored highly respected mathematical articles in excess of 4,000. …

Henry George’s Land Reform: The Distinction between Private Ownership and Private Possession

Abstract: JOHN PULLEN [*] ABSTRACT. Henry George stated that the taxation of land rent would amount to the abolition of the institution of private ownership of land, thereby alienating all those who, whether for economic or ideological reasons, regard the private ownership of land as essential for social order and progress. George believed that under his proposed reform the private ownership of land would be replaced by private possession. But his distinction between ownership and possession appears to have been based on a misconception of the nature of private ownership. His proposed reform could have been more logically described as a conditional, modified, or restricted private ownership of land, rather than as the abolition of private ownership of land. I George's Reform Policy: Initial and Modified Versions IT IS WELL KNOWN that Henry George believed that radical land reform was the essential solution to the problem of persistent poverty in the midst of progress. The reform that he proposed--viz., the taxation of land rent--is quite clear and unambiguous; but whether this reform amounts to, or was intended to amount to, the abolition of the private ownership of land as a legal institution, was left far from clear. The aim of this paper is to explore the distinctions made by George between ownership [1] of land and possession of land, and between common ownership of land and private ownership of land. One of the conclusions of the paper is that the lack of clarity in these concepts in George's writings has impeded the acceptance of his reform. His initial statements of the reform appear to be an unequivocal plea for land nationalisation and for the abolition of private ownership of land. He stated emphatically we must ... substitute for the individual ownership of land a common ownership ... We must make land common property. (1956, p. 328) and argued that since private ownership of land is the cause of the problem, nothing short of the abolition of private ownership of land can rectify matters. To remove an evil one must remove its cause. He regarded all other proposed remedies as mere palliatives, more or less inefficacious. But despite having presented the case for land nationalisation in such ringing terms, he then proceeded to offer a modified and less radical measure, viz., the public ownership not of the land itself but of the land value, to be achieved by imposing a tax on every portion of land equal to its annual value. He believed that this measure would amount to the abolition of private ownership of land, and he said that those who occupy and use the land after the implementation of this reform would be merely its "possessors" not its "proprietors." This distinction between possession and ownership was not formally defined, but can be inferred from statements such as: I do not propose to either purchase or to confiscate private property in land. The first would be unjust; the second, needless. Let the individuals who now hold it retain, if they want to, possession of what they are pleased to call their land. Let them continue to call it their land. Let them buy and sell, and bequeath and devise it. We may safely leave them the shell, if we take the kernel. It is not necessary to confiscate land; it is only necessary to confiscate rent. and In form, the ownership of land would remain just as now. No owner of land need be dispossessed. (1956, pp. 405, 406) Such statements indicate that for George the distinction between ownership of land and possession of land rests on the ownership of the land rent. The rights to "buy and sell, and bequeath and devise' are merely the "shell" or the "form" of ownership, but the right to the ownership of the land rent is the "kernel." When the state takes over ownership of the land rent through taxation, George believed it effectively removes the essence of private ownership of land, and transforms private ownership into private possession, even though the possessors may still regard themselves (and may be permitted to regard themselves) as landowners. …

Liberation Theology and Economic Development

Abstract: JAMES M. DAWSEY (*) Introduction: Economic Disorder LATIN AMERICAN LIBERATION theology has earned the world's admiration for its heroic stand on behalf of oppressed, marginalized people. But also, from its incipience around 1968, liberation theology has been surrounded by controversy because of its often-unabashed association with Marxist analysis. Today, twenty-five years of oversimplified economic rhetoric, especially concerning dependency theory, the recent disintegration of the Soviet bloc, and the loss of confidence in command economies, even in Cuba, have caused liberationists to re-evaluate the economic theories that underpin much of their thought (Ellis and Maduro 1990:10, 77-93, 209-210). In the following pages, I plan to address this small and, I think, fortuitous crisis by suggesting that the American economist Henry George has much to offer liberation theology. Liberation theology is rooted in commitment to the poor, not just in Latin America, but throughout the world. The greatest poverty in the world today is in Africa. Africa's share of the Gross World Product is a paltry 1.2 percent. Moreover, Africa's share of GWP has dropped since 1980, from 1.9 percent to 1.2 percent. In that time, Sub-Saharan Africa's external debt has tripled to $174 billion (Morrow 1992:42). This translates into devouring poverty for hundreds of millions of people and extreme hunger and malnutrition during periodic famines. Even the United States, which accounts for 25 percent of the Gross World Product, faces tremendous problems (Time, June 1, 1992: 42). (1) An uncrossable gulf separates those who are destitute from those who are rich in American society. While a few sports stars bring in millions of dollars each year, a survey shows that 27 percent of the dwellers of East Los Angeles go to bed hungry at night because they do not have enough to eat (Harter 1993). In fact, according to a 1991 study, approximately 20 percent of U.S. children went hungry sometime in 1991, the worst hunger rate being 34 percent, in Mississippi (Smith 1993:A-3). These are just a few of the massive problems that this generation faces. And with them in mind, we have a proper backdrop against which to trace the connection between the North American economist and social reformer Henry George and Latin American liberation theologians. Let me posit two similarities between Henry George and Latin American liberation theologians and argue for a third. They agree (1) that there is something basically wrong with the way that society is structured, and 2) that unjust institutions cause much suffering among people. They also have a similar view 3) that concentrated land ownership lies at the heart of social injustice. The Injustice of Social Structures BOTH HENRY GEORGE (in the late 1800s) and Latin American liberation theologians (since the late 1960s) have concluded that there is something unjust about the way that society is structured. Thus, much of people's poverty, George and liberationists have reasoned, results from an oppressive, dehumanizing, enslaving, evil economic system. The structures of injustice can be found in any society. They are most visible, however, in societies that are undergoing major transitions, especially on a new frontier where the rules are changing. As the following example shows, when the Brazilian government decided to develop the Amazon Basin, the result was not only ecological disruption, but the displacement of millions of people from their homes: Between 1967 and 1985, the Brazilian government's Superintendency for the Development of Amazonia (SUDAM) opened 8.4 million hectares for new development in the Amazon. "The most recent tally has 631 ranches, whose average size is 24,000 hectares, given the go-ahead by SUDAM. The biggest ones were Liquigas (678,000 hectares), Suia-Missu (560,000), Volkswagen A.G. (139,000), and the ArmourSwift/King Ranch (72,000). …

Agglomeration and Congestion in the Economics of Ideas and Technological Change

Abstract: Urban economists have long recognized that space is economically important. Evidence of the importance of urban agglomeration and the offsetting effects of congestion are provided in a number of studies of productivity and wages. Little attention has been paid to this evidence in the economic growth literature. The new growth research focuses on technological change. The production function is extended for new ideas common to this research in a way that allows for congestion and agglomeration in innovation and the hypothesis that these forces are important in explaining innovation is tested. Strong evidence is found that agglomeration and congestion are important in explaining the vast differences in per capita patent rates across US states. This suggests an important new agenda in linking studies of urban economics with the rapidly advancing of endogenous growth.

Focus on Economic Sociology A Principal‐Agent Analysis of the Family: Implications for the Welfare State

Abstract: This paper suggests that a principal-agent perspective may be one of several useful ways of analyzing the family. The principal-agent literature has so far ignored an important set of cases where the principal is incapable of defining and defending her own interests, and so is assigned an agent by law or custom. This paper applies principal-agent analysis to one such case, the family, where the child is taken as the principal and the parent is her agent. The principal-agent problem within families creates a prima facie case for certain state interventions to protect the interests of child-principals. The principal-agent perspective on the family sheds new light on two old debates: about provision of state welfare services in cash or in kind, and about user fees for social services.

Henry George and Classical Growth Theory: A Significant Contribution to Modeling Scale Economies

Abstract: JOHN K. WHITAKER [*] ABSTRACT. It is widely recognized that the analysis of economic growth in Henry George's Progress and Poverty was considerably influenced by the British classical tradition, especially the writings of Adam Smith, David Ricardo, and John Stuart Mill. What has been less clearly perceived is that George made significant extensions to the classical theory. This paper's aim is to provide an interpretation, and to some extent a "rational reconstruction," of George's positive analysis, largely leaving aside the striking normative lessons he drew from it. George's unsatisfactory treatment of capital is disposed of in Section I, while Section II--the core of the paper--follows George's lead in aggregating capital and labor into a single productive factor which is employed in a given natural environment. Section III adds the complication of improvement in the arts of production, and Section IV deals briefly with George's views on land speculation. Section V assesses, comparing George with his contemporary Alfred Marsha ll. HENRY GEORGE (1839--1897) is widely regarded as a mediocre amateur economist who absorbed--perhaps too well--the general ideas of the British classical school as to the effects of growth on factoral income distribution, and built thereon a social reform movement reflecting a largely outmoded view of the world. There can be little doubt that in writing Progress and Poverty, first published in 1879, [1] George was strongly influenced by the classical economists, especially Adam Smith, David Ricardo, and John Stuart Mill, as well as by the views of Thomas Robert Malthus on population. (Subsequently he was to claim affinity with the Physiocrats, but that was more retrospective affiliation than formative influence.) George's claims that land was rightly the property of all and pure rent an unearned and undeserved individual income echoed a long tradition, also associated with the classical school, especially James Mill and his son John Stuart, and rather naturally incited by classical rent theory. What distinguish ed George's proposals and helps account for the worldwide furor they raised was his call for "expropriation now" by the immediate punitive taxation of pure Ricardian rent without compensation to landowners. However, my concern here is not with George the social reformer, propagandist, and political activist, but with George the economic theorist: that is, not with the normative aspects of his thought but with the positive ones. I hope to show that his modeling of the economic growth process in Progress and Poverty went well beyond the classical paradigm and displayed considerable ingenuity, innovativeness, and analytical skill. In particular, he took spatial aspects into account, in a way giving him some claim to be regarded as a significant contributor to spatial economics. His analytical performance was, of course, not without flaws. In particular, his treatment of capital remains problematic and I propose to dispose briefly of that facet of his thought before expounding his analysis in the context of a two-factor setting involving only land and labor. This, as will be seen, follows a line of simplification suggested by George himself. It allows the exposition to be sharpened and focused on essentials. I The Problem of Capital ON THE PLUS SIDE, George deserves considerable credit for breaking away from the unsatisfactory wage-fund idea that all wages have to be advanced during the gestation period of any production process from a previously accumulated store of finished workers' consumption goods--perhaps a relic of a propensity of earlier writers to treat all production as synchronously yielded by an annual harvest cycle and all wages as immediately consumed. George recognized clearly the possibility of a balanced-flow situation in which production starts for any good are undertaken at a steady rate in time and current consumption requirements are met by the output emerging from a just-maturing previous start. …

Do reservation Native Americans vote with their feet? A re-examination of Native American Migration, 1985-1990

Abstract: Native Americans suffer some of the highest rates of poverty and unemployment and the lowest rates of human capital attainment among racial minority groups in the United States, but economists undestand very little about the impact these conditions have on the migration patterns of Native Americans. In 1994, a seminal article on this topic appeared in this journal (Cehula and Belton 1994). In their article, the authors suggest that the low levels of human capital and poor conditions in Native American reservations should make Native American migration sensitive to interstate differences in AFDC spending levels. This parer refines their analysis by using micro-level rather than aggregate ddta, and by controlling for reservation residence and the impact of informal social safety nets in the source region.

Why the Preaching Must Never Stop: Henry George’s and Paul Krugman’s Respective Contributions to the Free Trade Debate

Abstract: LAURENCE S. Moss (*) Introduction THE TINBERGEN ARCHIVES in Los Angeles, California are a monument comprised of books, lectures, and films--a monument that exists for the sole purpose of honoring the dead. Established to inform succeeding generations about this "century's greatest crime," the destruction of most of Europe's Jewish community, it "preserv[es] the history of the Holocaust and the blessed memory of the Six Million who lost their lives so cruelly and unjustly." Mr. Cal Tinbergen, the Director of the Archives, has assembled media of all types to fortify "the fight against bigotry and hatred." (1) In this never-ending battle Tinbergen and others are driven to spread ideas about tolerance and understanding over bigotry and hatred, so that peace and respect for human dignity someday might prevail in the world. I admire the clarity of Mr. Tinbergen's vision about who he is and what he does. I imagine he is a man who gets up each morning and sets out on a business routine calculated to fight bigotry and hatred and keep the memory of the victims of the Nazi genocide alive. I, myself, get up each morning, but with less clear goals. My college hires me to teach students how economic theory helps to make the world intelligible, especially for business decision makers. Along the way, I must qualify extreme principles in various ways and then challenge my students with examinations and term paper reports about my lectures. Deep down, however, I want to preach tolerance as well, but economists are not supposed to preach at all (Stigler 1982). Indeed, there is a long tradition in economic theory that promotes tolerance--based not on religious and moral duty, but on the value of capturing the gains from open trade and exchange. (2) That tradition exalts the middleman or entrepreneur, who discovers new and more valued combinations of resources and legal rights and sees nation-states as administrative regions that can provide frameworks for interregional trade, without themselves becoming salespeople for the trading groups and firms in their regions. When I get this message across to my students, I do indeed teach my students something worthy of comparison with Mr. Tinbergen's crusade against bigotry and hatred. I teach the gospel of free trade. As a member of a discipline that dates back more than 300 years, I manage to advance several steps beyond Mr. Tinbergen's call for mere tolerance of other peoples, races, and regional cultures. I use a variety of arguments to encourage government officials, politicians, business leaders, trade unionists, and even spiritual leaders to appreciate the importance of commercial exchange and to stop punishing people for engaging in trade and exchange. The Nazi round-up of the Jewish merchants and shop owners for supposedly profiting at the expense of the German people, the slaughter of the Armenian merchants during the first World War for their middleman activities, which had long aroused suspicion among Turks, and the current tensions in Indonesia directed against the Chinese business community accused of causing the Asian currency crisis--all are examples of merchant hatred. (3) As a student of the market process, I have kind words for the middleman trader who pioneers new trade routes and profits from integrating regions (Block 1976:186-191; Sowell 1998; Lerner 1961:41-48). As an economist, I take the work of the Tinbergen Institute one important step further: I address what happens to living standards in each respective region when trade and commerce are allowed to emerge and take shape in market settings. To an economist it is not enough that the inhabitants of Region A stop slaughtering those of Region B. For people to live dignified lives, they must have comforts. They must have materials to fuel their creative labors so that new shapes can emerge, and they must connect with each other for mutual interest and gain. Because free trade and exchange are so obviously advantageous, officials should tolerate economic activity and not tax, prohibit, or crush the improvements it makes possible. …

What do we need to know about land value taxation

Abstract: DICK NETZER (*) Introduction MORE THAN A century ago, Henry George concluded that poverty existed in America's rapidly growing cities in the midst of unparalleled rates of economic growth and prosperity for some people because the owners of land and other "natural opportunities," who do not contribute to the productive process, were appropriating the fruits of labor and capital. His solution lay in the taxation of the rent of land and natural opportunities -- that is, the recapture of rent for public use, rather than the taxation of labor and capital. George's insights were foreshadowed in the writings of the classical economists a few generations before him. They, however, had not pressed ahead with the policy implications; in Progress and Poverty, George did just that. The political movement created by that book had some early, partial successes in the form of adoption of various types of differentially heavy taxes on land. But, by World War I, the momentum had given out, and there were some retrograde developments, like reducing the already low taxes on land in some places (notably, the local "rates" in England and Wales). There have been very few political successes since then. In recent years, more and more public finance and urban economists have had positive things to say about land value taxation, but with no policy effect. That lack of success has always been something of a mystery, and there are various unproven hypotheses to explain away the mystery. At least one explanation that has a degree of plausibility is that land value taxation has an antiquarian flavor about it. From this perspective, it was a good idea in its time (when the only important level of government in the U.S. was local, and the only important tax was the property tax), but the world is so much more complicated today, and its problems call for complicated solutions. So there is an obvious challenge: is land value taxation still relevant to and feasible in today's world? To respond, we need to answer the question in the title of this essay: what do we need to know about land value taxation? Economists and Land Value Taxation: Then and Now I AM ABOUT to take some liberties, but the story might best begin by looking, in very general terms, at what we economists knew about land value taxation thirty years ago and what we know now. I choose thirty years ago, because there was little attention by economists--in North America or anywhere else-to the property tax, in any of its manifestations, from about 1930 until the 1960s. In the U.S., most public finance economists had been convinced that the property tax was a dying, anachronistic institution by three factors: 1) decades of savage criticism of the low quality of tax administration, which had not improved much, 2) the collapse in property tax collections during the Great Depression of the 1930s, and 3) its replacement by state-collected sales or income taxes. As late as 1956, a leading economist forecast that, in another 20 years, "the property tax will ... have become an all-but-forgotten relic of an earlier fiscal age" (Mitchell 1956). Even as he wrote, however, the role of the property tax in American state and local finance had stabilized. A new decline began in the mid-1960s, to be followed by stabilization in the years since 1980, but in the late 1950s, economists began to examine the property tax once again, and an extensive literature emerged. What did we learn specifically about land value taxation from that literature? As you will see, I do not think we learned a great deal. To me at least, that is reason enough for first-rate scholars to direct their attention to the appropriateness of land value taxation in the contemporary world, which is now being done under the sponsorship of the Lincoln Institute of Land Policy. Thirty Years Ago The state of knowledge of land value taxation in the economics profession up through the 1960s can be summarized as follows: 1) The theoretical literature on land value taxation after Henry George was very sparse indeed. …