The Single Tax - Land Value Tax (LVT)

[Roy L]

Actually, that was me that posted it,

No, you posted a different section from the same site that referred to supply of PRODUCTS, and I had to correct you. Investopedia also has this to say:

"The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price."

http://www.investopedia.com/universi...#axzz1tNUuxUja

Leave aside the error of assuming only producers can supply anything, and notice the wording: "when receiving a certain price." That means the "producers" ARE SELLING the good at that price.

but I accept it, just as I accept this definition from Harpers (same link as before):

For me there is nothing contradictory between the definition you cited and the one I just cited above. Is there a conflict there in your mind? Is there anything wrong with Harper's definition that you can see?

Of course there is no contradiction between the definitions. The conflict is between what you claim they say and what they actually say.

FWIW, a lot of definitions of supply talk about "amount available for sale," but I reject that formulation as it defines what is available for free as not being part of supply, clearly a nonsensical notion.

[Steven Douglas]

Yes, that is correct. But before you go off the rails again, do try to remember: EVERY PRICE, BY DEFINITION, IS AGREEABLE TO BOTH BUYER AND SELLER. Lower amounts than a price are merely "bids," higher amounts are merely "hopes."

Here's where you have gone off the rails already. The price referred to in supply is the Supply Price (as opposed to Demand Price).

http://www.merriam-webster.com/dicti...supply%20price
Supply Price: the lowest price at which a given amount of commodities will be offered under given conditions

The Supply Price referred to in Supply is NOT the amount for a given price that is agreeable to both a buyer and seller. Sellers UNILATERALLY determine the Supply Price (quantity willing to make available at that price), just as buyers unilaterally determine Demand Price (quantity willing to purchase at that price). They do NOT always agree with each other. In fact, Supply and Demand curves, by their natures, MOSTLY DO NOT AGREE. But wherever they do happen to agree with one another (where they intersect), that is called the Equilibrium Price, or "market-clearing price". Market Price comes later, after buyers and sellers actually interact with their agreement and a successful transaction establishes that price.

So far so good, or do you disagree with that?

[Roy L]

Here's where you have gone off the rails already.

Nope. You have, just as I prophesied.

The price referred to in supply is the Supply Price (as opposed to Demand Price).

Nope. It's PRICE: transaction amount.

The Supply Price referred to in Supply

The definition of supply refers to price, not "supply price."

is NOT the amount for a given price that is agreeable to both a buyer and seller.

YES IT IS.

Sellers UNILATERALLY determine the Supply Price (quantity willing to make available at that price),

Which might be why the definition says, "price" and not "supply price."

just as buyers unilaterally determine Demand Price (quantity willing to purchase at that price).

You refuse to talk about price, because you know you have been proved wrong. Simple.

They do NOT always agree with each other. In fact, Supply and Demand curves, by their natures, MOSTLY DO NOT AGREE. But wherever they do happen to agree with one another (where they intersect), that is called the Equilibrium Price, or "market-clearing price". Market Price comes later, after buyers and sellers actually interact with their agreement and a successful transaction establishes that price.

Gibberish.

So far so good, or do you disagree with that?

Nope. It's nonsense.

[helmuth_hubener]

ROTFL!! Thank you for conceding the whole argument.

Oh, I'm not participating in any "argument." I am just stating things as they are. Everyone may take them however they wish.

[Roy L]

Oh, I'm not participating in any "argument."

True, and you also aren't making any arguments.

I am just stating things as they are.

OK, so you agree that sellers and buyers swapping around the existing supply of a good, whether the price is higher or lower, does not affect the supply of that good. Good. You agree that the supply of land is fixed.

[Steven Douglas]

Well, let's just roll with it and see if I understand your understanding of price as it relates to supply. According to you, and do correct me if I misstate your position:

You seem to be claiming that the price component of supply is market price only - the price of a commodity when sold in a given market, which by definition is only established by actual transactions -- as in "past transactions", the quantities at given prices of which buyers and sellers have already agreed upon - is that correct?

[Roy L]

You seem to be claiming that the price component of supply is market price only - the price of a commodity

"Commodity" has a special meaning in economics.

when sold in a given market, which by definition is only established by actual transactions -- as in "past transactions", the quantities at given prices of which buyers and sellers have already agreed upon - is that correct?

Like any other objective fact, price is only established by the event in question: in this case an actual transaction.

Consider a runner's performance in a track event. His time is only ever established by actually running. However, we can still say a lot of things about how different times will affect different other things, and other things will affect his times: if he eats too much, his time will be longer; if he posts a fast time, he'll make the varsity team, etc. But we can also say that certain other things will not be related to his time: e.g., the track will not get any longer or shorter depending on his time, and so on.

[Steven Douglas]

...price is only established by the event in question: in this case an actual transaction.

Consider a runner's performance in a track event. His time is only ever established by actually running. However, we can still say a lot of things about how different times will affect different other things, and other things will affect his times: if he eats too much, his time will be longer; if he posts a fast time, he'll make the varsity team, etc.

It is true that a runner's actual time can only be established by actually running. However, you also used the word "time" in a future hypothetical context. These times are not yet known or established because the runner has yet to run. Thus, they are only projected times, not actual times, and we can and do distinguish between projected and actual. If he eats too much, his time MIGHT (NOT WILL) be longer. In fact, if he eats just right, his time MIGHT still be longer, just as he MIGHT post a record time despite the fact that he ate what those making the projections might have thought was "too much". If the latter happens, an uncritically thinking idiot might be tempted to conclude in hindsight that the runner ate "just the right amount", without accounting for other variables, other reasons, including the possibility of an even better record time had he eaten less. Either way, there is no "WILL" to any of it. It's nothing but a projection, and none of those projected times are actual times. An hypothetical time MIGHT become equal to an actual time in the future, but that is incidental, and not the case with all hypothetical projections, many of which do not manifest as projected.

Likewise, we can plot actual historical transactions on a supply schedule, which transactions did in fact establish market price through demonstrated agreement between buyers and sellers. On that much we agree, because those are factual historical points of Quantity Supplied and Quantity Demanded in actual transactions which established Market Price. We can even use these data to project hypothetical future supply (and demand). However, the hypothetical Quantity Supplied at any given FUTURE HYPOTHETICAL point are only based on hypothetical, not actual, agreement between buyers and sellers. They would only become points of Quantity Supplied and Market Price, with buyers and sellers in actual agreement, IF these transactions occur AS PROJECTED. And not all of them will - or else everyone who makes such projections is truly a prophet, and we both know that is not the case.

Now let's look at this in the context of your claim that all goods that are possessed and in existence are automatically part of supply:

According to you, the price component of supply is only based on actual transactions. That necessarily means that to be counted as supply a thing must be part of a transaction that a) has occurred, and/or b) WILL occur. That supply, those quantities owners are willing and able to make available at a range of prices over time, even if combined with future hypothetical supply, cannot and does not account for all goods that are possessed and in existence, which you claim are "automatically part of the supply".

By definition: Supply is a schedule which shows the various quantities owners are able AND willing to offer for sale at a range of prices in a given time period, ceteris paribus.

How, exactly, does that account for all goods that are owned and in existence, whether we only use historical "actual" supply, or even if we combine that with future projected supply? It cannot, because to even be counted as supply AT ANY POINT IN TIME, an owner must be both able AND willing to offer the thing in question for sale at a given price. For that to reflect the total quantity in existence, that total quantity in existence must appear and be accounted for at least somewhere on the supply schedule.

As an hypothetical: An owner that has 100 widgets in stock shows a demonstrated willingness to make 50 of these available at a given price, which is then reflected as Quantity Supplied at a single point on a supply curve. You would say that he has made 50 of these widgets available to the market for sale, and 50 available TO HIMSELF. But the supply schedule DOES NOT REFLECT THIS. It only accounts for what an owner was able and willing to make available TO OTHERS. Thus, the supply schedule is only "aware" of the 50 widgets that actually are made available as Quantity Supplied. The mainstream economics definition for supply does not account for what Rothbard referred to as Demand Reserve. Otherwise, you should be able to account for 100 widgets as Quantity Supplied at least somewhere ON THE SUPPLY SCHEDULE. If you don't, it's not counted as supply. If 50 never make it onto the supply schedule, you will only see the 50 that are made available to others in actual market transactions. In fact, in most cases, ONLY THE OWNER even knows the total quantity of widgets that are in stock, part of which was held in reserve, which he was able-but-not-willing to make available for supply.

You see this in the gold market. Nobody knows with any certainty who owns what amount, or what quantities are held in "Demand Reserve" by anyone. We only know something about the current amounts (to the extent we do) that are being traded. You don't know how much gold or silver I own. Nobody but me does. And since I am ABLE BUT NOT WILLING to make that stock available to anyone but myself at this time, that quantity of metals will not appear as any actual transaction, and thus will not appear as supply on any supply schedule (save the hypothetical one I might make for myself). Unless and until that happens it will not be counted as "available supply".

[Roy L]

Likewise, we can plot actual historical transactions on a supply schedule,

No, we can't. Supply is not historical.

which transactions did in fact establish market price through demonstrated agreement between buyers and sellers. On that much we agree, because those are factual historical points of Quantity Supplied and Quantity Demanded in actual transactions which established Market Price. We can even use these data to project hypothetical future supply (and demand).

Nope.

According to you, the price component of supply is only based on actual transactions.

Wrong. It is the other way around: supply is based on the assumption of such prices being transaction prices.

That necessarily means that to be counted as supply a thing must be part of a transaction that a) has occurred, and/or b) WILL occur.

No, WOULD occur.

That supply, those quantities owners are willing and able to make available at a range of prices over time, even if combined with future hypothetical supply, cannot and does not account for all goods that are possessed and in existence, which you claim are "automatically part of the supply".

All goods trade at their price. If the price a good trades at does not affect the available amount, supply is fixed. As is the case with land.

By definition: Supply is a schedule which shows the various quantities owners are able AND willing to offer for sale at a range of prices in a given time period, ceteris paribus.

They are "able and willing" to sell all they have at any price, by definition, because its price IS by definition what the whole supply sells for.

How, exactly, does that account for all goods that are owned and in existence, whether we only use historical "actual" supply, or even if we combine that with future projected supply? It cannot, because to even be counted as supply AT ANY POINT IN TIME, an owner must be both able AND willing to offer the thing in question for sale at a given price. For that to reflect the total quantity in existence, that total quantity in existence must appear and be accounted for at least somewhere on the supply schedule.

The whole amount in existence sells for its price. In the case of produced goods, the amount in existence will increase at a higher price. The amount of land won't.

You just refuse to know this.

As an hypothetical: An owner that has 100 widgets in stock shows a demonstrated willingness to make 50 of these available at a given price, which is then reflected as Quantity Supplied at a single point on a supply curve.

If that's the going price, why wouldn't he sell all 100 at that price? What you are saying is that he is effectively a buyer at a higher price, a seller at a lower price. That is nonsense.

You are forgetting that the supply and demand curves can't be constructed unless all market participants are price takers -- i.e., they can't affect market price as individuals. Your hypothetical assumes the owner of the 100 widgets sells only 50 at the market price. But selling those 50 can't make the market price go up, so he is essentially losing money by not selling all 100.

You would say that he has made 50 of these widgets available to the market for sale, and 50 available TO HIMSELF. But the supply schedule DOES NOT REFLECT THIS. It only accounts for what an owner was able and willing to make available TO OTHERS. Thus, the supply schedule is only "aware" of the 50 widgets that actually are made available as Quantity Supplied.

Wrong. The supply curve assumes people are logically consistent, and thus do not buy high and sell low, as your hypothetical widget owner effectively does.

The mainstream economics definition for supply does not account for what Rothbard referred to as Demand Reserve. Otherwise, you should be able to account for 100 widgets as Quantity Supplied at least somewhere ON THE SUPPLY SCHEDULE. If you don't, it's not counted as supply. If 50 never make it onto the supply schedule, you will only see the 50 that are made available to others in actual market transactions.

Supply is not restricted to actual transactions; it includes all the potential transactions at different prices.

In fact, in most cases, ONLY THE OWNER even knows the total quantity of widgets that are in stock, part of which was held in reserve, which he was able-but-not-willing to make available for supply.

All that are in stock are part of supply, as they are available at some price.

You see this in the gold market. Nobody knows with any certainty who owns what amount, or what quantities are held in "Demand Reserve" by anyone. We only know something about the current amounts (to the extent we do) that are being traded. You don't know how much gold or silver I own. Nobody but me does. And since I am ABLE BUT NOT WILLING to make that stock available to anyone but myself at this time, that quantity of metals will not appear as any actual transaction, and thus will not appear as supply on any supply schedule (save the hypothetical one I might make for myself). Unless and until that happens it will not be counted as "available supply".

Wrong. All gold and silver are part of the supply, just as everything else that already exists is part of supply, because it will trade at its price by definition.

[Steven Douglas]

No, we can't. Supply is not historical.

You really are off the deep end, Roy. Historical supply curves are created all the time. How else can supply curve analysis models be empirically tested, except in hindsight? Here is but one of a zillion examples:



Figure 2.2 illustrates the basic model of a perfectly competitive market. The horizontal axis depicts the total quantity Q of a particular good -- in this case corn -- that is supplied and demanded in this market. The vertical axis depicts the price P at which this good is sold. A market can be characterized along three dimensions:

commodity––the product bought and sold (corn);
geography––the location in which purchases are being made (the United States); and
time––the period of time during which transactions are occurring (the year 2009, when corn prices were about $4 per bushel).

That's not available supply NOW. Only THEN. A model using historical data. Real world.

Market supply curves as hypothetical models are not ever assumed to be prophetic or infallible by nature, nor are they created purely out of a vacuum. Otherwise they would be even more meaningless than many of them already are. The price and quantity components on every supply curve are derived using real world numbers, real world approximations, which is why you will not see a supply curve like the one above for the year 2013 showing trillions of bushels of wheat trading at thousands of dollars per bushel. Only real world numbers need apply, and those real world numbers are derived ONLY from real world historical data.

"...supply is based on the assumption of such prices being transaction prices."

Which are often wrong, of course - as revealed when a supply curve analysis (projection) is later overlain with an actual historical supply curve (thus no "WOULD" to it, as seen only in hindsight).

Are you under the impression that supply schedule assumptions are real world edicts of some kind? Prophecies? Scripture? Infallible? As it is projected, so let it be assumed as reality?

All goods trade at their price. If the price a good trades at does not affect the available amount, supply is fixed. As is the case with land.

All goods [out of those that are traded] trade at their price, whatever that is. But that does not mean that all goods in existence trade.

I find it ironic that you took exception to supply not accounting for goods that are given away for free, and yet you can't even acknowledge goods that aren't traded or given away at all, at any price! Not logical, Roy. Not "real world" at all. In a real world, chock full of "irrational" people, goods are traded, re-traded, given away, thrown away, stored away temporarily, and even hoarded.

They are "able and willing" to sell all they have at any price, by definition, because its price IS by definition what the whole supply sells for.

1) Gibberish - "able and willing" to sell "all they have at any price" -- is not the definition of supply, and not what happens in the real world. There is ALWAYS a quantity component - a VARIABLE - to supply, which has NOTHING to do with the entire quantity in existence, but only the entire Quantity Supplied at all points on a schedule or curve.

2) "price is by definition what the whole supply sells for" is a semantics sleight-of-hand and question-begging game on your part. To even refer to something as "whole supply" constrains it, by definition, to only those quantities that owners were actually WILLING to offer for sale at that price. Thus, saying "price is by definition what the whole supply sells for" is like saying "100% of all doctors who agreed were in agreement." Yep. All of them. Every one of them -- out of those who agreed, that is. The doctors who didn't agree are not part of that 100%. They're part of the 100% of doctors who did not agree.

If an owner sells 50 out of 100 widgets at a given price "the whole supply" (of those 50 widgets) indeed sold at that price, because "the whole supply" is the Quantity Supplied. You want "the whole supply", by an impossible leap of logic, to also mean "the entire quantity in existence" - when that is NOT what it means.

The whole amount in existence sells for its price.

Gibberish, incorrect, and has no absolutely no bearing whatsoever on the real world.

As of now the spot price of silver is $30.73/oz. - that is its market price. And guess what? I and MILLIONS OF OTHERS were able-but-not-willing to make ANY of our quantities available at or anywhere near that price. All the silver that DID sell at that price did in fact sell at that price (100% of silver that sold at that price sold at that price). But only those quantities at that particular time at that particular price - NOT the "whole amount in existence". It is not even possible for the "whole amount in existence" to be sold at that price. Because that would take time, and that would only be the price on the leading edge, as the FIRST quantities sold and were absorbed at that price. LONG BEFORE the entire quantity sold, however, the price would CRASH. Thus, that would no longer be the price at which the remaining quantities sold. Even then, you COULD fit all of that onto an historical supply curve, which showed the quantities that sold at different prices. But to say that it accounted for the total quantity in existence would require that the total quantity in existence actually be traded. That's not real world at all.

In the case of produced goods, the amount in existence will increase at a higher price. The amount of land won't.

That is true. In the case of produced goods, the total amount in existence will TEND to increase at a higher price. And so will the supply, which we don't ever erroneously conflate with the total amount in existence, since that is not now, nor has it ever been, the economics definition of supply.

The total amount extant of land, works of dead artists, historical trading cards, minted coins from other eras, etc., will not and cannot increase, but the SUPPLY will definitely vary - as it does every day - according to price.

Welcome to the world of circulation, Roy, as the same things are CIRCULATED - SUPPLIED AND RESUPPLIED as Quantity Supplied - over and over again, at both quantities and prices that are always variable, never fixed, ceteris paribus.

The quantity of goods produced will tend to vary according to price. However, there are durable "things" that are neither produced nor are they consumed, which are fixed in total quantity extant, but which are not fixed in supply (the economics definition ONLY). These are not produced, but they do circulate, and that supply (which is, at all times, the amount that owners are willing to make available for sale across a range of prices), is ANYTHING BUT FIXED. These quantities can and do vary according to price, and without regard to their defiance of the usual patterns and assumptions of Marshallian or Ricardian supply and demand or price theories as they relate to produced goods.