• auction-based geolibertarianism?

    by  • May 11, 2008 • The Global Picture • 7 Comments

    I’ve been trying to figure out a sane approach to creating a country. Geolibertarianism has caught my eye. The idea that the land is owned equally by all citizens of the country is both appealing and natural, but geolibertarianism avoids the pitfalls of communism by limiting collectivism to the land, recognizing other property as private. But I don’t like the idea of the government raising taxes on land under democratic assent. That seems prone to abuse to me.

    The approach I’ve been considering is an auction-based geolibertarianism. I don’t have a name for this and I’m fairly sure it’s already been considered, but I haven’t found out where. The idea is that the right to use each individual piece of land in given ways for a given period of time is auctioned. All land rights in the territory so governed are leases granted for limited periods and allocated at auction.

    The proceeds are then divided equally among the population as income. This system prevents land falling out of use because it is uneconomic to pay the land value tax on it, and also side-steps tricky issues of assessing the value of land. It also allows for sane environmental policy, as certain rights (like the right to strip mine the land) are simply never granted in the leases generated. Other environmental law can be based in the collective ownership of the land itself.

    Sublease is another very interesting land right that may or may not be granted. Transferability of leases, use for original purposes and so on are also open questions. Speculation is highly questionable because it creates a bunch of pathological incentives, like borrowing a pile of money to lease land one doesn’t intend to use, creating a bank-run economy because of the way the State uses its monopoly power. We’ve been there, let’s not do that again.

    This gives a universal basic income which is not raised by taxation, floats freely with market conditions (and so remains realistic) and still provides meaningful private land ownership.

    A “zoning board” would set land use terms and lease lengths, and also deal with the tricky issue of intelligently figuring out property boundaries to minimize pathological cases. Clearly this is a nexus of power that needs much more analysis.

    Another interesting aspect of this system is the possibility of some land being allocated by lottery rather than auction. More on this point in a later post.

    The temptation here is to cut 20% off the top of the auctions, call it taxes, and use it to run the government. I think this is an extremely bad idea, because it implies that the government somehow (ahem, democracy) has the right to eat the entire pie. Citizens vote to raise taxes to pay for projects, and we are back to square one. So the question of how the government is funded is still open, although the question of where the social safety net comes from is possibly answered by this proposal, albeit not for existing nation states.

    Another interesting question is whether the current lease holder should be cut in for a share of the proceeds when the land is next auctioned to compensate them for making improvements like taking good care of farmland or building irrigation. I’m tempted to say “no” as an antidote to land speculation. This probably makes lease length into a critical variable in the political system, and odds-are one would randomize land lease lenghts at the outset to see what worked and what didn’t.

    Microstates can be hotbeds for innovation in government and society. That is why their formation should be encouraged, and the prototypes left alone.

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    Vinay Gupta is a consultant on disaster relief and risk management.


    7 Responses to auction-based geolibertarianism?

    1. Ben
      May 11, 2008 at 4:32 pm

      (Remember me from FOSDEM?)

      There’s a lot of research that’s been done on a similar issue for existing governments: radio spectrum allocation. Since this issue came up well after most of the land was allocated, it’s getting more detailed analysis than the idea of land ownership is these days. http://www.spectrumpolicy.org/ has a nice pdf about how badly the US did in allocating its spectrum (http://www.newamerica.net/files/airwaves.pdf). Even if you don’t agree with their conclusions, a lot of the research applies quite nicely to the idea of geolibertarianism, and spectrum allocation is a bridge you’ll have to cross anyway–worth reading.

      For the record, the speculation you worry about has sort-of already happened with the US Auction-based system: Mobile operations are already so lucrative that the existing carriers have, on occasion, paid 10s of billions for spectrum at auction and let it rot, rather than face the possibility of a new competitor. Tricky problems.

      And a question: Does the renter of a piece of land own the building he constructs on it?

    2. May 11, 2008 at 4:46 pm

      Arr… wish I’d known you were based in Stuttgart when I was there!

      Spectrum is a very, very hard case. So is land near the river and water rights.

      In general, the auction of natural monopolies is *hard.*

      The “zoning board” or whatever it is that creates the auctions, partitions the resources etc. becomes the de facto govt. in a lot of ways. Its job is relatively easy when dealing with 500 roughly identical farm-able areas.

      The bastard is when it comes time to auction the top of the mountain.

      I actually think you wind up with four property categories for land.

      * land which is auctioned
      * national parks which are “leave no trace” environments
      * land which is allotted by lottery (equal odds of winning corresponds to equal share of the loot from the auctions)
      * social land reserve which is a quantity of land which can be had in exchange for say half of one’s land tax – this is an anti-starvation measure.

      Remember I’m aiming this whole play very firmly at very, very poor places. 4bn people need a new political system, and hypercapitalism in the American model is not sustainable.

      In terms of who owns the building on the land, I can see three basic options.

      * it is auctioned with the land at the lease end
      * it is rented separately at lease end
      * buildings are compulsorily moved at lease end

      The basic approach of “use distributed infrastructure everywhere” levels out many of the problems associated with financing power grids and other utilities. If you use screw foundations, it’s good from a leave-no-trace land management perspective, and buildings can be relocated.


      Some of the hardest political problems are soluble in technology with only tiny additional overheads.

      http://files.howtolivewiki.com/TIDES_PACKET/TIDES_BOARDS_V2_low_resolution.pdf – page 26 through about 31 gives a pretty good summary of how I’d see distributed infrastructure simplifying the governance issues in an SSTR / microstate context.

      Good to hear from you!

    3. May 12, 2008 at 7:14 pm

      a similar line of thoughts is follewed with the proposal of “cap and share” on http://www.capandshare.org/
      “People will be able to count on getting an income from the sale of their Production Authorisation Permits (PAPs) every year. They will therefore be able to use that guaranteed income to make the repayments on a loan, say, to get their house better insulated or to put a solar heater on the roof.

      If and when the system is extended to poor countries, many people there will either be able to get out of bad debts or gain a form of security that will enable them to borrow what, for them, would be a significant sum for the first time in their lives on better terms. Many small businesses would spring up. ”

      Kind regards


    4. May 12, 2008 at 7:45 pm

      Cap and Share makes a lot of sense on first reading. I’m not convinced we’ll have long-term issues with CO2 production – I think that technologies like http://nanosolar.com are going to make coal and oil uneconomic to use very soon. But the basic model could be applied in a lot of different areas – tax what you don’t want a society to do!

    5. May 13, 2008 at 4:16 pm

      First, we should define clearly the scope of the Government’s services. Vinay, you keep pointing to taxation – but show me what the taxation will pay for.

      In microstates, self-governance should be attained by:
      *Maintaining community size limit (such as starting with a few parcels, adding acreage as time goes on)
      *Natural law (what goes up must come down)
      *Gatekeeping (and exiling, perhaps)
      *Volunteer service (such as Council of Elders at http://openfarmtech.org/index.php?title=The_Contract)

      The last point is most important. For example, we do not need a water utility if people run an ecologically-advanced water system, or we don’t need expensive equipment for road maintenance when an open source road grader/versatile tractor is available (such as LifeTrac at http://openfarmtech.org/weblog/?p=187). We don’t need an army when we have FabRifles.

      What services are you looking to tax my ass on – if services should be provided by the private sector or by voluntary interaction?

      Land tenure, in practice, should be initiated by private donations into a trust, where the donors are the initial ‘Kings of the land’ who set the rules according to the above principles. I don’t see some higher entity holding or disposing of land. Small scales on the order of 5 by 5 square miles are about the largest units of proposed organization – capable of supporting the highest level of advanced civilization. I don’t see a ‘higher body’ holding/disposing of land outside of the initial contracts that created the microstate in the first place, according to ecological principles informed by the land itself.

      I’d like some more discussion here on the ‘voluntary nature of interaction’ – which allows for any minority to be not coerced by the masses – as happens in democracy (mob rule).

    6. November 25, 2008 at 2:13 am

      1. I don’t think land is really any different from other resources. It’s something you can buy and sell, which you can rent, which is useful for producing stuff or for enjoying directly (i.e. living on). It makes as much (and no more) sense for land to be communally owned as for capital. (Labour is maybe a special case.)

      1A. Yes, land is not created by anyone whereas capital is. But everything’s traded anyway: any piece of capital may well not be owned by the person who made it, if that’s even a meaningful statement (maybe it was made by many people cooperating). Whoever owns the land now probably paid for it in good faith and will be justifiably pissed if they are deprived of it. I know I would be.

      2. If we decide now that the government should capture all value in land then people who are invested in land will suffer and those invested in other things will be happy. This means I am happy — well, as happy as anyone with their life savings invested in the stock market can be at the moment. It means anyone whose major asset is their (or someone else’s) family home will be very unhappy. I think this change will transfer money from the middle class (who own their home and maybe investment units) to the rich (who are more likely to own shares) and the old (who have funded superannuation which owns shares).

      3A. If government owns all the land then it becomes impossible to set up certain types of business relationships (e.g. where someone decided to develop the land expecting a future benefit from it for themselves) and that may make the economy inefficient.

      3B. Regular auctions reduces security of tenure which will stress out the residents and perhaps reduce the efficiency of businesses.

      4. Strip-mining will be prohibited only if the government decides it wants it to be prohibited. It’s hard and dangerous to try to build social objectives into constitutional arrangements.

      5. A lot of power is placed in the hands of the government real estate organisation. Perhaps more than I would wish. Multiple balancing centres of power is generally thought desirable: resource-wealthy countries lacking them (Nigeria, Saudi Arabia, Libya, Iran, Kazakhstan, Iraq, etc.) tend to suck.

      6. I don’t see the big advantage of collecting money this way, rather than through taxes.

    7. Jesse
      December 31, 2008 at 6:19 am


      Be careful not to make the mistake of conflating the common with the collective. Geolibertarians do not propose that the government should “own all the land”–they propose that each individual has an equal right to access land. Any government agency which administers auctions and the like is serving only as an intermediary between individual parties (granted, many individual parties); it is not “awarding” land that it “owns”.

      As to landowners being upset about a land value tax or a land-auctioning scheme because they “paid for it in good faith”: forgive the brash analogy, but there was a time in the United States when human beings were “paid for in good faith” (i.e., slaves). If no one has a right to claim exclusive ownership of a thing, then it doesn’t matter if you simply declare such a thing to be yours or “purchase” it from someone else (who either claimed ownership unjustly, or bought if from someone who…etc., in theory we could trace land ownership to a brazen grab).

      To you point number six, speaking to the practical benefits (or lack thereof) of a geolibertarian-type system, I suggest that you research land speculation, if you are not yet familiar with the concept (I don’t mean to presume, but if you were familiar with the concept I think you would be able to see at least one benefit of a land value tax). When we (“we” as in a large group of individuals, not “we” as in the government) allow people to grab large areas of land and do nothing with them (except hope that urban expansion will lead to a big payday), we tolerate a most wasteful and reprehensible practice.

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