We can not get an `ought' from `is` statements alone. But we can derive a complex or interesting `ought' from a simple `ought' and a bunch of `is' statements.
I want a tax system that can finance a welfare state without burdening the real economy. I care about real gdp, low unemployment and to a small extent equality of after-tax income. I don't care about `storage of wealth': the private sector takes care of that just fine.
Given those `oughts' and a bunch of standard orthodox text book economics, you get a free market laissez faire economy and a state financed by land value tax as a good first order answer. Land value taxes do not disturb the ecomony, since land is a perfectly inelasticly supplied good. (See https://en.wikipedia.org/wiki/Tax_incidence for who actually ends up paying for taxes on goods and services, and for who can pass them on, and to what degree. It's all about elasticity.)
As a minor point, you want to add some sin taxes like eg carbon and alcohol tax, where you actually actively want the change to demand and supply that the tax causes: less carbon dioxide release, less alcohol consumed.
I don't see how agrarian or industrial development era makes a difference here. Eg Australia is an advanced economy, but relies on resource extraction and agriculture a lot, and a land value tax would make sense for them too. (They actually have one on the books, but it's mostly toothless with a small base and low rates.)
Ultimately, thermodynamics might be able to explain a lot about biology, society and economics. Alas, I don't think that science has advanced well enough for that grounding, yet; yet alone our laymen's understanding of it. Mostly, the thermodynamics that we have a good handle on is equilibrium thermodynamics, or at best near-equilibrium. Economies are thermodynamically very open systems with matter, energy and entropy flowing in and out. (Even in the confusingly similarly named `economic equilibrium'.)
And in any case, such a re-interpretation must `save the phenomena'. Ie just like the statistical mechanics explanation of thermodynamics makes the same predictions as the older macro-scale traditional thermodynamics.
> Where the reasoning really decouples for me however, is residential real estate. There, I would have expected pricing to essentially follow median wages.
I would expect land prices to follow basically average disposable income:
Basically, people use their income left over after taxes, groceries etc to bid up all available residential land for either paying rent or paying mortgages on. This sets the monthly cost of land, and a look at the prevailing interest rate on mortgages will tell you the value: monthly cost per square metre * 12 / yearly interest rate == capital value per square metre
(Where a eg 2% interest rate goes into the calculation as 0.02, ie a multiplicative factor of 50.)
Feel free to send me an email to continue the discussion. My address is in my profile.
We can not get an `ought' from `is` statements alone. But we can derive a complex or interesting `ought' from a simple `ought' and a bunch of `is' statements.
I want a tax system that can finance a welfare state without burdening the real economy. I care about real gdp, low unemployment and to a small extent equality of after-tax income. I don't care about `storage of wealth': the private sector takes care of that just fine.
Given those `oughts' and a bunch of standard orthodox text book economics, you get a free market laissez faire economy and a state financed by land value tax as a good first order answer. Land value taxes do not disturb the ecomony, since land is a perfectly inelasticly supplied good. (See https://en.wikipedia.org/wiki/Tax_incidence for who actually ends up paying for taxes on goods and services, and for who can pass them on, and to what degree. It's all about elasticity.)
As a minor point, you want to add some sin taxes like eg carbon and alcohol tax, where you actually actively want the change to demand and supply that the tax causes: less carbon dioxide release, less alcohol consumed.
I don't see how agrarian or industrial development era makes a difference here. Eg Australia is an advanced economy, but relies on resource extraction and agriculture a lot, and a land value tax would make sense for them too. (They actually have one on the books, but it's mostly toothless with a small base and low rates.)
Ultimately, thermodynamics might be able to explain a lot about biology, society and economics. Alas, I don't think that science has advanced well enough for that grounding, yet; yet alone our laymen's understanding of it. Mostly, the thermodynamics that we have a good handle on is equilibrium thermodynamics, or at best near-equilibrium. Economies are thermodynamically very open systems with matter, energy and entropy flowing in and out. (Even in the confusingly similarly named `economic equilibrium'.)
And in any case, such a re-interpretation must `save the phenomena'. Ie just like the statistical mechanics explanation of thermodynamics makes the same predictions as the older macro-scale traditional thermodynamics.
> Where the reasoning really decouples for me however, is residential real estate. There, I would have expected pricing to essentially follow median wages.
I would expect land prices to follow basically average disposable income:
Basically, people use their income left over after taxes, groceries etc to bid up all available residential land for either paying rent or paying mortgages on. This sets the monthly cost of land, and a look at the prevailing interest rate on mortgages will tell you the value: monthly cost per square metre * 12 / yearly interest rate == capital value per square metre
(Where a eg 2% interest rate goes into the calculation as 0.02, ie a multiplicative factor of 50.)
Feel free to send me an email to continue the discussion. My address is in my profile.