Windfalls and Wipeouts

The relation between land values and public policy is a field in which strong passions have been aroused. On the one hand, critics of ‘unearned increment’ have demanded state intervention to prevent speculators making what they consider to be gains at the expense of the community; on the other hand, the ‘speculators’ often turn out to be ordinary households, and the policies adopted in the UK have caused hardship, desperation and at least one suicide. They have also had consequences in blocking development (e.g. the redevelopment of Victoria Station) which their framers never envisaged. The issues are therefore of considerable importance, although they have tended to be ignored by economists and smothered in detail by lawyers. One must begin by wielding Occam’s razor. Many influential ideas are demonstrably based on logical confusion or untrue factual assumptions, which must be untangled before one can start to establish a workable basis for policy.